samchain/econo-pairs-v1 huggingface dataset:
Conclusion In summary, I would like to say that, even if there are factors suggesting that the significance of the exchange rate should not be exaggerated, it is my opinion that it should be considered in monetary policy decisions. Recently, the development of the exchange rate has been an important reason for the reservations I have entered against monetary policy decisions. The Swedish economy grew very strongly during 2010, but this should be seen in the light of the very steep fall that started in 2008 and continued in 2009. My assessment is that there are still relatively many unutilised resources in the Swedish economy and that both resource utilisation and inflationary pressures will continue to be lower than normal over large parts of the Riksbank’s forecast period. Contributing to this is the fact that the krona has (nominally) strengthened by about 10 per cent over the last year, which is more than was previously expected. As a stronger krona dampens both inflationary pressures and resource utilisation, I believe that a lower repo rate path than that decided upon would lead to better target fulfilment. References Campa, J. M. and Goldberg, L. S. (2005), “Exchange Rate Pass-through into Import Prices”, Review of Economics and Statistics 87, 679–690. Chinn, M. D. and Meredith, G. (2004), “Monetary Policy and Long-Horizon Uncovered Interest Parity”, IMF Staff Papers 51, 409–430. Ekholm, K. (2010), “Monetary policy and the exchange rate”, speech at HQ Bank, Stockholm 12 January 2010.

My view has been that the further appreciation of the Swedish krona has risked leading to impaired target fulfilment, and this has been the motivation behind my stance in favour of a lower repo rate path than that decided upon. Am I not concerned that a lower repo rate path would lead to excessive inflation, considering how inflation has increased recently due to higher energy and commodity prices? It remains to be seen how permanent these increases will be. In our most recent forecast, which assumed the stabilisation of these prices, underlying inflation, even in the main scenario, was estimated at less than 2 per cent for most of the forecast period (see Figure 2). On the basis of this forecast, there is thus scope for a more expansionary monetary policy. One matter that I intend to address at the next monetary policy decision is the wide gap between CPI inflation and CPIF inflation that we saw in January and February. This gap is partly due to a detail, related to mortgage costs, in the calculation method used, which also results in higher CPI inflation over the rest of the year than was forecast in the monetary policy report in February. However, in my opinion, the underlying inflationary pressure in the economy is still low, which, for example, is reflected by the low outcome for CPIF inflation. 2  BIS central bankers’ speeches  Monetary policy has to be forward-looking, as its influence on the economy is subject to a time-lag.
They might fix against the dollar but choose to hold at least a portion of their reserves in other major currencies. Since the advent of the euro, the dollar is no longer the only credible reserve currency. How do these features of the international monetary system affect the risks associated with today’s imbalances? Financial globalisation has relaxed the constraints on countries in financing their savings investment imbalances, thus allowing larger imbalances to be sustained for longer. This is in principle welcome in so far as it permits more efficient adjustment over time, and smoothes the impact of economic shocks on real activity and consumption. But it also poses major new challenges for creditors and debtors, both public and private sector. The reason is that the price at which the market is willing to finance imbalances depends on investors’ expectations about the future. This means that debtors in today’s world face much greater uncertainty about when credit constraints will begin to tighten. So there is always a risk that a reassessment of the economic prospects of a debtor country might lead to a rise in external financing costs. But there is considerable uncertainty about whether – and when – such a reassessment might occur. 2  BIS Review 3/2006  This uncertainty is particularly acute in the case of the US. Its dominant position in the world economy, its huge balance sheet and its reserve currency status make it special in a number of ways.

Michael Held: SOFR and the transition from LIBOR Remarks by Mr Michael Held, Executive Vice President of the Legal Group of the Federal Reserve Bank of New York, at the SIFMA C&L Society February Luncheon, New York City, 26 February 2019. * * * As prepared for delivery Thank you for that kind introduction, and for the opportunity to speak to you all today. As always, my remarks reflect my own views and not necessarily those of the Federal Reserve Bank of New York or the Federal Reserve System.1 When I was thinking about what to talk about today, I recalled how everybody’s favorite question at these kinds of events is, “What keeps you up at night?” Of course, at the top of my own list is whether my daughter is going to get into a good kindergarten in Brooklyn. But not far below that is reference rate reform. Today I’ll keep the former to myself, and speak instead about reference rates. It’s not just me who’s concerned. The Securities Industry and Financial Markets Association (SIFMA) named reference rate transition from the London Interbank Offered Rate (LIBOR) to its alternatives as one of two leading fixed-income market developments for 2019.2 And the Financial Stability Oversight Council (FSOC) has repeatedly identified reference rate transition as a financial stability risk.3 Today I’d like to give you an update on the state of that transition. Here’s the preview: The task is immense. But it is not insurmountable. Much work has been accomplished, and much work remains.
This would further reduce default probabilities among the biggest banks, thereby lowering the expected system-wide losses associated with big bank failure. Taking the earlier illustrative example, to reduce materially expected system-wide losses for the world’s largest banks would require a capital surcharge several times larger than its current upper limit. Interestingly, this would take bank capital ratios to levels not dissimilar to recent quantitative estimates of their optimal value (Miles et al (2011), Hellwig et al (2011)). Placing limits on bank size is a second option. By reducing balance sheet exposures, this measure would reduce directly system-wide losses in the event of big bank failure. The Dodd-Frank Act includes an explicit limit on the maximum deposit market share of US banks, capping it at 10%. But this does not prevent banks rising to a scale, relative to GDP, at which they could imperil state solvency. For that reason, limiting bank size relative to GDP has recently been proposed by a number of commentators and policymakers (Fisher (2011), Hoenig (2012), Johnson and Kwak (2010)), Tarullo (2012)). Full structural separation of investment and commercial banking, a modern-day GlassSteagall Act, has continued to attract support. The main benefit this would bring, relative to structural ring-fencing, is that it would eliminate loopholes from the ring-fence and better ensure that the distinct cultures of retail and investment banking were not crosscontaminated. That would lessen the risk of basic banking activities being starved of human or financial capital, both ahead of and during crisis.

The practical question is how far systemic surcharges take us in tackling the systemic risk externality. In other words, at current levels by how much have systemic surcharges reduced  BIS central bankers’ speeches  3  expected losses for the financial system? That is an empirical question. To assess it, consider the impact of capital surcharges on the expected losses facing the 29 institutions identified by the FSB. Using each of these banks’ balance sheets, we generate a measure of default probability using the Merton (1974) contingent claims model. We assume that the base level of equity for these banks is 7% (the new Basel III minimum) and that, in the event of default, they suffer losses on their assets of around 30%.4 To keep things simple, banks’ assets are assumed to be (log-)normally distributed, in line with Merton (1974), and default occurs only when a bank’s capital is fully exhausted. Assume initially that default risks across banks are independent. This is a highly conservative assumption, as in practice bank default probabilities are highly correlated at times of stress. Indeed, bank correlation coefficients in crisis often head towards one. For that reason, this thought-experiment provides a lower bound on expected losses across the financial system. Chart 5 shows expected losses across the 29 banks at different levels of the systemic surcharge. In the absence of any surcharge, expected losses across the system are just less than $ billion per year.
Unemployment would be materially higher and nominal wage growth materially lower. Ultimately, this reflects what is known as the “neutrality” of monetary policy: in the long run it has no impact on real economic variables (things like real output or relative prices). It can’t boost structural productivity, for example. Nor can it offset the consequences for real incomes of (say) disruptions to supply chains in Asia or Russia’s curtailment of the supply of gas to Europe. Indeed, in the first instance, at least for a period of time, tighter monetary policy lowers GDP and real incomes. I will say more about this shortly. For the time being, a better short-hand description is this: the pandemic and the war have led jointly to higher inflation and lower real incomes; the MPC will ensure the inflationary effects do not persist into the medium term; but the real-income hit exists either way, and will be reversed only to the extent the underlying shocks themselves go away. The second point I want to make is that we are inevitably having to learn, to some degree, about the scale of these “second-round” effects. The MPC has raised interest rates faster than at any time in its history but obviously more gradually than inflation itself. In the main, this is because the direct effects of the jumps in traded goods and energy prices, as violent  Bank of England  Page 6  as they are, are likely to fade before policy could really do much about them.

Since the beginning of 2013, Spain has experienced a decrease in its unemployment rate of some 6 percentage points and Spanish growth is nowadays one of the main drivers of the European recovery. Contrary to preconceptions, France has also demonstrated in the past its capacity to meet the challenge of economic and social reform. In the 1990s, to prepare for the introduction of the euro, France pursued a competitive disinflation policy that proved highly effective. Remember that in the late 1990s, France experienced the highest GDP growth and the weakest inflation rate among European countries, along with a significant fall in its unemployment rate. Today, French reforms are heading in the right direction, [Slide 5] in particular the tax credit for competitiveness and investment (CICE) and the Responsibility and Solidarity Pact (RSP) that enhance the competitive strength of the French economy. A policy of administrative simplification, the so-called ‘simplification shock’, and a new law to sustain economic growth and entrepreneurship (‘loi Macron’), are also being conducted in order to rebuild business confidence. However, we are not there yet and a number of reforms need to be complemented. In particular, in the labour market: hopefully renewed progress will be made with the draft law under discussion in Parliament. Finally, in the euro area, fiscal policy is now more balanced since significant adjustment has already been achieved. Structural efforts and a growth recovery have led to a reduction in deficits and to a stabilisation in the ratio of debt to GDP.
This cooperation within Secure Pay has already delivered important results: two sets of recommendations have been issued so far, concerning the security of internet payments in 2013, with an expected compliance of the market by February 2015, and the security of mobile payments in 2014, with recommendations currently being finalized. The final text of the recommendations concerning the security of payment account access service has also been published for information in May 2014 and shared with the EBA, in light of the ongoing revision of the Payment Services Directive. The fact that the European legislator has taken into account large parts of the Secure Pay forum’s recommendations in the review of the Payment Services Directive is for me the proof of the quality of the works led by the forum. I particularly welcome the integration of strong customer authentication in the revised text of the directive, which clearly constitutes a major progress in the security of retail payments. Secure Pay has recently undergone a significant governance change, and will in the future be co-chaired by the European Banking Authority and the European Central Bank. This should further increase cooperation between the oversight and supervision institutions and ease the implementation of recommendations. To conclude – and I will finish there –, I would like to underline how topical this conference is.

The expansionary fiscal policy is contributing to a strong development of household disposable income in the coming years, providing a basis for higher private consumption as well as increased saving. Exports rise during the forecast period but the increase is relatively modest both on account of the international upswing being tentative initially and because the krona is expected to appreciate. GDP growth is judged to be 1.6 per cent this year and then accelerate to between 2.5 and 3 per cent in the coming years, which as fare as can be judged is somewhat more than the Swedish economy can sustain in the longer run without giving rise to inflationary tensions. With the high resource utilisation, labour costs are judged to rise somewhat more than we foresaw in the December Report. Partly for this reason, domestic inflation in the forecast period is somewhat higher than foreseen earlier. CPI inflation stops at 2.2 per cent one year ahead and 2.4 per cent after two years. The corresponding forecast for inflation’s underlying rate, UND1X, is 2.2 per cent both one and two years ahead. Monetary policy focuses in the first place on the latter rate. In this price forecast, the supply shocks that are now leaving their mark on inflation are judged to drop out of the twelve-month change figures successively during the late spring. Inflation is accordingly expected to approach 2 per cent in the early summer.
In 1759, in his work Theory of Moral Sentiments, Adam Smith wrote that institutions are the framework  BIS central bankers’ speeches  1  However, in and of themselves, institutions are insufficient to ensure progress – the key is whether they are strong or weak.5 This is also the starting point for Daron Acemoglu and James Robinson’s book Why Nations Fail.6 They introduced the concepts inclusive and extractive institutions.7 •  Inclusive institutions do not forget why they exist: they remember that their purpose is to serve the people, as the term “public servant” aptly illustrates. A well functioning constitutional state makes cooperation and transactions simpler and cheaper. •  Extractive institutions, on the other hand, are found in countries where rulers govern without notable opposition, where the judicial system is not fair, and where rights are not equal for all. The authors refer to several examples where people groups with identical backgrounds and access to the same natural resources have developed differently because of institutional differences.8  for progress. Good institutions promote confidence and thereby efficiency in society. The Norwegian American Thorstein Veblen, 115 years ago, described institutions as the building blocks of economic development (see The Theory of the Leisure Class: An Economic Study of Institutions). In newer Norwegian research, Halvor Mehlum, Kalle Moene and Ragnar Torvik have documented that institutions determine whether a country will manage to utilise discovered resources (see “Institutions and the Resource Curse”, The Economic Journal 116, pp. 1–20).

•  The facts therefore served as a stark reminder that self-regulation just doesn’t work, primarily because of the imperfections in certain financial markets, which are neither transparent nor efficient (like the CDS market for example) and can generate potentially huge negative externalities. Thus, regulation and supervision were once again elevated to their rightful role after the crisis – a role they should never have lost. By way of an aside, I note that the crisis was triggered in the United States by unregulated entities (conduits) or banks that weren’t applying Basel 2 requirements (investment banks which theoretically were regulated by the SEC). By contrast, French banks for example, where supervision was at times branded “intrusive”, managed on the whole to get through the different phases of the crisis relatively unscathed. ii)  What rules should apply to finance? •  Once a consensus had been reached over the need to reinforce financial regulation and supervision, the next question was naturally: what kind of regulation? •  The principle that guided the regulators, notably on the Basel Committee, was that finance should once again be made useful to the economy: that it should serve the economy rather than govern it.
There seems to be a consensus among European authorities and market participants that simple, standard and transparent securitisations should have a beneficial regulatory treatment. Speed is now warranted, also given the recent ECB announcement of an ABS purchase programme, so as to decisively eradicate regulatory uncertainty. This recent ECB announcement on the launch of an ABS purchase programme, although decided taking into account monetary policy considerations, is also a game changer in the reactivation of the ABS market. It reduces the stigma carried from the aftermath of the financial crisis and it contributes decisively to put securitisation in the policy agenda. The inclusion of mezzanine tranches in the programme can effectively result in capital relief for originators. Also, the existence of a European guarantee scheme (possibly using European funds and with involvement of a supranational institution like the EIB/EIF group) to help originators achieve a significant risk transfer at an affordable price can be justified under the current adverse market conditions. It is also important to stress that the focus on ABS based on SME loans may be counterproductive. ABS based on residential mortgages represent the bulk of ABS issuance while capital relief associated with sales of these ABS has also the potential to generate new SME loans. The above steps depend on us as policy-makers. But one should not forget what depends less on us but can have a great impact on the securitisation market. I am talking about rating agencies.

What she wants now is an explanation for how and why we have come to this pass, and she wants to know how to translate that explanation into recommendations”. When I read this sentence (maybe in part because of the “she” used by Professor Dasgupta), I recognized myself. I am not an ecological expert, I am just “a concerned citizen” who does her best to understand what is happening and what I could do in my current position. So please allow me, as a non-expert, to adventure myself into three lines of thought today: -  (i) what scientist tell us about the current situation of the biosphere;  -  (ii) what this means for central bankers and supervisors;  -  (iii) and what may be required to address the situation. The situation is challenging, to say the least. Urgent action is needed. 1  Page 2 sur 12 1. Welcome to the Anthropocene: from climate change to biodiversity loss,  and  toward  a  comprehensive  assessment  of  our  interconnected ecological crises The scientific evidence tells us that while a lot of focus has been on climate change in recent years, it is only the “tip of the iceberg”, to quote a famous study by Will Steffen and co-authors.ii Other risks exist that are not only higher than climate change but also interact with it.
We cannot accept this assault on democratic systems and values and on the security of the European continent. Economic prosperity is, and will continue to be, built on the foundations of democracy and security. These values are the bedrock of open economies and financial systems, and Russia has betrayed them. The Russian shock is now the largest contributor to UK inflation by some way. There is an economic cost to the war, and we all have to recognise that, but at the Bank it will not deflect us from setting monetary policy to bring inflation back to the 2% target. The last disturbance is a domestic one. The UK labour force has shrunk over the last two years, and this is contributing to inflationary pressure due to the difficulty of recruiting. It is important to understand exactly why the labour force has shrunk, why inactivity – those not working and not seeking to – has risen, and of course what we might expect to see in the future. Have more people retired than was expected, has long-term illness risen permanently, and how many people may return to the labour force and over what time? A one percentage point reduction in the labour force may not sound much, but with a working-age population of around 40 million it is a lot of people. With such numbers, the shrinkage in the labour market adds an inflationary impulse on top of energy and international goods prices.

30 November 2017  Speech on the 60th Anniversary of the National Association of Specialised Lending Institutions (ASNEF) Luis M. Linde Governor  Good evening everyone. It is a pleasure for me to take part in this celebration of the 60th anniversary of the National Association of Specialised Lending Institutions. As your president, Fernando Casero, has just mentioned, throughout its history your Association has played a very important role in promoting and enhancing consumer lending, which is a key factor in driving economic growth. Indeed, consumer lending has a series of characteristics that make it especially relevant both for the financial system and economic activity. On the one hand, it is highly cyclical and is, therefore, a leading indicator of confidence among both consumers and financial institutions. On the other, it generally leads the way in terms of adaptation to innovation. As is well known, in the past consumer lending played an important part in the expansion of credit cards, and more recently it has been at the forefront of the incorporation of new technologies. In the expansionary phase that began after 2000, consumer lending grew rapidly in Spain, reaching a balance outstanding of € billion in mid-2008. The financial crisis reduced these figures, down to almost half that amount by early 2015. Since then, in keeping with the economic recovery, consumer lending has been very dynamic.