samchain/econo-pairs-v1 huggingface dataset:
Given these developments, the baseline scenario in this Report assumes that GDP will grow between 1.25 and 2.25 percent in 2016, less than was expected in December, and in 2017 it will grow between 2 and 3 percent (table 2). This implies that the economy will keep growing below its potential for the better part of the forecast horizon, so that a further increase in the output gap is projected. Just for refreshment, let me remind you that in the Monetary Policy Report of September last year we included several boxes that reflected our new estimate for trend growth (i.e. the medium-term growth rate) and potential growth – the non-acceleratinginflation rate of growth. Estimates remain as we communicated then: about 3.5 percent for trend growth and around 3 percent for potential growth. The labor market has been strikingly resilient, with persistently low unemployment rates and strong growth in salaried employment in most of 2015. Most recently, however, the latter has tended to decelerate, which along with other indicators in the same direction suggests that this market could be weakening (figure 4). About inflation, no big changes are foreseen from December. Incoming data confirm that it will gradually converge to 3 percent, after remaining above 4 percent during the first half of 2016. The better behavior of some components not included in the CPIEFE will help speed up this convergence. Thus, by December this year we expect inflation to be at 3.6 percent, two tenths of a point less than what we thought in December.

Ravi Menon: The Institute of Banking and Finance at forty Welcome remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore and Chairman of the Institute of Banking and Finance, at the Institute of Banking and Finance 40th Anniversary Dinner, Singapore, 10 June 2014. *  *  *  Deputy Prime Minister and Minister for Finance, Tharman Shanmugaratnam, Pioneers of IBF, distinguished guests, ladies and gentlemen, On behalf of the Council and staff of IBF, let me welcome you to IBF’s 40th anniversary dinner. IBF is where it is today because of what previous generations of Council members and staff, industry practitioners and training providers accomplished together. They are the Pioneers of IBF, whose contributions and achievements we are gathered here to celebrate. It is the inspiring vision and tireless efforts of these Pioneers to build competencies in finance that helped create the international financial centre that Singapore has become today. I am delighted that several of them are here with us this evening. IBF was set up in 1974 with the support of the Monetary Authority of Singapore (MAS) and the Association of Banks in Singapore (ABS). Those were early days in Singapore’s development as a financial centre. The birth of IBF helped to fill a critical gap in the training of Singapore’s financial sector workforce. The subsequent growth of IBF has been a story of each generation building on the efforts of previous generations and helping to strengthen the capabilities of Singapore’s finance professionals.
Also, whereas central banks protect themselves against risk in secured loans by requiring more collateral if conditions deteriorate, an outright purchase is a one-off transaction; there’s no going back to renegotiate the price afterwards. By analogy with the more familiar “LOLR” function, the following thoughts suggest themselves for debate in our community. •  As with LOLR, central banks should only engage in MMLR operations that do not interfere with monetary policy. •  A MMLR should aim to buy at a discount to the fundamental value of a risky asset, with the implicit bid-ask spreads unattractive relative to peacetime conditions in private markets but impliedly better than those available during the crisis itself. The  2  For example see, Buiter W and Sibert A (2007), “The Central Bank as Market Maker of Last Resort”, Maverecon – Willem Buiter’s Blog (http://maverecon.blogspot.com/2007/08/central-bank-as-market-maker-oflast.html). BIS Review 144/2009  3  purchase mechanism should be designed to reveal information about the state of the market and the fairness of prices paid. •  While the risk inherent in outright purchases cannot be avoided, the MMLR absolutely must stay within the capacity determined by its capital resources. •  And crucially, the MMLR should aim to be catalytic, helping ideally to kick-start a market rather than replace it. And it should avoid propping up markets that would not be fundamentally viable once the liquidity crisis subsided. The underlying objective is, as elsewhere, to help to maintain continuity of the crucial services that the financial system provides to the economy.

This growth in intra-regional trade has been spurred, in part, by the integration of production network and supply chain in the region, especially the emergence of China and its integration into the regional economy. Also, government policies to support freer trade through bilateral and multilateral trade agreements have also had a strong supporting influence. Accompanying the growth in intra-regional trade is a deepening process of financial integration in the region, defined as cross-border investment flows within East Asia. Evidence of this can be seen from the data on cross-border flows in FDI, portfolio investment, and bank lending that point to a rising trend. Also, financial prices in the region’s financial markets show greater tendency to converge. For example, cross-border interest rate and bond yield differentials have narrowed while the volatility in money market interest rates across the region has declined. To me, a key stimulus to the current process of financial integration has to be East Asia’s rapid economic growth and the accompanying growths in intra-regional trade and cross-border investment. Government policies to develop financial markets in the region have also been important in so far as helping to provide a clear direction of policy preference towards greater regional integration. As a result, cooperative government efforts to develop regional financial markets, especially the bond and equity markets, are being carried out in many regional fora.
Reworking the analysis of the text does not, however, affect the main conclusions regarding the impact of QE. Charts D and E are the equivalents of Charts 6 and 7, showing the calculated deficits with and without QE for a fully funded and a 30% underfunded pension scheme respectively. As before, QE makes little difference in the case of a fully funded scheme, but moves it towards deficit in the case of a significantly underfunded one.

Discounting the flow of future pension liabilities by a corporate bond rate only makes sense if the fund is no longer required to meet those liabilities in the states of the world where the bond defaults. But this is not generally the case: broadly speaking, the fund needs to meet its liabilities whatever happens. In normal times, this does not matter very much as the spread of investment-grade bonds over gilt yields is pretty small and does not vary very much. But during the peak of the crisis, the spread – even for investment-grade bonds – rose significantly (Chart A). Consequently, when standard accounting conventions are followed an additional factor needs to be added to Charts 4 and 5, reflecting the impact of changes in the corporate bond spread. That is shown by the mauve bars in Charts B and C respectively; the profiles of the other components of the deficit are unchanged. The main consequence of this is that the value of liabilities falls markedly during the period up to early 2009, indeed so much so that it counteracts the loss in asset value due to the fall in equity prices and pushes the fund into surplus. But it would be unwise for the sponsors and trustees of a pension fund to take comfort from this, given that the fall in the value of liabilities was merely an artefact of an increased probability of default on corporate bonds!
Swedish bank managers sometimes claim that the competition in the Swedish banking market is fierce and that it is easier to generate earnings abroad. Foreign bank analysts prefer to emphasise the relative smallness and maturity of the Swedish and Nordic banking market – the major structural deals have already been done and all households already have a home loan. However, bank managers and analysts seem to agree that the potential for improving return on equity is limited. To sum up, we can conclude that Swedish banks are neither more nor less profitable than their European competitors. While Swedish banks are cost-efficient, unfortunately they are less successful when it comes to generating earnings on services other than lending. It reminds me in some ways of the Swedish football team before Zlatan Ibrahimovic and Henrik Larsson blossomed into the stars they are today – disciplined and effective in defence, but fairly lacking in goals and imagination in attack. The structure of the Swedish banking sector So, is Swedish banks’ average profitability and smaller valuation discount a result of their inability, despite their efficiency, to benefit from higher margins due to tough competition, or is it because the banks operate in an oligopoly and are incapable of developing new, profitable products. In the former case the relatively low profitability is a symptom of an efficient and competitive banking sector. But in the latter situation the authorities should be concerned, while investors possibly can see interesting but risky development potential.

This is a world in which it is harder for policy to boost productivity and growth. the second half of the 20th century, the median level of GDP per capita was 15% below the level predicted from the trend of the ten years prior to the crisis, which is roughly where the UK is currently. See Reinhart, C. M., and V. R. Reinhart (2015) “Financial crises, development, and growth: a long-term perspective”, The World Bank Economic Review. 3  2  Refers to forecasts made for the first year after the April IMF WEO in question; for example the April 2010 WEO forecast for 2011 relative to the final outturn data. BIS central bankers’ speeches  In these secular stagnation views of the world, the water around us was getting colder before the crisis and has become colder since. But we have not noticed it. And it is this, rather than the slowness of the healing process and the aftershocks of the crisis, that explains the serial disappointments in economic growth. I have set this out as two very different stories about what is happening – “slow healing” and “secular stagnation”. Of course, given enough unfortunate events and enough repeated disappointment on the pace of recovery, they could look and feel the same for a long time. There is much that is common to them. In both stories for a period of time, productivity is lower, interest rates stay low for long and pay and income growth is weak.
Benoît Coeuré: Four years after Pittsburgh – what has OTC derivatives reform achieved so far Speech by Mr Benoît Coeuré, Member of the Executive Board of the European Central Bank, at the at joint Bank of France, Bank of England and ECB conference on OTC derivatives reform, Paris, 11 September 2013. *  *  *  I wish to thank Patrick Föll for his contributions to this speech. I remain solely responsible for the opinions expressed herein. Introduction Ladies and Gentlemen It is a great pleasure for me to speak here in Paris and to welcome you, on behalf of the ECB, to the conference on the OTC derivatives reform. The over-the-counter (OTC) derivatives markets were at the heart of the financial crisis and several root causes on what went wrong were identified. Increasingly complex and opaque financial products, combined with a lack of transparency, were contributing factors, but also the failure of public authorities to appreciate and address adequately the risks building up in the financial markets. Not only did regulators and supervisors not keep up with financial innovation, but they lacked the tools to monitor the risks adequately. Regulation also failed to keep up with the dynamics in the OTC derivatives markets over the last two decades, which saw an explosion in outstanding contract volumes. Post-trading infrastructures had become increasingly inadequate for coping with the growing volumes and complexity of such trades.

At a more general level, the lack of a level playing field in the enforcement of the new financial standards has a potential to fragment the global financial system and to lead to a suboptimal allocation of capital of liquidity and to overconsumption of scarce resources, such as the safe assets used as collateral by financial market participants. OTC derivatives are a case in point. I therefore strongly welcome the recent agreement reached between the European Commission and the US Commodity Futures Trading Commission (CFTC) on a common path forward regarding a number of measures on how to approach cross-border issues. In this context, the notion of substituted compliance is a useful tool, as it will help to reduce the risk of duplication and potential frictions of rules. Clearly, convergence at a very granular level may not be achieved. It may not even be desirable, as specific differences may reflect the specific institutional and regulatory frameworks in the jurisdictions concerned. Nevertheless, it needs to be ensured that the outcome in all material aspects is similar. A key objective of the G20 mandate for OTC derivatives reform was to ensure effective systemic risk reduction in these markets. It is unlikely that we will achieve this objective by converging on the lowest common denominator rather than by achieving common best practices. However, this may be the result if substantive regulatory differences are not addressed and consequently, opportunities for regulatory arbitrage open up.
And third, as part of this, we are very focused on understanding business models, how firms make money, the risks they take. This, too, is a feature common to our supervision of banks and insurers. To give you an example, the high return on equity and low cost of equity business model is dead. It should never had been alive, because it could only exist through a misunderstanding of risks. Moreover, banks can alter their cost of equity through the choices they make on risk. Sometimes I hear the cost of equity explained as if it is exogenous, but it is not. Let me turn now to the current situation. I am not going to tell you the answer to whether the UK banks need extra capital, if so, how much of what type, and how rapidly should it be put in. The answer will of course differ for each bank. Let me though set out some of the considerations that shape the answers, and in doing so remember that we have to take into consideration the sizeable increase in capital in the system since 2008. And let me also emphasise that the FPC does need to reach a conclusion on these issues soon, and in doing so reduce one contribution to uncertainty over the future. The first consideration to note is that we face a situation where there is uncertainty around our judgements on the quality of a number of asset classes and their valuation.

I was dismayed to hear recently a commentator saying that, “supervisors will never be more than box-tickers”. Wrong. If you don’t agree, meet my colleagues. I was also interested to read recently a claim that today supervisors are unable to stand up to the banking lobby. Wrong. We accept that in a judgement-based approach to supervision, there will be disagreement. We don’t seek disagreement for the love of it, but it is part of what we do. In terms of how supervision is done, my preference is to start with a risk-based approach to assessing capital needs and then back that up with other risk-based approaches and a simple non-risk based approach, like a leverage ratio. The general approach is also the one that we are developing for insurers by designing early warning indicators to act as a check on the modelled risk-based approach. Why do I start with a risk-based approach? Because there is a logic to the approach of the supervisor mirroring how the firm manages risk for itself. I would be horrified if a firm said to us, “you know, we don’t bother to assess the risk we are taking”. Some history is relevant here. Modern risk-based capital requirements began with the Basel I Accord in the late 1980s. I was in Banking Supervision at the Bank of England then as we implemented Basel I. It had simple, crude, risk weights, but it was better than anything that had come before.
2/5  BIS central bankers' speeches  Some have called on us to go further and incentivise change through imposing lower capital requirements for ‘green’ exposures and higher capital requirements for ‘non-green’ or carbonintensive exposures. As the prudential regulator, any incorporation of climate change into regulatory capital requirements would need to be grounded in robust data and be designed to support safety and soundness while avoiding unintended consequences or compromising our other objectives. In my view, the case for this has yet to be clearly established and possibly may never be. But our work to improve climate disclosures, scenario analysis, and risk management, could help unlock such assessments. Macroeconomy Beyond the financial system, achieving economy-wide net-zero emissions will require greening the way we heat our buildings, manufacture industrial goods like steel and cement, generate electricity and produce food. This could prove to be an opportunity for the economy to regenerate ageing capital and raise productivity. Analysis done by the Network for Greening the Financial System (NGFS) and National Institute for Economic and Social Research by 2050 suggests that such an orderly transition could lead to some increase in global GDP, and lower unemployment relative to prior trends. These positive effects should be larger in countries like the UK that are net importers of energy. However, as I mentioned earlier, much of that rests on how the transition proceeds. The lesson from previous episodes of structural change is that they never involve a frictionless re-allocation of capital.

(2021) estimates that $ of the $ of economic damage caused by Hurricane Sandy (New York, 2012) was attributable to climate change driven rises in sea-levels 7 See Chapter 6 of IMF Global Financial Stability Report 2020Opens in a new window 8 The Stern Review on the Economics of Climate ChangeOpens in a new window (2006) 9 4/5  BIS central bankers' speeches  9 See Government announcement of climate considerations being embedded across UK principal financial  regulatorsOpens in a new window 10 Dietrich, Müller, and Schoenle (2021) – ‘The Expectations Channel of Climate Change: Implications for Monetary  Policy’ 11 Monetary policy in the intangible economy - speech by Jonathan Haskel, University of Nottingham, February  2020 12 See ‘It’s not easy being green – but that shouldn’t stop us: how central banks can use their monetary policy  portfolios to support orderly transition to net zero’ speech by Andrew Hauser and Options for greening the Bank of England’s Corporate Bond Purchase Scheme discussion paper  5/5  BIS central bankers' speeches
23  All speeches are available online at www.bankofengland.co.uk/speeches  23  Chart 26: Asset price responsiveness to trade news Per cent  2018 - Positive news 2019 - Positive news 2018 - Negative news 2019 - Negative news  0.2  2018 - Positive news 2019 - Positive news 2018 - Negative news 2019 - Negative news  Per cent, pp for VIX 1.2 1 0.8  0.1  0.6 0  0.4 0.2  -0.1  0 -0.2  -0.2  -0.4 -0.3 -0.4 US Dollar ERI  2018 - Positive news 2019 - Positive news 2018 - Negative news 2019 - Negative news  CNY bps  -0.6 -0.8 S&P 500  Shanghai Composite  VIX  8 6 4 2 0 -2 -4 -6 -8  10-year US Treasury yields  High-Yield US corporate credit spreads Sources: Bloomberg LP and Bank of England calculations. Trade tensions are also taking their toll on companies’ sentiment and activity. Global goods trade has slowed (Chart 27). But the weakening has been even more striking in business surveys of sentiment, manufacturing and export orders. This weakening has been broadly-based across the world’s major trading economies, with simultaneous falls in sentiment across the United States, Asia, Europe and China.

Monetary policy responded with a force never previously seen in history. Today, the most likely shocks or downside risks to the economy are very different in their source and impact. They arise from factors such as global trade wars and Brexit. These shocks are different in their duration – more slow-burn than spontaneous conflagration. And they are radically different in their source, as they hit the supply potential of the economy, as much as its demand side. 31  El-Erian (2016). 32  All speeches are available online at www.bankofengland.co.uk/speeches  32  Consider the effects of Brexit uncertainty on the UK economy. By far the largest effects have been on companies’ investment and productivity. According to our Decision Maker Panel, investment among UK companies is estimated to be between 6-14% lower, and firms’ Total Factor Productivity (TFP) around 2-5% lower.32 These are large negative shocks to the economy’s supply-side potential. They are hits that monetary policy is not itself well-placed to mitigate. There is a risk of people normalising the deviance in monetary policy since the crisis. Around a quarter of adults in the UK working population have never experienced Bank Rate above 1% in their adult lives.33 In these changed circumstances compared with a decade ago, it is important that monetary policy is not a prisoner of its past, that the monetary cavalry are not called at the first whiff of grapeshot, that a dependency culture around monetary policy is not allowed to develop.
José Manuel González-Páramo: Sovereign contagion in Europe Speech by Mr José Manuel González-Páramo, Member of the Executive Board of the European Central Bank, at the Distinguished Speaker Seminar of the European Economics and Financial Centre, London, 25 November 2011. *  *  *  Ladies and Gentlemen, It is a great pleasure to speak to you here in London and discuss some key issues relating to the ongoing crisis in Europe. For centuries the City of London has held its position as a leading international financial centre. Few other places in the world exhibit such a high density of expertise in financial matters. At the same time, where financial activity tends to be concentrated experiences with financial contagion during crises are often also pronounced.

However, it suffered from weak national implementation and a lack of enforcement at the European level. Enforcement of the SGP was built on a peer pressure mechanism among Member States. In the past, however, Member States proved to be reluctant to enforce adequate fiscal discipline on their peers. Moreover, decision-making bodies at the EU level were left with a  10  See A. van Riet (ed., 2010), “Euro area fiscal policies and the crisis”, ECB Occasional Paper, no. 109, April (http://www.ecb.europa.eu/pub/pdf/scpops/ecbocp109.pdf). 6  BIS central bankers’ speeches  significant degree of discretion regarding the implementation of the fiscal rules, notably following the 2005 reform.11 Incentives for ensuring sound national fiscal positions have as a consequence been insufficient. Member States failed to adhere to their medium-term budgetary objectives and only slowly corrected excessive deficits. As a result, a number of euro area countries accumulated large fiscal imbalances already in “good times”, instead of using opportunities for reducing public deficits and debt levels. Therefore, they were left with hardly any room for manoeuvre when the financial and economic crisis hit. In the wake of the crisis, the substantial underlying fiscal and structural weaknesses in a number of euro area countries, as well as the inability of the current governance framework to prevent the emergence of such imbalances, became very apparent.