samchain/econo-pairs-v1 huggingface dataset:
Minister Calviño has now stated that Spain should not resort to using it and that, in any case, she only believes it is an option if conditionality is extremely low… Before this crisis, Spain was growing, it was competitive, its debt-to-GDP ratio was below 100%, its government deficit was 2.6% and its unemployment rate stood at 14%. Currently it has been able to obtain the funding it requires on the markets, it is not experiencing any difficulties, and the spread against the German bund is 110 basis points. Let’s hope that Spain can maintain this relatively comfortable position. Italy is not in the same position; could that be why it is adopting a more combative stance? I don’t want to start making those kinds of comparisons. Let’s come back to Spain then. There is talk of making a political pact, like the Moncloa Pacts of 1977. What’s your opinion? Are you in favour of pacts? I think we must always be in favour of political pacts during extraordinary times such as these. Although a comparison with the 1977 Moncloa Pacts is perhaps not possible. At that time, Spain was not a member of the EU and the euro did not exist. The main goal was to reduce inflation and change the income policy. Today, there is a deep recession that will have a very severe impact on the public finances and which will require a huge effort to get the economy back to normal. This is the most serious economic situation since the Civil War.

8  In this regard, over the years more and more countries are easing the requirements to work with the micro and administrative data produced by the public sector. I believe 13  that Spain should not lag behind in this endeavour. In keeping with this assessment, Banco de España provides researchers with the micro data of some of the surveys it conducts, such as the Survey of Household Finances and the Survey of Financial Competences. But more needs to be done. In this regard, we are committed to extending the availability of micro data to other products, such as the balance sheet data of non-financial corporations and some banking data. In this respect, Banco de España has recently joined INEXDA, a network of central banks whose aim is to exchange experiences in the management of granular data in order to facilitate their use by external researchers. Also, we must strive to have other public institutions join us in this initiative. Although the Spanish public sector currently provides samples of administrative data regarding, among others, tax returns and social security records, there is ample room for improvement in this area.
This policy would in practice be unsustainable because it does not provide the answer to how monetary policy should respond to wage - and cost-driven unemployment. This would mean ignoring the experiences of the 1970s and 1980s. If economic agents feel confident that inflation will remain low and stable, and take account of this in their behaviour, inflation will move more quickly towards the target. The interest rate will then need to be adjusted less each time inflation has to be brought back to the target. This will also result in more 2 stable developments in output and employment. Developments in financial markets after inflation targeting was introduced indicate that market participants are confident that we will keep inflation low and stable. This is reflected, for example, in the long-term interest rate differential between Norway and the euro area. The interest rate differential currently stands at around 1 percentage point, which corresponds closely with the difference in monetary policy objectives. Confidence among financial market participants is an important asset if it proves necessary to use monetary policy to sustain the level of economic activity. It also lays the basis for lower interest rates over time. We do not have to pay an additional risk premium because there is uncertainty about inflation. Maintaining a firm monetary policy over time is therefore highly valuable in itself.

How does monetary policy function? Monetary policy affects the economy through a number of channels. Let us make a stylised review of what happens if the central bank raises the key interest rate. In the short and medium term, this will result in a rise in the real interest rate. Normally, the exchange rate will also be strengthened. Prices for imported goods are an important part of the consumer price index (CPI). An appreciation of the krone reduces prices for imported goods measured in NOK. This is often called the “direct exchange rate channel to inflation”. The rise in real interest rates reduces consumption and investment demand. This is the “real interest rate channel to aggregate demand”. With a stronger exchange rate, domestically produced goods and services will be relatively more expensive than competing foreign products. Demand for domestically produced goods will decline. This is the “exchange-rate channel to aggregate demand”. The reduction in aggregate demand will in turn cause a reduction in price inflation. This is the “demand channel to inflation”. Price inflation and wage inflation are both affected by changes in inflation expectations. Some firms set prices for several periods. In wage formation, expected price changes will figure prominently in the calculation of expected future real wages. When monetary policy is credible, expectations regarding future inflation will be dampened by a rise in the interest rate. A change in expectations will in itself contribute to curbing future price inflation. Thus, the expectations channel amplifies the effect of monetary policy.
Its emphasis on the close link between financial transactions and economic activity has positioned Islamic finance to be well-anchored to serve the real economy. The adoption of profit- and risksharing, transparency and disclosure, and the universal ethical values of fairness which is implicitly embedded in the Islamic financial system provides the internal checks and  BIS central bankers’ speeches  1  balances. Embraced in its entirety, it enhances the prospects for sustainable economic growth and financial stability. The resilience of the Islamic financial system is also further strengthened by the international prudential standards and best practices that have now been introduced. These include the standards issued by the Islamic Financial Services Board since 2002 in the areas of capital adequacy, risk management, governance, and the conduct of business and supervisory process. The industry is also guided by international accounting standards that have been developed by the Accounting and Auditing Organisation for Islamic Financial Institutions since its establishment in 1990. In enhancing liquidity management in the Islamic financial system, the International Islamic Liquidity Management Corporation (IILM), which was established in 2010, is putting in place the mechanism that will facilitate effective liquidity management solutions through the periodic issuance of short-term Shariah-compliant financial instruments. As the Islamic financial system transitions to becoming more diversified and comprehensive, it provides the spectrum of financial solutions that meet the different needs of the economy. Such financing products offered in Islamic finance also include syndicated financing, equity financing and venture capital.

Hence, approximation of the auditing role with the best and contemporary international standards, learning about specifics and characteristics of the audited entities, and further  BIS central bankers’ speeches  1  intensification of inter-institutional cooperation during the processes are some of the elements having a key role in the work and results of this institution. In conclusion, I am fully confident that, by promoting the above-stated factors, the ALSAI will continue to perform at its best vis-a-vis the duties and challenges imposed by current developments and will succeed in accomplishing its mission towards the improvement of institutional governance. Thanking you for your attention, I wish you success in your work in 2016. 2  BIS central bankers’ speeches
The only option for the SNB is therefore to  2  BIS central bankers’ speeches  diversify its risks as efficiently as possible with a view to limiting the exchange rate, credit and concentration risks of its foreign currency investments. The SNB had already begun diversifying its investments in the late 1990s. The SNB foreign currency investments are considerably more diversified than those of many other countries, with many central banks investing their foreign exchange reserves mainly in US Treasuries, that is, in public debt titles and in dollars. While the SNB also holds the large majority of its portfolio in the form of government securities, it also currently holds as many as 10% of its reserves in equities and 5% in corporate bonds. In order to limit credit risk, the large majority of our public debt holdings have the highest (AAA) or second-highest rating (AA). In effect, our current allocation corresponds to 86% AAA-rated and 13% AA-rated public debt holdings. The SNB diversification strategy is, however, subject to limits. These spring from the stringent requirements with regard to the security and liquidity of the investments. Many investment markets are too narrow, and do not meet the SNB’s liquidity requirements. The SNB’s investment universe – and thus its scope for diversification – is therefore limited. The bulk of the worldwide supply of highly rated public debt instruments is denominated in euros and US dollars.

The second factor is the strong decrease of the price of oil after 2014 that lowered the inflation rate both directly, through the energy component of consumption prices, and indirectly. It is estimated that these two factors have led to a 1 pp decrease in the annual inflation rate. Unconventional monetary policy was successful in mitigating these disinflationary effects. Absent this  Page 6 sur 9 policy, in-house and ECB computations show that annual inflation would have been around 0.3pp lower between 2014 and 2019 (on average per year). After the onset of the pandemic, our monetary policy measures have also stabilized and then reversed the fall in inflation expectations. According to estimates from the ECB, all the measures taken since the beginning of the pandemic should contribute cumulatively around 1pp to the annual inflation rate over 2020-2022iv. Inflation expectations have picked up and long-term market based inflation expectations are currently above their pre-Covid levels (marketbased inflation expectations 5y/5y are close to 1.6% today). B. Beyond Covid, the ECB has a powerful “quartet of tools” to keep its monetary policy as accommodative for as long as necessary. Euro area HICP inflation increased to 1.6% in April 2021, from -0.3% in December 2020, while core inflation remained subdued at 0.7% in April and 0.2% at the end of last year. However, this rebound is primarily due to transitory factors and base effects, which are expected to fade out of annual inflation rates early next year.
Simon M Potter: Money markets and monetary policy normalization Remarks by Mr Simon M Potter, Executive Vice President of the Markets Group of the Federal Reserve Bank of New York, at the Money Marketeers of New York University, New York City, 15 April 2015. *  *  *  I would like to thank Julia Gouny, Deborah Leonard, and Eric LeSueur for their excellent assistance in the preparation of these remarks and colleagues in the Federal Reserve System for numerous insightful comments and suggestions. Accompanying charts can be found at the end of the speech. It is a pleasure to speak again at the Money Marketeers. Much has happened with the implementation of monetary policy in the sixteen months since I last addressed this audience: •  Recognizing a substantial improvement in the outlook for the labor market, the Federal Open Market Committee (FOMC) concluded its outcome-based asset purchase program in October 2014, having completed a total of $ trillion in Treasury and agency MBS purchases over nearly two years. •  The Federal Reserve has continued to test operational tools that it can use to control interest rates with a large balance sheet, through a continuation of the overnight reverse repurchase agreement (ON RRP) exercise that began in September 2013, as well as through term RRPs and the Term Deposit Facility. •  The FOMC revised and augmented its communications around the approach it intends to implement when it becomes appropriate to begin normalizing the stance of monetary policy.

In December 2014 and March 2015, the early provision of additional investment capacity through term RRP operations spanning the quarter-end dates, on top of the $ billion of capacity provided through ON RRPs, provided confidence to money market counterparties that sufficient investment opportunities would be available. 19 Absorbing some investment demand in term operations ahead of those quarter ends likely kept demand for ON RRPs on the quarter-end dates below the cap and helped to keep money market rates above the ON RRP offering rate. Given an apparent high degree of substitutability between overnight and term RRPs, cumulative take-up in these operations helps us to assess variability in potential demand for safe investments around peak times and to evaluate how much capacity the Federal Reserve might need to provide in an ON RRP facility to satisfy demand sufficiently to maintain interest rate control (Figure 6). 20 While our testing suggests that the current parameters of ON RRP operations have worked successfully with IOER to control short-term interest rates, there are limits to what we can learn from testing. Importantly, we will likely not know the level of support that proximity to the zero lower bound has provided to money market rates until we start to move away from it. Demand for ON RRPs following liftoff could remain relatively steady. But it could conceivably be much greater than what we have seen at higher levels of interest rates or as regulatory and structural changes in money markets boost demand for safe assets, which I will discuss momentarily.
Once people have gotten used to live digitally – remote working, e-commerce, telemedicine – the economy and society are going to change in a variety of ways. The financial sector is well-plugged into digitalisation. Those financial institutions that adopt deeper end-to-end digitalisation, who are able to use digital platforms for their business operations that today are conducted in person or on paper, are going to have a strong competitive advantage. New opportunities in particular areas of financial services are harder to tell. Impact investing may become a stronger growth opportunity. We have already seen some financial institutions launching impact funds to seek higher returns by investing in companies which are focused on combating the pandemic or providing solutions to deal with the associated health risks. Healthcare and supply chain resilience have taken on added importance, and there seems to be interest among asset managers to invest in these areas. Pandemic risk insurance is another area that might see good growth. There is now a much heightened awareness of pandemic risks. Although pandemic risk insurance has been around for some time, it never really took off. I think you are going to find demand for risk management and insurance solutions to address some of these pandemic-related areas of risk. The financial sector is fundamentally in the business of risk management. Covid-19 represents the materialisation of an extreme kind of risk.

This digital acceleration grant will help smaller financial institutions and FinTechs adopt digital solutions to strengthen their operational resilience during this period, improve their process efficiency, risk management, and customer service. The take-up has been very encouraging. More than 120 applications have come in. The first batch of applicants have already gotten their grants. New Opportunities What does the future look like for financial services, post-Covid? It is an important question that we are quite focused on at MAS. A lot has been written about how the post-Covid world might look like. I think it is a bit too early to tell, but some broad trends are discernible. First, the financial sector needs to be able to operate effectively with safe management. It is going to take quite a while before we find a vaccine or treatment for Covid-19. This means the virus is going to be with us for a while and, with it, the risk of renewed outbreaks of infections. 2/3  BIS central bankers' speeches  So, the financial industry must prepare itself to operate in a safe manner, amid the ongoing risk of pandemic. This could include changes in office layouts, the way transactions are carried out, everything we do has to take into account public health considerations. Second, and an obvious one, is digitalisation. There has been more digitalisation in the last two months than people had expected to see over the next five years. This acceleration is going to be with us.
The first one is of a general nature, while the second lies in differences in the relationship between the size of the financial sector and the size of the real economy in the most developed economies and the emerging ones. As to the general difficulty, I strongly believe that the world is becoming more fundamentally uncertain. Alignment and coordination of regulatory tools and policies can only take us so far. There is no guarantee that rules and harmonisation will produce the right outcome, that the new rules will be significantly better than previous ones, or that in the fundamentally highly uncertain world the “right” set of rules exists at all. Therefore, it is surprising to me that we are so focused on the design of the, hopefully, right set of rules and often also on limiting the space for their diversification. After all, diversification is a tried and tested strategy for dealing with fundamental uncertainties. The push for harmonisation at the expense of space for diversification is leading individual sovereigns to take a different approach, namely, that of insulation and buffering. This itself is not such a bad thing. After all, taking as a benchmark the maritime world, in which the rules of shipbuilding are fundamentally clearer, more certain and more effective than the current rules of financial market regulation, big ships are constructed with watertight compartments to contain any flooding if the hull is breached.

For example: •  their financial markets are typically more volatile than those in advanced economies, and so is their GDP growth, which at the same time is higher on average than in advanced economies;  •  these countries are also typically experiencing stronger credit growth, as their financial sectors are in the process of catch-up;  •  they usually have lower credit ratings and shallower government bond markets, which in some cases implies a lack of high quality liquid assets, a lack of adequate collateral etc. Saying that, I must stress that this difference does not apply to some; my country is a testimony to this;  •  the countries face a whole range of home-host issues, as many globally significant financial institutions operate branches or subsidiaries in those countries. These are just examples of features which could possibly interact with the Basel III framework in emerging economies in a way that was not originally intended. As I see from the topics covered by your workstream, you touch on all these aspects, so there is a chance  2  BIS central bankers’ speeches  that the paper that will emerge out of your contributions and out of the discussions you will have today will be useful for regulators in EMSEs and for the Basel Committee on Banking Supervision as well. Hopefully, today’s workshop will help you with this.
Meanwhile, on the other side of the ledger, many essentially backward-looking indicators of UK real demand and activity have held up reasonably well. But we should not yet place great weight on that. It can sometimes take time for disturbances to affect real economic activity. In the United States, arguably there was quite a lag between the onset of problems in housing finance and the pass through to spending. The UK looks to be quite a lot better than the US. The latest data for Q4 last year did, however, suggest that household spending on durables slowed quite significantly. And we are seeing softening in consumer confidence and property market conditions. So the picture on the real economy is mixed. What is clear is that credit conditions are unambiguously tighter than two months ago, underlining that source of downside risk to the outlook for demand and inflation. In retail lending markets, banks have raised the interest rates charged (relative to Bank Rate) on new lending, but they have all been doing much the same and many borrowers seem to have been willing to pay the extra. In consequence, banks generally may not have achieved their desired conservation of balance sheet capacity, and we are now seeing the withdrawal of some lending products. And in wholesale markets, the spread between the price that the banks themselves pay for funds, roughly LIBOR, and the expected central bank policy rate has, again, widened significantly over the past couple of months across the major international markets.

One is an apparent reluctance on the part of banks to raise fresh capital except where the market thinks that it is beyond doubt that they need to do so. Given the feedback from credit conditions to asset prices and the real economy and so potentially to banks’ future earnings, it might seem slightly odd for banks internationally to be maintaining distributions to shareholders but tightening credit availability in order to preserve resources. This has to be seen in the wider context. One possible explanation for banks holding back from raising fresh capital is that they may want to avoid giving an adverse signal about themselves. If there is a co-ordination problem, the regulatory authorities internationally should be able to tackle it, allied to ensuring prudent valuations of legacy portfolios. But another possible explanation is that, like some other market participants, bankers may believe that many legacy assets are fundamentally undervalued at present and that the markets for securitised assets will, with time, recover and reopen. On that view, banks are avoiding becoming overcapitalised on a fundamentals (or forward looking) basis, and so setting off another expansionary phase in the credit cycle, a little further down the road. The serious puzzle which that underlines is why there is a dearth of buyers for the supposedly undervalued paper. With the terms and availability of financing from banks and dealers having tightened, levered funds are hardly likely to be the US Cavalry.