samchain/econo-pairs-v1 huggingface dataset:
Several reports have made the case for rethinking local economic policies, including Michael Jacobs’ work as part of the IPPR Commission on Economic Justice.1 The Government has put “place” centre-stage in its own policy agenda.2 I discuss ways in which analytical techniques and data might help in shaping those policy choices. Some areas of public policy can only operate at the national rather than local level, such as monetary policy. Even then, however, a local perspective can be important for better understanding the economic issues people face and for building understanding and trust among those people. That is why the Bank of England has recently augmented its own local initiatives, as I will discuss. Other central banks are following suit. 1 2  IPPR Commission on Economic Justice (2018). See also Collier (2018). Department for Business, Energy and Industrial Strategy (2017). 2  All speeches are available online at www.bankofengland.co.uk/speeches  2  In his recent book, Raghu Rajan blames neglect of the Third Pillar of society – community – relative to the market and the state (the first two pillars) for rising societal disconnection and mistrust.3 Rajan is right. Economic policymakers, including central banks, have a pivotal role to play in resurrecting that Third Pillar, in making economic policy local, to better support our economies and societies. Here is how. Mapping the Economy  Let me begin with some simple mapping of the economy. The most widely-used metric of economic success is Gross Domestic Product (GDP).

Importantly, it improves the decisions they make, nationally and locally, governments and citizens. Weather is by no means a unique example. Micro-level data, digital twins and massive-scale simulations are being used to better understand all manner of other systems at all manner of resolutions – from the sub-atomic scale when seeking the Higgs-Boson, to the global scale when modelling flows across oceans, the world wide web and galaxies. All have benefitted from drawing on mass micro-level data, crowd-  sourced, centrally-stitched, micro-to-macro. Until recently, fewer such high-resolution data existed when it came to tracking flows of goods and services, people and money through our economy. That is changing. These data increasingly exist in companies, whose management systems capture activity in close to real time. They exist through now-ubiquitous  sensor, camera and satellite technology. And they exist in governments, local and central, in the form of administrative data on people, goods and money flows. Increasingly, these data are being put to use to understand the economy.40 In the UK, the Office for National Statistics recently started publishing a range of high frequency economic indicators, based on such sources as administrative data on VAT returns and geospatial data on traffic flows. The Bank has made increasing use of these sorts of data in its own real-time assessment of the economy. Let me give a couple of examples. One topic attracting attention recently has been the economic consequences of a disruptive Brexit.
Anita Angelovska Bezhoska: Address – Ministerial Dialogue on the Economic Reform Programmes of the Candidate Countries Speech (via video conference) by Ms Anita Angelovska Bezhoska, Governor of the National Bank of the Republic of North Macedonia, at the Ministerial Dialogue on the Economic Reform Programmes of the Candidate Countries, Brussels-Skopje, 12 July 2021. *** Dear Ministers, representatives of the European Commission, the ECB and Eurostat, It is a great pleasure to be part of this dialogue. It serves as a foundation for important multilateral discussions and accentuates our mutual consensus on the importance of candidate countries to become fully fledged member states. It is for the second time that we meet virtually, an unambiguous reminder that the storm is not over, but fortunately, we are navigating through it on a stronger footing and with greater knowledge than it was the case a year ago. The flattening of the health curve globally inevitably prompted flattening of the recession curve as well. Similar is the state of the Macedonian economy, which has been heading for a recovery. The fast restoration of the global supply chains provided strong and fast impetus to the export sector. Despite the worries for lasting scarring on consumption due to risk aversion and worries on contagion, as the containment measures were lifted, consumers adjusted their behavior swiftly and boosted demand. The recovery has been underpinned by strong, prolonged and well-coordinated accommodative macroeconomic policy mix.

Our policy rate is still in a positive territory at a level of 1.25%, alternative instruments are available for targeted actions, the level of foreign reserves remains comfortable and the banking system stable with NPLs ratio of only 3.4%, despite the pandemics shock and closure of a bank in the midst of the pandemics. Of course we have to be vigilant, and not only of conventional side effects of "too loose for too long" stance, but also of the possible adverse feedback  1/2  BIS - Central bankers' speeches  loop between real and financial sector, as well as of the so called "zombification" risk. As complacency is not an option, shielding against those risks asks for further strengthening of the financial safety net, which will remain one of our priorities. Thus, although still overwhelmed with the current challenges and the need for further policy support, we must not remain oblivious to the pre – pandemic strivings to increase the potential to grow faster, but in a sustainable and inclusive way. This requires gradual shifting of the focus back to the pre-crisis structural bottlenecks such as the quality of institutions, strengthening the rule of law, investing in human capital and in the potential to innovate, as well as to new structural hurdles that will be left as a legacy of the pandemics, which might not be even well known at the current juncture. Clearly, we as central banks cannot play a main role in these segments, but perhaps a supporting one.
Instead, insurers must be aligned to the broad diversity of consumer needs and preferences, while also being flexible to adapt as these needs and preferences change over time. Such a market will see the emergence of a diversity of business models from multi-channel strategies to specialised players focused on single channels such as direct marketing, financial advisers or bancassurance. Still others will realise the fortune at the bottom of the pyramid 10 through microinsurance. Specialisation is also expected to occur along the supply chain with new players, including from noninsurance sectors such as retailers, adding greater value with innovations in areas ranging from branding and marketing to data enrichment. 6  International Telecommunication Union- ICT Facts and Figures 2013. 7  Nielsen quoted by Media Research. 8  Swiss Re- Sigma No.6/2013 Life insurance: focusing on the consumer. 9  Based on the target set under the Economic Transformation Programme (ETP). 10  C.K. Prahalad “Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits”. 2  BIS central bankers’ speeches  Bancassurance, financial advisers and direct channels While the possibilities for alternative distribution channels are extensive, I will address three areas that are already showing great promise for our markets here in Asia, namely: bancassurance, financial advisers and direct channels. Bancassurance presents a unique proposition for insurers to widen their outreach while maintaining acquisition costs at manageable levels.

The job the FPC has been given in the aftermath is to avoid another avoidable disaster. And real progress has been made. Through new capital requirements the banking system now has the resilience to absorb even a repeat of the 2008 recession, without causing serious economic damage. And with the help of this work, we can stay agile as debt evolves so we can ensure the resilience of the system keeps pace with the underlying vulnerability in the economy. That’s not to say we will be slaves to any particular approach. No single model can capture everything. The point is that we have a benchmark for our assessment, ensuring continuity and discipline in our approach. To that benchmark, we can apply judgements. 12  All speeches are available online at www.bankofengland.co.uk/news/speeches  12  A pocket of risk In that regard, we’re watching closely what’s happening in corporate debt. Although, as we’ve seen, the aggregate picture looks fairly benign, a more concerning development hides underneath. We have just been through a period of rapid growth of one type of corporate lending: leveraged lending.
The result can be disruption to the financial intermediation function with resulting constraints on the availability of credit for households and businesses. This, in turn, can lead to further reductions in aggregate demand that put additional stress on the weakened financial system. Obviously, this is not a favorable dynamic. Financial instability can impact the conduct of monetary policy via three major channels. First, financial instability can generate a sufficiently large shock to aggregate demand that the central bank may encounter the zero lower bound constraint – the constraint that the monetary policy instrument, for example, the federal funds rate – cannot easily be pushed below zero. In such circumstances, it may not be easy to fully offset the shock through the pursuit of a more stimulative monetary policy. At the zero bound, the central bank is not powerless, and may turn to other monetary policy tools such as forward guidance and large scale asset purchases. But these tools may not be as effective as lowering the short-term rate instrument. In particular, the central bank may not be willing to use these nonconventional tools to the full extent necessary to provide the same degree of stimulus as it would provide if it could set interest rates at negative levels. That might be because of uncertainty about how nonconventional tools will work or because of the potential costs associated with the use of such tools in terms of market functioning and the risks of future financial instability.

William C Dudley: Why financial stability is a necessary prerequisite for an effective monetary policy Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York and Chairman of the Committee on the Global Financial System (CGFS), at the Andrew Crockett Memorial Lecture, Bank for International Settlements 2013 Annual General Meeting, Basel, 23 June 2013. *  *  *  This panel is entitled Monetary Policy and Banking.1 That takes in a lot of territory. Rather than try to cover the waterfront, I am going to start with a single premise: Financial stability is a necessary prerequisite for an effective monetary policy. There is a critical chain of linkages from monetary policy to banking and onwards to the real economy. Financial stability is a necessary condition for those linkages to operate effectively. Thus, it is a necessary condition for monetary policy to be able to achieve its economic objectives. I will then outline briefly what I see as some of the major implications that stem from that premise. These include that the central bank has a major role to play in ensuring financial stability and should evaluate the stance of monetary policy in light of problems in the financial system that may impair the monetary policy transmission mechanism.2 In my mind, the biggest lesson of the financial crisis has been that monetary policy cannot work properly when there is financial instability. When financial instability occurs, it disturbs market functioning and can also impair bank balance sheets.
In addition, these issues are garnering considerable attention internationally at present, including in the wake of a report by the Eminent Persons Group, requested by the G20 and presented in October 2018. In that report, it is recommended that the IMF revisit the IV and make it more flexible as regards CFMs like that currently in use in Iceland. 6  Honoured guests: I had not originally intended to speak at such length on economic developments and prospects and monetary policy conduct, but public discourse over the past few days changed that. I also intended to discuss other changes that, in the long run, could be much more important than whether interest rates are currently a few basis points higher or lower. These changes fall into two categories. First are the changes that could take place following the Ministerial Committee’s decision this autumn to commence work to improve the interactions between monetary policy and financial stability policy and to strengthen the framework and architecture of macroprudential policy and financial supervision. Second are the changes in payment intermediation caused by technological advances, among other factors — which, for example, have put the question of a possible electronic króna, or rafkróna, on the agenda. I have high hopes for these changes. But discussions of them must await another occasion. 7

The ASEAN+3 member countries have already taken steps to multilateralise the Chiang Mai Initiative towards a more advanced and robust framework for the effective pooling and utilisation of liquidity support in the region. The bilateral relationship between Malaysia and Korea Malaysia’s economic relationship with Korea is very much part of this integration process in Asia. The bilateral trade and investment relationships between Korea and Malaysia over the recent years has continued to increase with trade now averaging RM45 billion per annum. Both countries have already benefited from the growing production networks within the region as well as from the numerous trade and investment opportunities from an increasingly open and liberal business environment. Investment linkages, though still relatively modest, have been on an upward trend since 2006. Korean investment in Malaysia is predominantly in the manufacturing sector, particularly the electrical and electronics sub-sector. The opportunity for further co-operation in this area is vast. Korea, as a nation known for its knowledge-based and innovative capabilities, can leverage on the liberal investment climate offered by Malaysia to diversify into new growth areas such as green technology and biotechnology. In the area of finance, Malaysia now has a well-developed financial system, with deep capital markets including a comprehensive system of Islamic finance. The Malaysian bond market is the fourth largest in Asia in terms of volume after Japan, China and Korea. More than 55% of the outstanding bonds are Shariah-compliant and the sukuk market is the largest in the world.
Although the cost of bank credit for households and firms and of fixed-income securities issues rose as the single monetary policy adopted a more neutral stance, these costs reached levels which, from a historical perspective, should be classified as moderate. In any event, somewhat less generous financing conditions than those prevailing during the recent period of exceptionally low interest rates are better suited to the circumstances of the Spanish economy. Consequently, they provide some relief following a lengthy phase of high demand pressure, while helping to make our growth pattern healthier. The strength of demand has been met by very favourable elements in the supply-side response. All the productive branches contributed positively to the expansion of output, though mention should be made of the continuing momentum of construction and the notable dynamism of the manufacturing branches, closely linked to the recovery in the European economies. It is worth noting once again the Spanish economy’s continuing high employment-generating capacity, both in 2006 and in early 2007, since this feature is playing a key role in the continuity of this long expansionary cycle. The strong growth of employment in 2006, at a rate of more than 3% for the year on average, contributed decisively to sustaining domestic spending.

Moreover, their information on such risks is abundant, but not systematised, and is fragmentary and limited in depth. It is therefore likely that the risk of financial crises in the future will be less, but it is also possible that, if such crises emerge, they will do so with greater intensity than in the past. The improvements arising from new products and financial agents have enabled institutions to spread risks and dilute the impact that an upward revision of the risk premium might have on their balance sheets. But there is considerable uncertainty about the final destination of financial risk, since this is neither created nor destroyed, only transformed or diluted. The most desirable outcome would be for risk to end up at new institutions that can withstand negative returns in the short term without having to close out positions or cut back risk exposures. If ultimately it is pension funds that are going to retain the risk, concern should be voiced about the mismatch between increasingly sophisticated financial markets that defuse the risk in an optimal fashion and consumers whose financial knowledge has not evolved in step with market sophistication, and who remain rooted in a very elementary financial culture. 6  BIS Review 67/2007  Spanish credit institutions, with a traditional business model based on long-term relationships with retail customers, are more sheltered from this complexity than other international banks that are more active on financial markets and have deeper interactions with the markets.
This Summit indeed provides an opportunity for bankers and the private sector to discuss the issues facing the banking industry. It is now just over a year since the release of the Financial Sector Masterplan. It is therefore also a good time to undertake stock taking. Today, I would like to take the opportunity to discuss the progress that has been achieved over the recent year. I would also like to discuss some of the critical issues in the strategies that are being adopted by the banking institutions in charting their strategic course to enhance capacity and capability to achieve improved effectiveness and competitiveness. During the period of slower economic growth in 2001, following the global downturn in the technology sector, the banking sector clearly demonstrated its resilience and underlying strength. During this period, domestic sources of growth was important in sustaining the economy. Access to financing in this environment was therefore particularly important. The strengthened position of the banking sector in terms of quality of portfolio, capitalisation and profitability enabled them to continue to perform their intermediation function without disruption. The banking sector generally remained profitable and financially sound during this period. At the end of this first quarter, the risk weighted capital ratio was sustained at 12.5%. Profitability of the banking industry had also continued for the third consecutive year since the Asian crisis.

With the completion of the merger programme in December 2000, the banking groups are at various stages in building up their management team and enhancing corporate governance. A number of measures have been implemented to ensure that banking institutions’ Boards and key committees have sufficient representation of independent directors and that the Boards are encouraged to appoint qualified professionals to run the banks. Towards this end, Bank Negara has liberalised the remuneration package of the chief executive officers of banking institutions and left it to the Boards to formulate appropriate packages to attract the necessary talent and determine their remuneration package. In the final analysis, a more competitive banking system should produce benefits to their customers and the business in terms of easy access, quality choices and competitive prices. An indicator of the improved level of competitiveness has been the narrowing of margins. During the year 2001, gross interest margins of banking institutions have narrowed to 3.86% for the commercial banks from 4.3%. This reflected the larger reduction in the average lending rate vis a vis the average cost of funds. Competitive interest rates were particularly evident for mortgage and hire purchase loans reflecting strong demand for credit for these sectors. The competitiveness of the domestic banks in terms of the gross interest margin has also improved. The gap between the domestic banks and foreign banks has narrowed from 0.92 percentage points as at the beginning of year 2000 to 0.69 percentage points as at the end of 2001.
Qualitative survey balances can be adjusted to match the mean and variance of an estimated productivity gap from which inference about productivity may be drawn. See Charts 3.7 and 3.8 in the August 2011 Inflation Report. 9  Potential productivity is constructed using the BCC surveys of capacity utilisation and productivity data from the ONS for the manufacturing sector and private services excluding finance sector. The BCC survey asks firms whether they are operating at or below full capacity. Since the survey measures are qualitative, they have been mean and variance adjusted over the period 1989 to 2006 to infer a measure of the gap between actual and potential productivity. The trends shown in charts 5 and 6 are chosen such that the shortfall between actual and potential productivity maps closely to the mean-and-variance-adjusted survey measures of spare capacity. 10  The annual flow of business investment prior to the recession averaged around 7% of the UK capital stock. A 20% reduction in business investment for 5 years would result in the capital stock being only around 2% lower (assuming plausible assumptions for the rate of depreciation). 4  BIS central bankers’ speeches  It is possible that this simple arithmetic underestimates the impact of the falls in investment spending, particularly if the falls were concentrated in highly-productive forms of investment. Perhaps because in the face of the deep recession companies were less willing to undertake riskier, high-return investment projects, and the constraints on UK banks made them less willing to finance them.

And some of it may be because our sights were set too high based on past trends. But I also think there are good reasons to think that the recession, and particularly the impact of the financial crisis, may have dampened underlying productivity growth in recent years. At the risk of stating the bleeding obvious, we need the banks to be working for our economy to grow and prosper. Productivity and monetary policy Why does all this matter for monetary policy? The medium-term outlook for inflation depends critically on the balance of demand and supply in the economy. If demand is greater than the goods and services that can be supplied, prices will tend to rise. And vice versa. As such, when setting monetary policy, the MPC needs to make an assessment about current and future trends in supply, as well as demand. The discussions about economic growth we typically read about in newspapers and see on TV are normally posed in terms of demand. Is gloom on the high street spreading? Claims and counter-claims about the likely impact of the fiscal consolidation. But the MPC also needs to consider the prospects for supply. How quickly is the capital stock likely to grow? And, importantly, will the recent weakness in productivity persist or reverse? Typically, the growth rates of factors determining the supply potential of our economy – population, the capital stock, structural productivity – are far less volatile than those of demand.