samchain/econo-pairs-v1 huggingface dataset:
Percentage points 0.5 100bps increase in CCyB  So, rather than increasing the burden on monetary  100bps increase in policy rate  0.3  policy, and depressing inflation still further, what to my 0.1  mind would have helped far more ahead of the crisis is an effective prudential policy – in particular, higher  -0.1  capital requirements for banks. And if that’s more  -0.3  obvious after the event than before, let me offer one  -0.5  other pre-crisis comparison, this one between the UK -0.7  and two countries whose experiences of the crisis  Output Inflation  were far less severe than ours, namely Canada and  Credit Crisis spreads prob. Australia. Source: Aikman et al, forthcoming. These countries had significantly smaller and less international banking systems than the UK’s. But policy – and specifically prudential policy – probably mattered too. Even as a share of what turned out to be much less risky assets, Canadian and Australian banks had more loss-absorbing capital (Chart 7), enough to avoid any risk of insolvency. Meanwhile, real short-term interest rates were generally lower than those in the UK (Chart 8). So monetary policy was if anything looser yet, thanks in part to better prudential policy, the crisis was far less severe.

But early on, it’s as important to look at investment surveys as it is the official estimates. These too bear out the broad shape of the MPC’s August forecast (Chart 14). And as I’ve explained today, that shape has nothing to do with the longer-term consequences of EU exit, depending much more on the uncertainty about those consequences. All that said, there’s little doubt that the economy has performed better than surveys suggested immediately after the referendum and, although we aimed off those significantly, somewhat more strongly than our nearterm forecasts as well. The central projection in the August Inflation Report didn’t involve a recession, simply a slowing in the economy’s rate of growth. But that slowing looks so far to have been more moderate than we feared. Why might that be? Well, again, one shouldn’t rush to judgement here. Even within the quarter, the average forecast error on near-term GDP growth is around ¼% point. And even after the event, it may not be clear why a particular out-turn has differed from the central prediction, in one direction or the other. 11  I gave a talk about this in 2013, highlighting the pioneering work of Daniel Kahnemann (Broadbent (2013)).
Mervyn King: Twenty years of inflation targeting Text of the Stamp Memorial Lecture by Mr Mervyn King, Governor of the Bank of England, London School of Economics, London, 9 October 2012. All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  *  *  *  I am indebted to my colleagues in the Bank and on the Monetary Policy Committee for invaluable help and insightful comments on earlier drafts of this lecture, especially to David Aikman, Charles Bean, Nils Blythe, Alex Brazier, Spencer Dale, Iain de Weymarn, Richard Harrison, Andrew Hauser, David Miles and Tony Yates. In particular, I regard Tim Taylor as a co-author of the lecture, although he is absolved of any errors in the current draft. Introduction I am delighted to be back at the School to deliver the Stamp Memorial Lecture. Lord Stamp was eminent in the worlds of both academic and public life. Among other achievements, he was an alumnus and a governor of the School, and a Director of the Bank of England. Following his untimely death, in an air raid in 1941, he was succeeded at the Bank by John Maynard Keynes. Keynes and Stamp often broadcast live discussions on the BBC which were published a week later in The Listener.

In Asia, and in many emerging market economies, meaningful headway has been made toward recapitalizing banking systems, ridding banks’ balance sheets of problem assets, and improving supervisory and regulatory frameworks. As a result, economies are growing again, equity markets have rebounded, and foreign capital has begun to return. What a difference two years of hard work can make. When I last addressed this conference in October of 1998, I said that bank supervisors have a special role in maintaining financial stability, and that our special role has two components: facilitating the resolution of problems when they occur, and taking the necessary steps to lower the risk of problems occurring. Two years ago we were busy with the first component – crisis management and resolution. Today, as we stand on the threshold of a new century, we have the opportunity to focus on the second – prevention. With that in mind, it is my view that the greatest challenge to the long-term goal of financial stability, both locally and globally, is the accelerating pace of change and financial innovation, driven by the steady march of technological advancement. To be sure, such rapid change has created unprecedented opportunities for both producers and consumers of financial products and services. But it must also be acknowledged that with such remarkable progress has come new, more complex and potentially farreaching risks.
I am positive that with improved macroeconomic stability there will be more investment in such productive activities. Tourism Distinguished guests, tourism is another of Government’s priority sectors from which growth and employment are expected to be generated. One of the key aspects of Zambian tourism is the  4  BIS Review 72/2006  increasing participation of locals in the sector through among other activities establishment of lodges that are complimenting the traditional hotels and offering services with a Zambian touch. It is worth mentioning that tourism, more than any other sector, is labour intensive and provides jobs for local people in both rural and urban areas. In order to stimulate the potential of this sector, there will be need to facilitate access to affordable and sufficient credit, entrepreneurship (private sector capacity building) training, improved marketing and provision of the necessary support infrastructure. Access to most of these tenets will enable the local small scale investors to provide competitive tourist services. Ladies and Gentlemen, may I also add that tourism should not be based on wild life (visiting national game parks) alone. Here on the Copperbelt, you have a unique opportunity to develop a tourism industry based on copper mining - e.g. going underground. Collectively, we can also encourage and promote eco-tourism in much of rural Zambia. Energy sector Mr. Chairman, a growing economy needs sufficient, stable and affordable energy supply. I have here in mind the electricity sector.

They are likely to stay slightly above 2%, largely owing to commodity price developments, before moderating again towards the end of the year. Overall, we see evidence of short-term upward pressure on overall inflation, stemming largely from global commodity prices. While this has not so far affected our assessment that price developments will remain in line with price stability over the policyrelevant horizon, very close monitoring of price developments is warranted. Inflation expectations over the medium to longer term continue to be firmly anchored in line with the Governing Council’s aim of keeping inflation rates below, but close to, 2% over the medium term. Risks to the medium-term outlook for price developments are still broadly balanced but could move to the upside. Upside risks relate, in particular, to developments in energy and nonenergy commodity prices. Furthermore, increases in indirect taxes and administered prices may be greater than currently expected, owing to the need for fiscal consolidation in the coming years, and price pressures in the production chain could rise further. On the downside, risks relate mainly to the impact on inflation of potentially lower growth, given the prevailing uncertainties. Turning to the monetary analysis, the annual growth rate of M3 increased to 1.9% in November 2010, after 0.9% in October. This strong increase is in part related to base effects and volatile factors. The annual growth rate of loans to the private sector also increased, rising to 2.0% in November from 1.5% in October.
In turn, the stabilising arm of the autonomous national fiscal policies was tasked with addressing idiosyncratic shocks and cyclical slippages, while guaranteeing fiscal sustainability. However, the independent conduct of fiscal policy in a monetary union has inherent externalities that warrant some constraints. The EMU was built on the basis of placing full responsibility for fiscal policy decision-making and implementation on the governments of the individual Member States, without interfering with the conduct of monetary policy. In this sense, the independence of the central bank was reinforced by two means: i) the prohibition of monetary financing and ii) a virtuous conduct of fiscal policy to avoid calling into question the independence of the monetary authority. The consequences of fiscal actions were thus the sole responsibility of the individual Member States. For this reason, a “no bail-out clause” was included in the Treaty. The main objective of this clause was that financial markets should play a disciplining role by requiring different risk premia according to the underlying fiscal fundamentals. At the same time, limits were set to the deficit and public debt of the Member States that where later complemented by the provisions of the Stability and Growth Pact (SGP). There were two additional reasons for this. The first is that financial markets could not always be trusted to act as a deterrent against unsound policies.

Since the second half of 2004, the liquidity of offshore spot zloty market has increased significantly and average daily turnover reached almost USD 1 billion. In addition, high nominal values of single transactions between non-residents contribute to a segmentation of the zloty foreign exchange market. This phenomenon is even more visible in the case of the zloty option market. At the same time the consolidation of the Polish banking sector, transfer of treasury operations to parent banks and very limited amount of Polish banks’ capital, which determines the scope of risk they can take, limits the liquidity of the domestic market. In the future, financial market for instruments denominated in zlotys could become even more segmented and therefore less effective in absorbing different kinds of risks. 12 This process will accelerate with our accession to the eurozone. Experience of some EMU members, e.g. Finland, indicates that EMU membership will be accompanied by a visible contraction of the domestic market. 13 The introduction of the euro will change banks’ internal organisation of risk and liquidity management. Treasury activities will be centralised on a multi-country group level and proprietary trading will be transferred abroad to head offices. This process might be accelerated by the already observed transformation of subsidiaries into branches of foreign banks. Domestic outlook Let me turn to domestic outlook of the Polish economy.
Whatever the merits of cryptocurrencies as money, authorities should be careful not to stifle innovations which could in the future improve financial stability; support more innovative, efficient and reliable payment services as well as have wider applications. 23  On the downside, at present, crypto-assets raise a host of issues around consumer and investor protection, market integrity, money laundering, terrorism financing, tax evasion, and the circumvention of capital controls and international sanctions. The Bank of England’s FPC is currently considering the risks posed to UK financial stability. And internationally the Financial Stability Board (FSB) will report to the G20 in Argentina later this month on the financial stability implications of crypto-assets. At present, in my view, crypto-assets do not appear to pose material risks to financial stability. This is in part because they are small relative to the financial system. Even at their recent peak, their combined global market capitalisation was less than 1% of global GDP. In comparison, at the height of the dotcom mania, the valuations of technology stocks were closer to about a third of global GDP. And just prior to the global financial crisis, the notional value of credit derivative swaps was 100%. In addition, major UK financial institutions have minimal exposures to the crypto-asset ecosystem. Looking ahead, financial stability risks could rise if retail participation significantly increased or linkages with the formal financial sector grew without material improvements in market integrity, anti-money laundering standards and cyber defences.

Our overhaul of RTGS is helping to reduce complexity and costs in other areas as well. Take cross-border payments, where the Bank is leading by the adoption of emerging global standards for payments messaging and by working with other central banks and the private sector to explore the scope for cross-border payments in central bank money through synchronised national RTGS systems. This all could increase the speed and safety, as well as lower the costs, associated with cross-border transactions to support purchases and travel overseas. When coupled with the capture of richer payments data made possible by its renewal, RTGS will help support innovative services for the more effective management of personal and company finances. These benefits will be amplified by the UK’s ambition in implementing the Open Banking standard– under which the largest banks will be required to make customer data available to other existing firms and innovators, if the customer demands. In turn, this will help improve aggregator, comparison and switching services. Taken together, these advances will support innovation that allows you to manage your finances seamlessly, from tracking how much you spend on beer and books, to managing your future savings and current loans.
In particular, the acceptance of the principle of transnational mutualisation of financial risk in Europe, although implemented very gradually and limited to funds contributed by the industry, is essential to ensure the homogeneous treatment of banking risk throughout the EU. Above all, from a broader standpoint, the agreement means that a significant political obstacle to extending the risk-sharing framework has been overcome. This will very likely pave the way for more significant progress in European integration in the future. Let me finish by noting that in recent economic history it is difficult to find bouts of regulatory reform as intense as at present. Globally, the unprecedented costs of the banking crisis for citizens as a whole have spurred major regulatory changes designed, firstly, to tighten up prudential regulation so as to reduce the likelihood of fresh crises in the future; and, secondly, to develop new resolution regulations to lower and allocate more fairly the cost of maintaining financial stability. In Europe the application of the regulatory reform coincides in time with a far-reaching institutional change which has to lead to the creation of a banking union. And, in Spain, all these important regulatory and institutional changes are taking place against a background of deep reform of our financial sector which has involved the clean-up of balance sheets, the recapitalisation of vulnerable banks, progress towards greater consolidation of the industry and enhancement of regulations, particularly those governing savings banks.

François Villeroy de Galhau: Insurance and pensions – institutional innovation, economic innovation, technological innovation Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the7th annual EIOPA Conference, Frankfurt am Main, 22 November 2017. * * * Ladies and Gentlemen, It is a pleasure to be in Frankfurt today for this 7th Annual EIOPA Conference and I wish to warmly thank EIOPA’s Chairman Gabriel Bernardino for his kind invitation. I must say that I feel at home, since we are not far away from the ECB building where I take part in the meetings of the Governing Council at least every two weeks. But today I will speak in my capacity as President of the French supervisory authority, the Autorité de Contrôle Prudentiel et de Résolution (ACPR), which belongs to the board of supervisors of EIOPA, and which is in charge of the supervision of both insurance companies and banks in France. This is an important responsibility as the French insurance market is the second largest in the European Union, just behind the United Kingdom, with an aggregated balance sheet of approximately EUR 2,600 bn. Given that I am speaking before the panel dedicated to innovation, I will take this opportunity to focus on three kinds of innovation, which in my view can lead us to rethink insurance and pensions: institutional innovation, economic innovation and technological innovation. 1. Institutional innovation Let me start with institutional innovation.
Since the wage increases are small, it is reasonable to assume that there is spare capacity in the labour market. This means there is also scope to use monetary policy to try to reduce unemployment. Household indebtedness nevertheless remains high The actual purpose of a monetary policy that leans against the wind is to counteract a buildup of debt that is perceived as risky. When one assesses whether the policy conducted has been appropriate, one wants to know how far one has succeeded in this. In this context, it is important to note that the household debt ratio has remained relatively stable since autumn 2010. In 2010 three things happened that may have affected developments; the mortgage cap was introduced, the Riksbank began to raise the repo rate, and after a period of silence there were suddenly lots of statements and initiatives from the political side referring to the housing market and household indebtedness.10 It would have been interesting to be able to distinguish the separate effects of these events on indebtedness, but this is of course very difficult. One piece of the puzzle is Finansinspektionen’s conclusion that the mortgage cap has had an effect. They note in their Mortgage Report in March 2013 that the mortgage cap is continuing to work and that the loan-to-value ratios for new mortgages are no longer rising.11 For me as a monetary policy-maker, the decisive question is to what extent monetary policy has contributed to limiting household debt recently.

These two elements are interlocked, thereby taking account of the insights reached in international discussion in this area. The SNB supplies the economy with liquidity first and foremost through money market operations, but also, under certain circumstances, through its function as lender of last resort. Emergency liquidity assistance is only provided if the stability of the system is severely jeopardised. The SNB guards against this situation by helping to ensure a well-functioning liquidity supply. It facilitates and secures the operation of cashless payment systems, regulates and monitors both the payment and the securities settlement systems and works to ensure that these systems are crisis-proof. In addition, it continually oversees and analyses developments in the financial system and collaborates closely with the Swiss Federal Banking Commission (SFBC), the banking supervisory body. Currently, there are three questions that direct the SNB’s use of information on the stability of the financial system when it makes monetary policy decisions. The first question is whether monetary policy – as an instrument for ensuring price stability – can be improved by including information on banking system stability? The second question works the other way round: Can monetary policy influence the stability of the banking industry? And – if the answer to this second question is yes – the third (normative) question is whether monetary policy should be used to increase stability in the banking industry. While the answers to the first two questions are in the affirmative, the response to the third is negative.
Firstly, the correction of the real estate sector and of the high level of private-sector debt, which had started prior to the crisis, already entailed significant elements of spending containment. Further, however, the forceful effects of the international financial crisis and of the global recessionary trends compounded this situation, amplifying the contraction of domestic demand, eliminating any possible external support and exacerbating the loss of confidence. This latter factor was, moreover, particularly affected by the impact of the far-reaching deterioration of the labour market on income expectations, an important matter which I shall return to later. As a result of these factors, there was a marked decline in Spanish household spending, both on consumption and on residential investment. In 2008, both items accounted jointly for 80% of the decline in the contribution of national demand to output, which stood at slightly more than 4 pp for the year on average. Naturally, the heightening of the financial crisis in the final stretch of the year, and the subsequent deterioration in macroeconomic expectations, saw the contractionary impulses spread to the other components of domestic spending, meaning that business investment ultimately collapsed in the second half of the year. Indeed, the sole prop of spending in 2008 was net external demand, which showed a marked increase with a contribution of 1 pp to GDP growth for the year as a whole and of 2.3 pp in the final quarter.

Indeed, at last year’s presentation of the Annual Report to the Council, I referred to budgetary policy as one of the main underpinnings of the Spanish economy in this phase of the cycle and I pointed out that the favourable fiscal position would allow the automatic stabilisers to operate to their full extent without jeopardising budgetary stability. One year on, the fiscal results for 2008 and the projections available – which point to a budget deficit approaching 10% of GDP in 2010 and to a public debt ratio that might exceed the threshold of 60% of GDP – augur a drastic change in outlook, with the possibilities of fiscal policy boosting spending having been exhausted. Fiscal measures that call into question the commitment to budgetary stability in the medium term should be categorically avoided, since that would adversely affect the cost of raising funds and confidence in the Spanish economy, and it could also generate expectations of future tax rises that might ultimately sterilise the expansionary effects of the measures adopted. Public-sector debt must be prevented from becoming an obstacle once the Spanish economy is better placed to grow. Accordingly, priority must be given to promptly defining a credible strategy to reduce the deficit to levels compatible with budgetary stability, once the exceptional circumstances that led to the rise in the deficit have disappeared. The demand-side expansionary fiscal and monetary impulses are proving very powerful and are contributing to the alleviation of the contractionary forces at play.