samchain/econo-pairs-v1 huggingface dataset:
BIS central bankers’ speeches  5  Preparedness to implement normalization Extensive testing of ON RRPs and other supplementary tools have provided policymakers with confidence that they will be able to maintain control over interest rates – that is, that rates will move up with increases in the IOER rate – during the normalization process. 12 An important determinant of the effectiveness of an ON RRP facility is whether a sufficiently wide set of nonbank counterparties has access to it. The New York Fed currently executes RRPs with 163 counterparties comprising many of the major cash lenders in secured and unsecured money markets – including money market funds that manage about 70 percent of the total U.S. money market fund assets under management and account for more than a quarter of total tri-party repo lending against government collateral. 13 This provides a high degree of confidence that we are transacting with an adequate set of counterparties to achieve our policy execution objectives. 14 Throughout the testing regime, the Desk has varied the settings and design of the reverse repo operations, with operational results informing subsequent changes. We’ve operated at different times of the day, increased the maximum bid limit per counterparty, and introduced an aggregate cap of $ billion and a single-price auction mechanism to allocate awards should the sum of submitted bids exceed the cap. We’ve also adjusted the offering rates and tested ON RRPs in conjunction with term RRPs at quarter-ends.

However, the ability of Asian banks to continue to take up the slack could be constrained by the already high loan-to-deposit ratio and limited access to US dollar funding. More importantly, it is doubtful whether these non-European banks would have the appetite to take up long-term project and infrastructure financing, which is a specialised business traditionally dominated by the European banks. Any cutback in infrastructure financing could have serious repercussions for developing Asia, which has a strong need to build and upgrade infrastructure networks to promote sustainable growth, create employment opportunities and boost competitiveness. ADB estimates that Asia requires as much as $ trillion in overall infrastructure investment between 2010 and 2020, with an average of $ billion in annual infrastructure spending. It is therefore vital to further develop the capital markets in Asia, in particular the local-currency bond markets, to effectively channel the region’s vast savings to meet its huge demand for infrastructure financing. Asian governments have been making efforts to develop the bond markets. At the national level, initiatives such as consolidation of issuance in a few benchmark maturities and development of interdealer markets have helped increase liquidity and improve reliability of yield curves in a number of jurisdictions. Meanwhile, collaborative efforts are being made in regional forums. A notable example is ASEAN+3’s Asian Bond Markets Initiative with the strong support from ADB. The Initiative has been looking into both demand and supply side issues pertinent to the development of the bond markets.
François Villeroy de Galhau: Central banks and climate - not the only game in town, but more committed than ever Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Climate Finance Day, Paris, 26 October 2021. * * * Ladies and Gentlemen, It is always a pleasure to attend this landmark event for sustainable finance. But on the eve of COP 26 opening, climate emergency is such that I owe you more than just another speech. I see it as my duty both to report the great progress we have made in this area and to set out the enormous challenges that lie ahead: in very concrete and practical terms, what we have achieved since the last Climate Finance Day in October 2020 (I), and what we have to further achieve in the coming year, notably on a better understanding of the macroeconomic effects of climate change (II). **  I. Our climate action has accelerated over the past year I am proud to stress that the Banque de France, and more generally Central banks have never been more committed. Addressing climate change is part of our missions as supervisor and Central bank: we are acting in the very name of our mandates. Our actions revolve along two axes, as stylised in this quadrant. [Slide] Against the vertical axis, as supervisors, we have made significant progress to identify and help contain climate-related risks born by financial institutions.

It has been the impressive growth in productivity that has been the fundamental factor behind the stunning improvement in the output/inflation mix we have been observing these past several years. What accounts for this improvement in productivity, and is it sustainable? These questions are really at the heart of the debate as to whether the United States is or is not a “new economy”. No one disagrees that the surge in the production of computers and software has been integral to the recent upswing in productivity. Where the differences in view enter is over the deeper sources of productivity growth and the sustainability of the productivity improvements - that is, whether they are temporary or permanent. Those suggesting that there is no “new economy” argue that the recent improvement in US productivity growth is easily explained: it is a combination of a normal cyclical reaction to a surge in demand and a pickup in the growth of the capital stock, most notably high-technology equipment and software. Once growth in demand settles down, this view holds, and investment in high technology slows, productivity growth will moderate. Even proponents of this view recognize, however, that the rapid increase in productivity and output growth in the computer industry will likely increase the growth rate of the economy over the longer term. By contrast, those supporting the idea of a “new economy” tell us that what we are witnessing in the US economy is the fruition of some longer-term trends in information technology, deregulation, globalization and labor markets.
Rachel Lomax: Current monetary policy issues Speech by Ms Rachel Lomax, Deputy Governor of the Bank of England, to the Hull & Humber Chamber of Commerce, Hull, 22 November 2007. I am very grateful to Gareth Ramsay for his help in preparing this speech, and to several other colleagues at the Bank of England for useful comments. *  *  *  Tonight I want to talk about the current issues confronting the Monetary Policy Committee. It’s hard to tell the story of an economy as open as the UK without starting with global developments. That’s not a point I need to labour here in Hull, the Gateway to Europe, and home to a brand new World Trade centre. And it’s never been more true than today. The past 4 years have seen the fastest growth in the world economy since the early 1970s 1 . But even more striking than its pace has been the change in the balance of global growth, with emerging economies contributing nearly three quarters of the increase in world output 2 . This has become even more pronounced over the past year, as Chinese growth has picked up even as the US economy has slowed. The world’s economic see-saw has tilted. That’s the new reality behind two dramas that have held the world’s attention since last August: the turmoil in financial markets; and the renewed surge in energy prices. Both these developments are highly unusual and very recent. No-one knows how they will play out.

On his initiative, on December 19, 1991, the Government adopted a Decision which obligated the National Bank to start printing value coupons. This Decision, adopted in greatest secrecy, was a legal basis for all operational actions that allowed the new currency, the Denar, to be presented to the public on April 26, the following year, 1992. On this day, also on the initiative of the academician Kljusev the systemic laws were adopted, as well as the document on the Anti-inflationary program, which, unfortunately, did not survive the fall of his Expert Government. On this day, besides recollecting the past, we are called to look towards the future. Here we look at the importance of low inflationary expectations for the efficiency of the economy and the role of the National Bank in maintaining these expectations. In fact, academician Kljusev had devoted his entire scientific work to the issue of efficiency of economic policies. For the central bank, as well as for the commercial banks that the central bank closely cooperates with, basically there is only one true treasure on which the effectiveness of its policies is based and that is the confidence of the public. It is impossible to imagine a stable bank without having to imagine the confidence of citizens who are its customers. Also, it is impossible to imagine confidence in a central bank without simultaneously having confidence in its objectives.
In Spain, as in the euro area, the deterioration in these qualitative indicators has been comparatively more pronounced in the case of manufacturing than in that of services. The quantitative indicators, which in principle tend to be more closely related to activity, have also tended to show less favourable behaviour in manufacturing than in services. This mixed behaviour across sectors, and developments coinciding with the timing of the global trade tensions between the United States and China are consistent with the shocks observed since the beginning of 2018, which appear to have had a more pronounced impact on manufacturing, being external in origin; from the viewpoint of demand, manufactures are typically more closely linked to exports than are services. In addition, the regulatory changes in the car industry sector, which came into force after the summer of 2018, have also contributed to explaining the weakness of exports and of manufacturing as a whole, while services, a much smaller proportion of whose value-added is exported, have shown greater resilience. One area in which the slowdown in activity has made itself plain is the labour market. This is a reason for concern, given that the rate of unemployment in the Spanish economy is still high, something that I shall refer to later in greater detail. In particular, Social Security registrations have lost significant momentum since the beginning of the year, growing in September at a year-on-year rate of 2.4%, as against 3.1% at the end of 2018.

Having said that, while these gains have so far been based mainly on the moderation of labour and financial costs, in the future they will have to come increasingly from genuine increases in productivity. Long-term growth of the Spanish economy: the challenge of productivity The productivity challenge  The timid gains in productivity seen in the past recession and subsequent recovery proved to be insufficient to close the gap separating us from the core European countries. The limited headway in productivity by the Spanish economy should be a cause for great concern, since productivity gains are the only mechanism which can generate sustained, stable growth of per capita income in the long term. The consensus in this respect in economic circles is practically unanimous, and the repute of the studies in this area is attested to by the Nobel prizes in economics awarded to Robert Solow and Paul Romer in 1987 and 2018, respectively, for their contributions in the fields of productivity and longterm economic growth. A few figures will suffice to illustrate how improvements in a community’s standard of living over the long term depend almost entirely on productivity gains. Thus, for example, 80% of the increase in US per capita income since 1948 can be attributed to the growth of total factor productivity (TFP).2 In other words, increases in TFP of around 2% per year have allowed the average US citizen to enjoy inflation-adjusted annual income which in 2015 was about $ 30,000 higher than in 1948.
[4] The growing role of non-banks offers the benefit of diversifying sources of finance and can thereby help to ensure a smooth provision of funding to the real economy. [5] Evidence also suggests that a higher share of non-bank finance can help economies to recover faster from recessions,[6] when banks’ ability to lend may be impaired. [7] Crucially, however, the benefits of this diversification rely on making sure that the non-bank financial sector provides a stable source of funding, ensuring robust financing for companies in both normal and stressed market conditions. Liquidity and leverage – lessons from recent market events As the market footprint of non-bank financial institutions increases, new risks and vulnerabilities can arise. Let me discuss three in particular. First, the strong growth of the non-bank financial sector – especially the asset management industry – over the past 15 years has been accompanied by an increase in liquidity mismatches. A key contributing factor is that investors in open-ended funds – which account for the largest part of the investment fund sector – can typically redeem their shares on a daily basis without prior notice. This creates a liquidity mismatch especially in funds that invest in relatively illiquid assets, such as high-yield corporate bonds. Liquidity demand has become more procyclical as a result, especially during periods of financial market stress. During the pandemic, we saw how liquidity mismatches in open-ended funds increased demand for market liquidity, which amplified stress in financial markets.

When employers recommend that their employees “opt in” to retirement plans, they achieve a far lower rate of participation than when employees are automatically enrolled, but may “opt out.” What accounts for this? The economics of the plan work either way. And the incentives have not changed. Employees are not promised more money if they choose not to “opt out” than if they choose to “opt in.” But a better result is achieved by “nudging” employees simply by changing the starting point.2 Compliance programs may be more likely to achieve their desired effects if they are based on studies of how people actually behave. Here are three ideas that would benefit from continued empirical study. 1/6  BIS central bankers' speeches  First, can we increase participation in voluntary training and education programs by prepopulating enrollment? That is, can we rely on the same type of inertia that keeps employees from opting out of retirement savings programs? I’m speaking here of programs above and beyond the minimum training firms already require. These might explore in greater depth the ethical decisions that come up in corporate life—in particular, times when the corporation’s interest and a client’s interest appear to diverge. Second, I am interested in the potential for certain employees to serve as carriers for social norms. Their identification is not always based on rank in a corporate hierarchy. Step one is to find out who these people are. We might, for example, attempt to map electronic communication within an organization.
There are three elements which appear to be underpinning these concerns about the sustainability of growth in the current economic climate: the prospects for the global economy; the prospective impact of the government’s fiscal tightening; and the legacy of the financial crisis. I will discuss these three issues in turn before coming back to the crucial issue of how the Bank of England’s monetary policy can best support the recovery. The global economic outlook A serious setback for the global economy would have major repercussions for the growth of the UK economy. Our economy has a very international focus, and exports, international business activity and the financial sector all play a part in creating strong linkages from the UK to other major economies elsewhere in the world. The sharp drop in business and financial sentiment across international markets in late 2008 and early 2009 – and the ensuing downturn in the global economy – played a major part in tipping the UK into recession two years ago. Similarly, the rebound in the global economy has helped to support our recovery over the last year or so. However, a serious downturn in global growth does not seem very likely at the moment. According to the IMF, global growth this year is now projected to be nearly 5%, compared to a projected growth rate of less than 2% just eighteen months ago.

As Chart 11 shows, we have seen two major spikes in CPI inflation within the last two years. And it is possible that another one is in prospect when higher VAT comes into effect early next year, particularly if this is accompanied by a continuation of the recent surge in energy and commodity prices. These repeated episodes risk eroding confidence that UK policymakers remain committed to low and stable inflation, with a knock-on effect on inflation expectations in financial markets, among the business community and the public which could be self-fulfilling. In the depth of the recession in the first half of last year, we could be fairly relaxed about upward pressures on inflation. At that time, the MPC was worried about the opposite trend – a lurch into deflation with prices and wages on a downward spiral. But these deflationary fears have not been realised. Instead, inflation has run above the target and wage freezes introduced to help businesses weather the storm of the recession are coming to an end. The current period of above-target inflation risks being prolonged by monetary policy which is too lax – creating a climate in which higher inflation is not just the product of one-off shocks but becomes more deeply ingrained. 12  BIS Review 134/2010  The economy is now recovering at home and abroad. The world economy is growing above its pre-crisis trend, and domestic spending in money terms is also following the same pattern, as Chart 12 shows.
By deepening our insight into a bank’s risk management, we gain a much better understanding of its strategies and controls. We learn what risks the bank believes are ahead and what measures it takes to mitigate them. We also develop a more refined sense of a bank’s sensitivity and ability to adapt to potential conditions in the future. This first trend of adopting a more “risk-focused” approach to banking supervision has a positive effect on banks as well. When we examine the quality of a bank’s risk management, we demonstrate to management the importance that we ascribe to developing and maintaining safe and sound control structures. A risk-focused approach thereby creates implicit incentives for bank management to understand and to find better ways to control its risks. What results is not just a more proactive risk management function, but also a greater commitment to sound corporate governance across the bank. 2.2  Second trend: incorporate incentives into supervision  Basel II recognises this result and goes one step further by creating not just implicit but also explicit economic incentives for banks to improve the quality of their risk management. The inclusion of incentives directly in the regulatory framework represents the second important trend in supervision. The proper use of incentives can help to align a bank’s objectives more closely with public policy goals of safety and soundness.

Finally, a third proposal - and this is actually one I myself suggested at the IMF and World Bank annual meetings in Washington in September 2002 - currently being studied by the Group of Twenty is to have a so-called Code of Good Conduct, which would set out best practices and guidelines for borrowers, lenders and the international community. The Group of Twenty consists of the G7 major industrialised countries, the largest emerging market economics and also the EU presidency, ECB, IMF and the World Bank, as well as the chairpersons of the International Monetary and Financial Committee and the Development Committee. Although these best practices would be non-binding, they could improve the process of crisis resolution. In particular, the Code would spell out general principles for all parties involved and would also offer a “toolbox” of agreed instruments and best practices to be used by interested parties depending on the circumstances. The Code would also include CACs in the set of instruments to be recommended. In the October meeting, the Group of Twenty decided to encourage a group of issuers and market participants to engage in further discussion. D.  Concluding remarks  In conclusion, the issues generated by the fast evolution of the financial system I have been speaking about today are very complex and demanding for public authorities. I hope that I have been able to demonstrate that some elements of the necessary public response are very encouraging, while others will require renewed efforts.
Another observation is that central banks’ inflation forecasts now tend to lie below their respective targets, not just in the short term, but also at the end of the forecast period. This is the case with the Riksbank's and the ECB's forecasts, but also the Federal Reserve’s forecasts are below the target for two years ahead, not reaching target level until 2023 (see Figure 2).1 It appears to be the case that central banks are increasingly making the assessment that they will have difficulty conducting a sufficiently expansionary policy to bring inflation back on target as quickly as usual. * I would like to thank Mikael Apel for helping prepare this speech, Elizabeth Nilsson for translating and Emma  Bylund, Charlotta Edler, Petra Frid, Jens Iversen, Åsa Olli Segendorf, Marianne Sterner, Ulf Söderström and Anders Vredin for valuable comments. 1 The ECB’s target is that inflation should be “below, but close to, 2 per cent”. However, the long-term forecast (5 years ahead) has gradually been revised down and is currently at 1.6 per cent, which is the lowest ever. 1 [15]  However, this is not so strange. It is explained primarily by two interacting factors. One is that the pandemic has resulted in an unusually rapid and large fall in demand. It is hardly surprising that this has the consequence that inflation is falling so far that it may be difficult to get it to rise quickly enough to reach the target level in a couple of years’ time.

In my speech in 2016 I also didn’t address how monetary policy and communication of monetary policy should be formulated more explicitly in a situation where inflation is not expected to reach the target during the forecast period, and there is a risk that the long-term inflation expectations will fall and become entrenched at a low level. We had not come that far then, but as many countries now find themselves in a situation where this risk is a reality, it is a problem that the world's central banks and governments need to deal with. Continued expansionary policy with possible modifications So, if I return to the Riksbank, how do I think we should act more specifically – what should be the plan from now onwards? With regard to communication of  6 [15]  the principal plan, we should, as I mentioned earlier, both be completely clear that monetary policy is still aimed at the inflation target, and also continue emphasising why it is important that the inflation target is some way above zero – with the aid, for instance, of the three questions I mentioned earlier. Explaining why a respectful distance to zero inflation and deflation is so important is not a new element in our communication, but as it is more important than ever before that there is a broad understanding of it in society, we need to increase our efforts. Of course the actual policy should in accordance with this remain expansionary, with the tools that are at our disposal.