samchain/econo-pairs-v1 huggingface dataset:
That would, of course, be grounds for us to contemplate further easing in our monetary stance. That follows because our inflation target is, importantly, a symmetrical one: we need to be just as ready to contemplate easing if we see evidence on the downside of the economy underperforming, and hence the likelihood of inflation running over time materially below our 2 1/2% target, as we would be to exercise restraint on the upside. We take this symmetrical nature of our responsibility very seriously and there is undoubtedly a significant risk that the US slowdown could have a material dampening effect on UK activity. Analysts have used a large part of the alphabet to try to describe various views of how the US economy may develop. I am not sure that I find any of these pictograms particularly helpful, not least because people are sometimes pretty vague about vital details like the dimensions of the letter they favour or the angle of its arms: a big V, after all, can feel awfully like a U when you are down the bottom and trying to find your way up again. The short answer is that none of us can pretend to know precisely how the story will develop. It will be important to keep an open mind and be prepared to adapt our assessment in the light of actual events. But in doing so, there are four considerations that I would suggest are particularly germane to this first area of uncertainty.

But it is also a situation in which cost and price pressures can begin to build up. The task of the MPC is to ensure that this does not happen, by keeping inflation in line with our target so that the economy can continue to grow at a sustainable rate. The uncertainties I have described thus lie in both directions: the economy could grow more strongly or less strongly than we currently project, though the risks lie predominantly on the downside. The uncertainties are probably rather greater than normal just at present, but we can take some confidence from the underlying soundness of the economy. So we address the uncertainties from a position of strength. That does not mean that the ride may not be bumpy at times, but it does mean that we have grounds for reasonable optimism that we will come through the present uncertainties in good shape. 4  BIS Review 22/2001
A subset of those digital assets, known as stablecoins, could over time be used by consumers and businesses as money, if they serve as a safe means of payment, a store of value, and a unit of account.2 Some jurisdictions are considering bringing these kinds of instruments into the regulatory framework by requiring their issuers to become banks or other licensed entities.3 This could enhance the ability to safely integrate them into the payments system. It could also expand access to central bank accounts and services to new entrants, allowing the stablecoins to be backed by the most liquid and stable of assets: central bank reserves. Traditional commercial banks are also forming consortiums and partnering with digital innovation firms to increase their offerings of liabilities associated with digital activities, which might entail offering deposits to stablecoin issuers or even direct issuance of stablecoins. Many are also investing in distributed ledger activities that could transform their businesses. Preliminary analysis of the May 2022 Senior Financial Officer Survey suggests that most U.S. Global Systemically Important Banks (GSIBs) expect growth and development in these areas to be a medium or high priority over the next couple of years, and banks continue to explore these areas to see how they fit into their business strategies.4 Central banks are also innovating. Many are implementing new forms of payments or experimenting with central bank digital currencies (CBDCs) to prepare for the future.

Exports continue to grow, deflation has moderated, and unemployment appears to have peaked. Less easy to quantify is the change in mood, although it is, as I have said, shown to some extent in the activities in the markets, as well as in consumer spending. What is, I think, clear to every observer, however cynical, is that there has been, among all sectors of the community, a marked and quite sudden turnaround, from pessimism bordering on despair to a cheerful if cautious optimism. This comes as a huge relief after the gloom and despondency of the second quarter. Important initiatives, such as CEPA and the relaxation of restrictions on individual travellers from the Mainland, have undoubtedly helped to stimulate confidence. So too have the general - though by no means conclusive - signals that the world economy is also in better shape. It is also very likely that the recent surge in markets and the gradual growth in economic activity are part of a longer-term trend, going on for at least a year now, in which there have been underlying improvements in the Hong Kong economy. Deflation, under the discipline of the Link, has made Hong Kong more competitive: it is now a less expensive city in which to do business or take a holiday. The real effective exchange rate for the Hong Kong dollar - which is a true measure of the competitiveness of an economy - has declined by 24% over the past five years.
The behaviour of wage costs and the high margins seen in certain activities tend, moreover, to make the inflationary episode more persistent, with the adverse consequences this may have for price and cost-formation habits and for the trend of the relative prices and costs that bear on the economy's competitiveness. It is therefore very important not to lose sight of the fact that the main instrument available in the current circumstances is that of making structural reforms that enhance the economy’s flexibility, liberalise certain sectors and markets, and increase competition. Despite the efforts made in recent decades, there are still numerous areas of the Spanish economy that need reforms. I do not intend to address these in detail, but I shall refer briefly to those spheres where I consider pressing action is needed. And I should stress that it is here where the potential room for manoeuvre to counter weakening growth in the euro area is to be found. 6  BIS Review 122/2008  In the labour market, it is imperative to bring about a milder reduction in employment in cyclical slowdowns. In this connection, we must explore channels which provide a response by wages to changes in the economic environment, aligning them to productivity gains, and avoiding upward inertia in the face of external shocks introduced by mechanisms such as wage indexation clauses.

Dear ladies and gentlemen, In capacity of the Governor of the Bank of Albania, as well as the Chair of its Supervisory Council for the last seven years, I had the privilege to serve in one of the highest public positions of the country. Throughout this period, I have conceptualised and supervised the implementation of a set of important reforms, which have affected the organisation and activity of the institution, and have enhanced the ability and accomplishment level of our legal tasks and our institutional commitments. Due to the limited time to provide a complete overview of the institution’s achievements, which have been maximally assessed in the annual resolutions of the honoured Parliament, allow me to focus on some of the main directions of my work. The main mission of the Bank of Albania is to achieve and maintain price stability. This mission is interpreted as an average inflation rate of 3% in both the medium and long term The Bank of Albania, in fulfilling this mission, conducts exclusively and in independently the monetary policy function. The monetary policy of the Bank of Albania has performed a notably qualitative leap throughout the previous term. In this light, in 2015 we have adopted a clear inflation targeting regime, which represents the golden standard in this field, by: building up the necessary infrastructure of analysis and forecast; improving the operational framework for the monetary policy implementation; strengthening transparency and improving its communication effectiveness to the Parliament, public and various groups of interest.
Lars Heikensten: Six monetary policy issues  Speech by Mr Lars Heikensten, First Deputy Governor of the Sveriges Riksbank, at Umeå School of Business and Economics, in Umeå, on 7 November 2000. *  *  *  First a word of thanks for the invitation to visit Umeå and talk about monetary policy. The Swedish economy is developing favourably. Growth has been impressive in recent years, averaging around 3% in annual terms, and at present the rate may be even higher. This has contributed to a rapid reduction of unemployment and strongly rising employment. A look at the statistics shows that the present expansion of employment in Sweden is the fastest since the labour force surveys were first published in the early 1960s. And although growth has been strong, inflation has remained moderate. The explanations for the good circle in which our economy is now moving are not simple. But I do believe that one contributory factor is the realignment of economic policy that has been achieved in the past ten to fifteen years. This has involved deregulating the credit and foreign exchange markets, modifying components of the transfers system and paving the way for stronger competition. All this has helped to improve the workings of the economy. Another factor, perhaps the most important, has been economic policy’s commitment to stability, with price stability as a statutory objective and a successful consolidation of the public finances.

We know from experience that wages rise, sometimes so much that they generate inflation. Downward wage adjustments are less frequent. Seen from this angle, inflation might be regarded as a smooth way of achieving necessary adjustments to real business costs. Another risk, according to some observers, is that an unduly low inflation target leaves too small a margin for monetary policy. The economy is liable to land in a situation where the central bank is no longer in a position to influence the development of prices by pushing the real interest rate down. It simply is not possible to reduce the interest rate below zero per cent. As I see it, the Riksbank’s decision to target a specific annual rate of inflation and implement its policy symmetrically has eliminated a large part of the risk of our being caught in a deflationary spiral and the dilemma of zero interest rates. Everyone knows we strive to bring inflation back to the targeted level of 2%. Inflation expectations in recent years have in fact been stable around the 2% target. A specific target also means that the labour market parties know the rules of the game, which I believe has promoted reforms in wage formation. To a large extent, wage demands are now drawn up on the premise of inflation being 2%. All in all, I see no grounds today for reconsidering our 2% target. The objections in the literature to a target around 2% seem to be less relevant if anything than they were some years ago.
Most tail companies are not zombies, overburdened by an insurmountable mountain of debt or a broken business model. Rather they are companies surviving, but not yet thriving. And they account for fully 80-90% of all jobs. They are not the tail; they are the dog. If you restricted creative destruction to true zombie – those whose productivity was negative – this would make little arithmetic difference to average productivity, raising it by perhaps 1%. 55  A more creative solution to the long tail problem would be to build a stronger diffusion infrastructure – that is to say, creating some stronger and longer diffusion spokes to attach to the UK’s strong innovation hub. Let  54 55  Schumpeter (1942). Assumes workers with negative productivity flow into firms with zero productivity. 20  All speeches are available online at www.bankofengland.co.uk/speeches  20  me discuss three approaches for creating those institutional spokes. All three are already underway, to some extent. Once in place, they could speed-up the process of technological trickle-down to the long tail. (a) Supporting Supply Chains  Recent years have seen a lengthening and deepening of supply chains, nationally and internationally. 56  The  largest UK companies have direct supply chain links with several thousand other companies, large and small, national and international. As well as benefitting efficiency and lowering costs, these supply chains provide a natural infrastructure that could be harnessed to spread good practice across companies.

Some companies already actively support firms in their supply chain to help improve their productivity, the fruits of which can then be shared. A set of structured projects are underway nationally, co-ordinated by Be the Business, which aim to use the supply chain infrastructure to disseminate knowledge and best practice across companies in the long tail. As another example, I recently visited a company which had invested in a new technology centre. This enabled them to simulate all of the processes and products in their complex business. They had created, in effect, a “digital twin” of their business. This technology allowed them to evaluate the impact of potentially productivity-improving changes to their business model, cheaply and quickly. Indeed, it was being used in just this way to drive through those changes. Once established, this digital twinning technology can be applied to any business, large or small, simple or complex. Indeed the company I visited was doing just that, inviting in companies from their supply chain to help them understand and improve their business productivity-wise, in a way which benefitted both sides. If that digital twinning model could be introduced across greater numbers of companies and lengthier supply chains, it could serve as a very effective diffusion engine for innovation. One way of doing so, recently proposed by academic and inventor Philip Bond, would be to create a central digital-twinning infrastructure that could be available to any company across the UK.
5 Ivashina and Scharfstein (2010) document a sharp contraction in new loans to large borrowers during the peak of the financial crisis with a 47% quarter-on-quarter fall from Q3-Q4 2008. 6 Brooke et al (2015). 7 Haldane (2013) for instance argues that “We need to build defences to protect against the collateral damage from financial flood. We need to be popping, not mopping”. 8 Consistent with that, the FPC is not authorised to take actions that would “have a significant adverse effect on the capacity of the financial sector to contribute to the growth of the UK economy in the medium or long term”, Financial Services Act (2012), Section 9C; see http://www.legislation.gov.uk/ukpga/2012/21/pdfs/ukpga_20120021_en.pdf. 9 The Bank of England published a staff paper in 2015 that sets out a framework for measuring the macroeconomic costs and benefits of higher bank capital requirements. See Brooke et al (2015). 10 Brooke et al (2015) estimate that a1percentage point increase in risk-weighted capital ratios will result in a 10 basis point increase in lending rates. This estimate includes a partial offset due to the Modigliani Miller (1958) theorem, under which the capital structure has no impact on funding costs as more equity makes debt safer and equity less volatile, lowering the required rate of return for both. The conditions for the full offset in the theorem are unlikely to hold in practice for banks.

The real failure of economists was that too much energy was devoted to forecasting – to trying to assess whether economies would turn down – and not enough was spent analysing the question of “well, what if they do; how bad could it be?” And as a result, the financial system was unprepared. It was not a failure of economics. It was a failure to apply economics to the right question. Without economics, the answers to “how bad could it be?” relied all too often on recent historical precedent; on this time being different. 11  And, even more dangerously, they relied on market measures of risk; indicators that – as recent work at here the LSE Systemic Risk Centre shows – often point to risks being at their lowest when risks are actually at their highest. 12  The Financial Policy Committee’s mandate is to break free of the shackles of forecasting, to free us from trying to predict if the economy will turn down, and to apply economic analysis to the question of how bad it could be if it did. 13  The re-focussing of economic research since the crisis has supported us in that. It has  established, for example, how far: 14  Recessions that follow credit booms are typically deeper and longer-lasting than others ; 15  Over-indebted borrowers contract aggregate demand as they deleverage ;  While they have high levels of debt, households are vulnerable to the unexpected.
Phase 2 in Figure 5 describes developments last year up until December. We are now in the early stages of phase 3: The repo rate is starting to be raised, while reinvestments are continuing so that the bond holdings are more or less held constant. We have communicated that we will reinvest principal payments and coupons “until further notice”, but we have brought forward reinvestments of large principal payments that are due during the first half of this year to obtain a more even reinvestment profile over time. An issue we need to address during the spring is how to manage reinvestments of the principal payments due next year. Phase 4 in Figure 5 implies that the repo rate has been raised slightly more. Not until then do the bond holdings start to decrease. The fifth phase in Figure 5 actually concerns developments in the long term. Our strategy is that the repo rate and the repo rate path will in the long term revert to being the main monetary policy tools. Purchases of government bonds or other securities then act as a complement when the policy rate is close to its lower bound. Figure 6 shows the Riksbank’s purchases and holdings of government bonds: The left-hand graph shows the development of our purchases, and the right-hand graph is a technical illustration of how our holdings might develop if bonds that mature after June 2019 are not reinvested.

However, there is some difference between developments in the United States, where growth has remained strong and unemployment is at its lowest level in almost 50 years, and the euro area, where developments have been more subdued. Wages are now rising increasingly rapidly in countries like Germany and the United States and are helping to push up inflation. But despite these basically good prospects, we also see a substantial number of risks regarding developments abroad, which I will come back to at the end of my speech. For some time now, we have been in an economic boom in Sweden. This in turn is partly due to the expansionary monetary policy. Despite a partial slowdown in growth, output is still above its trend level (see Figure 2). It was striking that GDP fell between the second and third quarters of last year, but we believe most of this has to do with temporary factors, including the fact that household consumption of cars was brought forward to quarter 2 due to amended tax rules, which pushed down car sales in quarter 3. 2 [13]  Figure 2. Economic activity still strong in Sweden High output level 6  High pressure on the labour market 6  GDP gap  4  4  2  2  0  0  -2  -2  -4  -4  -6  -6  -8  01  04  07  10  13  16  19  -8  Note. Left-hand graph.
But sadly it is a phrase that we are now well and truly stuck with. Like a lot of our operations, Quantitative Easing can seem a bit mysterious and confusing to those not steeped in what central banks do. As much of this confusion arises from a misunderstanding of the Bank of England’s accounts, I am therefore delighted to be speaking to an audience of accountants, who might find this arcane subject rather exciting! In January this year, the Chancellor authorised the Bank to create a new fund – the Asset Purchase Facility – for the purpose of buying assets from the private sector. Any profits on the Asset Purchase Facility are passed to Her Majesty’s Treasury, while any losses are also indemnified by the Exchequer. The accounts are therefore not consolidated with the Bank’s own accounts, as the Bank has no economic interest in the fund. Initially, the Facility purchased commercial paper, funded by the proceeds of sales of shortterm Treasury bills by the Debt Management Office. This asset swap took credit risk onto the public sector’s balance sheet and was therefore more akin to a fiscal operation. But since March, purchases have been on a much larger scale and funded through the issuance of central bank reserves rather than Treasury bills. The bulk of the purchases have been of government bonds, though a small quantity of investment-grade corporate bonds have also been bought.

No matter how rapidly or how slowly the economy is growing, or how fast or slow the money is circulating, the aggregate amount of reserves will be exactly the same. So it should be clear that the quantity of central bank reserves held by the commercial banks is useless as an indicator of the effectiveness of Quantitative Easing. Now obviously we would prefer that the money circulates more rapidly and that this is done through increased bank lending and deposit taking. In other words, we would like to see a further expansion of credit and broad money. Since the banks collectively are now awash with reserves, they should not be prevented from making additional loans because of any liquidity concerns. Banks are, though, constrained by a lack of capital and are looking to reduce leverage rather than increase it. Fortunately, increased bank lending is not necessary for Quantitative Easing to work. Indeed, it was precisely because the Monetary Policy Committee expected the additional monetary injection not to stimulate bank lending directly at the current juncture, that the Asset Purchase Facility’s purchases were targeted at assets held primarily by the non-bank private sector 1 . So if the Asset Purchase Facility buys gilts from pension funds or asset managers, they will then have to look for another home for their money. As it is not very rewarding just to hold it on deposit, they are likely to look to put their money into other assets, including equities and corporate bonds.