samchain/econo-pairs-v1 huggingface dataset:
First of all, in a Monetary Union which covers an area stretching from Lapland in the north of Finland to Andalusia in the south of Spain, we cannot expect complete homogeneity of the economic cycle or of economic conditions in a more general sense. Therefore, it makes sense for the euro area Member States to maintain control over the remaining tools of economic policy so as to be able, if necessary, to respond to developments which are particular to their own economies. On the other hand, when formulating their economic policies, euro area Member States must give sufficient consideration to the impact that these policies will have on the rest of the euro area economy. This is particularly important in EMU since euro area countries are no longer exposed to the discipline of financial markets to the same extent as used to be the case when they conducted their own autonomous monetary policies. Prior to the introduction of the euro, unsustainable economic policies were penalised by the markets in the form of higher interest rates, substantial risk premia and exchange rate pressure. In EMU, however, where financial markets take an increasingly euro area-wide focus and where the exchange rate risk associated with national currencies no longer exists, the effects of inappropriate policy choices in any one country tend to be largely spread across the entire euro area. Only relatively small risk premia remain.

Against the background of this centralised decision-making structure, the role of the 11 national central banks consists mainly of the practical implementation of monetary policy and other tasks of the Eurosystem, such as the issuance of banknotes, the collection of monetary statistics or the operation of the Eurosystem’s payment systems. The fact that these tasks have to be carried out on the basis of agreed rules and specific instructions given by the decision-making bodies of the ECB, however, by no means lessens the importance of the national central banks in the overall set-up of the Eurosystem. *** Another particular characteristic of EMU is that, while Monetary Union has led to the introduction of a single monetary policy, Economic Union has not resulted in the development of other common macroeconomic policies, which instead remain in the hands of the national governments of the Union’s Member States. With a centralised monetary policy and decentralised fiscal and structural policies, the economic and monetary pillars of EMU can appear to be somewhat uneven at first glance. But we should not be fooled by appearances. In fact, the structure of EMU’s economic pillar reflects the need to strike an appropriate balance between providing flexibility and diversity, while - at the same time - ensuring that all of the economic policies of the euro area contribute to the success of EMU. Two factors have to be considered in this regard.
For example, automated marketmaking might allow an investor to instantaneously transact in a security at a visible price, with the market maker then able to immediately offset the risk by automatically hedging the exposure. Electronic and automated trading has also introduced risks to the Treasury market, as it has with other markets. For example, in the case of automated or high-frequency trading, firms must have sufficient internal controls to handle erroneous data and prevent malfunctioning algorithms. Considering that automated trading firms may hold limited amounts of capital given their minimal levels of net long or short exposure, some firms may be particularly vulnerable in the event of such an error. We have already seen some of these risks manifest themselves in foreign exchange and equity markets, where electronic trading is even more common. Further study is required to understand the particular nature of such risks in the Treasury market and the implications that may exist for other institutions, particularly since many automated trading firms are not direct netting members of FICC. Automated trading has also raised questions on issues related to fairness and market behavior. For example, there is likely some dispersion across firms with respect to the speed at which they can transact, which in turn could lead to dispersion in the quality of execution that market makers and end-investors are able to achieve. This is an important topic for examination and reflection, but it is also worth remembering that a varied level of technological access has long been a feature of competitive financial markets.

And if the word “currency” indicates an alternative unit of account – the “bitcoin”, for example – nor is this likely to be of enduring significance. You can find goods and services quoted in bitcoin. In the United States, at a rough guess, there may have been as much as $ worth of such transactions last year2. But in a country where annual consumer spending is twelve and a half trillion dollars, that’s a negligible proportion of the total. In the opinion of most  1  I’m thinking here of things like direct debits, or the capacity to receive our monthly pay. 2  According to Coinbase, around 20% of bitcoin transactions – worth $ in total – were for retail purposes. 2  BIS central bankers’ speeches  economists, it’s pretty unlikely that its use as a means of exchange will become very widespread. It’s not just that the value of bitcoin is extremely volatile, though that’s certainly been the case (Chart 2; see also Ali et al (2014a and 2014b) and Yermack (2013) for the shortcomings of Bitcoin as a useable money). One should also recognise that established currencies have a significant built-in advantage. Rather like a common language, the benefit to any individual of using a particular unit of account is greater if others use it too. That gives a big head-start to the incumbent. Switches do very occasionally happen: degrade a currency sufficiently, via hyperinflation and collapse of the banking system, and people will eventually look for alternatives.
In other words, some trade-off between inflation and output has become possible and lambda has become relevant. As I mentioned earlier, the period of inflation targeting can be divided into pre- and post-crisis periods. During the Great Moderation, the economy’s supply capacity grew at a steady pace, and, for the most part, 15  In New Keynesian models, the slope of the Phillips Curve is related to the deep parameters governing the frequency with which firms are assumed to be able to re-optimise their prices, following the formalisation of Calvo (1983). See Calvo, G (1983), “Staggered prices in a utility-maximising framework”, Journal of Monetary Economics, 12. 9  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches  9  deviations of inflation from target reflected temporary disturbances to demand that were expected to drive output and inflation in the same direction (Chart 1). 16  Generally, monetary policy faced few trade-offs; divine  coincidence largely ruled. The crisis brought shocks both to demand and supply, higher inflation and large shortfalls in output and employment. The era of divine coincidence was over and the MPC had to balance a series of challenging trade-offs (Chart 2). What can be learned about lambda from this era? Taking these trade-offs at face value suggests a value of lambda of between 0.1 and 0.2 for the inflation targeting period as a whole, on the basis of data outturns 17  (Chart 6) and on the basis of MPC forecasts (Chart 7).

The room was absolutely jam-packed with staff from the PRA and the wider Bank – standing room only, in fact if one more person had entered it would have been a clear health and safety breach. My colleague Vicky Saporta was in the Chair, and this was a tough job: arguments raged, data was questioned, competing views were offered and challenged. Why so much excitement at the PRA? After all, boring is good in our line of work. Were we perhaps having our own private Brexit debate, with Vicky in the role of speaker? Were we changing our pension scheme, which is in my experience the only topic that gets people hotter under the collar than Brexit? Or were we picking next year’s Charity of the Year? None of the above. This was a meeting on what we call “horizon-scanning”, which we have made a strategic priority for the PRA as we come out of the post-crisis reform period. What is this activity? Why have we made it a priority? And why does it generate so much interest from our staff? This part of our work has its origins in two simple observations about financial history. The first is that crashes and financial crises are an enduring phenomenon 1. The second is that as memories of the most recent crisis fade, market participants often gravitate back to bad practices, sometimes in a new-fangled form, leading to the next crash.
It is this excessive credit cycle – the risk of “go and stop” seen during financial crises – that a moderate capital buffer must seek to smooth out. It should be noted in passing that a clear majority of Member States of the European Union have adopted other macroprudential measures  Page 3 of 6 to specifically limit residential lending, constraining households: in my view it is out of the question in France. II. To reduce fragmentation and improve private risk sharing in Europe, we must now complete the Banking Union. We must now resolutely work towards completing the European Banking Union. I would first like to explain why. The finalisation of the Banking Union should, alongside the Capital Markets Union, contribute to improving private risk sharing within the euro area. Private risk sharing fulfils an economic stabilisation function: in the United States, for example, private financial flows between the federal states are a more powerful damper than budget mechanisms involved in public risk sharing. Furthermore, this private risk sharing should help to channel the euro area’s large savings surplus – EUR 390 billion in 2017 – towards European companies, within a real Financing Union for Investment and Innovation at the European level. We have taken a step forward with the agreement of 25 May at the Ecofin Council meeting on the "banking reform package" set out in the Commission's legislative proposal of 23 November 2016.

Such a step would only be taken in accordance with the principle of subsidiarity, and all the sums borrowed would  Page 5 of 6 be gradually repaid by the banking sector. Rather, it is about building confidence in bank resolution in Europe by showing that it will always be able to intervene effectively in the event of a crisis. Such a system will also encourage the lifting of the constraints imposed by certain national authorities on capital and liquidity flows. I regard the European Commission's proposal to set up a backstop through a credit line provided by the European Stability Mechanism (ESM) as a top priority. We also need a common scheme for providing liquidity to financially sound banks after resolution which is in line with euro area monetary policy rules. Of course, a compromise will have to be found in order to make headway on the third pillar of the Banking Union, deposit insurance. Once we have completed the resolution framework, we will be less in need of a shared European scheme. A pragmatic approach could be to introduce a system of loans between national deposit guarantee schemes (DGS), with guarantee mechanisms to ensure that liquidity advances do not lead to losses for the lending DGS. This would lead to a sharing of liquidity without sharing risks, which would be a first step towards shoring up financial sector confidence and strengthening depositor protection.
William C Dudley: "Remarks at the Economic Press Briefing on the Regional Economy" Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Economic Press Briefing on the Regional Economy, Federal Reserve Bank of New York, New York City, 10 August 2017. * * * Good morning, and welcome to the New York Fed’s Regional Economic Press Briefing. Today, we will provide an update on economic conditions in the region, and then discuss the issue of regional wage inequality. As always, what I have to say reflects my own views and not necessarily those of the Federal Open Market Committee or the Federal Reserve System.1  Current Economic Conditions The Federal Reserve has pursued an accommodative monetary policy since the Great Recession to facilitate achieving our dual mandate of maximum sustainable employment and price stability. This policy stance has provided support to the economy and helped lower the unemployment rate from 10 percent at the depths of the Great Recession to 4.3 percent currently. Measures of underemployment have also improved considerably and are near precrisis levels. Stronger labor market conditions are perhaps the best means to improve the economic wellbeing of most Americans, particularly those who have been struggling and are most vulnerable to economic downturns. Improved job opportunities have helped to support household income growth, consumption, and saving, as well as the housing market.

In part, this likely reflects the fact that productivity growth has been sluggish compared to historical experience. Relative income differences are likely to get more attention when economic growth is weak and people do not see significant improvement in their absolute income levels. With that in mind, as we consider how to address the issues of income inequality and mobility, we should also consider how to improve flagging productivity growth, because that would help raise the level of household income. Wage Inequality Today’s briefing will focus on labor market inequality, including wage inequality in our region. 1/4  BIS central bankers' speeches  Currently, we see comparatively high levels of inequality in the labor market in terms of differences in the wages workers earn. This situation has been in the making for several decades. Since the early 1980s, wages have increased more rapidly for workers toward the top of the income distribution than for the median worker, and much more rapidly than for workers toward the bottom of the distribution. Further, this increase in inequality can be seen throughout the entire distribution of wages. In my view, two main factors are responsible for this pattern of differential wage growth and the resulting increase in wage inequality. First, advances in technology have dramatically changed the nature of work, increasing the skill requirements for many jobs while displacing others. Second, the pace of globalization has accelerated in recent decades, with increased crossborder trade, investment, immigration, and the emergence of global supply chains.
Starting from the February meeting, the repo rate was cut below zero and the first of a series of asset purchase programmes was begun. Furthermore, we signalled that there was a possibility of foreign exchange interventions if the krona appreciation already forecast were so strong and rapid that it jeopardised the upturn in inflation. We deliberately increased our focus on the development of short-run inflation, as we had a low tolerance of poor outcomes. What considerations should govern our choice of future path? We are now in April 2016 and I judge that we have largely succeeded in our efforts. Growth has become much higher than expected, although this is not merely due to monetary policy. The trend towards declining confidence in the inflation target has turned around in that inflation expectations have begun to rise again. The monetary policy conducted is far from uncomplicated. In a world of minus rates it is more difficult to assess what impact the interest rate decisions will have on different channels, that is, how the transmission mechanism will work. It is also difficult to assess the stimulation effects of the bond purchases. 2 Moreover, the Riksbank has been clear that low interest rates increase indebtedness among households in a way that increases vulnerability in the Swedish economy. But most of all, I feel that our monetary policy is successful and better than the alternative.

My point is that the global conditions for growth will gradually improve and that the course of inflation will normalise. But this depends on decisions made abroad, which govern the real interest rate that we in Sweden have to relate to. Growth conditions in Sweden also depend on the Swedish economy's ability to constantly transform in an orderly manner. Monetary policy can function as a bridge over to a new normal situation. But the new normal will be determined by decisions that are beyond the central bank's control. 3  Another such period, but one in which completely different challenges arose, was the financial crisis 2008–2009. 4  See the minutes of the monetary policy meeting on 10 February 2016 and SvD Andrén Meiton 9 March 2015. 4  BIS central bankers’ speeches
Moreover, these moving parts are likely to be significantly more tightly-coupled than in the past as a result of financial and global integration. In other words, the global economic and financial system may, over recent decades, have become a “system of systems”, with multiple, interacting layers each a complex system in its own right. Chart 2 provides a stylised characterisation of those layers, decomposed four ways. At the highest resolution – the “micro-prudential” layer – are individual financial firms. These are, if you like, the atoms of the financial system. Like atoms, however, some individual banks are themselves complex entities, with many moving and interacting business parts. At one lower level of resolution – the “macro-prudential” layer – is the financial system. This comprises interactions between financial firms in the network, as might arise from counterparty relationships in interbank, repo and derivatives markets. This layer is akin to an organ, like the brain, whose behaviour is the result of interactions between complex neurological sub-components. At a lower level of resolution still – the “macro-economic” layer – is the national economy. This comprises complex interactions between the financial sector and the wider economy – the flows of funds which intermediates money from owners to borrowers. It is akin to the  BIS central bankers’ speeches  5  physiology of a human, whose behaviour in the result of complex interactions among its organs, themselves complex sub-components. Finally, at the lowest level of resolution of all – the “telescopic” layer – is the global economic and financial system.

This gave a very clear 14  BIS central bankers’ speeches  idea of how many households and banks might be affected by such an intervention and by how much. This was a macro-prudential policy calibrated from micro-prudential constituents. Although a first step, there is clearly further to go in using micro-level data to calibrate the impact of macro-prudential tools on lender and borrower behaviour. Turning to the global economic and financial system, it is here where the existing policy architecture may at present be most deficient. Some have gone further and argued that there is nothing at present that much resembles a global financial architecture at all (de Larosiere (2014), Haldane (2014)). Despite the crisis being the first truly global one, reform of the global financial architecture has been slow. There are many dimensions to reform of the global financial architecture. These include the appropriate role and resourcing of the IMF, the reserve currency role of the dollar and the appropriate role of so-called for capital flow management policies to modulate fluctuations in the global flow of funds (IMF (2012)). Each of these has been widely discussed and debated over many decades. On some issues, there has been progress. For example, the IMF now endorses the use of capital flow management policies in some situations, in contrast to its position a few years ago. But there is one area where progress in strengthening the international financial architecture has been much slower.
16  Figure 8 Bank credit survey (*) (average for four moving quarters)  Demand  Supply  100  100  100  100  50  50  50  50  0  0  0  0  -50  -50  -50  -50  -100  -100  -100  -100  12  13  14  15  12  16  Enterprises  13  14  15  16  Real estate and building firms  Persons  (*) Difference between percentage of respondents that said lending standards had become less stringent to some extent and percentage of respondents that said that lending standards had become more so to some extent. Source: Central Bank of Chile. Gráfico 9 Citigroup surprise index  Manufacturing prospects (*)  (mean of 25 moving weeks, pivot=0)  (diffusion index, pivot=50)  70  70  60  60  35  35  55  55  0  0  50  50  -35  -35  45  45  -70  40  -70 12  13  14  15  16 U.S.  17 Eurozone  40 12  13  14  15  16  17  Japan  (*) Measured using the purchasing managers' index (PMI). Source: Bloomberg.

As a working assumption we assume that the MPR will follow a trajectory similar to the one implied by financial asset prices during the ten days prior to this statistical closing of this Report. Thus, we assure that monetary policy will have responded swiftly to the changes in economic conditions and will remain expansionary through the whole projection horizon (figure 12). As always, the conduct of monetary policy and any possible adjustments to the MPR will be contingent on the effects of incoming information on the projected inflation dynamic. On the external front, there are some sources of uncertainty that may have significant effects but by their nature are very hard to quantify. For example, political and economic uncertainty surrounding European elections, worries about Brexit implementation and possible shifts towards protectionism in several developed economies. Other risks that have long lingered in the external scenario have varied in intensity. The US economy has evolved favorably, averting the risk of a new recession. The much awaited fiscal impulse could help to sustain somewhat higher growth in the years to come. However, it is also a source of risk, as its implementation may have problems or inflationary effects that might trigger a faster withdrawal of the monetary impulse, creating disruptions in financial markets. China continues to be a source of concern, especially its leverage, although its authorities have successfully weathered its gradual slowdown without causing disruptions, and this has been welcomed by markets.