samchain/econo-pairs-v1 huggingface dataset:
It’s also crucial because it complements, on the one hand, the fiscal stimuli launched by national governments, and on the other, the rapid and powerful intervention by the ECB since the start of this crisis. With all these measures now in 2/4  BIS central bankers' speeches  play, Europe is better equipped to respond to this unprecedented crisis. The agreement includes a generic reference to a future recovery fund that is yet to be defined. What criteria do you think it should meet? The ECB has always stressed the need for our Economic and Monetary Union to be completed in order for the euro area to become more resilient. On the one hand, we need a European deposit insurance scheme so that savings have the same protections in every country. We’ve also called for progress in capital markets so that euro area firms have access to more sources of funding. And in the fiscal sphere, we need a shared budgetary instrument that completes the monetary union. The fund that has been proposed could go in that direction, but its size and how it is funded remain open to discussion and will depend on future decisions by governments. In any case, the determination to present a shared response is very significant, because it is a strong political signal, and also a strong signal to the markets. Spain started the debate when it too voiced its opposition to the use of the ESM.

Luis de Guindos: Interview in La Vanguardia Interview with Mr Luis de Guindos, Vice-President of the European Central Bank, and La Vanguardia, conducted by Mr Manel Pérez and published on 12 April 2020. * * *  What is your assessment of the global economic situation in the midst of this coronavirus crisis? The global economy will enter recession and so will the European economy, albeit an even more severe one. The ultimate fall in GDP will depend on how long the lockdown lasts. International bodies have calculated that the economy will shrink by 2% to 3% for each month of lockdown. So one and a half months would be around 5%. Three months would be double that. Do these calculations also apply to the Spanish economy? Spain had an advantage at the start of this crisis – it was seeing growth that was higher than the average of its euro area peers. But it also had a problem – its economy is more exposed to the crisis as it is more dependent on services like tourism, which are heavily affected by the pandemic. This makes it very likely that Spain will experience a deeper recession. And coming out the other side of the crisis, what do you think the economic recovery will look like? In the euro area, the most likely scenario is that we will see some signs of growth starting in the third quarter, but we will have to wait until 2021 to see a genuine recovery in economic activity.
The APP guidance At its meeting in December last year, the Governing Council updated its forward guidance on net asset purchase by stating in particular that “From October 2022 onwards, the Governing Council will maintain net asset purchases at a monthly pace of € billion for as long as necessary to reinforce the accommodative impact of its policy rates; [it] expects net purchases to end shortly before it starts raising the key ECB interest rates.” The forward guidance on net asset purchases since September 2019 differs from that which prevailed until December 2018. The APP is no longer considered as a separate instrument from the interest rate instrument, but hierarchically subordinated to it, both in terms of its purpose (‘reinforce’) and its timing (‘shortly before’). This subordination was a change: from their inception in 2008, the so-called non-standard measures had always been presented, as distinct and complementary and not as an extension of the rate cuts. The main advantage of this new APP guidance was to reinforce the guidance on rates and to support the “low for long” strategy at the time. The coupling of the two instruments strengthened the impact on the whole yield curve. However, given the change in the inflation context (from a situation where inflation has been too low for too long to a situation of uncertainty), the challenge for the APP guidance today is to move from persistence to optionality.

Yet even theoreticians, and practitioners alike, including our Governing Council, soon realised that turning theory into practice raised additional issues. Let me discuss three. 1. The time horizon of forward guidance In theory, a small commitment reaching into the distant future is enough – through the power of rational expectations on all the expected real interest rates – to have a powerful impact today. This stretches credibility in two senses: first is it a realistic description of the way the world and expectations work? Even Michael Woodford has been working on models of limited planning horizon that mitigate its power. The second way in which time stretches credibility is whether long-dated commitments are believable. 2. Defining dates or states It was recognised long ago that so-called “open ended” (or “Delphic”) forward guidance was not 1/5  BIS central bankers' speeches  very effective and there was a shift towards more conditional “Odyssean” guidance, which is “calendar-based” and/or “state-contingent”. But “calendar-based” or “state-contingent” forward guidance pose other challenges which are quite evident in the current policy debate. “Calendarbased” is very clear and easy for markets to understand (“I’ll meet you at 8pm” v “I’ll meet you half an hour after I leave home”). But it’s the commitment that is the most hostage to fortune because large shocks can occur in the interim. “State-contingent” is less risky in this respect because it adjusts according to evolutions in the economy. State-contingency gives us flexibility on timing, but experience tells is sometimes less clear and hence less powerful for markets.
But I am less convinced it is now the main driver. The underemployment rate, which measures the fraction of the workforce that want to work more hours, still remains more than half of a percentage point above its pre-recession level in 2007. However, although some potential adjustment could possibly remain, we have nevertheless seen a substantial unwinding of spare capacity even in these broader indicators of underemployment. 10  The Curve has shifted downward  The Phillips curve traces the relationship between pay growth on the one hand and the balance of labour market supply and demand, represented by unemployment, on the other. The same shape of curve can be drawn at lower or higher levels of pay growth and unemployment. A shift up or down in the level of the curve does not affect the coefficient of the relationship between pay and unemployment. But any given level of unemployment will generate a higher or lower rate of growth of pay. There are a number of very different reasons why the Phillips curve may have shifted downwards so that current very low levels of unemployment are generating very weak upward pressure on pay. These include a lower natural rate of unemployment, lower or more anchored inflation expectations and changes in expectations of real pay growth. 10  The same picture holds even if we look at net desired hours, controlling for the number of people who want to work less hours than they currently are.

And arguably, since the crisis, that relationship has become more important to our understanding of inflationary pressure in the economy. Before the crisis the supply side of the economy posed far fewer puzzles. Productivity grew at a relatively steady rate around 2% a year and we had, or thought we had, a relatively clear idea of labour supply. The MPC certainly did not need to give as much attention to the evolution of the supply side of the economy as its present day counterpart. That is not just my recollection as the Treasury representative on the Committee from 2002 to 2007. It is borne out by the minutes – the rate of mentions of ‘supply’ and ‘productivity’ in the minutes of MPC meetings in the past decade has been about twice that in the decade prior to the crisis. As my colleague, Ben Broadbent has pointed out, pre-crisis the MPC could navigate primarily by demand and output. Changes in unemployment lagged changes in demand and output and, in the UK at least, the relationship between pay and unemployment appeared relatively stable. 5  The post-crisis uncertainty over productivity and the dependence of economic growth on labour supply has, as Ben suggests, led the MPC to depend more on the labour market as a guide to spare capacity in the economy and on the relationship between pay and unemployment as a guide to domestically generated inflationary pressure in the pipeline.
And what has been called the Wimbledonisation of the UK financial markets – the sale of nearly all the British merchant banks and stockbrokers and the dominance of foreign players – gives confidence to prospective market participants that the competitive environment is genuinely open to all comers. London is also a growing centre for Islamic banking. Finally, London may be benefiting from measures elsewhere; certainly in the years since the Enron and WorldCom scandals, commentators have suggested that the application of the Sarbanes-Oxley legislation to foreign firms listing in New York may have encouraged some firms to list here instead. But the single most important factor is the first one suggested by economists: London’s comparative advantage lies in its skilled labour and financial know-how both in the financial firms and in the professions which support them. The free movement of labour within the European Union, and relative openness to immigration by those with specific expertise from outside it, has also meant that employers in the financial sector can access the world labour market. And the relative flexibility of the labour market here in the UK compared to others in Europe may also be a factor. That concentration of skilled labour has spurred competition and innovation. We have seen a very striking illustration of this in the last few years with the rapid growth of hedge fund management and private equity firms in London.

Many have been established and are staffed by people who acquired their skills and earned their capital at the more established investment banks and fund management firms of the City. Being at the heart of world markets helped them spot the opportunities and assess the competition. Once they struck out on their own, they could draw on a network of former colleagues and contacts for staff, information and expertise. Future prospects of the City of London So what are the prospects of the City of London? One of the clear lessons from history is that any position can be lost. It is always possible to throw away an advantage by ill judged decisions. Any widespread operational disruption or fear about security could also be very damaging, which is one reason why we and the other tripartite authorities are spending so much time on improving crisis response and management. But in the absence of disaster the structural factors I have discussed seem likely to favour further concentration of financial business in the City. First, the entry of China and India international market has been associated with a massive expansion of international trade and finance in relation to overall world GDP. That seems likely to continue and has been a major factor in the growth of London in the past. Fifteen years ago people worried that developments in information technology would undermine centres like the City of London.
On balance, despite the ongoing financial turmoil, I would argue that financial integration has had a stabilising influence on the global financial system for the reasons just mentioned. 18 If, however, risk assessment and management is inadequate,  16  See Kose, Prasad and Terrones (2005, 2006). 17  The financial market liquidity indicator is constructed to gauge market tightness, depth and resiliency, and liquidity risk premia. 18  The available empirical evidence on how measured financial openness affected the severity of banking crises is somewhat inconclusive. The finance literature argues for a joint consideration of efficiency and stability issues, see Ferguson et al. (2007), ch. 6.3 for references to the literature. BIS Review 9/2008  7  asset valuation is difficult and highly uncertain, and incentives are distorted, the risks to financial stability could increase. The current financial turmoil provides a clear example of how a shock to a relatively small segment of a national financial market can spread globally across borders and across other markets. As early as 2005, US sub-prime loan delinquencies started to rise. Consequently the value of credit products based on sub-prime mortgages rated lower than AA started falling.

The corollary is clear: central banks should employ the full set of instruments available to them to fulfill their mandates. Central banks are entrusted with the fulfilment of a precise set of objectives and, to do this, they are given the powerful tool of independent statutes. But trust must be earned daily and backed by hard evidence (on our effectiveness), and not based on faith or belief. 3. The extension of independence to other economic policy functions Third, we should bear in mind that the time-inconsistency argument for an independent monetary authority is also relevant – and thus, may also be applied – to the need for an independent financial supervisor, as short-term incentives to relax supervisory policies may have important consequences over financial stability in the long run. In turn, this may also influence monetary policy-making. And this argument applies both for micro-prudential and macro-prudential supervision. 4  See article 130 (ex-article 108 TEC) of the Consolidated Versions of the Treaty on European Union and the Treaty on the Functioning of the European Union (2016/C 202/01): When exercising the powers and carrying out the tasks and duties conferred upon them by the Treaties and the Statute of the ESCB and of the ECB, neither the European Central Bank, nor a national central bank, nor any member of their decision-making bodies shall seek or take instructions from Union institutions, bodies, offices or agencies, from any government of a Member State or from any other body.
The number has declined from 29 institutions per million inhabitants in 1997 to 21 in 2004. The high level of concentration in small countries may be an indication that there are economies of scale in the financial industry. In large countries, even banks with small market shares can achieve economies of scale. Large credit institutions offering a range of services can also achieve economies of scope by selling several types of product to the same customer. Norway has more banks per capita than the euro area, and the number of banks has remained fairly stable over the past few years. One reason may be that bank alliances have allowed smaller banks to benefit from economies of scale and scope. This occurs in part through integrated technology and product development solutions, and the sharing of knowledge and expertise. In addition, the number of foreign operators in Norway has increased. Concentration in the banking industry also results in a concentration of risk. At the same time, larger entities may manage risk better than smaller entities. Cross-border activity In countries with a high level of concentration, more consolidation may weaken competition. Particularly in small countries, it has been necessary for banks to establish activities in other countries in order to achieve economies of scale. In the Nordic countries, Nordic financial conglomerates have emerged in recent years, and the largest banks now define the entire Nordic region as their domestic market. The Nordic region is very advanced in the development of cross-border solutions.

Developments in the financial sector  Scale and size of the various markets Financial markets have expanded strongly in many countries, partly as a result of extensive deregulation in the financial sector in the 1970s and 1980s. Technological advances reduced the effect of regulation and have, together with institutional changes, made it possible for market participants to respond in improved and more efficient ways. Credit institutions’ total assets have increased sharply over the past few years in all countries in the comparison. Banks’ total assets, as a share of GDP, are not particularly high in Norway compared with other countries, even though banks are the main lenders to Norwegian households and enterprises. This may be because Norwegian banks extend few loans to the public sector and to foreign borrowers compared with banks in other countries, and because Norwegian enterprises borrow from foreign credit institutions more than enterprises in other countries. Banks’ total assets have increased while the number of employees and person-hours has declined. Productivity growth has been strong. Direct mediation of assets and liabilities through the securities market has also increased. Nevertheless, bonds and notes do not account for more than about 7 per cent of domestic debt. This share has remained fairly stable in recent years. Private enterprises borrow less in the domestic bond market than enterprises in other countries. Particularly in the US, lending through these markets is well established. The financial system in Norway is largely dominated by banks.
These new possibilities mean that institutions have had to become much more sophisticated risk managers because of the singular features of these financial products and intermediaries, particularly their complexity and opacity. If we factor in the natural doubts as to the sustainability of this scenario (not so much as to whether it will continue but as to how benign it will be), it becomes evident that the satisfactory behaviour of the markets and financial intermediaries should not be allowed to lead to complacency, but should be used to strengthen the soundness of institutions as a precaution against possible changes in the favourable central scenarios. Spanish deposit institutions have not been unaffected by these developments. In fact, to the favourable factors listed above should be added, in the case of Spain, a highly favourable  BIS Review 45/2005  9  macroeconomic scenario and a growth differential with the core European countries in both output and employment. This, along with the good starting position of our institutions in terms of efficiency and competitiveness, enabled the soundness and international leadership of our financial system to be strengthened. Our institutions have thus been able to meet the demand for more and increasingly complex banking products and services, and at the same time improve their profitability. Naturally, however, the above comments on the international scenario and the need for markets and institutions to maintain their operational soundness apply likewise to Spanish institutions.

•  A common sight in Singapore stores is the array of multiple point-of-sale terminals cluttering up cashiers’ counters. This is confusing for customers and unproductive for counter staff. The ABS has tapped on the payments industry to develop a unified point-of-sale terminal or UPOS, which can accept all major card brands, including those that are contactless or embedded in smartphones. UPOS terminals are already being rolled out. •  About 1,000 of them have been deployed at convenience stores such as 7-Eleven and other retailers. •  Another 10,000 are expected to follow over the next two years. •  Large supermarket chains, such as Cold Storage, FairPrice, and Sheng Shiong are also piloting and gradually deploying these UPOS terminals. Online payment of bills – seamless payments and collections Payment of bills in Singapore needs to be made less cumbersome. The future should be one where we can securely and seamlessly pay our bills online, without having to: •  fill in our card details for the umpteenth time; or  BIS central bankers’ speeches  5  •  fill out lengthy paper-based GIRO forms to authorise standing payment instructions which take weeks to be approved.
Such an outcome could be a serious setback to the timely attainment of our dual mandate policy objectives. This risk consideration means that the decision to lift the funds rate from zero should be made only when we have a great deal of confidence that growth has enough momentum to reach full employment and that inflation will return sustainably to 2 percent. We should also proceed cautiously and keep the path of rate increases relatively shallow for some time after we begin to raise rates. This approach will allow us time to assess how the economy is performing under less accommodative financial conditions and reduce the odds of overaggressive rate hikes choking off progress toward our policy goals. History shows that premature exit is a risk Great Depression Past experience with the zero lower bound also counsels patience. History has not looked kindly on attempts to prematurely remove monetary accommodation from economies that are in or near a liquidity trap. The U.S. experience during the Great Depression – in particular, in 1937 – is a classic example for monetary historians: In response to the positive growth and reinflation that occurred after devaluation and suspension of gold convertibility, the Fed raised reserve requirements, the Treasury sterilized gold inflows, and there was a fiscal contraction. Subsequently, the economy dropped back into recession and deflation. During this time, interest rates remained very low. The discount rate was lower after 1937 than before, and Treasury bill rates were less than 1 percent.

We should be exceptionally patient in adjusting the stance of U.S. monetary policy – even to the point of allowing a modest overshooting of our inflation target to appropriately balance the risks to our policy objectives. Conflicting signs in the labor market Of course, to judge the success of policy, you have to know when you’ve actually reached your targets. Knowing when we hit our inflation target is straightforward. After all, a 2 percent increase in PCE prices is an easily identifiable number. But full employment is a far more nuanced concept. As the FOMC’s annual January “Statement on Longer-Run Goals and Monetary Policy Strategy” recognizes, maximum employment can be influenced by a large number of structural factors that can change over time and may not be directly measureable. In light of this uncertainty, the Committee considers many factors in gauging maximum employment. As the extremely relevant research presented at this conference makes clear, judging the degree of slack along these many dimensions is a difficult and complex task. But it is one that is critical for the conduct of monetary policy – we must have a good idea of what constitutes achievement of our full employment target. Our Chicago Fed research staff has been working long and hard, and in my remarks today, I will briefly talk about some of our results that touch on several of the most contested labor market issues on the table today. These involve labor force participation, job openings and wages.