samchain/econo-pairs-v1 huggingface dataset:
Andrew G Haldane: The Great Divide Speech by Mr Andrew G Haldane, Executive Director and Chief Economist of the Bank of England, at the New City Agenda Annual dinner, London, 18 May 2016. *  *  *  I would like to thank James Antwis, Andrew Bailey, Jeremy Franklin, Jonathan Fullwood, Andrew Hauser, Andrew Hebden, Alex Holmes, Leanne Leahy, Emma Murphy, Ben Nelson, Laurie Roberts, May Rostom, Pedro Santos, Minouche Shafik, Emma Sinclair and Paul Robinson for their comments and contributions, and to Gillian Stamp for conversations on these issues over many years. In November last year, the Bank of England hosted a so-called Open Forum. This was a new departure. For the first time in its 300-plus year history, the Bank brought together all of the main stakeholders in the financial sector: not just policymakers, banks and investors, but politicians, civil society, businesses, regional representatives, religious groups and the media. This was a deliberately broad church, with an eclectic congregation comprising religious zealots, high priests, regular church-goers, agnostics and atheists. The aim of the Open Forum was to discuss, in an unscripted way, the progress made towards fixing the financial sector. The Open Forum was an opportunity to hear a different set of views from a different set of voices: from the customers and users of finance, as well as the producers and investors; from the often-silent majority of outsiders to finance, as well as the often-vocal minority of insiders. This made for a very different dialogue.

Assuming this pre-crisis trend was a reasonable one 8, this is a cumulative income loss of over one year’s worth of pre-crisis GDP or £ trillion. For advanced economies, the corresponding cumulative loss of income is also close to one year’s worth of pre-crisis GDP or $ trillion. These are simply mind-boggling sums. And the clock, of course, is still ticking. These losses are unlikely ever to be fully recovered. Quite how we value the net present value of this continuing stream of losses depends on how much we discount the income of future generations and how sustainable pre-crisis rates of growth were believed to be. But even on conservative estimates, it seems possible the eventual cumulative losses of income could total multiples of annual pre-crisis GDP. One reason these losses may have endured is because crises have a deep, and irreversible, scarring effect on an economy’s growth potential. 9 That may arise because credit-starved companies are unable to invest or indeed start-up in the first place. Or it may be because financial crises act as a permanent drag on risk-taking and entrepreneurship, as was also evident after the Great Depression of the 1930s. 10 Either way, perhaps it should come as no surprise that productivity has flat-lined since the crisis. Yet it is perhaps along the third dimension – social capital – that the losses arising from the crisis may prove most enduring. Social capital is inextricably linked to trust. And banking is quintessentially a trust business. At root, it involves swapping promises to pay.
A similar message emerges from two papers presented in Session 3, which have scrutinized the factors that contributed to the very rapid credit expansion in the specific cases of Romania 2 and Lithuania 3 , and from the World Bank report 4 presented in Session 6, which provides a detailed overview of the recent credit developments in all ten new EU member states from Central and Eastern Europe. While stressing the demand factors that have fuelled the expansion of credit to the private sector, these papers also point out that the supply side has played a role too: the boost in credit volume was made possible by the privatisation of banks, deregulation of financial systems, and the deepening of the financial markets in the region. Both the above-mentioned World Bank report and the paper 5 prepared by International Monetary Fund staff, also presented in Session 6, were aimed at identifying vulnerabilities and risks that might threaten the financial stability of CEE countries. The former concludes that these countries vary rather widely with regard to the sustainability of the credit growth. While the largest new EU member states seem to be still on the safe side, the Baltic states and, to a lesser extent, the emerging economies of South-Eastern Europe probably witness a credit boom that leads to significant macroeconomic imbalances and might ultimately end in a crisis.

This may also be working alongside the level of uncertainty to encourage firms to meet output growth using labour rather than undertaking capital expenditure projects. At the margin, the idea that workers are responding to Brexit by showing increased flexibility could mean that there is more room than headline measures of slack suggest for the economy to grow without generating above-target inflation in the medium term (Slide 8). Certainly, it would help explain why, despite unemployment being at its lowest level in 42 years, measures of domestically generated inflationary pressure generally remain below levels that would be consistent with inflation being at target in the medium term. That includes a wide range of measures, including unit wage costs, those derived from the Consumer Price Index, and those based on national accounts measures of value added. In turn, the subdued nature of domestically generated inflation is evidence that the current elevated level of headline inflation is attributable to pressure arising from the pass through of the depreciation of sterling. In 2  See Broadbent (2017) for a full discussion of these issues Private sector real wage growth, calculated by deflating nominal wage growth by output prices, was 1.8pp weaker in the year to 2017Q2 than expected at the time of the May 2016 forecast, while growth in productivity per head was 0.7pp weaker.
Among UK companies, debt as a fraction of companies’ total financial liabilities has risen from around 20% in 1988 to around 34% today. In certain sectors, the run-up in debt has been more dramatic – for example, among US and UK commercial property companies whose leverage has more than doubled in the past decade. It is also true of some companies subject to leveraged buy-outs including, of course, Liverpool Football Club. Finally among sovereigns, the picture up until recently has been benign with public debt flat relative to GDP. But the crisis means that picture is set to change dramatically. Among the G7 countries, the IMF forecast that public debt ratios will rise from around 80% of GDP in 2007 to around 125% by 2014. In the UK and US, public debt ratios are forecast by the IMF to double, mirroring the pattern following past financial crises. 6 Taking together the debt position of the financial sector, households, companies and sovereigns paints a sobering picture. Total debt ratios relative to GDP rose significantly in all ten countries studied by McKinsey’s, from an average of around 200% in 1990 to over 330% by 2008. 7 Over the same period, UK debt ratios more than doubled, from just over 200% to around 450% of GDP. To date, servicing these debts has been cushioned by policymakers’ actions.

On the contrary, it is important to deal with these issues on an international level. But the overall framework has not been drafted with the specific situation in the banking sector in mind. It may therefore be difficult to find suitable solutions in a crisis situation without running the risk of breaking a number of regulations. It is not acceptable that decision-makers should have to fumble in an acute crisis situation, trying to steer clear of this risk. It is also important that the action by the authorities in such a situation is evaluated against a regulatory framework fit for its purpose. A framework which makes it possible to maintain a proper balance between the different parties involved also in a crisis situation. There is a need for a special insolvency and resolution framework for banks In my opinion, all this points in one direction. A special insolvency regime is needed for banks and other institutions that are covered by the safety net. In this country it has long been said that banks should be covered by the ordinary corporate bankruptcy legislation, at least as long as there is no direct threat to the system. This is because government intervention over and above the existing safety net for the banks should be avoided. I believe that this is the wrong way to look at it. The ordinary bankruptcy regime does not sufficiently recognise the need for speed when dealing with banking problems.
Private debt has increased, although it has also increased in Europe. The counterpart to these developments is a high level of saving in Asia – primarily China. Asia’s willingness to purchase US Treasury bonds has allowed the imbalances to build up further. The Norwegian economy is also part of this picture. High oil prices have resulted in substantial surpluses in oil-exporting countries’ current accounts, which have been invested in international capital markets. A balance of payments surplus provides the opportunity to save and apportion revenues over time. Trade deficits and surpluses do not necessarily reflect an imbalance, but can be a prudent adjustment. Chart: Exports from emerging economies in Asia Emerging economies in Asia now account for 16 per cent of total global exports, compared with 9 per cent in 2000. With substantial labour reserves and a cost level that is considerably lower than other countries, it has been easy for emerging economies to find markets for manufactured goods. A Chinese manufacturing worker’s hourly wage is about 1/20 of a US worker’s wage3. Even though there are considerable gains related to international trade and free capital movement, there are also dangers to be avoided. Over the past thirty years, a number of countries have been hit by financial crises. The Asian crisis at the end of the 1990s showed that the combination of large trade deficits, small foreign exchange reserves and a fixed exchange rate regime proved to be demanding.

BIS central bankers’ speeches  1  The financial crisis hastened the pace of these changes. The global economic downturn in the wake of the crisis was marked in many countries and regions. For the OECD area as a whole, GDP fell by 3.5 per cent in 2009. Chart: Growth in 2009 Emerging economies, on the other hand, sustained a high level of activity despite a sharp fall in demand for their exports. As shown in the world map, countries in South-East Asia and some countries in South America and several parts of Africa continued to grow when the rest of the world was struggling with the aftermath of the crisis. To enable poor countries to grow more rapidly, international trade is vital. It allows countries to specialise, while giving them access to goods and services from other countries. But specialisation necessitates readjustment. Over the past decades, western countries have encountered strong competition from low-cost countries, particularly in manufacturing production. As a result, firms, and virtually whole industries, have closed down and new industries have emerged. Norway has also had experience of losing industries that have become commercially non-viable, as when the textile and clothing industry almost completely disappeared in the 1970s. Chart: Current account Imbalances in world trade have built up over the past decade. Large and rising deficits in the US economy have been driven by high consumption and a strong appetite for credit among US households. Consumption has outstripped production in the US for a long period.
SPEECH DATE:  22 November 2018  SPEAKER:  Cecilia Skingsley  VENUE:  SNS finance panel  SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11) Tel +46 8 787 00 00 Fax +46 8 21 05 31 registratorn@riksbank.se www.riksbank.se  Considerations for a cashless future1 Two years have passed since I asked the question of whether the Riksbank should issue digital money – the e-krona. 2 Since then, we at the Riksbank have started an investigation and have been given the opportunity to analyse and discuss the matter from several different angles. Of course, the need to modernise the money issued by the Riksbank is new and is connected to the increased digitalisation of society as a whole. But there are also points in common with older issues such as that of which role central government should play on the payment market. On 28 September 1900, a crowd of bankers gathered in Stockholm to listen to Professor Pontus E. Fahlbeck, a member of the Riksdag (the Swedish parliament). The subject of this meeting was the decision by the Riksdag to give the Riksbank sole right to issue banknotes in Sweden. As from 1904, the commercial banks’ right to issue banknotes would thus come to an end. At the meeting, this reform was denounced as unnecessary, inappropriate and even dangerous. It was not considered possible for the Riksbank, on its own, to be able to provide the ‘means of exchange’ to such an extent as to satisfy the needs of the business sector.

12 Above all in times of financial unease, problems can arise when confidence in the private banks’ money can rapidly collapse. The question is what happens in a financial crisis if confidence in the entire banking sector sinks. Would there be problems if, in the future, it became impossible to switch from commercial bank money to central bank money? Issuing an e-krona is sometimes described as something revolutionary and, in principle, I share this opinion. However, how revolutionary it will be depends, to a great extent, on how the e-krona is designed. If it were to be approximately the same as cash but stored in a card or another physical unit, the consequences for the payment market, monetary policy and the financial system would generally be minor. The more popular the e-krona were to become, the greater the consequences would be, of course: greater competition with depositing in banks and greater risks for the Riksbank’s balance sheet, for example. Careful analysis and calibration is therefore required here. It is also therefore wise to proceed with caution. At the same time, we must stand prepared with a state solution if cash becomes completely marginalised, which could happen quickly. 13 Judicious government intervention in the payment market cannot be consigned to history. In my opinion, the presence of the state will also be needed in the future to allow us to manage the different problems that could arise if state-issued means of payment (banknotes and coins) were to vanish entirely from the payment market.
Housing finance has, as in Sweden, often been an issue of great political interest, which is reflected in all the above factors. Outstanding residential mortgage loans /GDP 1998. Per cent 70 60 50  %  40 30 20  Greece  Italy  France  Spain  Belgium  Portugal  Ireland  Austria  Finland  EU  Germany  Sweden  UK  Netherlands  0  Denmark  10  Sourc e: EMF 1998  It might be thought that standardised financial products such as housing loans should be very suitable for cross-border sales, but cross-border activity has been little to date. This is probably related to the housing loan market being primarily focused on private customers, who are difficult to reach without a local distribution network. It remains to be seen what internet can change in that respect. However,  1  BIS Review 113/1999  why should people not purchase a housing loan on the net, when they now pay bills and carry out other transactions that way. There are already today good possibilities for finding the cheapest housing loan on the market via internet, so technology will certainly increase transparency and competition even within the traditional more inert private sector. We are far from the time when Swedish house owners waited respectfully for years to move their building credit at the bank to a real five-year loan at a housing loan institution.

If now EMU leads to increased competition in the housing loan market, which should be an effect of monetary union, there will also be an expanded need to finance housing loans in way that is economical with capital. It is not unreasonable to believe that securitisation in this perspective will attract increasing interest. Increased competition can accordingly drive forward a growing market for securitisation. However, the causal connection can also be the opposite, namely that improved opportunities for securitisation will increase competition. This is the experience in Australia, where the housing loan market was deregulated in the 1990s. A legislation that facilitates securitisation reduced the previously high entry barriers which existed in the market, cleared the way for new players and reduced costs for the housing loan customers – in fact by as much as a couple of percentage points. Some conclusions Taken as a whole, we seem to be moving towards greater competition in the housing finance sector. New financing forms, new technology and possible EMU membership are driving factors that will together reduce entry barriers and thus increase competition. Since housing loans are standardised products, it is above all price which is the means of competition. The financing issues will thus be at the centre of interest. The traditional Swedish form for housing finance where the entire balance sheet constitutes one body of collateral has many advantages. It is possible that the investors’ demands for collateral in the form of equity may gradually make this form too expensive.
As prepared for delivery  Good afternoon, everyone. When I give a closing keynote I try to bear in mind that you’ve been listening for hours to complex and technical material. I wish I could say that I’m here to offer some light relief, but, alas, no. The topic I’m going to address this afternoon is both complex and technical. It’s the recent turmoil in the repo markets and the Fed’s actions to address it. I’m going to start by laying out the Fed’s operating framework for carrying out monetary policy. This will take me into aspects of the “plumbing” of the financial system, which may seem like an esoteric topic to many, but it’s one of critical importance, so please bear with me. I will then go over the money market turmoil from a month ago that led the New York Fed to conduct open market operations to stabilize short-term interest rates. I’ll conclude by describing the path forward as laid out in the Fed announcements this past Friday.1 Before I go any further, I should give the standard Fed disclaimer that the views I express today are mine alone and do not necessarily reflect those of the Federal Open Market Committee or others in the Federal Reserve System. Monetary Policy, Interest Rates, and Ample Reserves As a prelude, it’s worthwhile to step back and remember how this all connects to the Fed’s overarching monetary policy goals. The Federal Reserve has two goals set by Congress: maximum employment and price stability.

My message to you is: Don’t let last month’s temporary spike in SOFR, or hope for the creation of some other replacement reference rate, become an excuse for delaying your transition away from LIBOR. I’ve said it before and I’ll say it again: like death and taxes, the end of LIBOR is unavoidable, and we must do all that it takes to prepare for a LIBOR-less future.9 And the existence of LIBOR is only guaranteed for another 807 days.10 Conclusion I’ve talked through a lot of important issues this afternoon, and I greatly appreciate your attention. The events I’ve described are an apt reminder of the importance of well-functioning financial markets and the vital role the Federal Reserve plays in providing liquidity. They are also a demonstration of our ability to act swiftly and effectively to execute our monetary policy implementation goals and keep the federal funds rate within in the target range. Thank you. 1 Board of Governors of the Federal Reserve System, Statement Regarding Monetary  Policy Implementation, October 11, 2019; Federal Reserve Bank of New York, Statement Regarding Treasury Bill Purchases and Repurchase Operations, October 11, 2019. 2 Board of Governors of the Federal Reserve System, Statement Regarding Monetary  Policy Implementation, October 11, 2019. 3 Board of Governors of the Federal Reserve System, Statement Regarding Monetary  Policy Implementation and Balance Sheet Normalization, January 30, 2019. Further details were announced in Board of Governors of the Federal Reserve System, Balance Sheet Normalization Principles and Plans, March 20, 2019.
In this regard, I welcome the recent compromise as part of the trialogue process on the transposition of Basel III into EU law and I hope it will now be formally adopted as quickly as possible. Moreover, we await the next US package with great interest. An astute observer might object: why did Credit Suisse fail if it met the Basel requirements? The answer is simple: while good regulation is necessary, it is never sufficient. A Highway Code - regulations -, even the best one in the world, will only be effectively enforced if the traffic police - supervisors - are efficient. This proactive supervision is one of the great successes of our European Banking Union. As part of this proactive supervision, we will obviously continue to keep a close eye on the risks affecting the financial sector. We just published our Assessment of risks to the French financial system at the end of June ii and it reiterates our confidence in the solidity of French banks. Nevertheless, we will continue to be even more vigilant to the risk of a disorderly market correction which could affect non-bank players most exposed to leverage and liquidity risk. The second reminder came in the crypto-asset sphere with the "crypto winter" punctuated by a long series of shocks: the collapse of Terra-Luna, the failure of FTX, and the legal proceedings taken against Binance and CoinBase in the United States. Europe was a pioneer in this area by adopting MiCA regulation.

Christian Noyer: No moral hazard – the banks are doing their job Comment by Mr Christian Noyer, Governor of the Bank of France, in the Financial Times, 18 September 2007. *  *  *  In recent weeks, Central Banks in Europe and the US have acted repeatedly to provide liquidity to interbank money markets. These interventions have raised some questions. Concerns were expressed that monetary authorities were bailing out speculators, thus creating the same kind of moral hazard that may have led to excesses in the past. There were also concerns as to whether the integrity of monetary policy would be compromised. These are valid questions. On numerous occasions, in the past, we pointed out the potential dangers that mispricing of credit risk posed for financial stability. We may be now seeing some of the consequences. Excessive risks were taken, and losses will have to be accepted. It is important that monetary and financial authorities take no action that would prevent this process from running its course, let alone be seeing to be condoning past or future excesses. However, the logic behind recent interventions is different. Put very simply, financial turbulence and uncertainty have suddenly triggered an upward shift in the demand for Central Bank money. Faced with such a shift, whose direction is apparent but amplitude uncertain, the choice, for monetary authorities, is clear: either accommodate, and provide temporary liquidity; or not, in which case, interest rates would have to rise to restore balance in the interbank market.