samchain/econo-pairs-v1 huggingface dataset:
The persistence and intensity of inflationary pressures reflect a combination of various demand and supply factors. Notable among the demand factors are the relatively strong recovery in activity following its collapse in 2020 and the changing consumption patterns as a consequence of the pandemic and the measures adopted to contain it. Among the supply factors, the higher price of energy - with major strains in the gas market - and the disruption to global supply chains stand out. This high global inflation environment was also reflected in expectations of monetary policy normalisation and, in consequence, a moderate tightening of private-sector financing conditions. As at global level, the repercussions of the war for the Spanish economy are highly uncertain. Spain’s direct exposure to the countries at war is low. However, the invasion of Ukraine has also changed the economic environment and represents, at a time when the recovery from the pandemic remains incomplete, a new shock that can be expected to entail adverse consequences in the coming quarters for economic activity and inflationary pressures through various channels. Of these channels, the most important is probably commodity markets, including markets for both energy and non-energy commodities, in particular foodstuffs and metals, of which Russia and Ukraine are both significant global producers and exporters. Spain’s direct exposure to these imports is relatively low; for example, in 2019 only 6% of its total energy purchases from the rest of the world came from Russia. This percentage is much higher in countries such as Germany and Italy (17% and 22%, respectively).

Indeed, in the three years before the creation of the PRA in 2013, just two new UK headquartered banks had been authorised. And the financial crisis had exposed the need to ensure UK retail deposits were never again put at risk by poor management including of the international and investment banking activities of the big banking groups. Parliament rightly did two things to address these issues. It implemented legislation requiring the ring-fencing of the core services in the largest UK banking groups those on which retail and smaller business depend.2 And shortly after setting up the PRA, it gave us a clear secondary objective to facilitate effective competition.3 The PRA embarked on multiyear programmes on both fronts. To achieve ring-fencing, the banking system saw over £ billion of assets moved between legal entities, governance structures re-written and IT systems rewired. As part of our focus on competition, the New Banks Start up Unit was established with the Financial Conduct Authority in 2016,4 and barriers to entry for new banks were lowered.
And by the time the CCFF and the MPC’s second round of asset purchases got under way in earnest, the UK-wide lockdown was underway – and nearly all of us were working from home. Table 1: The Bank’s operations since 1.3.20  Funding Schemes  Asset Purchases  Liquidity Facilities  GBP bn (as at 27 May)  Change Stock since 1 outstanding March  Chart 15: The Bank’s balance sheet (%GDP)  Peak stock level since 1 March  ILTR  28  +21  28  1 & 3 Month CTRF  6  +6  11  USD swaplines  23  +23  37  APF Gilts  556  +121  556  APF CBPS  14  +5  14  CCFF  19  +19  20  TFSME  12  +12  12  TFS (closed)  107 -  107  FLS (closed)  2-  2  Total  769  Per cent 40 Banknote Covid-19 convertibility to gold crisis 35 reinstated Amalgamation of Treasury and Bank note issues Failure of Lehman Brothers  Banknote convertibility South to gold Sea suspended bubble  WW1  30 25 20  WW2  15 10 5  +207 0  Source: Bank of England  1700  1750  1800  1850  1900  1950  2000  Source: Bank of England, available here. Dotted line extends series to mid-2020, assuming completion of current asset purchase programme.

Available here  0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec  Source: DMO and Bank Calculations. Past values adjusted for inflation (April 2020 equivalents). Moment 7: central banking on the home front Table 1 and Chart 15 summarise the scale of the Bank’s recent balance sheet operations: a balance sheet that has expanded by almost a third in three months, and will reach nearly 40% of annual UK GDP by mid-year. To deliver that, we are doing more than ten times the number of weekly operations than in the pre-Covid19 period (Chart 16). This is eye-popping by itself. But, more extraordinary still, virtually all of it has been done remotely – hundreds of billions of pounds worth of operations delivered from peoples’ bedrooms, attics and kitchens, whilst isolated on their own, or caring for children and other relatives. The Bank has long embraced home working as part of its flexible working arrangements – but the sheer scale of what has been done – what we have had to do – would frankly never have been contemplated by choice. Preparation began early – and the 12  All speeches are available online at www.bankofengland.co.uk/news/speeches  12  technology that enables all of our critical operational functions, and the operational and risk controls that go with them, were quickly re-configured to support working from home. By the time of the MPC’s first policy package on 11 March, we were already operating on a fully-live split-site basis.
), Fiscal policy Implementation in Oil-Producing Countries. IMF 2003 J. Wakeman-Linn, C. Aturupane, S. Danninger, K. Gvenetadze, N. Hobdari and E. Le Borgne, Managing Oil Wealth: The Case of Azerbaijan. IMF 2004 World Bank report No. 32700-TP: Country Assistance Strategy for Timor Leste. 2/8  was introduced in 2001. According to the rule, only the expected real return on the Fund is to be used. The rule has functioned as a budget guideline. Effects on the Norwegian economy The question may be asked as to which effects we can observe of petroleum revenue spending in the domestic economy. The risk of “Dutch disease”6 has been a common reference in the discussion on petroleum revenue spending. The Dutch disease occurs if spending is so high that the basis for internationally exposed industries is eroded and fluctuations in economic activity are amplified. As mentioned, in 1970s and 1980s there were clear symptoms of contamination. Norway’s fixed exchange rate policy in the years from 1986 to 1992 drove high inflation out of the economy, however. Our inflation targeting regime will achieve the same objective. It appears that the economy has again become more stable. And the fiscal rule has contributed to this. This is then a third positive result. Shifts in industry structure, with higher growth in sheltered industries, are a feature common to all developed countries. But, it may seem that this shift has occurred slightly faster in Norway than, for instance, among our Nordic neighbours. The changes have also been fairly considerable after 2002.

If we include retirement due to disability, the average retirement age is only 60.9 The number of persons on benefits in the working age population has shown a marked rise. Up to the beginning of the 1990s, there were small differences between Norway and its neighbours. Over the past decade, however, the increase has been clearly strongest in Norway. There are two sides to the conclusion as to the question of Dutch disease. On the positive side, we have avoided dramatic changes in industry structure, and we use our resources fairly efficiently. We have managed to insulate the Norwegian economy from oil market fluctuations and gradually managed to keep macroeconomic developments on a fairly steady course. On the negative side, there are signs that labour supply over a life-cycle is falling faster in Norway than in other countries. This may indicate that, with our current income level, we give high priority to increasing our leisure time. However, it may also indicate that we do not, as individuals, pay the true economic costs of leisure time and early retirement. Pension rules, benefits and taxes contribute to this. Similarly, enterprises are perhaps being offered the wrong incentives. On balance, the picture is still fairly positive: so far, petroleum wealth has not led to developments in the mainland economy that are negative in relation to other Nordic countries. However, it must be stressed that it is too early to draw a conclusion; there will probably be a substantial increase in petroleum revenue spending ahead.
The implication is that you see a trade-off between inflation and the rate of economic growth, so that if only we’d let up a bit on controlling inflation then this country could enjoy higher activity and lower unemployment, which are the really good things in life - or at least we could avoid some of the worst damage that is currently being inflicted upon the whole of the agriculture, large parts of manufacturing industry and even some services sectors. And that might even be true for a time. The trouble is that, in anything other than the short term, it would be likely to mean more rather than less economic damage, and lower rather than higher growth and employment. Often in the past in this country we behaved as if we thought that promoting higher growth and employment - which of course is what we all want to see - was largely a matter of pumping up demand. We paid too little attention to the structural, supply-side, constraints. All too often we tried to buy faster growth and higher employment even at the expense of a bit more inflation. In effect we tried to squeeze a quart out of a pint pot. And you all know the result - rising inflation and a worsening balance of payments, which eventually could only be brought back under control by pushing up interest rates dramatically and forcing the economy into recession.

This is the key element of our duty, the feature of a good banker. By being active in AML, we are simply doing our job. Any negligence on this means we are not up to the requirements of our job. We need to emphasize that the key element in the process, is the strong commitment to understand and implement it. It is very important for such commitment to come from the highest management structures of the bank. If such commitment is missing, this will be immediately shown at the structures of the bank that are directly involved in the AML process, whose functioning will be negligible and full of formalism. Within the institution, this commitment should be shown: in the preparation and approval of the internal procedures on AML (including those of knowing the client), in setting up the proper entities and appointing the responsible persons (on monitoring the AML implementation process) with the proper professional and hierarchical qualities, in rightly defining their rights and responsibilities, in giving them moral and material support, in providing qualitative and continuous training for the staff, especially for those that have direct contact with the client and analyse its ML risk profile and in keeping up a positive pressure in the institution for such process to be implemented and be continuously functioning. In one word, the climate that should exist within the institution for such issue (but not only) should favour in any instance the responsible actions being taken from the bank staff on AML.
The mere assumption that a bank is too big to fail can be a self-fulfilling prophecy. 4 On the assumption that it will be bailed out if necessary, the bank may take on excessive risk much more readily, and focus its business model too heavily on debt-based growth. Thus, the bank becomes even bigger, thereby increasing the likelihood that the state will have to intervene in a crisis, so that the original assumption proves to be correct. Given this increased likelihood of a bail-out, the bank can now take on even more risk, and the de facto bail-out obligation becomes even more acute – a vicious circle. This bail-out obligation can result in very high and unforeseen costs to the state. The scale of these costs was highlighted by the global financial crisis, which at the time saw announced  2 3 4  For example, cf. International Monetary Fund (2014) for an estimate of the magnitude of this subsidy. Cf. Afonso et al. (2014). Cf. Alessandri and Haldane (2009). Page 4/14  state support for the financial sector in advanced economies amounting to some 20% of GDP (cf. slide 2). 5 State budgets, which are already under strong pressure from the recession associated with a financial crisis, can be overstretched by the cost of state support measures. And indeed, during the crisis, a number of countries did find themselves having to shoulder costs well in excess of their financial capacities. Ultimately, they coped by resorting to external support.

We are convinced that the improved regulations contribute to the good framework conditions that characterise Switzerland in general. This in turn is an essential prerequisite for the sustainable and successful development of the Swiss banking sector. A robust, well-regulated banking system is a key locational advantage in international competition. It attracts clients and businesses, and is therefore desirable not only in the interests of financial stability, but also from the perspective of the globally active banks themselves. d) Implementation of the TBTF regulations is already well under way  Thus, ladies and gentlemen, the Swiss regulatory approach targets the fundamental causes of the ‘too big to fail’ issue and is cost-effective. We are therefore confident that full implementation by the end-2019 deadline will create the conditions necessary for resolving the ‘too big to fail’ issue in Switzerland. What is our current status regarding fulfilment of the TBTF requirements? In our latest Financial Stability Report published in June, we stated that implementation is already well under way. In terms of the resilience requirements – the first pillar of the regulations – both big banks are on track. They already fully meet the requirements for risk-weighted capital that will apply from end-2019. As far as the second pillar – resolution – is concerned, the two big banks have made further progress. Here too, they already meet some of the requirements in full, namely those relating to gone-concern loss-absorbing capacity. Nevertheless, the finish line has not yet been reached.
Consequently, one of the key response from the authorities was to develop the BASEL III Reforms Package that aims to strengthen global supervision of international banks and banking systems. While the global banking supervisors have been working hard to improve banking supervision, the financial crisis has mutated into a fiscal crisis in some markets in Europe, once again threatening the viability of some global banks and causing the risk of contagion to other financial institutions and markets. Consequently this drives home the lessons that strengthening banking supervision alone is not sufficient and that prudent fiscal and monetary policies are essential for a sound and resilient banking system. Before I talk about Basel III, I would like to revisit the evolution of the Basel II framework which was published by the Basel Committee in June 2004 with a tentative full implementation date of 1st January 2007. Consequently in 2007 a pertinent question was that why did Basel II fail to prevent the financial crisis. The response was that apart from its slow and uneven implementation in the advanced markets, Basel II was a flawed standard that had failed to address some of the major supervisory weaknesses. These included the lack of a common definition of quality of capital, no limits on leveraging, no common standards for liquidity and a failure to recognize the excessive market risks embedded in trading and derivative transactions that had risen very sharply among the major banks. Therefore, Basel II would have not done the job it was required to do.

Although the general government “structural deficit” is not directly observable and, therefore, its calculation is based on assumptions subject to a high degree of uncertainty, it is a useful indicator of the underlying state of public finances. This indicator will, moreover, play a more important role in the new phase of fiscal policy due to begin, in the event that the EU Council eventually rules that Spanish general government is no longer in an excessive deficit situation. As I have already mentioned, the latest data point in this direction. In fact, exiting the “corrective arm” of the EU’s Stability and Growth Pact would involve Spain automatically entering the “preventive arm”.
Over time, these developments reduced the trend real interest rate, big R*, required to bring actual stocks of wealth and capital into line. And policy rates, including in the UK, followed the trend rate downwards. Figure 1: Changing demographics and a fall in trend productivity growth have reduced R* Indicative contributions to changes in the trend real interest rate  1 In my 2018 SPE conference speech, available at https://www.bankofengland.co.uk/-/media/boe/files/speech/2018/finding-the-  right-balance-speech-by-dave-ramsden.pdf, I gave more detail on the evolution of the Bank’s balance sheet tools during and following the global financial crisis. 2  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  2  Figure 2: r* fell sharply during the financial crisis Stylised diagram of the equilibrium real interest rate  The shock of the financial crisis then added a further downward impetus to equilibrium real interest rates. A number of headwinds to demand — including a rise in uncertainty and a tightening in the financial conditions facing households and firms — meant that the medium-term equilibrium real interest rate, “little r*” fell sharply below “big R*”, itself already much lower than in previous decades, and so well below the so-called “zero lower bound” (Figure 2). In response, monetary policy makers cut policy rates as low as they could go – in the UK Bank Rate was cut to 0.5% in late 2008, its then effective lower bound. But with equilibrium rates deeply negative, further stimulus was needed.

4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4  Figure 5: Market functioning indicators returned to normal levels following the MPC’s actions Stylistic summary of market functioning indicators  Figure 6: The MPC’s intervention lowered gilt yields  Figure 7: The Bank’s balance sheet has reached an unprecedented size  Gilt yields  Bank balance sheet as % of lagged nominal GDP  Sources: Bloomberg calculations  Finance  L.P  and  Bank  For some, these facts might suggest that the MPC is once again running out of policy room for manoeuvre. My own view is that this is not the case – we have policy tools still available, and scope remaining to use those tools. The question is not so much what tools are available as which is the best tool for the job at hand. 3. The state of the policy toolbox What I want to do for the rest of this talk is set out the current state of the policy toolbox. While I will include my personal view where appropriate, I am keen to draw as much as possible on recent MPC statements or judgements and on Bank analysis.
Earlier in my remarks I did make reference to the fact that one of the greatest dangers facing African economies is the risks that the current crisis might trigger significant policy reversals that undermine important institutions such as the Government as well as the central bank. It is important that in Africa, the critical work of consolidating fiscal positions and improving the Governance arrangements and financial management of public resources is sustained. In many ways, fiscal sector reform reflected in the curtailment of fiscal dominance, have been the central platform upon which macroeconomic stability has been built and achieved in Zambia. From the central bank perspective, the Bank of Zambia has worked to improve its own credibility by working with commercial banks and other financial institutions to improve Governance arrangements in the financial sector, improve the frequency and level of communication between the bank and the institutions that it supervises, as well as the general public. Much of this work has been done under the framework of a comprehensive Financial Sector Development Plan (FSDP) that has had broad support from our cooperating partners. At the regional level, a new SADC Model Central Bank Act has also been approved by the Ministers of Finance in SADC that enshrines important principles of independence and good corporate governance as a yardstick to be followed by all central banks in the region.

Both of these facts suggest that any rapid expansion of Central Bank balance sheets or government deficits may be viewed as inappropriate and would therefore undermine the credibility of these institutions and their ability to anchor inflation expectations, which remain fragile. It is with these four points in mind that I pose the question: Is the global financial and economic crisis an opportunity or a curse for Africa? I do not see the global crisis as a curse on Africa – some unknown force guiding us to our inevitable doom. Rather I see the global crisis as presenting a set of circumstances to which Africa is capable of responding proactively – to the great benefit of its people and indeed to the global economy. My reading of the current debates on the state of economics is that the poor predictive power of most macroeconomists in calling the financial crisis has bred the widespread belief that it is not so much that economists failed in their duties, this they certainly did; but that the science of economics itself has been found to be severely wanting. I myself have a more balanced view. There were certainly ample signs that trouble was brewing in the global economy – best reflected in the growing financial imbalances across the globe, for example between the  BIS Review 128/2009  3  United States and China, in an ever more interconnected financial landscape.