samchain/econo-pairs-v1 huggingface dataset:
15.01.2019  The Spanish economy: transformation and challenges Spain Investors Day Pablo Hernández de Cos Governor  Let me thank the Governing Board of Spain Investors Day and its chairman, Benito Berceruelo, for their kind invitation to speak here today, together with the Minister of Foreign Affairs, at the gala dinner of this 9th edition of Spain Investors Day. I am convinced that, as on previous occasions, the meeting will be a success. I will be focusing on the situation of the Spanish economy and on its banking sector. Along with a brief description of the current conjunctural setting, marked by a more complex and uncertain international economic environment, I would like to summarise some of the improvements observed in the Spanish economy in recent years, in the wake of the latest and acute crisis we experienced. I shall, moreover set out various challenges and vulnerabilities which, in my opinion, need to be properly and resolutely addressed. The aim thereby would be, first, to shore up the potential growth of our economy in the long term and, further, to adapt our financial system to the new regulatory demands and to the new competitive and technological setting. Let us take the economic situation first.

The question of whether borrowers should choose an adjustable or fixed borrowing rate – in order to be able to safeguard their own interests to a greater extent – became more relevant with the advent of credit market liberalisation in the 1980s. However, in almost the entire period since then, the nominal interest rate level has exhibited a falling tendency, first as a result of a decline in inflation expectations, then after 2000 due to a decline in real interest rates. Borrowers who chose a fixed-rate loan have therefore not benefited from falling interest rates during the fixed rate period. There are few success stories to be heard from borrowers who chose fixedrate loans. This will probably change ahead. The share of mortgages with a high loan-to-value ratio has increased in recent years, particularly among young borrowers. In addition, more households are choosing interest-only mortgages. The opportunity to postpone paying the principal can act as a buffer when servicing the debt becomes more demanding. For many households, this buffer has already been used. The increase in household borrowing has not been matched by a similar increase in investments in financial assets. The household saving ratio has been on the decline since 2002 and was very low, probably negative, in 2006. Household saving also seems to be negative this year. This means that in addition to financing housing investments by raising loans, borrowers are also financing some of their consumption – often a new car or boat – by increasing their (net) debt.
The effects of this angst are already showing up in the investment numbers. An additional fly in the ointment, if you will, is the recently released downward revision for GDP growth covering last year and an announced estimate of a sizable downward revision to payroll employment. One implication of these revisions is that the economy’s underlying momentum was already somewhat less robust than previously thought, even before recent developments pointed to a less rosy outlook. The Path Forward So what will the response from the Fed be to all of these developments? Our role is to navigate a complex and at times ambiguous outlook to keep the economy growing and strong. As events unfold and conditions evolve, it’s critical we understand which developments are mere bumps in the road and those that will affect the outlook in a material way over the longer term. That means maintaining a data-dependent approach that takes into account the risks and uncertainty that are weighing on the economy. I will continue to consult everything from very granular data about individuals’ experiences of employment conditions, through to the macro projections for global growth. We need to consider all of the information available and be flexible in our response. Conclusion Low inflation is indeed the problem of this era. The current outlook of moderate growth, low unemployment, but stubbornly low inflation is a reflection of the broader economic picture—the July rate adjustment an appropriate response to ease financial conditions and support the economy.

John C Williams: Monetary policy and the economic outlook Remarks by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at Euromoney Real Return XIII: The Inflation-Linked Products Conference 2019, New York City, 4 September 2019. * * * As prepared for delivery Thank you for the opportunity to speak this morning. In a speech Chair Powell gave last month, he said, “Low inflation seems to be the problem of this era, not high inflation.”1 Persistently low inflation is just one of the reasons the theme of this conference is very timely. Our Dual Mandate Goals And inflation is one of the topics I’m going to address today. The Fed has two goals set by Congress: maximum employment and price stability. These are also known as the dual mandate. When I talk about price stability, our objective is to keep the inflation rate near our symmetric 2 percent goal,2 so understanding inflation data and how it fits into the broader economic picture is critically important. This morning I’m going to set the scene for that broader economic picture and explain how changes in the landscape influenced the rate adjustment the Federal Open Market Committee (FOMC) made in July. I’ll then discuss the challenges on the horizon and how they feed into my thinking on monetary policy.
Steps have been intensified during this recent decade for greater financial integration. The motivation for greater financial integration is not only to unlock the growth potential of the region, but to achieve more effective and efficient intermediation of funds in the region, particularly by channelling the large surplus funds in the region to productive investments in the region. This would also support regional economic integration. While Asia’s trade with economies outside the region has doubled since 2000, intra-Asia trade has tripled. Now, more than fifty five percent of Asia’s total export is within the region. Intra-regional investment activity has also increased significantly during this decade. It is important to recognise that the approach to a more integrated Asia is different from that adopted by Europe. In the early 2000s, a study undertaken by the ASEAN ten economies concluded that the region did not have the preconditions for a single currency. A different route would therefore be taken to achieve greater integration. For the ASEAN region, it would involve a sequenced liberalisation of the financial sector and capital account, and the development of regional financial markets and financial infrastructure including the regional payments and settlement system. This arrangement also allows for a gradual pace of integration to ensure domestic readiness and the flexibility to take into account the prevailing conditions and stage of development of the participating financial system. Regional collaborative efforts also have been significantly enhanced in the area of crisis management.

The region is now well ahead in the areas of regional surveillance and supervisory arrangement, and in crisis prevention, management and resolution. Regional support mechanisms have also been established. There are also regional institutional arrangements in place for the active sharing of information on the emerging risks to regional stability and on building domestic capacities and to coordinate regional responses in the event of eminent risks to the region. These efforts will be further strengthened into the future. Islamic finance as a growth area in Asia The rapid integration of Islamic finance into the international financial system is a growing feature in the financial landscape of Asia. Developments in several emerging economies in Asia have seen the rapid expansion of Islamic finance. Global Islamic financial assets are now estimated to be more than 1 trillion US dollars. While more than 60 percent of the world’s Muslim population is in Asia, the interest in Islamic finance transcends to beyond this community. The inherent principle of Islamic finance, which requires financial transactions to be accompanied by underlying economic activity, ensures the close link between the expansion in financial assets with the real economy. It also increases its potential in fostering  BIS central bankers’ speeches  3  sustainable growth. This has positioned Islamic finance to be well-anchored to serve the real economy, and enhances its potential as a sustainable and stable form of financial intermediation.
Isabel Schnabel: Interview in Die Zeit Interview with Ms Isabel Schnabel, Member of the Executive Board of the European Central Bank, in Die Zeit, conducted by Ms Lisa Nienhaus on 16 March 2020 and published on 18 March 2020. * * *  Ms Schnabel, where are you speaking from at the moment: your home office? No, I’m in the main building of the European Central Bank in Frankfurt. As the board member responsible for market operations, I need to be on site. But many of us, including other members of the ECB’s Executive Board, are indeed working from home. And I am also keeping at a safe distance from colleagues. Indeed, it would not be good if you were absent from the ECB. Market prices are collapsing, loans are defaulting, firms are threatened by bankruptcy if they don’t get help. Is the virus crisis now turning into a financial crisis? We are living through turbulent times: stock markets are showing exteme volatility, equity prices have fallen dramatically. And the events are gradually being reflected in the data that we receive from the real economy. We know that production in China collapsed in January and February. All that will also have an impact on the banking system, but there is no acute banking crisis at present. We are, however, carefully monitoring the current situation so that we are able to respond swiftly to new developments should that become necessary. Which indicators are you looking at?

During the Spanish flu pandemic, many people died from secondary bacterial infections which can now be treated more effectively. And we are economically in a much better position to deal with a shock of this nature. Why? The internet puts a whole range of technical options at our disposal that allow us to continue working. Our social security systems are much better. People will only stay at home if they continue to be paid when they get sick. At the same time, there is now more international division of labour than there was back then, so we feel the impact more strongly if supply chains break down. The economy is estimated to have contracted by 6% at the time of the Spanish flu. Is this 3/4  BIS central bankers' speeches  virus crisis economically less bad? No-one can say, but we will play our part in containing the economic consequences of this crisis. 4/4  BIS central bankers' speeches
The auction procedure went smoothly and while rates did trade soft on the quarter end, this was only a temporary phenomenon and there was no evidence of market disruption from the unfilled bids at the auction. As part of its prudent planning the Committee continues to consider additional design features that may help address the potential risks associated with an ON RRP facility while preserving its ability to support the effective implementation of monetary policy during the normalization period. 15  14  If the total amount of bids received in an operation is less than or equal to the $ billion size limit, awards will be made at the fixed offering rate. However, if the total amount of bids received exceeds the overall operation size limit, the $ billion in ON RRPs will be allocated through a single-price auction using interest rates that counterparties submit with their bids. Awards are made at a “stopout rate” – the rate at which the overall size limit is achieved – with all bids below this rate awarded in full and all bids at this rate awarded on a pro rata basis. The stopout rate is determined by evaluating all bids in ascending order by submitted rate up to the point at which the total quantity of offers equals the overall size limit. For more details about ON RRP operations, please see the FAQs on the New York Fed’s website.

Prior to the crisis, many banks typically borrowed fed funds in order to satisfy reserve requirements or obtain short-term  1  2  The effective fed funds rate is a measure of the prevailing rate in the market each day. This is calculated as a volume-weighted average of rates on trades arranged by major brokers, and is published by the New York Fed. See http://www.newyorkfed.org/markets/omo/dmm/fedfundsdata.cfm. BIS central bankers’ speeches  financing. In recent years, however, the Fed’s LSAPs have led to very high levels of reserve balances, and thus reduced the need for banks to borrow fed funds to meet reserve requirements and clear payments. 2 As a result, trading activity in the fed funds market today is smaller and the nature of that activity is different than it was prior to the crisis. 3 Nevertheless, a new Federal Reserve data collection that captures both brokered and bilateral transactions shows that trading activity in fed funds remains significant. 4 These data indicate that daily trading volumes are about $ billion and are relatively stable. Moreover, longer-term correlations between the fed funds rate and other money market rates remain robust. As a result, the fed funds rate continues to be a suitable measure of the marginal cost of funding for banks, and remains connected over medium-term horizons to other short-term interest rates that also matter for the transmission of monetary policy.
3 Larry Summers in particular warned that the Federal Reserve’s scope to cut interest rates would be too limited  to effectively deal with a recession, see for instance Summers (2016). 4 See, for instance, Lundvall (2020) for a review of the factors behind the fall in real interest rates. 2 [15]  What does an inflation forecast below the target entail? So how should one interpret the fact that the Riksbank is forecasting an inflation rate below the target? One interpretation has been that “the Riksbank has abandoned the inflation target”. If this merely means that we accept that inflation will not quite reach 2 per cent within the coming years, then it is of course true — this is after all what we are forecasting. However, I want to make it clear that it is certainly not true that we have abandoned the target in a general sense and are focusing on something else. What worries me somewhat is that in some quarters the view seems to be that the inflation target has become obsolete. The argument is that the inflation target was useful for bringing down inflation from the overly high levels it was fluctuating around earlier, but once we attained a low inflation rate, the target has no further purpose and might as well be abandoned. However, the purpose of an inflation target is not just to prevent high inflation, but also to ensure that inflation does not become too low.

by overcoming the effective lower bound to interest rates, or injecting liquidity directly into the retail sector.8 But there is no sign that central banks are thinking of digital currencies in this way. The Bank of England, for example, has stressed that any CBDC would complement, not substitute for, physical cash.9  The Bank’s Index Linked Term Repo facility, for example, operates weekly, and allows all eligible counterparties to bid for six month liquidity against the full range of eligible collateral (see Bank of England Market Operations Guide: Our tools | Bank of England). 8 See, for example Securing macroeconomic and monetary stability with a Federal Reserve–backed digital currency | PIIE 9 See for instance Innovation to serve the public interest - speech by Andrew Bailey | Bank of England 7  Bank of England  Page 9  4. Digital currencies may affect the way central banks deliver monetary control Over and above any impact that digital currencies may have on the transmission mechanism, they could also have implications for how central banks achieve ‘monetary control’: i.e. ensuring that short term market rates are aligned with official rates chosen by policy makers.10 Today, most central banks achieve this control by ensuring they at least meet banks’ demand for central bank reserves, and remunerate those reserves such that market rates trade near or at the official rate. Other things equal, flows into digital currencies issued or backed by the central bank, will drain reserves from the system.
In the United States, however, saving was low and investment was high partly because of the low interest rates. The low interest rates also stimulated the housing market which, in combination with decades of an  8  4  China has had a very high investment ratio, but aggregate saving is even higher. BIS central bankers’ speeches  expansionary housing policy, led to the build-up of a bubble that eventually burst. Many observers therefore believe that the global imbalances were one of the causes of the financial crisis. 9 There are better and worse reasons for current account surpluses and deficits In the 1970s and 1980s, large current account surpluses or deficits were generally regarded as something negative. This period was marked by fixed exchange rates and by the regulation of capital flows across national borders. A deficit was often seen as a sign of an approaching devaluation. However, after the capital markets were deregulated and the exchange rates began to float to a greater extent, the view became more positive. It was assumed that changes in the current accounts reflected an optimal redistribution of the freely-moving capital. In the 2000s, however, we began to hear warnings that, above all, a rapid correction of the imbalances could have serious consequences for the value of the dollar, resulting in rising long-term interest rates, recession and a possible financial crisis.

Karolina Ekholm: Do global imbalances pose a risk to the Swedish economy? Speech by Ms Karolina Ekholm, Deputy Governor of the Sveriges Riksbank, at the Stockholm Chamber of Commerce, Stockholm, 13 June 2011. *  *  *  The views expressed in this speech are my own and are not necessarily shared by the other members of the Riksbank’s Executive Board or the staff of the Riksbank. I would like to thank Hanna Armelius for all her help in writing this speech. Financial crises often come as a surprise. After the event, however, it may be a simple matter to look back and see all the flashing warning lights that should have signalled that things were about to go seriously wrong. I do not think many people realised how vulnerable the global financial system really was before the latest crisis, and consequently this crisis came as a surprise too. However, there were people who did see warning lights flashing. The problem was that they appeared to be flashing for a different type of crisis than the one that eventually arrived. What we expected to arrive was an international crisis triggered by a collapse in the real value of the dollar. 1 The warning lights began flashing due to the major global imbalances arising from the fact that that some countries, above all the United States, had substantial and persistent current account deficits while others, for example China, had substantial and persistent current account surpluses.
Durmuş Yilmaz: Press conference for the presentation of the inflation report Speech by Mr Durmuş Yilmaz, Governor of the Central Bank of the Republic of Turkey, at the press conference for the presentation of the second issue of the Inflation Report, Central Bank of the Republic of Turkey, Ankara, 30 April 2008. *  *  *  Distinguished Guests and Members of the Press, Welcome to the press conference for the presentation of the second issue of the 2008 Inflation Report, one of the most important communication tools of the full fledged inflation targeting regime that we have been implementing. In this conference, I would like to give you a short summary of our evaluations and the Central Bank’s inflation forecasts in the Inflation Report which will be posted on our website later today. 1. Inflation developments  Dear Members of the Press, I would like to start with a general assessment of inflation developments. The monetary tightening exercised since mid-2006 has been successful in achieving a significant reduction in underlying inflation. The fall in headline inflation, however, has been more limited, owing mainly to factors largely beyond the control of monetary policy, such as developments in food, energy, and administered prices. Consumer prices rose by 3.1 percent in the first quarter of 2008 and annual inflation reached 9.15 percent (Figure 1). Thus, as of March, annual inflation exceeded the upper limit of the uncertainty band, which was 9.1.

Figure 2: Contribution to Annual CPI Inflation 12  Tobacco and Gold** Food and Energy* Services Core Goods  10 8 6 4 2  03/08  02/08  01/08  12/07  11/07  10/07  09/07  08/07  07/07  06/07  05/07  04/07  03/07  02/07  01/07  0  * Food and Energy: Food, non-alcoholic beverages and energy. **Tobacco and Gold: Alcoholic beverages, tobacco products and gold.. Source: TURKSTAT, CBT. . Both domestic and international developments have played a part on the course of food prices. A prolonged shortage of rainfall in Turkey resulted in low crop yields in 2007, which turned into an adverse supply shock. Strong global demand for food and continued elevation in agricultural commodity prices further added to domestic food inflation through the external trade channel. Recently, adverse impacts of these factors have been quite visible especially in processed food prices. Accordingly, annual food inflation maintained its high levels with a marked contribution of about 2.3 points to the 3.1 percent year-to-date headline inflation. Therefore, food prices became the main factor impeding the disinflation process (Figure 3, Table 1). Adverse developments in energy prices have been another major factor in slowing the disinflation process. Rising oil prices continued to lead to significant hikes in the prices of fuel-oil products. Elevated oil prices have also affected the prices of energy items in housing utilities, including electricity tariff rates, which were adjusted upwards by a significant margin.