samchain/econo-pairs-v1 huggingface dataset:
In Norway, the government used covered bonds in a swap arrangement that was in operation between November 2008 and October 2009.9 The swap arrangement was a response to banks’ substantially weaker access to long-term funding after the Lehman Brothers bankruptcy. The arrangement dampened the effect of high risk premiums in the market and complemented the policy rate cuts that were made in the same period. Extraordinary loans for banks Providing longer-term loans on extraordinary terms was an instrument commonly used by many central banks at the start of the financial crisis. In the euro area, this instrument remained in use after the turbulence had subsided in the form of the so-called TLTRO programmes. The terms of the loans are intended to spur banks to maintain or increase growth in lending to households and enterprises. Norges Bank regularly lends to banks, but only in the short term in order to regulate liquidity in the banking system. In normal times, when markets are functioning normally, it is not our job to compete with the private investors that fund banks. However, if banks’ funding markets cease to function, as in 2008, the situation is different. In Norway, central bank loans on extraordinary terms are more likely to be provided in order to bring down short-term money market rates, known as Nibor rates, closer to the policy rate. This could be considered in a situation where the policy rate is near its lower bound while short-term market rates are substantially higher.

But an environment in which borrowing is free and the real interest rate is considerably lower than trend growth in the economy is unlikely to be sustainable over time. Chart: Estimates of the neutral interest rate The neutral interest rate cannot be observed and must be estimated. In the Bank’s Monetary Policy Report, the current neutral real interest rate in Norway is assumed to be around zero. The estimate is based on calculations from a range of different models. As we can see in the chart, these calculations show that the neutral interest rate has fallen to a historically low level close to zero over the past 20 years. With an inflation target of 2 percent, this means that setting the policy rate at zero would enable us to bring the real interest rate down to 2 percentage points below its equilibrium level.1 2 In Norges Bank’s assessment, monetary policy has sufficient room for manoeuvre with an inflation target of 2 percent. First, international experience has shown that the room for manoeuvre in monetary policy is not exhausted when the policy rate is close to zero. I will come back to this. Second, our calculations show that over the past 20 years, the real interest rate has normally remained less than 2 percentage points away from its estimated equilibrium level.3 This may suggest that a real interest rate that is 2 percentage points below equilibrium has in most cases provided sufficient economic stimulus.
The coal and iron deposits found here were critical to the Industrial Revolution, and it was the output of nails and bolts, screws and fasteners produced from those ceaseless blast furnaces that made the Black Country synonymous with manufacturing prowess around the world. But that is not the whole story. Just as important were the innate qualities of doing it yourself and perseverance which characterise the Black Country. There is no finer example than the Iron Bridge – the world’s first – at Coalbrookedale, built in 1779. As one commentary noted, it stood as “indisputable proof of the abilities of our mechanics and workmen”. It reflected not just the local availability of coal and iron, but also the skills of those who built it. And it is those same skills that we celebrate tonight. Local business success, recognised by these ‘Best of the Black Country Awards’, is the story of the Black Country being born again. The products of the 21st century may not be the nails and bolts, screws and fasteners of the past, but they will require the use of manufacturing know-how and business ingenuity to service the needs of consumers. I have been struck, as I travel to a different part of the country each month, by how many firms are producing imaginative and innovative products for which there is a real demand around the world. By this I do not mean that all successful firms are making high tech products.

Against a background of firm growth and a limited margin of spare capacity, and with inflation above the target, the MPC judged last week that an increase of 0.25 percentage points in Bank Rate was necessary to keep CPI inflation on track to meet the target in the medium term. So that is where we are now. Where will interest rates go next? I do not know. And the reason I do not know is that we do not take our decisions in advance, but wait to see how the economy unfolds and then take our decisions one month at a time. The Black Country is where it all began. But now we must look to the future. The Black Country has entered a new era. And you are making it happen. I have explained how the MPC sees the prospects for the economy. If we can retain the degree of stability that we have seen now for more than a decade, then you will have the opportunity to start and expand businesses that will compete for Black Country business awards in the years to come. The winners tonight are shining examples, and I know you are all looking forward to finding out who they are. It has been a pleasure to come back to where it all began for me. And, whether or not you are one of the lucky few to win an award tonight, I wish your business every success. 2  BIS Review 112/2006
(2020), “Does financial structure affect the carbon footprint of the economy?”, Financial Integration and Structure in the Euro Area, ECB, March. 13. European Council (2022), “International taxation: Council reaches agreement on a minimum level of taxation for largest corporations”, 12 December.

For example, for the euro area, see Gambetti and Musso (2017), “The macro eco nomic impact o f the ECB’s expanded asset purchase pro gramme (APP)”, ECB Working Paper No 2075. Fo r the United States, see Weale and Wieladek (2016), “What are the macro eco no mic effects o f asset purchases?”, Journal of Monetary Economics (79): 81-93. And lastly, fo r the United Kingdo m, see Kapetanio s et al. (2012), “Assessing the eco no my-wide effects o f quantitative easing”, The Economic Journal, Vo l. 122, pp. 316-347. 7  Co stain, Nuño and Thomas (2022), “The term structure o f interest rates in a hetero geneo us mo netary union”, Working Paper No 2223, Banco de España. 4  over time and across asset classes -, it played an additional role to reduce fragmentation within the euro area and thus ensure a smooth transmission of the single monetary policy. Let me now turn to the TLTROs. In 2014 the ECB launched TLTROs. Unlike the (non-targeted) longer-term refinancing operations (LTROs) that preceded them, these ECB loans were specifically targeted at encouraging euro area banks to expand their lending to households and firms. Provided they met certain lending targets, banks received TLTRO loans under very advantageous conditions. 8 In this respect, TLTROs are complementary to asset purchases. While asset purchases aim to reduce the funding costs of those agents (such as sovereign and large corporate issuers) that fund themselves through bonds, TLTROs are intended to increase households’ and (smaller) firms’ access to bank credit.
Although much has been done over the past few years to mitigate the structural flaws that make wholesale funding a point of weakness in the global financial system, some important issues and vulnerabilities remain. I will focus my remarks today on some of those vulnerabilities – including the areas of tri-party repo and money market mutual funds markets – and discuss what could be done to make wholesale funding markets more stable.1 I will also consider the larger issue of the appropriate role of wholesale funding in the financial system. How comfortable should we be with a system in which critical financial activities continue to be financed with short-term wholesale funding without the safeguards necessary to reduce the risk of runs and the fire sales of assets that can threaten the stability of the entire financial system? As always, my remarks reflect my own views and not necessarily those of the Federal Reserve System. Wholesale funding as a structural vulnerability As this audience knows, in the two decades before the financial crisis, the global financial system underwent rapid transformation. During this period, there was a shift from bank-based financial intermediation to capital markets-based financial intermediation,2 and an increase in the scale and complexity of securitization activities.

Furthermore, in view of the importance attached to publicly available data, there is a need for this information to be harmonised and provided in a standardised format that is easy to access. As in any other policy field, the higher the quality of the input data, the more reliable are the results of analytical work, and thus the policy decisions. In addition, there is the definition of data confidentiality. Taking an extreme view, all information that has not been published could be labelled “confidential”, while the other extreme would be to make everything public. It would be fair to say that the “definition” used in Europe appears to be stricter than that in other jurisdictions. For example, some regulators such as the US Federal Financial Institutions Examinations Council publish selected supervisory information on banking institutions operating in the US market, including on subsidiaries of European banking groups, regularly (on a quarterly basis). Parts of these data are “confidential” in Europe, but this is not so on the other side of the Atlantic. As mentioned earlier, a change in attitude by EU financial regulators would greatly benefit the quality of the risk-monitoring and risk-evaluation work undertaken by macro-prudential bodies. In addition, it would provide a concrete signal of increased transparency to market analysts and financial market participants. In turn, it would help significantly to minimise the reporting burden of the industry. Let me try to illustrate my point with some examples.   The breakdowns of banks’ credit exposures by type of collateral or counterparty sector (e.g.
The many differences in the speed of the economic recovery in the world has combined with foreign exchange tensions and, in the past few months, increased inflationary pressures at the global level. Food prices, responding to the stronger demand of emerging economies and to worsened supply-side conditions, have skyrocketed, rising even faster than between early 2007 and mid-2008. Add to this the sustained increase in the oil price since mid-2010, which intensified last February because of the political unrest in the Middle East and Northern Africa. BIS central bankers’ speeches  1  Under these circumstances, today monetary policy faces an important challenge. Like after the global financial debacle of 2008, when it was highly flexible in responding to the confidence crisis around the world, now it must again be flexible in withdrawing the monetary stimulus, creating the conditions for sustainable growth and acting preventively to avoid a resurgence of inflation. Since last December, the Board has raised the monetary policy interest rate (MPR) by 75 basis points to 4 percent in the meeting of last March. In the scenario we consider the most likely, we will continue to remove the monetary stimulus, at a pace that will depend on unfolding macroeconomic conditions, but which will be principally oriented to achieving the inflation target. Now let me describe the factors that underlie the most likely scenario and the main risks it faces.

For Chile, baseline projection in March 2011's Monetary Policy Report. Sources: Bloomberg and Consensus Forecasts. Figure 10 Incidences on annual CPI inflation (1) (2) (percentage points) 12  12  9  9  6  6  3  3  0  0  -3  01  02  03  04  05  06  07  08  09  10  11  12  13  Othe r (64.7%)  Fre sh fruits and ve ge table s (2,9%)  Foodstuffs w /o fre sh fruits and ve ge table s (21.3%)  Fue ls (5.7%)  Public utilitie s (5.4%)  Total  -3  (1) Gray area, as from first quarter 2011, indicates breakdown of inflation forecast in baseline scenario. (2) In parentheses, shares in CPI basket. Sources: Central Bank of Chile and National Statistics Institute (INE).
Durmuş Yilmaz: Central Bank monetary and exchange rate policies and economic outlook Speech by Mr Durmuş Yilmaz, Governor of the Central Bank of the Republic of Turkey, at a meeting organised by the Aegean Industrialists and Businessmen Association, İzmir, 8 June 2006. *  *  *  Distinguished Guests, Ladies and Gentlemen, It is, indeed, a great pleasure for me to address another information meeting – yet another one in a series held since 2003 – organized in cooperation with Dünya Newspaper with a view to informing the business world. Today’s meeting is the first meeting of 2006. I would like to take this opportunity to thank the Aegean Industrialists and Businessmen Association for their organization. Considering recent inflation figures, I am sure you are all expecting me to inform you of developments in the economy, especially those regarding inflation. However, before moving on to topical subjects, at this very first meeting of 2006, I would like to briefly touch on what the transformation process the Turkish economy has been undergoing since 2001 means to us. I also want to give you a framework of the macroeconomic outlook. My speech will cover the developments in inflation, the Central Bank’s interest rate and exchange rate policies, the developments in financial markets, growth, employment and the current account deficit. As I have mentioned earlier, the Turkish economy has been undergoing a structural transformation process.

In other words, the critical point for the Bank is to assure that the impacts of the above-mentioned developments are confined to 2006 and avoid any deterioration in expectations, which stand as a significant determinant of the inflationary process, for the sake of achieving medium-term targets. At this point, I would like to draw your attention to a few important points about the interest rate policy of the Bank and underline some issues once again. Short-term interest rates are the main policy instrument of the Central Bank. The Central Bank makes its policies and interest rate decisions in line with its main goal of achieving price stability and inflation targets. The Bank makes all its policies and decisions in view of medium-term trends rather than daily or shortterm ones, and these policies and decisions are grounded on main trends. In this framework, while making its interest rate decisions, the Bank uses a very wide data set including supply-demand conditions, costs, model forecasts, expectations, domestic and external developments; and evaluates all these data with a forward-looking perspective. This process is certainly a dynamic one, and every new piece of data and development is being closely monitored within the framework of the Bank’s inflation forecasts. Another significant fact about the interest rate decisions of the Bank is that the impacts of these decisions are observed with a time lag. The impact of the decisions on economic activity becomes evident within a period of 3-9 months, while their impact on inflation is observed within a period of 9-18 months.
The search for yield that prompted excessive risk-taking was the result of low long-term interest rates around the world, not simply rates in the UK. So what would have happened had we adopted the counter-factual policy of higher levels of Bank rate? Of course, it is impossible to know with certainty. And much depends on what would have happened to the exchange rate. On the MPC, two views were discussed. One was that by setting interest rates at a much higher level, so dampening domestic demand and output growth, expectations of the long-run exchange rate consistent with a sustainable path of domestic demand might be dislodged and “jolted” down to a lower equilibrium level – from A to B in Chart 8. Certainly, there seemed good reason at the time to imagine that slower growth at home might mean that hot money would return to countries experiencing stronger growth. As a result, the current exchange rate would have fallen from O to P in Chart 8 and then been expected to follow the path PB consistent with uncovered interest rate parity. The result would have been higher external demand to offset weaker domestic demand. After a time, we might have attained “one-speed” growth, so avoiding the unpalatable choice between “two-speed” and no growth.

I do not see this as inconsistent with inflation targeting because it is the stability of inflation over long periods, not year to year changes, which is crucial to economic success. The key principles underlying flexible inflation targeting are credibility, predictability and transparency of decision-taking, and they will remain the cornerstone of successful monetary policy in the future. Conclusions Governor Leigh Pemberton’s 1992 lecture concluded with a message for the LSE: “in a world of price stability you might not think of inviting the Governor of the Bank of England to address you”. Had price stability guaranteed financial stability, and had I achieved my long-held ambition of being boring, that might have been true. Unfortunately, it is not how things have worked out! What I have tried to show tonight is that the case for price stability is as strong today as it was twenty years ago – both in theory and in practice. The clarity and simplicity of the inflation target helps to anchor inflation expectations on the target. We forget the lessons of the 1970s and 1980s at our peril. In the end, the essence of central banking is to maintain confidence in, and the value of, paper money. It is far too soon to bury inflation targeting. Together with central bank independence, it played a key role in bringing price stability to the UK.
Table 2: Assessment of the relative suitability of Basel III standards to address selected forms of risk  Risk Microprudential solvency risk – ‘true’ asset risk  Microprudential solvency risk – ‘unknown’ asset risk under Knightian uncertainty  First Best Mitigant RWCR: Requires loss absorbing capital to cover solvency risks. If risk can be measured and risk weights can be chosen appropriately, this allows for the greatest level of granularity. LR: Effective when risks are unknowable and cannot pinpoint particular asset classes of concern, especially in the face of limited historical data or fattailed loss distributions. Vulnerability to risk shifting arbitrage  RWCR: High degree of granularity reduces the scope for risk-shifting  Vulnerability to gaming  LR: Lack of granularity and degrees of freedom minimises gaming opportunities. Second Best Mitigant LR: Provides loss absorbing capacity but does not include any risk granularity by design. Less effective Mitigants LCR & NSFR: Neither ratio attempts to mitigate the risk of losses. RWCR: Provides loss absorbing capacity but may perform less well out-of-sample and vulnerable to model risk (IRB approach) or miscalibration of risk weights (standardised approach). LCR & NSFR: standardised assumptions mitigate some scope to shift risk but also allow some scope for distortion if weights are miscalibrated. LCR and NSFR: Small number of modelled assumptions offer some safeguard against gaming. LCR & NSFR: Neither ratio attempts to mitigate the risk of losses. LR: Greatest scope for distortion through risk shifting because of lack of risk sensitivity.

Another strand of the literature has examined whether unlevered investors may also be prone to this fire-sale mechanism. This is a question of rising importance given the rapid growth in open-ended investment funds since the crisis. In Feroli et al (2014), asset managers are motivated by their relative ranking. This generates a feedback loop in which falling asset prices incentivise further selling for fear of diverging from the pack (Morris and Shin (2016), Vayanos and Woolley (2013)). This channel is amplified if investors perceive there to be a first-mover advantage in withdrawing funds, generating ‘run-like’ behaviour (Goldstein, Jiang and Ng (2017), Chen, Goldstein and Jiang (2010), Morris, Shim and Shin (2017)). A recent paper by Bank of England colleagues (Baranova et al (2017)) provides a framework for quantifying the risks posed by investment funds in corporate bond markets (see also Ceterolli et al (2016)). In their model, investors act pro-cyclically, withdrawing funds when corporate bond prices fall and causing investment funds to make a first-round of asset sales. Dealers provide liquidity, but require a further fall in price as compensation. This leads to further redemptions and further asset sales, amplifying the fall in price. Chart 21 shows that this amplification effect can be quantitatively significant: weekly redemptions from bond funds of 1% of total net assets, similar to the level observed at the peak of the crisis, increase the liquidity premium in bond spreads by 40 basis points.