samchain/econo-pairs-v1 huggingface dataset:
But the Bank’s estimates suggest it may have been more than 6% smaller than it is today. In money terms, we as a nation would have been between £ billion poorer – roughly, the GDP of Yorkshire and Humberside. As defensive measures go, then, UK monetary policy for the past few years has been positively Boycott-ian.1 Since the start of 2013, the economy has begun to respond to the medicine. UK output is estimated to have grown by over 3% in the past year – that is, at the top of the league table  1  Again for the uninitiated, Geoff Boycott was a famous Yorkshire and England batsmen venerated for his defensive technique. BIS central bankers’ speeches  1  among the G7 nations. And growth this year and next is forecast by the Bank to remain around 3%, again at or close to the top of the G7 league table. Output is now just about back to its pre-crisis levels. The employment picture has been even more positive. Over 1.5 million jobs have been created in less than three years. Unemployment has fallen from a peak of 8.4% in 2011 to 6.6% today. It is expected to fall further, to below 6% by 2017. Over the same period, inflationary pressures have abated, with inflation falling from a peak of 5.2% in 2011 to 1.5% today, below the Bank’s 2% inflation target. The Bank’s forecasts suggest it is likely to hover around that target in the period ahead.

They are chosen not because they are probable outcomes, but precisely because they are improbable contingencies against which it would be useful to safeguard, consistent with the Hippocratic oath. One adverse scenario is that the economy could stall in its recovery, deflationary forces could set in and monetary policy could be trapped for a protracted period at the zero lower bound. This is not so much secular stagnation as secular deflation. And you do not have to look too hard to find real-world examples. The most widely studied is, of course, the Japanese experience since the bursting of its bubble in the early 1990s. In the quarter-century since, nominal GDP in Japan has barely budged. And while real GDP growth in Japan has averaged 0.7% per year since 1997, this has been offset by a persistent fall in prices of, on average, over 1% per year. Similar deflationary concerns, albeit on a lesser scale, have been voiced recently in the euro-area. So how great are these risks in the UK today? At least to my ear, the mood music is different. From its trough, real GDP in the UK has risen by 7% and nominal GDP by 19%. UK real GDP has risen at or above trend for each of the past four quarters. It is expected to continue  4  Varian (2014), Tuckett et al (2014). 5  For example, the Blue Brain project is setting out to reconstruct the brain piece by piece by building a virtual version in a supercomputer (see http://bluebrain.epfl.ch/page-52063.html).
The MPC judged that slow productivity growth was partly a result of the post-crisis weakness in the banking system, which had been restricting the reallocation of capital and labour.5 It was not clear how quickly productivity growth might return to pre-crisis rates as demand recovered and financial intermediation returned to normal. But old habits die hard, there was an (ultimately misplaced) optimism that productivity growth would pick up sharply. Chart 3: Productivity growth anaemic post-crisis Index: 2001 Q1 = 100 118 116 114 112 110 108 106 104 102 100 2001  2002  2003  2004  2005  2006  2007  2008  2009  2010  2011  2012  2013  5  Whereas half of all productivity growth at the economy-wide level in the years prior to 2008 occurred through this channel, reallocation appeared to make no contribution to productivity growth around this time. See Barnett, A, Barriel, M, Chiu, A Franklin, F (2014), “The Productivity Puzzle: Firm-Level Perspectives,” Bank of England Working Paper. 6  All speeches are available online at www.bankofengland.co.uk/news/speeches  6  In parallel, evidence of increased labour supply was emerging. In the wake of the crisis, several forces encouraged more people to seek work and others to delay retirement, including the accumulated debt burdens of UK households in the run-up to the crisis; increased uncertainty about future incomes in its aftermath; changes to pension arrangements; and reforms to the UK’s welfare system.

The adverse impact on profitability, and therefore capital, would likely limit the pass-through of rate cuts into loan rates, reducing the effectiveness of negative interest rates. That is why the MPC has concluded that the lower bound on Bank Rate is “close to, but a little above, zero.” This judgement is informed by close consultation with PRA supervisors. Of course, the effectiveness of unconventional policies means that there is considerable total policy space. In the UK, the MPC can increase its purchases of both gilts and corporate bonds, providing stimulus through a number of channels including portfolio rebalancing. At present, there is sufficient headroom to at least double the August 2016 package of £ billion asset purchases, a number that will increase with further gilt issuance. That would deliver the equivalent of around a 100 basis point cut to Bank Rate on top of the near 75 basis points of conventional policy space. Forward guidance at the ELB adds to this armoury. All told, a reasonable judgement is that the combined conventional and unconventional policy space is in the neighbourhood of the 250 basis points cut to Bank Rate seen in pre-crisis easing cycles. For example, as banks’ profitability is gradually eroded, they may widen net interest margins by cutting deposit rates further or raising loan rates. For more detail on the potential for time dependency, see Brunnermeir, MK and Koby, Y (2018) ‘The Reversal Interest Rate’, NBER Working Paper No. 25406.
Accordingly, these considerations are subject to very high uncertainty. In this respect, the social security registrations figures for October would suggest the recovery in this variable had flattened somewhat (in contrast to preceding months, the year-on-year rate of change in registrations did not fall in October and held at -2.3%). Also, the manufacturing PMI for October, published this very week, has shown a slight rise in business confidence in the sector, both in Spain (+1.8 points) and in the euro area as a whole (+1.1 points). There has been a clear downward surprise in inflation in recent months (it dipped to -0.9% in October according to the CPI leading indicator published by the INE last week). This has essentially been due to the behaviour of the prices of services (especially those relating to tourist and leisure activities) and of non-energy industrial goods (weighed down by the relative weakness of demand). This would be consistent with inflation rates in the coming quarters even more modest than those foreseen in the September projections exercise. 1.4  The main conditioning factors of economic activity in the coming quarters: risks and policies  The macroeconomic outlook I have described is subject to extraordinary uncertainty and the underlying risks are tilted to the downside. The key aspect influencing Spanish and global economic developments in the short term is, unquestionably, how the epidemiological situation will evolve. Considerable risks persist as 10  to the future course of the pandemic.

To this effect, Europe-wide measures are crucial, even if they do not take the most appropriate form for optimal efficiency, as would have been the case, for example, of a permanent macroeconomic stabilisation instrument depending on the common budget. That said, in the absence of such an instrument, the European recovery fund may fulfil this function in a reasonably adequate manner in the coming years. However, harnessing the maximum potential of these funds poses a huge challenge. The first difficulty lies in the need to develop the capacity to set in place a number of new high value-added projects that do not supplant those that would have been carried out had the European funds not been available. In addition, these projects require prompt execution, to permit a more robust economic recovery once the pandemic has been overcome. Indeed, this is the Government’s declared intention: to use these European funds as promptly as possible as a catalyst for structural transformation. Nevertheless, it is fair to acknowledge the huge challenge that the swift implementation of a potentially very large number of projects will entail for the existing structures. The projects executed under these programmes must be concentrated on areas such as digitalisation, the fight against climate change or improving human capital. Their effects on economic growth potential will depend, above all, on the projects to be executed being selected in accordance with a carefully designed structural reform plan.
Only a minority of those with mortgages have ever experienced a rise in borrowing costs. Fewer still have significant inflation in their lived experience. Easy money is always an easier decision than tight money. But an asymmetric monetary policy reaction function is a recipe for a Minsky mistake. Having followed the right script on the way in, central banks now need to follow a different script on the way out to avoid putting 30 years of progress at risk. Financial Stability  The Bank has been bedevilled by bouts of financial instability since its inception. After I joined, these continued with the failures of BCCI and Barings. Each met with a ratchet response - more regulation, more regulators. At root, what these failures illustrated was a structural flaw in policy: the Bank was being asked to look in two directions at once, as both regulator of, and promoter of, the City. Both are useful roles. But giving one institution both roles invites failure when, as inevitably happens, the wrong balance is struck. Looked at now, firm failures in the 1980s and 1990s, and the cluster of small banks in the 1970s, were not close to being financial crises of the scale and severity we would recognise today. Certainly, none of them were systemic in their impact, either for the financial system as a whole or the wider economy. Contagion was short-lived and limited. And few losses of job or GDP resulted.

Ardian Fullani: Latest economic and financial developments in Albania Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the press conference on the monetary policy decision-making of the Supervisory Council of the Bank of Albania, Tirana, 26 October 2010. * * * At today’s meeting of 26 October 2010, the Supervisory Council of the Bank of Albania analyzed and approved the Monetary Policy Report for the third quarter of 2010. After scrutinizing the latest economic and financial dynamics at home and the expected performance in the future, the Supervisory Council of the Bank of Albania decided to keep the key interest rate unchanged at 5.00%. In what follows, I will elaborate upon the analysis and the main conclusions today’s decisionmaking of monetary policy was based on. *** The performance of the Albanian economy during the third quarter of 2010 reinforced the main developments in the first half of the present year, featuring gradual recovery of aggregate demand, lower risk premiums and consolidation of macroeconomic stability. Broadly in line with our projections:   economic growth has accelerated (resurged) and its base seems to have broadened;    CPI inflation and expectations have been anchored close to the Bank of Albania’s target for inflation;    The external position of the Albanian economy has recovered and the exchange rate is more stable;    liquidity in the system has increased and the interest rates have generally been downward.
The issuance of loans has grown very rapidly, especially in the United States but also in the U.K. and other European countries (Chart 15), and now accounts for close to a tenth of aggregate corporate debt in the advanced economies. At the same time, the terms on which they’ve been issued have become looser: the share of “covenant-lite” loans, imposing fewer restrictions on borrowers, has risen significantly.11 And at least until recently, the spreads on these loans – the extra margin on the interest rate, relative to safer government debt, demanded by lenders – had been falling (Chart 16). Chart 16: Spreads tightened through much of that period  Chart 15: Large flows of leveraged loans over the past two years 12-month flow £ 110  12-month flow £  Basis points  500  2,500  US (RHS) UK (LHS) EU (LHS)  90  Leveraged loans  400  70  High-yield bonds  2,000  300  1,500  200  1,000  100  500  50 30 10 -10 2001  0 04  07  10  13  16  19  Sources: LCD, an offering of S&P Global Market Intelligence and Bank calculations. 2005  2008  2011  2014  2017  Sources: LCD, an offering of S&P Global Market Intelligence, ICE/BofAML, Board of Governors of the Federal Reserve System (US) and Bank calculations.

They helped underpin the international monetary framework (which in that era meant closely-managed exchange rates, with or without the gold standard); and  3. They provided channels through which funds could continue to flow in conditions of financial emergency. Much has changed since 1917. Sterling and the dollar have traded places as the world’s leading reserve currency. The gold standard is a distant memory. The major global currencies have swapped fixed for flexible exchange rates. And the scale and sophistication of international trading and capital markets, and the number and diversity of reserves-holding countries, have expanded greatly. But amidst all that change, those three goals of financial co-operation between central banks remain fundamentally the same. Of course, the central banks of today collaborate on a much wider range of policy, supervisory and macro-prudential issues. But at our heart we are still banks – and it is our balance sheets, and the financial interdependencies they give rise to, that frame everything else we do. It is therefore an honour to celebrate with you the centenary of the events that really gave birth to it all. In my remarks today, I want to give a Bank of England perspective on those events, to describe the services that we provide today, and to touch on some of the challenges and opportunities for the future.
In my intervention this afternoon, I would like to offer first some views on why the new capital framework is necessary. I would then like to address two topics: firstly, co-operation among supervisors; and secondly, the work that must continue to maintain the relevancy of the framework. 2. The benefits of Basel II. Why the new framework is the one we need. Forward-looking approach to capital and risk management As I mentioned before, the new capital framework takes a forward-looking approach to capital and risk management that will remain up-to-date with sound practices in the industry. In the sixteen years since the 1988 Accord was adopted, the tools for measuring and managing risk have evolved in ways that its architects could not have anticipated. Improvements in technology and telecommunications, the explosive growth in the markets for securitised assets and for credit derivatives, and the emergence of new disciplines in risk management - such as operational risk management - have changed the ways that banks measure and manage their risks. As risk management practices become more sophisticated, the static and very simple rules of the 1988 Accord are becoming less relevant to the most sophisticated and complex banking businesses. Therefore, in the mid-1990s, the Basel Committee agreed that it was time to develop a new framework for capital. Our goal was to develop a new approach that would be more sensitive to the actual risks that banks take on and that would ensure a level playing field for banks that compete globally.

Transparency and regular evaluations are necessary to maintain the legitimacy of the central bank's operations. They also give the central bank stronger incentives to fulfil its mandate and motivate the central bank to develop the monetary policy analysis in the best possible way. It also appears that detailed evaluations of monetary policy are becoming increasingly common. In Sweden, the parliamentary Committee on Finance conducts an annual evaluation of the monetary policy conducted over the last three years. An external and more comprehensive evaluation of the monetary policy conducted in Sweden between 1995 and 2005 was carried out on behalf of the Committee on Finance by professors Francesco Giavazzi and Frederic Mishkin. The Committee on Finance has decided that Swedish monetary policy should be evaluated by external experts every fourth year. Norges Bank (the central bank of Norway) includes an evaluation of its monetary policy in its Annual Report. On behalf of the Norwegian Ministry of Finance, an annual evaluation is also carried out by Norges Bank Watch, which consists of a group of independent experts. I myself have taken part in two evaluations – an evaluation of ten years of monetary policy in New Zealand on behalf of the country's Minister of Finance in 2001 and an evaluation of monetary policy in Norway as Chairman of Norges Bank Watch in 2002. 1 Evaluations of monetary policy are thus important and appear to be becoming common practice. One must therefore ensure that reasonable principles and appropriate methods for evaluations are developed and applied.
Just suppose for a moment that, for the rest of this year, the level of average earnings is flat – what would be the peak rate of growth of the series? The answer would be 7% due to the sizeable base effect, and then it would fall back quickly, other things equal. Needless to say, 7% is a chunky growth rate for earnings, but on its own it would tell us nothing of real substance about the future. That is not where we should place most of our focus on the labour market. Our focus should be on whether, and how rapidly, people return to the labour force, and in what degree, a point I will come to in a moment. The risks to the outlook for inflation Let me now turn to what could cause things to turn out differently, and thus what we must watch very carefully. First, so far, we have seen a pick-up in import prices which has extended beyond energy prices, and we have observed these increases pass through into producer output prices, 3/5  BIS central bankers' speeches  and now into consumer prices, to some extent. In some cases these increases reflect prices returning to pre-Covid levels, and in part they also reflect bottlenecks in supply chains as we experience a rapid but uneven recovery. There are good reasons to interpret this as a temporary feature, but we must be on the lookout for the risk that these features are more sustained.

Some legal issues have yet to be thoroughly examined, such as the application and enforceability of laws for the crossborder DLT models, mechanisms for handling liability and dispute resolution if there is no centralised party administrating the DLT platform, and compliance with personal data protection principles in relation to data sharing and perpetual storage. Also, traditional cybersecurity issues still apply to DLT, including denial of access attacks and other cyber attacks. 7. The next stage of ASTRI’s study will deliver more detailed findings from a number of the proof-of-concept trials, along with assessment on whether some of this work can be put into action. It will also address the regulatory implications of DLT, and the general control principles for DLT for the banking and payment industry. We plan to deliver the next set of results in the form of another white paper in the second half of 2017. 8. Third, as I announced in September, we are setting up the HKMA-ASTRI Fintech Innovation Hub. I am now pleased to say that, following intensive preparation, the Hub is ready for use as from today. The Hub is equipped with high-powered computing resources and supported by the experts at ASTRI to allow banks, payment service providers, fintech firms and the HKMA to brainstorm innovative ideas, try out and evaluate new fintech solutions in a safe and efficient manner. All in all, the Hub will cater for the big and small institutions alike in supporting their research and adoption of fintech. 9.
Active participation in this endeavour by the State and local authorities, academic institutions, private, non-profit and public organisations is crucial for its success. Official endorsement is thus of paramount importance. The participation of private and not-for-profit stakeholders in the National Strategy's implementation will be further supported by the development of a code of conduct and prior agreement to specific protocols. A code of conduct is envisaged to provide a uniform framework for the contribution of stakeholders in order to achieve the common objectives set. Public awareness on financial literacy through tailored campaigns is equally important, as it will facilitate the receptivity and usefulness of a National Strategy for financial education. Last but not least, a challenge lying ahead is the proper governance structure for the body that will undertake the implementation of the National Strategy on financial literacy. International organisations such as the World Bank2 have clearly opined that national strategies should be initiated, developed, and monitored by a credible and unbiased authority with financial education expertise and appropriate flexibility and resources. In many cases it is deemed that Central Banks can play such a role. Concluding remarks At this point, I would like to emphasise once again my personal interest and my commitment to assist the Committee's role in achieving its goals. Enhancing the population's financial literacy is an ambitious but needed goal.

The ongoing work of the Committee The ongoing work of the Committee is noteworthy. It includes an evaluation of the scientific bibliography on financial literacy, as well as a review and assessment of international initiatives for the promotion of financial literacy. The Committee, with the help of CBC staff, has also conducted an in depth econometric analysis of the results of the CBC's sampling survey in order to representatively assess the level of financial literacy in Cyprus, as well as to identify the groups that are in greater and urgent need of financial education. For instance, people who studied financial subjects at high school scored higher in the survey than those who focused on classical studies with 5.2 out of 7, compared to 4.5 out of 7 in knowledge questions; 5 out of 7 being the minimum score for adequate knowledge as set by the OECD. The CBC had carried out a sampling survey in 2018 to better identify the extent of the financial literacy problem, covering all groups of the population at a national level. This survey followed another similar survey, which focused on university students, namely, a survey by Andreou and Phillips (2018)1 which showed that the low level of financial literacy among university students appears to be a major problem in our society. The CBC survey, which as I mentioned covers all segments of the population, is instrumental in deriving useful results on financial literacy in Cyprus.