samchain/econo-pairs-v1 huggingface dataset:
9  8  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  8  official interest rates to close to zero and expanded their balances sheets progressively by around $ trillion or 13% of global GDP (Chart 8). Chart 8: Central Bank Balance Sheets  20000  USD (billions)  18000 16000 14000 12000 10000 8000 6000 4000 2000 0 2006  2007  2008  2009  Fed  2010  2011  2012  ECB  2013  BoJ  2014  2015  BoE  2016  2017  2018  SNB  2019  2020  Total  Source: Respective central banks and Bank calculations. Interestingly, this rapid growth in central bank money creation was not mirrored in money spending growth in the economy. In the ten years prior to the Covid crisis, narrow money globally rose by over 150%, while money spending globally rose by less than 50%. In the UK this contrast was starker still, with central bank money rising by around 200%, while money spending rose by less than 50%. 11 One way of reconciling these diffuse trends in the monetary and real sides of the economy comes from looking at a different measure of money - commercial bank money.

These include the rise of global trade and value chains which offer access to lower-cost inputs, lowering the price of final imported goods and services 8; demographic trends which have added to the economy’s labour supply, lowering wage costs 9; and increased automation and flexibility in the jobs market holding down wage growth and potentially flattening Phillips curves.10 Chart 7: UK GDP after the Great Depression and Great Recession  50 Cumulative percent change 40 30 20 10 0  Years 0  -10  t+1 t+2 t+3 t+4 t+5 t+6 t+7 t+8 t+9 t+10 t+11 t+12 The Great Depression  The Great Recession  Source: ONS and Bank calculations. These structural factors would, in theory, be expected to cause a downward shift in the price level rather than in the rate of inflation. But because these factors have played out over a lengthy period, they may have shown up in a persistent drag on measured inflation rates. For example, Faijgelbaum and Khandelwal (2016) estimate that global trade integration has lowered the price of the typical household consumption basket by between a quarter and two-thirds – a huge effect. This subdued pattern for global inflation, driven by demand and supply-side factors, has occurred against a backdrop of global monetary policies remaining highly accommodative, itself in part a response to these disinflationary forces. For example, in the aftermath of the global financial crisis, central banks lowered  8  Johnson (2018). Goodhart and Pradhan (2020). 10 Haldane (2018).
Foreign investors sold Ericsson shares to a value of SEK 30 billion between September 2000 and February 2001. At the same time, the AP funds' new investment regulations and investments in the premium pension scheme have led to substantial outflows. These flows can undoubtedly have had significance in the short term, although this effect should not be exaggerated. However, the situation in Sweden is basically stable, as I pointed out earlier. There is no distrust of Sweden pressurising the exchange rate as at the beginning of the 1990s; no fundamental imbalance in our economy to arouse international concern. One measure of this is the spread between the longterm German interest rate and the corresponding Swedish interest rate, which grazed 5 percentage points during the crisis period at the beginning of the 1990s. That was how much more the pension funds in the USA and Japan wanted to receive to invest money in the unstable Sweden rather than the secure Germany. Today the interest rate margin is roughly the same and has been so since early 1999. The long-term confidence in the Swedish economy appears unshaken and the explanation for the weak krona must therefore be sought in the financial markets rather than the real economy. A floating exchange rate floats! If the krona is undervalued, shouldn't we at the Riksbank do something about it? We do have a foreign currency reserve that can be used to buy krona if necessary. However, there is good reason to approach this question with great caution.

One important reason is, of course, the above, namely that the weakness of the krona is the other side of the dollar's strength and reflects the international  BIS Review 34/2001  3  financial unease. We can't do very much about this, no more than can the Canadians or Australians who are in the same situation. Another reason is that we have a price stability target and not an exchange rate target and trying to maintain both with the aid of the repo rate is not an easy task. In many cases the targets are in total conflict with one another. We in Sweden have chosen a floating exchange rate and will therefore have to accept that the exchange rate floats. If the Riksbank were to intervene on the market now and then, we could easily cause speculations as to what exchange rate we might have as a target. The forecasts as to when the Riksbank might intervene and the positions it might take would then become a part of stockbrokers' daily work. This is not a good thing, as it increases unease on the market, rather than reducing it. Nevertheless, it should be remembered that every central bank may need to intervene under certain circumstances, either by buying or selling currency, e.g. to restore some order to a market that has become unbalanced or to even out sudden large flows. In both cases, one should of course state the purpose of the intervention.
This will be influenced in the medium to long term by macroprudential policies that impact the efficiency of the financial system and through it aggregate productivity. ·  ·  ·  ·  ·  Comparing the FPC’s objective function with the more familiar monetary policy objective function helps illustrate the operation of macroprudential policy: 1. Clarity of objectives. The primary objective of the FPC, financial stability, can only be estimated; whereas that of the MPC, inflation, can be readily measured. As a consequence, FPC performance is best judged in the short term by intermediate indicators and drivers of financial stability; 2. Impact on growth. Although both committees are tasked with promoting the government’s economic objectives subject to achievement of their primary objectives, the MPC has very limited ability to influence trend growth. The MPC’s trade-offs, when they occur, are to limit excessive short term volatility in output and inflation, particularly in “exceptional circumstances,” circumstances that only extend modestly the policy horizon. In contrast, the FPC is more likely to face trade-offs between short term growth and its actions to achieve its primary objective. And the FPC can have  9 The recent interest in this concept is based on work by Tobias Adrian and co-authors (Adrian, T, Boyarchenko, N and  Giannone, D (2019), ‘Vulnerable Growth’, American Economic Review, 109(4)). For a discussion, see this article by Steve Cecchetti and Kim Schoenholtz. 10 Throughout this speech, deteriorations / worse outcomes for GDP-at-risk are referred to as when GDP-at-risk is increasing / high.

This objective is founded on my belief that the first two pillars gain sustainability only if the public understand the role of the central bank, its independence and its policy. Last but equally important, I would like to emphasise the need of cooperation and coordination with the fiscal policy. Fiscal policy and its impact are facts of life which can’t be ignored. Therefore, monetary and macro-prudential policies have to be designed and implemented in full awareness of its existence. A Central Bank does not live in an isolated island; its success will, among others, depend on its ability to act in coordination and cooperation with the fiscal policy, without losing its independence. Incorporating this understanding in the central bank theory and practice requires some adjustments and flexibility but, at the same time, requires that central banks preserve their focus and independence and acknowledge their limitations. Altogether these changes will allow the central bank and its inflation targeting regime to become a useful tool at the hand of the monetary authorities to preserve economic and financial stability in the post-Global Financial Crisis period. Thank you very much for your attention! BIS central bankers’ speeches  3
Despite a decline in recent days, that expected peak is now around 5¼%. This is by some distance the largest rise in market interest rates between MPC forecasts since the Committee was founded. By way of comparison, Chart 10 plots this increase in market interest rates against one particular, simple representation of how interest rates might have had to respond to a couple of key developments since August: the decline in sterling’s exchange rate and the original, two-year version of the Energy Price Cap. Both would tend to raise medium-term inflation, for any given level of interest rates, and would therefore tend to merit an additional response from policy (all else equal). This is expressed in Chart 10 as the change in something called an “Optimal Policy Projection”, or “OPP”. From time to time, the Committee is shown these OPPs to inform its policy judgement. The Annex provides more background on the OPPs. Bank of England  Page 18  Chart 10: Market interest rates have risen dramatically since the August MPR Percentage points 2.5  2.5 Yield curve news  2.0 1.5 1.0  “Optimal” response to demand effects of energy package and sterling depreciation  0.5 0.0 Dec 2022  2.0 1.5 1.0 0.5  Dec 2023  Dec 2024  0.0 Dec 2025  Chart shows the marginal impact on the OPPs of the original Energy Price guarantee, assuming that energy prices remain flat at a level consistent with the guarantee once it has expired.

The problem naturally lies in the negative rates of credit flow for productive activities other than construction and development, and in the contraction of credit for households, both for house purchases and for other purposes. And, in addition to a problem of volume, there is a problem of prices; our households and firms are paying higher interest rates than the average rates paid for comparable transactions in the euro area as a whole, although these spreads are small in the case of financing for house purchase, very high for consumer loans and also substantial for credit obtained by non-financial corporations. To explain this we must look both at supply-side factors relating to loanable funds by banks, and to demand-side factors on the part of borrowers, households and firms. Concerning the demand for credit, the recessionary environment, high unemployment, the hitherto scant growth prospects and uncertainty are evidently affecting potential borrowers. On the supply side, neither liquidity – provided in a stable fashion and at a low cost by the Eurosystem – nor the shortage of capital would appear to be significant explanatory factors. We believe that on the supply side the two most influential factors are the deleveraging of banks and the lack of projects that may be deemed solvent, or offer sufficient guarantees. There are in fact figures confirming that the most dynamic and productive companies obtain financing; the trajectory of exports is a good indicator in this respect.
The direct effect of the global downturn on overall growth in the Norwegian economy has so far been limited. This is partly attributable to high oil prices and the high level of activity in the oil sector. However, as a result of the interest rate differential and the strong krone, the global downturn will have a substantial impact on Norwegian business and industry. The government’s use of petroleum revenues or expectations of increased spending of petroleum revenues may have contributed to sustaining activity and the strong krone. Increased use of petroleum revenues over the central government budget is stimulating demand for goods and services. This will intensify the contest for economic resources and pressures in the business sector. Mainland GDP in 2002 Percentage change. Projections published at different points in time 2.5  2.5  2  2  1.5  1.5  1  1  0.5  0.5  0  0 Nov 00  Mar 01  Jul 01  Nov 01  Mar 02  Jul 02  Nov 02  Source: Norges Bank SG Gausdal 31.01.03  The exchange rate may move more in the short term than is necessary in the long term. One reason may be that the krone has to overshoot its long-term level since market participants will weigh the interest rate differential against the possibility of a future depreciation of the krone.

This may be related to greater uncertainty as to developments in the German economy. Forward interest rates 10 years ahead. US, Germany and Norway Per cent 7.5  7.5  7.0  7.0  Norway 6.5  6.5  6.0  6.0  US 5.5  5.5  Germany  5.0 4.5 01/01/01 01/05/01  5.0 4.5  01/09/01  01/01/02 01/05/02  01/09/02  01/01/03  Source: Norges Bank SG Gausdal 31.01.03  The mandate for monetary policy with an inflation target provides a sound basis for assessing Norges Bank's interest rate setting. According to the regulation, the direct effects on consumer prices resulting from changes in interest rates, taxes, excise duties and extraordinary temporary disturbances shall in general not be taken into account. This means that monetary policy must be oriented towards bringing underlying inflation, adjusted for the deviations mentioned above, close to 2½ per cent. An adjusted index such as this will be most relevant when assessing the orientation of monetary policy in retrospect. The most common indicator of underlying inflation – the consumer price index adjusted for tax changes and excluding energy products (CPI-ATE) – has shown a year-on-year increase of between 1.8 per cent and 2.7 per cent since the inflation target was introduced. In December, the last observation to date, the year-on-year rise was 1.8 per cent.
Further, the risks to global growth have stepped up. Such risks include most notably those derived from the increase in protectionist policies, from the growing vulnerability of certain countries and agents to a potential further adjustment to global financial conditions, and from the possible heightening of geopolitical tension in certain hotspots. In addition, in the European arena, the outcome of the Brexit and the direction of Italian economic policies are major areas of uncertainty. These developments, along with the increase in global risks, might ultimately affect the growth outlook for the euro area as a whole and, therefore, for the Spanish economy. The economic expansion in the euro area has not been accompanied to date by an acrossthe-board and sustained acceleration in prices (see Chart 4). In this respect, the recent rise in inflation, to 2.2 % in October according to the latest leading indicator published today, is essentially due to the increase in the cost of energy, while the more stable components continue to post low rates of increase. That said, the intensity of job creation and the progressive reduction in the degree of labour market slack in the euro area economies are prompting a gradual rise in wages. Should this continue over time, it would contribute to a sustained pick-up in inflation towards rates closer to the Eurosystem’s medium-term price stability objective, consistent with an inflation rate lower than, but close to, 2%.

William C Dudley: More lessons from the crisis Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Center for Economic Policy Studies (CEPS) Symposium, Princeton, New Jersey, 13 November 2009. *  *  *  Thank you for having me here to speak today. It is a real pleasure to have this opportunity to speak at CEPS again – this is a great forum to talk about policy issues. Tonight I want to discuss some of the challenges we face in making our financial system more robust. We have learned a great deal over the past two years about our financial system and its vulnerabilities. The task ahead is to put these lessons to good use. Our goal must be to make the financial system more resilient to shocks. If we can do that successfully, we should be able to reduce the risk of financial crises. In assessing the causes of this crisis, one clear culprit was the failure of regulators and market participants alike to fully appreciate the strength of the amplifying mechanisms that were built into our financial system. These mechanics exacerbated the boom on the way up and the bust on the way down. Only by better understanding the sources of these damaging dynamics can we construct solutions that will strengthen our financial system and make it more robust. Today, I am going to focus mainly on the extraordinary liquidity events that played out during this crisis.
22.03.2021  The challenges to the banking sector a year after the outbreak of the COVID-19 pandemic 1st “Observatorio de las Finanzas” Symposium (El Español/Invertia) Pablo Hernández de Cos Governor  Good evening ladies and gentlemen. I should like to thank the organisers of this 1st “Observatorio de las Finanzas” Symposium staged by El Español/Invertia for inviting me to deliver this opening address. This forum has proven timely; the challenges posed by the pandemic make it particularly important for the main financial institutions and the regulatory and supervisory authorities to pool their views on the situation of the Spanish financial system. To contribute to this debate, I shall analyse today what the banking sector’s pre-crisis starting point was, the impact of the crisis over this first year, the current situation and the challenges ahead. The starting point: a more resilient banking sector As we know, the COVID-19 pandemic strongly impacted Spanish economic activity in 2020. GDP underwent a year-on-year decline of 11% last year, marking an unprecedented peacetime contraction. This decline has been appreciably steeper than that of other, comparable euro area economies. This relatively worse performance has been due, at least in part, to structural factors, such as the greater weight in our economy of the services sector. The adverse impact has been particularly severe in some sectors of the economy (hospitality, retail and wholesale trade, transport, etc.) and in specific population groups (in particular among the lesser skilled and young adults).

Starting positions, in terms of equity and credit quality, were already divergent. Moreover, in a crisis such as the current one, in which the pandemic is affecting different regions and sectors of activity in different ways, the worsening of banks’ solvency will foreseeably hinge on their degree of exposure to such regions and sectors. The current situation: the importance of maintaining stimulus measures and targeting them more specifically The current macroeconomic setting is characterised by an incomplete, gradual and uncertain recovery. Indeed, as a result of the restrictions on mobility that had to be applied in the first quarter, a further decline in GDP in this period cannot be ruled out. This would mean that, at end-March, GDP would still be slightly over 9 pp below its pre-crisis level. In any event, we should acknowledge that the development of effective vaccines against the virus has contained some of the risks to the economy. And, in turn, this has equipped the authorities with what is, in fact, also the best economic policy tool available to usher in the recovery: the roll-out of vaccination programmes that allow for the progressive lifting of the restrictions on economic activity. In this situation, retaining the exceptional support measures for the economy is warranted until the recovery firms. This support is also crucial for preventing the crisis from being compounded by a financial component that would deepen and lengthen it.
The architectural concept of Sasana Kijang is also inspired from our earliest form of currency that was used in the third century and which denotes a harmony of simplicity and class. And the facade design of the building is derived from the geometric patterns of the traditional Malaysian songket fabric which is woven with intricate gold and silver threads which creates a strong bond, thus giving the fabric its strength and elegance. This is similar to the Central Banking community that is interlinked through our similar objectives and bonded through collaboration and strategic alliances. Other features of the building is the extensive use of glass which allows for the greater use of natural light. The building also features a range of green technologies as part of our commitment and responsibility to the environment. Finally, another important part of Sasana Kijang is the Bank Negara Malaysia Currency and Economics Museum and the Art Gallery that will be opened to the public. These collections that have been built since the earliest days of our Bank over a period of more than five  BIS central bankers’ speeches  1  decades aim to foster greater understanding on the history of our currencies and of our economy and financial system, and also represents our support to contemporary art in Malaysia and thus contribute towards preserving the heritage of our country. Allow me now to invite Yang Amat Berhormat, Dato’ Sri Mohd. Najib bin Tun Haji Abdul Razak to deliver his address and to officially launch Sasana Kijang.

It involves in effect aiming to keep overall, aggregate demand in the economy (as a whole) more or less continuously in line with the underlying overall capacity of the economy (as a whole) to BIS Review 7/1999  –2–  meet that demand. Effective price stability is essentially a measure of our success in achieving economic stability in that much broader sense. It is a limited role. Neither we nor the ECB can do very much directly to affect the underlying supply side of the economy which depends upon its structural characteristics, and above all, in today’s world, on the efficiency and flexibility of goods, capital and labour markets. Monetary policy cannot substitute for supply-side reform, but by maintaining price stability we can, indirectly, help markets to function more effectively. Nor can either the MPC or the ECB do much directly to influence the pressures on particular firms or particular sectors or regions of the economy; we and they can only influence the monetary situation in the economy of our respective currency areas, as a whole. We have essentially one instrument: the short-term interest rate. But, again, if we are successful in achieving overall stability, that will also contribute over time to a more rather than less favourable operating environment for the different component parts of the economy. But that is the most that either we in the MPC or the Governing Council of the ECB can hope to do.