samchain/econo-pairs-v1 huggingface dataset:
03.09.2018  Welcome address Second Annual Research Conference of Banco de España 3 September 2018  Pablo Hernández de Cos Governor  Good morning. I would like to welcome you to the second Annual Research Conference, which this year is jointly organised by Banco de España and the Institute for Fiscal Studies. 1  Let me start by thanking our colleagues from IFS. The IFS is a benchmark for rigorous policy analysis, far-reaching influence and frontier academic research, and it is indeed an honour for us to collaborate with them. This meeting has become our flagship research conference with the main goal of bringing together leading scholars and policy-makers to discuss frontier research on recent economic developments and the policy options to address them. Last year the conference focused on macro, monetary and macroprudential policies. This year we want to turn our attention to tax and transfer systems. After several years of sustained recovery, the Great Recession has left a legacy of high public debt ratios, low potential output growth and rising inequality in some countries. For instance, the euro area aggregate public debt 1  I would like to thank Olympia Bover and Roberto Ramos for their contributions to this speech. 1  stands at close to 90% of GDP, almost 25 percentage points up on its pre-crisis level. Also, the IMF estimates that potential output growth in the major advanced economies has been declining since the early 2000s, this trend being further aggravated by the global financial crisis.

271-301 6 See, for example, the discussion in Feldstein M. (1995), “The effect of marginal tax rates on taxable income: A panel study of the 1986 Tax Reform Act.”, Journal of Political Economy 103 (3), pp. 551-572. 5  3  top earners, while the reaction of the labour supply is modest. 7  For policymaking, it is crucial to know the direction and extent of these behavioural reactions. On one hand, because they inform the need for policy evaluation frameworks that go beyond the simple estimation of morning-after effects. On the other, because behavioural responses are at the root of the optimal design of the tax and transfer system. As a consequence, accounting for them is central to addressing a host of current policy debates, such as the optimal level of progressivity. Second, one influential avenue of research has documented a consistent trend of income concentration at the top of the distribution in some OECD countries in the last few decades. One explanation behind this pattern points to the concurrent fall in top marginal rates, whereby some authors have established a causal link. For example, it has been documented that the top 1% income share in the US has increased from around 8% in the early 1960s to 18% in recent years, this trend having been accompanied by a dramatic fall in the top marginal tax rate from 85% to 35%.
The decisions that we make affect the whole economy, and ultimately serve the good of the people of the United Kingdom. And, making these decisions effectively relies on good data. This isn’t new: the Bank has been collecting data in one form or another since its foundation in 1694. But while data have always been important, the pace of change in technology has unlocked much greater potential. Across public and private sectors alike the possibilities of leveraging data on a massive scale or in innovative ways are being explored – in health and consumer tech, in finance in the form of fintech, and regtech and suptech for regulators like the Bank.1 As well as providing new opportunities for individual firms, the use of data in fintech – to better price and allocate capital and to monitor the uses to which it is being put – has the potential to support productivity growth across the wider economy.2 3 It is often said that “data is the new oil” fuelling a new industrial revolution. While the transformational potential is similar, there are differences from oil which mean that the nature of that revolution will be very different. Unlike oil, data are “non-rivalrous”, meaning more than one person can use the same piece of data at once. Once in the public domain it also becomes by definition “non-excludable”, meaning you can’t control who does and doesn’t have access.

The "Banker" program comes as a solution complementary to the study programs arranged by educational institutions, and a parallel to the banks' direct efforts in attracting and employing national cadres. We are gathering here today to celebrate the opening of the first course of this integrated program, which hopefully will provide the financial institutions with needed human resources, and offer good job opportunities for the youth of our homeland. In conclusion, I can only reiterate my thanks to all those who contributed to accomplishing the "Banker" program, which I hope will continue to successfully achieve the objectives for which it has been established. Thank you for listening. BIS Review 125/2006  1
The second observation is that by encouraging the use of responsible liquidity management, source countries can reduce the probability of a sudden rush for the exit. The FSB’s recent proposals to reduce structural vulnerabilities from asset managers are an excellent example of this. Recommendations to enhance reporting to authorities, undertake more stress testing and to extend the suite of liquidity management tools available to fund managers will all help better align investors’ expectations of liquidity with reality, and hence ensure their flows to the rest of the world are less flighty and more sustainable. Conclusion  Thus far I have focussed on the idea that acting in our own local interest to build up domestic resilience helps protect us from global forces that we cannot control on our own. Let me end with a word on the benefits and limitations of working together. 15  Details of the modelling and assumptions used are set out in Technical Appendix 2: Model of monetary-macroprudential policy coordination with market-based finance. 7  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  7  There are many ways in which co-operation on macro-prudential policies could be deepened further. Options which could warrant further investigation range from formalising the exchange of information, to frameworks for reciprocity for tools beyond the countercyclical capital buffer, to common stress test scenarios and risk assessment that are used across the world.

Such a short-term supply cost could come about if higher spreads affect the relative price of different factors of production, for example by increasing the cost of capital and depressing investment. 16  We rely on five-year averages given we look at the sum of coefficients of five lags of ∆Cred* Following Ajello et al (2016), private sector agents’ expectations of period 2, denoted by 𝐸1𝑃𝑆 , depart from full-information rational expectations, which would lead them to cut back spending when credit was growing quickly and a crisis became more likely. Their expectations instead treat the crisis probability as fixed and negligibly small. See Ajello et al (2016) for more details. 17  10  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  10  Credit spreads are affected by the setting of the CCyB (𝑘1 ): when banks are required to use a greater proportion of more expensive equity, this raises their weighted average cost of funding, leading them to increase the spread between lending rates and the policy rate. The benefit of using the CCyB is that it reduces the probability of a banking sector crisis (𝛾1𝐵 )  18  via two channels: first, activating the CCyB can ‘lean’  against a build-up in banking sector credit growth (𝐵1𝐵 ), since (𝜙𝑠𝐵 < 0 and ℎ𝐵 > 0); and second, for a given level of credit growth, a higher CCyB directly reduces the probability of a crisis due to the resilience benefits of higher bank equity capital (ℎ𝑘 < 0).
The differences in the interest rate affect the currency flows which, in turn, puts pressure on the exchange rate. In Sweden, for 20 years, we have had free capital movements, a variable exchange rate and an independent monetary policy aimed at meeting the inflation target. However, recent years’ experiences have shown that it can be difficult to conduct an independent monetary policy when capital movements are free, even with a variable exchange rate. The exchange rate has not always acted as the stabilising factor that many economists have counted on. One example of this is the ECB’s highly expansionary monetary policy from the start of 2015, which risked entailing an excessively rapid appreciation of the krona. One hypothesis put forth is that monetary policy’s trilemma may, in fact, be a dilemma: It is not possible to fully unite an independent monetary policy with free capital movements. New studies based in what is usually known as the financial cycle provide a certain amount of support for this. 15 No widely-accepted definition of the financial cycle exists, but, as a rule, it is usually constructed on the basis of time series of various financial variables such as indebtedness, asset prices and so on. What distinguishes this cycle is that it lasts for longer and fluctuates more than a normal economic cycle. According to the new studies, there exists a global financial cycle that is mainly steered by monetary policy in the United States. For smaller economies, it can be difficult to deviate from this global cycle in practice.

This is very much the theme of my speech here at the Swedish Economics Association – weighing the effects of monetary policy today against the effects tomorrow and what challenges this creates. But I thought I’d start by discussing the downward trend in global interest rates and what this means for monetary policy, as it is important to realise that the problems we are grappling with in Sweden are very much influenced, and shared, by the world around us. 3 [23]  Downward trend in global interest rates The financial crisis that broke out in the autumn of 2008 was preceded by a seemingly calm and stable period of low inflation and good economic growth. The period is normally referred to as The Great Moderation. This positive development can be attributed to a number of factors. Ever-faster globalisation led to greater movement of goods, services, labour and capital among countries. This, in combination with various deregulations increased competition on labour and goods markets, contributing to higher economic growth. Increasingly independent central banks focused on achieving low and stable inflation are also considered to have contributed to the positive development. In retrospect, we can now see that major financial imbalances had built up in what appeared to be a stable macroeconomic environment. Central bank monetary policy had successfully stabilised inflation. But this did not prevent the break-out of the more serious economic crisis since the 1930s.
The other point has to do with the fact that it becomes easier to produce consistent forecasts and scenarios. This is particularly important when preparing estimates and developing scenarios in a somewhat longer-term perspective than the usual two years, which can sometimes be valuable in order, for example, to show the effect on inflation of shocks that are judged to be temporary. The assumption of a constant repo rate becomes generally more unrealistic the longer the forecast horizon is extended. When the difference between the market’s view of the future repo rate and the assumption of an unchanged repo rate has been large, it has also been complicated to link assumptions about short-term interest rates to a reasonable picture of, for instance, future long-term rates, since long-term rates depend on expectations of how short-term rates will evolve. Up to now the Riksbank has chosen to highlight forecasts based on an unchanged repo rate; this has basically worked well, not least in terms of communication. Little by little, however, the Bank's monetary policy work has evolved to the extent that there are now sufficient analytical resources with which to deepen the discussion in this area. The approach used so far has also, as the Bank’s analysis has developed, felt like a bigger restriction in the internal work than before. The perceptions of how the Riksbank acts seem also to have become so well established that the communication risks of presenting forecasts with different interest rate scenarios appear smaller today than before.

The combination of low short-term rates and asset purchase programs has driven yields on long-term sovereign debt to historically low levels (Figure 2). In large parts of Europe and Japan, short- and long-term yields remain near zero, a full decade after the onset of the financial crisis. Economic developments since this unprecedented monetary stimulus provide valuable insights into the efficacy and limitations of monetary policy. On the positive side of the ledger, advanced economies have seen steady growth and significant declines in unemployment, with rates today near, or in many cases well below, those seen before the crisis (Figure 3). Bold monetary policy actions surely played an important role in averting far greater catastrophes and aided economic recovery. However, this success was achieved only after a disappointingly slow recovery and many years of economic hardship. And, despite the improvement in the real side of economies, inflation rates have persistently been below central banks’ goals (Figure 4). The fact that inflation has been running below target in most advanced countries—the United Kingdom being the most prominent outlier—suggests that this challenge is not due to factors specific to a single country. Instead, there are more systemic factors at play. Investors view these low inflation readings not as an aberration, but rather a new normal. This is evidenced by a broad-based decline in market-based measures of longer-run inflation expectations since the mid-2000s, with the UK again providing the exception (Figure 5).
In such instances, we need to have a close co-operation between the FIUs in order to ensure that we are able to be ahead of those with criminal intent. Further, I was particularly impressed that all of you are hoping to have an action plan to be implemented thereafter. 2  BIS Review 133/2008  My dear friends, it goes without saying that we need to come out strongly in our efforts to deal with all these matters. We have seen world economic frameworks being threatened, and being under tremendous pressure during the past one month or so. We have seen unprecedented chaos and turbulence. Nevertheless, we have been able to come through because of the diligent work that we have done. In our own country, there were times when we were encouraged to deregulate, deregulate and deregulate. Fortunately, we did not deregulate as much as we were advised to, by certain quarters. Because of that, we had a few fences around our economy; and those fences today are the important buffers that are protecting us when the unparallel financial tsunami is hitting the entire world. When you have fences, it is difficult for outsiders to come in. At the same time, however, when an external disaster strikes, the fences come in handy, because the fences protect you. So, in a way, we have been protected by some of the safeguards that we had installed in our systems. Even when we opened out our economy, we were careful, and we opened out slowly.

can be useful breeding grounds for this kind of illegal financing efforts. These terror financiers make use of unsuspecting bankers as their partners. Although sometimes, certain bankers can be knowingly involved, on many occasions, they may even be unknowingly involved. Sometimes these money launderers and terrorists use informal systems. They by-pass the formal systems and have other parallel systems. I am sure that, in your deliberations you would be discussing these matters and considering as to how these can be addressed. If there is a parallel system, which is operating side by side with the formal system, they can make use of such systems to do what they want. They also disguise transactions. Certain transactions which are actually for laundering money or which are financing terrorism would not be obvious, as they may be cleverly concealed. The transactions will be packaged in such a way that unless you have a vigilant or trained eye, you would not be able to spot it. Very often, the illegal financiers will also pretend to be very respectable people in society, and indeed, may even be considered so by the world at large. They may come in the guise of social workers, philanthropists, community workers, aid workers, NGOs, etc. Therefore, we have to be alert. We have to be a few steps ahead. We have to have bankers, media, regulators, prosecutors and a judiciary who will keep abreast of the methods and the ruses that could be adopted by these unscrupulous people. We must also have regular updates.
The second area of prospective demand for humans skills is bespoke design and manufacture (“hands”). Routine technical tasks are relatively simple to automate and are already well on their way to disappearing. 57  Gratton and Scott (2016). AlphaGoZero is one such attempt. It is an updated version of AlphaGo, a computer programme that plays the game ‘Go’, which itself was the first software to beat a human professional player in full match. 58  15  All speeches are available online at www.bankofengland.co.uk/speeches  15  But the same is not true of non-routine technical tasks – for example, the creation of goods and services that are distinctive in their design, manufacture or delivery. A rise in global wealth and income is likely to create an increasing demand for luxury goods and services of this type, whose characteristics are unique and supply constrained. Indeed, this can be seen already in the rising demand and price of rare art and artefacts and independently-produced foodstuffs and beverages. To meet this demand, Mark Carney has spoken about the re-emergence of a new artisan class. If so, this would mark something of a return to our pre-industrial revolution future. 59  The third, and perhaps the biggest potential growth area of all, is social skills (“hearts”). That is, tasks requiring emotional intelligence (such as sympathy and empathy, relationship-building and negotiation skills, resilience and character) rather than cognitive intelligence alone. These are skills a robot is likely to find it hard to replicate.

Through the Accelerator and the Bank’s broader Fintech work, we have made valuable connections with important parts of the financial and technology sector beyond the regulatory perimeter – relationships that could matter greatly in the years to come. And those engagements with FinTech firms have also exposed central bankers to some very different ways of working and thinking: more agile, more willing to experiment, less bound by convention. Internal ‘hackathons’ run by our Technology department along similar lines, and aimed at identifying innovative solutions to Bank-specific problems, have been extraordinarily popular and have shown central banking officials to be capable of much more radical thinking than is sometimes supposed. The firms we have worked with have also valued the experience, giving them insights on the wider application of their technologies, and the needs and thought patterns of regulators and policymakers. Our feedback has been honest: positive where that is due, but also highlighting challenges or gaps where they are evident. And our work has in turn been part of the broader effort by the UK authorities to support and guide the sector. 9  All speeches are available online at www.bankofengland.co.uk/speeches  9  The latest wave of innovation in financial technology has shaken up traditional thinking about how to deliver financial services, defining the pace and shape of innovation in what has sometimes been quite a slow-moving industry technologically-speaking.
Esteemed Guests, Before concluding my speech, I would like to thank you for your participation. I hope our assessments and analyses will help the participants of the financial market to undergo a better decision-making process. BIS Review 68/2006  5

Others say that the consequences may be more difficult to deal with and more persistent precisely because the country has its own currency and is not under the wing of a large currency area. Yet others claim that if Iceland fixes itself against another currency and obeys the laws of others – interest rates based on what is happening in France, Italy and Germany and not in Iceland – that this will produce a more cautious attitude up here in the frozen north, the appetite for risk will diminish and economic developments will take a healthier turn. Thus there are countless questions, of which I have mentioned only a few. Of course I have taken care in these opening remarks to leave all these questions open for those who follow. It is a particular pleasure to have lured so many distinguished guests here to do theoretical battle about these questions. It is equally welcome to give our leading experts the opportunity and time to ponder these issues and present their own views. So everything promises a rewarding outcome from this conference. It has been organised with ample reason, in the right place and at the right time, and with exceptionally qualified speakers.
Zeti Akhtar Aziz: Asia in the world – sustaining the region’s transformative momentum Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Wharton Global Alumni Forum: “Asia in the world – sustaining the region’s transformative momentum”, Jakarta, 22 June 2012. *  *  *  The global economy is experiencing a period of profound change. Asia is very much at the centre of this global change. Asia’s changing role in the global economy has not only been in terms of its growing size, but also in terms of its influence in global economic and financial developments. The issue before us is whether Asia will continue its transformative momentum over the medium to longer term, to become an increasingly important source of global growth and stability. It is my very great honour and pleasure to be here in Jakarta to speak at this Wharton Global Alumni Forum. Exactly a decade ago, I was actually invited to speak on the same subject on the state and future of Asia at the Wharton School in Philadelphia. Then, having just emerged from the Asian financial crisis, the region was again being challenged by a series of economic and financial shocks, in particular, the bursting of the dot com bubble in the United States in the year 2000. Observers had questioned the sustainability of the region’s medium and longer term growth prospects.

The fact is that there is often not much resource slack in the economy also makes it hard to discern a clear empirical relationship. Unfortunately, in this episode, we don't need a precise estimate of slack to be highly confident that the level of slack in the labor market is at or above the record of the post-World War II period. Although the headline unemployment rate of 9.8 percent is about one percentage point below its level at the end of the 1981-82 recession, other, more indicative measures paint a bleaker picture. For example, the prime age male unemployment rate is at a record high, by a significant margin. The labor market data released last Friday showed the September value at 10.4 percent, an increase of 6.5 percentage points from the start of the recession. In contrast, in the 1981-82 recession the prime age male unemployment rate peaked at 9.3 percent, rising by 4.2 percentage points from the start of that recession. Over the post-World War II period as a whole, it was only in the wake of the 1981-82 and 1990-91 recessions that the prime age male unemployment rate remained above 6 percent for more than just a few months. In addition, during all post-war expansions, the prime age male unemployment rate has fallen below 5 percent, even during the short expansion of 1980-81. Currently, even under very optimistic forecasts for the economy, it appears very unlikely that the prime age male unemployment rate will dip below 6 percent before 2011.