samchain/econo-pairs-v1 huggingface dataset:
Obstfeld, M. and K. Rogoff (2004), “The Unsustainable US Current Account Position Revisited”, NBER Working Papers 10869, National Bureau of Economic Research, Inc. Obstfeld M., Rogoff K. (2009), “Global imbalances and the Financial Crisis: Products of Common Causes”. Obstfeld, M., J. C. Shambaugh and A. M. Taylor (2009), “Financial Stability, the Trilemma and International Reserves”, NBER Working Paper 14826. Ostry, J. D., A. R. Ghosh, K. Habermeier, M. Chamon, M. S. Qureshi and D. B. S. Reinhardt (2010) ”Capital Flows : The Role Of Controls“, IMF Staff Position Note SPN/10/04. Rodrik D. and A. Subramanian (2008): “Why Did Financial Globalization Disappoint?”, http://www.iie.com/publications/papers/subramanian0308.pdf. BIS Review 120/2010  11

(2020), “Bank of Japan’s policies have been a success”, Nikkei Asian Review, March 6. Rogoff, K. (1985), “The Optimal Degree of Commitment to an Intermediate Monetary Target.” Quarterly Journal of Economics 100, pp. 1169-1189. Rogoff, K. (2017), “The curse of cash”. Princeton University Press. Sims, C. (2016), “Fiscal policy, monetary policy and central bank independence”, Jackson Hole Symposium. 24 [25]  SOU 2007:51, “Riksbankens finansiella oberoende” (The Riksbank’s financial independence). SOU 2013:9, “Riksbankens finansiella oberoende och balansräkning” (The Riksbank’s financial independence and balance sheet). SOU 2019:46, “A new Sveriges Riksbank Act”. Sveriges Riksbank (2020a), “Monetary Policy Report”, April. Sveriges Riksbank (2020b), “Consultation response, SOU 2019:46”. Söderberg, G. (2018), “What is money and what type of money would an e-krona be?”, Sveriges Riksbank Economic Review 2018:2, Sveriges Riksbank. Ubide A. (2020), “Euro yearbook”. Vredin, A. (2019), “Särskilt yttrande av kommitténs sakkunnige Anders Vredin” (Special comment by the committee's expert adviser Anders Vredin), SOU 2019:46, pp. 1898-1908. 25 [25]
The latter represent those periods in which there was no primary issuance or spread data because the markets were effectively closed. Chart 1 Market functioning “heat map” based on issuance and spreads data(a)  Sources: Bank of America Merrill Lynch Global Research, Bloomberg, Dealogic, JPMorgan Chase & Co. and Bank calculations. (a) Shading is based on a score that reflects, for unguaranteed debt, both issuance (relative to GDP) and spreads in primary markets and secondary markets, expressed as a number of standard deviations from average, using as much data as was available from January 1998. Updated to end-May 2011; recent months use 2011 Q1 GDP. (b) Insufficient data for UK CMBS secondary markets. Since the nadir in late 2008, most markets have been on a course of gradual healing. The heat map shows how issuance and spreads in these particular markets have recovered. Advanced economy corporate bond spreads have fallen back sharply since their peaks  2  BIS central bankers’ speeches  (Chart 2). Measures of volatility and bid-offer spreads across a range of asset classes have also fallen back since the height of the disruption (Charts 3 and 4). And most international equity indices have picked up markedly since their troughs (Chart 5).

Something clearly has to give here – investors know – and must remember – that there is no such thing as a free lunch, and that additional return involves additional risk. The  BIS central bankers’ speeches  9  macro-prudential concern is that the reach for yield encourages financial innovation and growth in some parts of the financial system where the risks are not well understood,10 especially if it leads to greater interconnectedness within the banking system. This is one area which is likely to warrant further attention and analysis by the FPC in due course. Financial innovation and the emergence/growth of new products The financial industry is characterised by its tendency to innovate, continuously designing and offering new financial products to its customers. In my view, financial innovation should be seen as a “good thing” in normal circumstances. It can lead to a more efficient allocation of capital and a reduction in the costs of financial intermediation, both of which should help sustain real economic growth. For example, the rapid growth of electronic trade execution in the foreign exchange market has increased the speed and ease with which trades can be conducted. That should ultimately make international trade cheaper, bringing with it the associated benefits. Improvements in technology can, by facilitating wider market access, also lead to improved price discovery and market liquidity. Moreover, innovation can help issuers align the risk characteristics of new products more closely to those that investors demand.
[19]Joined Cases T-131/16, Belgium v Commission and T-264/16, Magnetrol International v  Commission, judgment of the Court of 14 February 2019. [20]REGULATION (EU) 2016/679 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of  27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation). [21]COMMISSION IMPLEMENTING REGULATION (EU) 2016/2286 of 15 December 2016 laying  down detailed rules on the application of fair use policy and on the methodology for assessing the sustainability of the abolition of retail roaming surcharges and on the application to be submitted by a roaming provider for the purposes of that assessment. [22] 9 / 10  BIS central bankers' speeches  [22]DIRECTIVE (EU) 2015/2366 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of  25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC, [23]Belgium, Denmark, Finland, Germany, Greece, Ireland, Italy, Spain, Sweden and the United  Kingdom. [24]OECD (2010), “Have equal-treatment laws improved job quality for part-time workers?”, Box  4.3., OECD Employment Outlook: Moving Beyond the Jobs Crisis. [25]Report of the Massachusetts Commission on Old Age Pensions, Annuities, and Insurance,  1910. [26]DeWitt, L. (2010), “The development of social security in the United States”, Social Security  Bulletin, 70(3).

This, in turn, introduces uncertainty over the behaviour of the incomes of these agents, which means they tend to postpone their consumption and investment decisions. The sharp decline in the consumer confidence indicator in March (the largest decrease in the historic time series, which goes back to July 1986) gives an indication of the magnitude of these effects. This fall suggests that the increase in uncertainty may have begun to adversely affect household spending decisions. The results of the latest edition of the Banco de España Business Activity Survey (EBAE) suggest that the war has begun to worsen the expectations of non-financial corporations regarding their turnover and also the duration of the global supply chain problems, which is now estimated to be longer. Third, the invasion of Ukraine will affect the Spanish economy through the trade channel, the direct impact of which is assumed to be moderate, as bilateral trade flows with the countries at war are relatively limited. In 2019, the last year before the pandemic, Spanish goods exports to Russia and Ukraine represented only 1.6% and 0.3% of the total,  respectively. Russian tourism, meanwhile, accounted for 2.2% of total spending by foreign tourists. However, the indirect effects on Spanish trade flows may be significant. The war will particularly affect central and eastern European countries, which are more exposed to Ukraine and Russia, and, therefore, the growth of Spanish export markets.
And such incorrect expectations may then lead to unwarranted increases in housing prices and household indebtedness. But I would like to point out that it is genuinely difficult to know what will be a “normal” or average level for future mortgage rates. It is not at all certain that the Riksbank’s long-run assessments of the repo rate are more correct than those of households or other market agents. A low repo rate is necessary, despite the risks I have observed that there are risks linked to holding a low repo rate over a long period of time, and that monetary policy should in principle take these risks into account. But at the  9  At the Riksbank, we usually say that the average repo rate in the longer run can be expected to be in the interval of 3.5 to 4.5 per cent (see, for instance, the Riksbank 2013b, p. 47). Short-term mortgage rates are usually 1.5 to 2 percentage points higher. Households’ expectations of short-term mortgage rates five years ahead are now around 4 per cent. And market agents’ expectations of the repo rate five years ahead are around 3 per cent. See Figure 5 and Figure 6. BIS central bankers’ speeches  7  most recent monetary policy meetings I have nevertheless advocated cutting the repo rate even lower. There are several factors behind this stance.

In this country, it is felt most in terms of SME and mid-cap finance. Many were struck by the potential ability of financial technology – fintech – to help bridge this financing gap, but I would emphasise that there was also bit of a caution, as I believe Reverend Giles Fraser noted in the last panel. We should not get too far ahead of ourselves, but look to further evidence that it can bridge the gap. I think the Chancellor is absolutely right that fintech has potential both in terms of expertise in finance and capability in technology. If these can be married effectively, we have an opportunity. There were a few specific examples that were mentioned that I would just like to reinforce. First, and as Alex Brummer very rightly emphasised, the opportunities that come from big data and a greater open architecture that is already there. As our Chief Operating Officer Charlotte Hogg would note, the Bank of England is one of the biggest repositories of big data. There is always a question about to what extent that can be leveraged more broadly into the system, and though it is still early days, the Bank may want to consider taking this on as a challenge. Jon Cunliffe raised a separate and important issue with receivables finance, where fintech could make a real difference. Following the crisis, payment terms for companies increased to 120 days and have not come back.
Asset quality also began to show initial signs of deterioration as would be expected given the fall in property prices and the increased strain put upon the cash flow of the affected companies and their employees. BIS Review 32/2003  1  From mid-May however the operating environment of the banks improved as SARS was brought under control. It would be premature to say that the SARS effect has dissipated entirely. In particular, the full effects on asset quality may take some time to show through. But most of the banks that we have talked to are now saying that the impact of the specific factor of SARS on their results for 2003 is expected to be relatively mild. However, the underlying problems in the economy, which SARS helped to magnify, are still with us. Thus, while the balance sheets of the banks remain strong, the earnings outlook for 2003 remains uncertain; and the banks continue to face a number of challenges. One of these is the state of the property market. The heavy reliance of the banks on property lending is well known: residential mortgage lending, in particular, accounts for 35% of the total domestic loans of the retail banks. Property prices have fallen sharply since the Asian Crisis, and the effect of SARS was to produce a further downward spiral. In the three months from March to May, property prices are estimated to have fallen by 8%.

We believe this benefitted policyholders and left the industry in good shape to weather the recent financial storms of the Great Recession. Those are also desired outcomes that lie at the heart of the Solvency II Directive and so I want to leave you in no doubt that we will implement the Directive in a full and robust manner so as to continue to deliver the level of financial resilience consistent with the safety and soundness of firms and policy-holder protection. Another difference in the UK is that we are anticipating more internal model applications than any other EU country, which is not unexpected given the scale and diversity of the UK industry. This creates an unprecedented challenge for the industry, and for the Bank, in ensuring that models are of a high quality and that they meet the Solvency II requirements. It also creates some logistical challenges which you need to be aware of. If there are a lot of you trying to get approval, and only one of us, don’t expect that you can all present us with your models at the last minute and expect a one-to-one service. If too many firms leave their preparations too late, then we will have to prioritise – if you want to be sure, then get in as early as you can. Naturally, a significant proportion of our work relates to internal model approval, given the complex nature of many models and the detailed requirements of the Solvency II Tests and Standards.
As a result, they expect that, as the FOMC increases the federal funds rate over time, other interest rates might not rise one-forone with it. As one consequence of this, they express a concern that the Federal Reserve might see greater use of its ON RRP operations over time as monetary policy is tightened, because the rates offered on these operations—presumably rising one-for-one with changes in the target federal funds rate range—will become increasingly attractive relative to other market rates, which they expect to rise more slowly. To date, at least, this does not appear to be happening. I think this paper makes an important point about transmission: monetary control does not stop at the effective federal funds rate, and our framework must ensure that the stance of monetary policy is passed through into other money market rates. However, I am less persuaded that the data supports Darrell and Arvind’s concern about the present efficacy of the framework. First, I think the recent pickup in dispersion we see in money markets might not tell us much about what will happen going forward. A lot of what has happened in money markets in recent years may relate to one-off factors associated with money market fund reform and with liftoff from the zero lower bound.

BIS central bankers’ speeches  7  Capital requirements and leverage constraints both affect the overall size of banks’ balance sheets. But credit booms and busts are often associated with excessive lending to particular risky segments of the market. So instruments to affect the composition of balance sheets are also potentially useful, for instance through selective variation in the risk weights applied to the calculation of capital ratios. Quantitative controls applying to particular sorts of loans, such as maximum loan-to-value ratios on mortgages are another option, as are minimum haircuts on repo and similar financial transactions between intermediaries. Finally, since excessive maturity mismatch is an aggravating feature of financial crises, banks could be asked to increase their holdings of reliably liquid assets as the risk of instability builds, in an analogous fashion to the capital buffer. Macroprudential policies are sometimes described as the missing instrument, but in reality many of these tools are familiar to regulators and there is already international experience in their application, often from emerging economies (though in some cases their application has been aimed at restraining aggregate demand rather than reducing the risk of financial instability). Indeed, the Australian experience nearly a decade ago is a prime example. Over 2002 and 2003, house prices here rose nearly 40 per cent, stimulated in part by changes in the tax treatment of housing, increased competition in credit markets and the attainment of a low inflation macroeconomic environment; alongside this, there was a similarly rapid rate of expansion in mortgage lending (see Chart 3).
They estimated that there were an additional 2.4 million borrowers estimated to be in “near negative equity” where the borrower has less than 5 percent equity remaining. Declining house prices will push these near negative equity borrowers into negative equity. This increases the risk that these borrowers will default on their mortgages either out of necessity – say as the result of a job loss – or out of choice, which is called strategic default as borrowers determine that there is little economic advantage to keep paying the mortgage. Longer delays in the foreclosure process further increase the incentive for a borrower to strategically default by extending the period of time that they can live “rent free” in the house. In addition, declining house prices increase the expected losses on those mortgages that do default. Problems in housing markets can impact economic growth. Housing directly effects growth through incentives for builders to build new houses. Housing starts will likely remain depressed as long as house prices are declining. Falling house prices can also negatively impact consumption growth to the extent that homeowners increase their savings in an effort to offset declines in their housing wealth. The degree to which housing markets deteriorate over 2011 and the impact that this will have on overall growth is hard to predict with any accuracy. The most likely outcome is that the economy will continue to improve as the year progresses despite the ongoing drag from housing.

The concern six months ago was that a soft patch – amid an environment with little room for conventional monetary policy – could be particularly risky. However, growth picked up in the third quarter to an estimated 2.6 percent, and as 2010 came to an end, economists were revising upward their growth forecast for 2011. The risk that the economy will enter a double-dip recession now seems quite low. The increased optimism reflects in part the compromise on the extension of the Bush tax rates, the Federal Open Market Committee’s decision to purchase up to $ billion in Treasury securities, and stronger retail sales during the holiday season. While there are many factors that will affect the shape of the recovery in 2011, a key factor will be the degree of improvement in the labor market. From its peak in December of 2007, employment is down by 7.4 million jobs and remains below its level in January 2000. That is, the “Great Recession” eliminated an entire decade’s worth of job growth (Chart 2). Improved job growth is essential to generating the increase in disposable income that will support continued consumption growth which is so important for overall economic growth. Leading indicators for the labor market are pointing to a likely pickup in the pace of employment gains over the course of this year. Many new hires are preceded by firms posting job openings. According to the Labor Department, at the end of October, there were 3.4 million job openings, up from 2.3 million a year earlier.
BIS central bankers’ speeches  Chart 3:  Chart 4:  Bank estimates of the level of GDP(c)  Output per head in the UK energy extraction industry  Index: 2008 Q1=100 104 Data  Fitted trend  Labour productivity, index 2008=100 180  102 160  100  140 120  98  100  96  80  94 Latest ONS data  60 40  92  20  90 2006  2007  2008  2009  2010  0  2011  1987  1991  1995  1999  2003  2007  2011  Source: ONS and Bank calculations. Source: ONS (including the Labour Force Survey) and Bank calculations. (c) Chained-volume measures. The fan chart depicts an estimated probability distribution for GDP over the past. It can be interpreted in the same way as the fan charts in Section 5 of the August 2011 Inflation Report. (a) Calculated using Workforce Jobs sectoral employment splits scaled to match total LFS employment levels. (b) Trends are calculated over the periods 1987 Q1 to 2005 Q4 and 2006 Q1 to 2011 Q2  Chart 5:  Chart 6:  Measured productivity and an estimate of trend underlying productivity, based on the BCC survey of space capacity within firms in private services (ex. finance). Measured productivity and an estimate of trend underlying productivity, based on the BCC survey of space capacity within firms in manufacturing.

The credit for this goes mainly to the Ministry of Finance. We, as a Central Bank, try to contribute to this process in the best possible way. The formal launch is a matter of decision by the government. I see no reason why this should not happen within the current month. Preconditions The third topic that I will touch on is: What are the conditions for the tasks I talked about to be successfully completed and thus to successfully complete the entire process of joining the euro area? The short answer to these conditions is contained, in my opinion, in one word: "consolidation" with three important dimensions – political, institutional and fiscal. 3/5  BIS - Central bankers' speeches  Political consolidation means a functioning parliament and a regular government with clearly defined and consistently implemented priorities, and joining the euro area must definitely be one of these priorities. Institutional consolidation means ambitious reforms to address the still serious institutional deficits in the country and achieve the much-needed institutional convergence. Perhaps biased, but I will give an example with the BNB. In 2014-2015, the Central Bank, and the banking sector as a whole, were the subject of sharp political attacks and heated political discussions. Among other things, one of the main reasons was precisely the institutional deficits in the banking sector. It was about both the state of banking supervision and the lack of an institutional framework for solving problems in the banking sector.