samchain/econo-pairs-v1 huggingface dataset:
That comes about through a range of channels. For example, greater competition encourages UK firms to operate more efficiently. Access to larger export markets enables them to take more advantage of economies of scale. And the ability to trade allows the UK to specialise in sectors where it has a competitive advantage. To the extent that leaving the single market or the customs union makes it harder to do business with the EU, that will reduce the economy’s productive capacity. (Equally if leaving the EU allows the other economies to trade with and invest more openly in the UK then these same channels are likely to support UK productivity). We don’t know whether these long-run channels are already in operation. But it is possible that they have been contributing to reinforce the continued weakness of productivity growth. 6  In the short run what we do know is that uncertainty about the eventual outcome of the Brexit negotiations, and perhaps the expectation that Brexit will lower economic growth over time, has been depressing business investment. Businesses are waiting for more clarity before embarking on new capital projects, and that reduces their productive capacity relative to what it could have been, as well as hampering resource re-allocation across the economy. We see this most clearly in business surveys. Brexit has consistently ranked at or near the top of the list of 7  the risks identified in the Deloitte survey of Chief Financial Officers.

That was corroborated by our Agents’ pay survey which was pointing to a ½ percentage point increase in settlements this year, from around 2½% to around 3%, with the ability to recruit and retain staff the number one factor driving growth. Since February the picture has remained the same. Wages did indeed pick up to 2.8% by the May Inflation report. And the very latest observation, of 2.9% regular pay growth in March, was slightly higher than our expectation even in May. Wage growth has now been rising steadily over the past six months, and unit labour costs have been rising towards growth rates consistent with overall inflation at target. The period of unusually subdued growth in wages appears to be coming to an end. The year so far That brings me to the third unusual situation that that we have had to contend with – developments in the economy so far this year, and how the MPC have responded to them – most recently at our May policy meeting. At the time of the February report we judged that the trade-off between managing slack and controlling inflation was much diminished. We went so far as to say that “were the economy to evolve broadly in line with the February Inflation Report projections, monetary policy would need to be tightened somewhat 14  See: Ramsden, D (2017), “Monetary Policy from End to End: Define, Decide, Deliver”, speech at King’s College London, 20 November 2017.
I will discuss that framework later on. This framework can be seen as an evolutionary response to crisis experience, not just this crisis but a great many previous ones. It is impossible to know if this framework will proof us against future crises. But in remembering those errors of the past, it gives us a fighting chance of not repeating them. So I want to take you on an historical journey charting the Bank of England’s role in financial crises and its response to them. Now, I know what you are thinking. The evolution of financial stability in the UK viewed through the lens of the Bank of England sounds deadly dull. So I am going at least to try to add a touch of colour to the events and personalities of the time. The very beginning Let’s start at the very beginning. The Bank of England was put on earth, way back in 1694, to do none of the things it does today – namely, preserving monetary and financial stability. Instead, it was a confection of the then monarchs, William III and Mary II, to pay for their war debts. At the time the Bank was little more than a branch, with a mere twenty staff. Pretty early in its life, however, the Bank began to involve itself in the business of banking. It began to grow its balance sheet by taking deposits from and extending loans to other banks, typically by the practice of “discounting” bills of exchange.

Gent Sejko: Conducting monetary policy when fiscal space is limited Speech by Mr Gent Sejko, Governor of the Bank of Albania, at the high-level seminar on “Rethinking monetary-fiscal policy coordination”, jointly organised by the Bank of Slovenia and the International Monetary Fund, Tirana, 20 May 2016. *  *  *  Dear Panel Moderator, My honorable fellow Panelists, I believe this seminar provides a perfect platform for exchanging insights on the coordination of monetary and fiscal policies. This issue is quite topical from the perspective of challenges central banks are facing today. Before going into more detail on the topic of this panel, I would like to share some thoughts with you regarding the coordination of monetary and fiscal policies. The price stability mandate of the central bank and their operational independence does not lessen the need of effective coordination between monetary and fiscal policies. At a strategic level, the foremost objective of the macroeconomic policy is to achieve sustainable growth, in a context of price stability and a viable external account. This goal requires the contribution of both the fiscal and the monetary policies, within their respective domains, as well as a fair degree of coordination amongst them. On a macro scale, a balanced policy mix and an effective policy coordination requires: –  Policy sustainability: monetary and fiscal policies need to be on a sustainable path.
As part of our policy of non-internationalization of ringgit, we prohibited the trading of ringgit assets and products outside of our jurisdiction. It undoubtedly the opaque pricing mechanism has adverse impact on the domestic financial market, price discovery process and the stability of the financial market. Accordingly, when there were reports of ringgit futures contracts being introduced on offshore exchanges, we issued reminders to onshore financial institutions and corporations against participating in them. The prohibition also encompassed engaging in any onshore FX transaction with non-residents that could be deemed as facilitating offshore ringgit transactions. These rules are not new but have been there all this while. We also instituted several measures this week as volatility also picked up sharply after the US Presidential election result. Because of adverse consequences on genuine investors and businesses, we should no longer tolerate the NDF market and its damaging influence over the onshore pricing of ringgit. Let me make it doubly clear on this. Onshore banks are reminded against quoting onshore ringgit opening price referencing to the offshore prices. Markets should not price ringgit excessively or out of sync with the underlying fundamentals. We have also reminded onshore banks to avoid dealing in FX with non-resident banks suspected of engaging in NDF speculative activities except for those that provide confirmation of their non-involvement in the offshore ringgit NDF market. This week has seen many noises surrounding these measures. There is no new policy on capital flows. There is no proxy capital control either.

This in turn will help boost customers’ confidence and trust in their bankers, which in my view would be tremendously important to the sustainable development and credibility of our banking industry. 2  BIS central bankers’ speeches  What do we expect a bank to do in consumer protection? Just exactly what do we expect a bank to do in consumer protection? Under the guiding principle of “treating customers fairly”, we expect banks to do three things when they market banking or investment products: •  banks should set out and explain clearly the key features and risks of the products concerned, including any applicable fees, commissions or charges;  •  banks should conduct an assessment of the financial capability, investment experience and risk appetite of their customers. This is an important tool that enables the banks to have a more objective view of the risk tolerance level of the customers;  •  banks should assess the needs of their customers, and the suitability of a financial product for their customers. If a bank considers that a product is not suitable for a customer, it should not solicit or recommend the customer to purchase the product. I would like to point out that Hong Kong adopts a disclosure-based investor protection regime, which means that an intermediary is obliged to disclose and explain to the customers the key features and risks of an investment product.
Moreover, after some years of subdued financial cycles, most cycles in euro area countries have normalised and in some countries they have even accelerated [SLIDE 4]. This is the case for France, and should it be a concern? In France, asset prices are currently rising in a context of low market volatility. Since low volatility and abundant liquidity may encourage risk-taking behaviour alongside search-for-yield behaviour, we must be vigilant against the risk of a widespread mispricing of financial assets that could hinder the economic recovery. To give you some numbers: residential real-estate prices are back in positive territory, with year-on-year growth of 2% in real terms, and the commercial realestate sector is still buoyant. Our main alert is on non-financial corporation debt, which is now 74.4% of GDP against 61.8% in 2010 [SLIDE 5]. Overall, private debt in France now amounts to 130.5% of GDP.2 I do not want to bombard you with numbers but the main difficulty now is for policymakers to disentangle from these positive figures what is a desirable consequence of our monetary policy stance and what clearly signals a potential financial risk that we must address. 3. – Policy makers: can monetary policy and macroprudential policy be best [better?] combined? As said, overall private debt in the euro zone has diminished as a share of GDP. But in some countries, the financial cycle is picking up, while at the same time inflation has been slowly 2/4  BIS central bankers' speeches  increasing, but remains below our target.

Monetary policy in the euro area is maintaining short-term nominal interest rates at very low levels, and through our forward guidance, rates are also very low up to medium-term maturities. But, as the economy is recovering and we are progressing towards our inflation target, the Governing Council clearly decided on 26 October to pursue the gradual normalisation of our monetary policy. We will continue along this road, but financial stability concerns could be increasing. It has recently been argued that this could result in unwanted side effects in terms of asset price misalignments or spur a search for yield that would entail excessive risk taking. The issue of the side-effects of monetary policy is not entirely new. Monetary policy is never neutral since it works its way through to the real economy via its effects on financial conditions, that is to say the current and expected cost of borrowing liquidity, and in turn on asset prices and risk premia, even in normal circumstances. Let me first say some words on bank profitability – which is not the only element of financial stability (1). I will then discuss the price of assets and the financial cycle (2), before turning to the relation for policy makers between monetary policy and macroprudential policy (3). Lastly, I will say a few words on how we should complete financial regulations (4). * * *  1.
It can only affect the long real mortgage rate after tax in the long run to the extent that the rate of inflation for a given tax system affects real tax deductions and real wealth and property taxes. An inflation target and low, stable inflation mean that this opportunity for influence disappears. Then monetary policy will no longer have any long-run effect on housing prices in relation to disposable income.8 Monetary policy could still affect the debt ratio if it could influence the loan-to-value ratio. A higher policy rate might limit the debt ratio if it led to a lower loan-to-value ratio, if there was a negative relation between the policy rate and the loan-to-value ratio. As can be seen in Figure 5, however, there is hardly any support for such a relation. Thus, there does not seem to be any support for the view that monetary policy could affect indebtedness in the long run. In the short run, that is a few years ahead, monetary policy has very little effect on housing prices and even less on the debt ratio, as the debt ratio’s numerator and denominator move in the same direction in the short run. At the latest monetary policy meeting (Sveriges Riksbank 2012d) I mentioned a typical result from empirical estimates, namely that a one percentage point higher policy rate for four quarters leads to just over 2 per cent lower housing prices and debt than would otherwise be the case.

Temporarily high inflation is needed to reduce unemployment One consequence of high unemployment over a long period of time and of unemployment tending to become entrenched at higher rates, is that inflation will be higher for a given rate of unemployment. This means that a sufficiently large demand for labour to bring down the high unemployment towards a long-run sustainable rate will lead to higher inflation than normal for a period of time. It is therefore important to allow inflation to overshoot the target for a number of years. This would be a necessary cost that should be weighed against the gain of bringing down unemployment. As inflation on average has fallen below the target, an inflation rate above the target would at present also have the advantage that average inflation over a long period would come closer to the target, something that would contribute to avoiding the unnecessarily high average unemployment that earlier policies have caused. According to Prospera’s surveys, inflation expectations have stabilised at 2 per cent from 1997, despite average inflation being lower. Inflation expectations would thus probably be stable even if inflation were to overshoot the target for a period of time. Summary: Monetary policy too tight My conclusion is that monetary policy in Sweden is and has been too tight.
For most of this period, we have integrated in our policy important monetary policy elements that define essential characteristics of the inflation targeting regime. Various internationally recognized experts of monetary policy have compared the current setup of monetary policy to a fully fledged inflation targeting framework. During these recent years Bank of Albania has publicly announced a numeric objective of 3 percent with a tolerance zone of plus minus 1 percent for inflation in the 12 coming months. In addition, weekly repurchase argument rate, the key policy rate, has become the most  BIS Review 119/2007  3  important instrument of monetary policy and signaling tool. Yet, we are still in the process of empirical investigation and quantification of the monetary transition channels, with particular focus on the efficiency of the inter-bank markets. Modestly but surely I have to admit that the efficiency of our monetary policy has increased. In general we are satisfied with the reaction of the interest rate behavior, which model the developments of the bank of Albania key rate with the appropriate lag structure. Moreover increased and more efficient communication with the public are reflected in contained inflation expectations which are anchored to Bank of Albania announced numeric objective. We are happy to observe that results of consumer and business confidence as well as financial market expectations surveys indicate these trends. It is widely accepted that such results are outcome of our continuous attention toward ever lasting improvement of institutional and regulatory framework on which Bank of Albania operates.

Ardo Hansson: European and domestic economic challenges for Estonia in 2014 Speech by Mr Ardo Hansson, Governor of the Bank of Estonia (Eesti Pank), to the Riigikogu (the unicameral Parliament of Estonia), at the presentation of Bank of Estonia’s Annual Report 2014, Tallinn, 26 May 2015. *  *  *  Honourable President of the Riigikogu, Distinguished Members of the Riigikogu I am here today to give you a summary of the year 2014 at Eesti Pank. I will speak on the economy in the euro area and on monetary policy, and I will discuss the Estonian economy and the work of the central bank last year. The euro-area economy, monetary policy and fiscal policy In 2014 the economy of the euro area as a whole grew, but the situation varied a lot between different countries and overall growth was slower than had been forecast. Data from the start of this year suggest that economic activity in the euro area is staging a modest recovery. The competitiveness of the euro area has improved during the recovery from the crisis, but again the situation varies between countries. There are countries that have successfully introduced reforms, but there are also those where reforms have stopped or even gone into reverse. •  Here I must emphasise that long-term economic growth can only be built on reforms that raise economic competitiveness.
We may be aided by our understanding of the common factors shared by past financial crises, and how lessons from the past have helped to shape the current policy. But always, there will be other or new challenges that will be difficult for us to anticipate or be aware of. With these in mind, let me share with you my thoughts on some of these issues. First, on the causes of financial crisis. According to a well-known study by Reinhart and Rogoff in 2008, financial crises in the past, dated back to the 1800s, shared many common causes. Chief among these are macroeconomic imbalances and the roles played by large and persistent capital flows, asset price bubbles, and credit boom. Although, compared with the Asian financial crisis, the current crisis does differ in terms of the impact, the scale, and the role played by financial innovation, but the two crises, nonetheless, do share many of the common factors mentioned above. For example, in the case of asset price and credit boom, the real house price in the U.S. increased by more than 40 percent between 2002 and 2006, while U.S. loan growth, particularly mortgage loans, accelerated during the same period. These signs were also present in East Asia before the 1997 crisis.

At the same time, the yield curve has steepened somewhat further, implying that the attractiveness of short-term instruments included in M3 continues to decline compared with more highly remunerated longer-term instruments outside M3. On the counterpart side, the annual growth rate of bank loans to the private sector continued to conceal differences in the magnitude of growth across sectors. The growth of loans to non-financial corporations stood at –0.2% in December, after –0.1% in the previous month, while the growth of loans to households strengthened to 3.0% in December, after 2.8% in November. Taking into account the effect of derecognition of loans from bank balance sheets and looking through short-term volatility, the latest data confirm a continued gradual strengthening in the annual growth of lending to the non-financial private sector. At the same time, the latest data point to the overall size of bank balance sheets having contracted again after expanding for most of 2010, mainly on account of a reduction in lending between banks. It is important that banks continue to expand the provision of credit to the private sector, in an environment of increasing demand. To address this challenge, where necessary, it is essential for banks to retain earnings, to turn to the market to strengthen further their capital bases or to take full advantage of government support measures for recapitalisation. To sum up, the current key ECB interest rates still remain appropriate. We therefore decided to leave them unchanged.
First, to reap the benefits of the division of labour requires social institutions that give confidence to people to take up specialised employment. Social institutions and market economies go hand in hand. Second, people who, for the most part, pursue their own self-interest, are also prepared to stand back and ask how their actions should be constrained by social institutions. Such institutions arise because we build them. On the first, The Wealth of Nations begins with the most famous example of Smith’s commentary. He explains the idea of the division of labour by looking at a “very trifling manufacture”, namely “the trade of the pin-maker”: “a workman not educated to this business … could scarce, perhaps, with his utmost industry, make one pin in a day, and certainly could not make twenty. But in the way in which this business is now carried on, … it is divided into a number of branches … One man draws out the wire, another straightens it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head; … the business of making a pin is, in this manner, divided into about eighteen distinct operations”. 4 Smith describes seeing a small factory of this kind in which the daily output of pins was almost 5,000 for each person employed. Specialisation increases productivity. The division of labour permits “this great increase of the quantity of work”.

Fritz Zurbrügg: Fiscal and monetary policy – interdependence and possible sources of tension Speech by Mr Fritz Zurbrügg, Member of the Governing Board of the Swiss National Bank, at the University of Lucerne, Lucerne, 21 November 2012. *  *  *  Ladies and Gentlemen, It is a great pleasure for me to be giving this presentation at the University of Lucerne this evening. Tonight’s topic is one that has interested me for some time. During my ten years at the International Monetary Fund, I repeatedly dealt with questions of fiscal and monetary policy and the interplay between them – albeit in a general and rather abstract way. Over the past six years at the Federal Finance Administration, my work was focused on fiscal policy, and in particular its implementation. This summer, I transferred to the Governing Board of the Swiss National Bank (SNB), and now have the unique opportunity, and the privilege, to focus on monetary policy. Although it is probably a little early for me to be making definitive speeches on both of these economic policy areas, I would like to share a few initial thoughts with you. Introduction In some countries, the scope for fiscal policy action has recently come up against its limits. Governments today find themselves in the position of being virtually unable to finance their normal range of activities, meaning that there is also no scope left for discretionary economic stimulus measures.