samchain/econo-pairs-v1 huggingface dataset:
Today, it contributes around a tenth. China has been the mirror image. Having contributed less than 5% in 1980, today China is the single largest source of global saving, contributing around one fifth. It has been argued by some that these trends could simply reflect different cultural attitudes towards saving among US and Chinese citizens. In the US, it is often said that there is a culture of spending rather than saving – neurologically, the impatience gene may be dominant (Haldane (2010)). In China, by contrast, the culture may be biased towards saving rather than spending, with the patience gene dominant. In other words, differences in agents’ rate of time preference, or degree of patience, might account for savings imbalances (Buiter (1981)). 4  BIS Review 174/2010  But a recent survey of time preferences in 45 countries suggests cultural differences are not the full story (Wang, Rieger and Hens (2010)). Asked to choose between a payoff this month and a larger payoff next month, 68% of US students choose to wait; they exhibit patience. Facing the same trade-off, 62% of Chinese students made the same choice. These differences are small. 3 They are also the “wrong way around” to explain imbalances. So if cultural factors are not the explanation, what is? Charts 8 and 9 plot national saving rates in China and the US, broken down on a sectoral basis. There are striking differences in saving behaviour across the government, household and corporate sectors in the two countries.

Significant progress been achieved in particular in the Islamic capital market where the outstanding amount of Islamic private securities amounted to USD79 billion or 54.3% of the total outstanding private securities in the market. The number of Shariah-based unit trust funds have also increased to 136 with a net asset value of over USD5.2 billion while 85% of the listed Malaysian stocks are Shariah-approved counters. The second strategy is to accord greater emphasis on the enabling environment for increased innovation in the Islamic financial industry. The product range in Islamic finance has now expanded into a broad spectrum of innovative instruments, including investment and equity linked products based on musyarakah, mudarabah and ijarah. These products are competitive both in terms of product structure and pricing. The enhanced depth of the Islamic financial markets, in particular, the sukuk market, has increased the attractiveness of the Islamic financial instruments as an asset class for investment. The drive for innovation has been supported by the investment in human capital development. A sufficient pool of the talent and expertise has been key to the development of the Islamic financial hub in Malaysia. The International Centre for Education in Islamic Finance (INCEIF) was established in 2006. INCEIF which has an international faculty and students from more than 40 countries is focused on programmes for Islamic finance professionals and specialists in Islamic finance.
In other words, should a requirement arises for a tightening in the public budget, we assume that this requirement will be met by measures for cutting down on expenditures rather than increasing the indirect taxes. Any deviation from this framework may lead to a revision of the outlook for inflation and monetary policy. Distinguished Members of the Press,  BIS Review 100/2008  13  A protracted period of rising food and energy prices has been hampering our disinflation efforts since the adoption of the inflation targeting regime. Ongoing uncertainties resulting from global as well as domestic factors that led to a significant deterioration in inflation expectations necessitated a more cautious monetary policy stance. In this respect, in order to prevent the said uncertainties to be reflected on the general pricing behavior, we have conducted a monetary tightening over the past three months. Monetary tightening was effective in containing inflation expectations, as the deterioration in inflation expectations came to a halt in July. Current stance of the monetary policy supports disinflation. We expect inflation to remain at elevated levels in the short term before gradually moderating towards the targets. Our revised inflation forecasts suggest that the inflation targets of 7.5 percent, 6.5 percent, and 5.5 percent set for the next three years are attainable, even under quite conservative assumptions on food and energy prices.

Recent readings on domestic sales, production and confidence indicators suggest a similar outlook. At this point, I would like to remind you that the indicators regarding the course of domestic demand are presented in detail in the July Inflation Report. BIS Review 100/2008  7  Figure 8: Private Consumption (Seasonally Adjusted, Billions, YTL) 19 18 17 16 15 14 13 08Q1  07Q3  07Q1  06Q3  06Q1  05Q3  05Q1  04Q3  04Q1  03Q3  03Q1  12  Source: TURKSTAT, CBT. Data on consumer credits suggest that monetary conditions continue to be restrictive. Consumer loans have been growing at a moderate pace compared to the periods of vigorous domestic demand (Figure 9). The decline in risk appetite and the tightening in global credit conditions are likely to restrain credit expansion in the period ahead. Figure 9: Consumer Loan Growth Rate (Q-on-Q, in real terms) 80 Housing Automobile  60  Other 40 20 0  06.08  03.08  12.07  09.07  06.07  03.07  12.06  09.06  06.06  03.06  12.05  09.05  06.05  03.05  -20  Source: TURKSTAT, CBT. Overall, domestic demand conditions continue to support disinflation (Figure 10). Therefore, the underlying inflation is expected to decelerate in the medium term.
The underlying inflation measured as the CPIF (CPI with a fixed mortgage interest rate) is expected to be just below 2 per cent during the greater part of the forecast period. CPI inflation, on the other hand, will vary significantly, as CPI also considers changes in interest rates on mortgages, which are affected by the decisions we take regarding the repo rate. 4  BIS Review 11/2010  Inflation measured in terms of the EU harmonised index, the HICP, has recently been higher in Sweden than in the euro area (Figure 20). During the autumn, this was just below 2 per cent in Sweden, while it was negative in the euro area. HICP does not include prices of owner-occupied housing, and thus inflation measured in terms of HICP and CPIF are largely the same. The relatively high HICP inflation in Sweden is primarily due to the heavy increase of unit labour costs in Sweden over the last three years, averaging approximately 5 per cent per year (Figure 21). In addition, the Swedish krona weakened during the financial crisis, pushing up import prices. In turn, the rapid increase of unit labour costs over the last three years is primarily due to the fact that productivity fell for three years in a row, in addition to which hourly wages increased more during that three-year period than during the immediately preceding three-year period. This development will be reversed during the forecast period.

After the Second World War the abandonment of the “golden standard” changed things completely. The introduction of the fiat money changed the monetary policy framework dramatically, forcing the financial stability issues to take back seats in the central banks considerations. There were two main reasons for financial stability being less of a worry. First, by using the fiat money the role of the lender of the last resort was not limited anymore. The central bank could lend to commercial banks as much as they wanted to borrow, just printing new money. There was no need to hold a parity to anything. Second, many central banks faced serious troubles in order to meet their ultimate target, the price stability, within the new fiat money environment. Therefore the policy focus shifted and huge effort was concentrated on finding a new appropriate policy framework. The situation was even more complicated due to the fact that both aforementioned points were closely interdependent. To illustrate this point, let's assume that there was an inflationary pressure which caused redistribution disturbances to the financial system as it led to the redistribution of wealth from lenders to borrowers. The central bank either had not established the appropriate framework for dealing inflation yet, or even worse, inflation had not been viewed as an undesirable phenomenon. On the other hand, the central bank was ready to fulfil its role as a lender of last resort. But saving the commercial banks from imminent bankruptcy further increased inflationary pressures. At the end this caused kind of inflationary trap.
The increase in payroll tax rates, the rise in high income tax rates, the increase in taxes associated with the Affordable Care Act, and the sequester will result in fiscal drag of about 1¾ percentage points of GDP in 2013, an unusually large amount of fiscal restraint when the economy doesn’t have strong forward momentum and unemployment is still elevated. In terms of the labor market, we have seen only a moderate improvement in labor market conditions over the past six months or so. After an encouraging pick up in the pace of job creation around the turn of the year, the employment report for March showed a gain of only 88,000 jobs. While I don’t want to read too much into a single month’s data, this underscores the need to wait and see how the economy develops before declaring victory prematurely. I’d note that we saw similar slowdowns in job creation in 2011 and 2012 after pickups in the job creation rate and this, along with the large amount of fiscal restraint hitting the economy now, makes me more cautious. Since September, payroll employment has increased an average of 188,000 per month, compared with an average of 172,000 per month over the previous two years. The unemployment rate has declined from a peak of 10 percent in October 2009 to 7.6 percent in March; however, much of the decrease is due to a fall in the number of people actively looking for a job.

Furthermore, as of March there were still almost 3 million fewer jobs than at the end of 2007, and the ratio of employed Americans to the working age population was actually lower than it was at the end of the recession. Also, in an indication that employment is far from healthy, job finding rates have changed little since the recession. New York Fed staff research agrees with the broad consensus that cyclical factors are the major reason for the continued weakness in labor market conditions. In sum, these developments lead me to expect sluggish real GDP growth over the course of 2013 of about 2 to 2½ percent. As such, I anticipate that the unemployment rate will decline only modestly through the rest of the year. In the near term, there is considerable uncertainty about the outlook, particularly because the multiplier effects from fiscal drag and sequestration are still unclear. This uncertainty should gradually decline – for better or for worse – over the coming months, as the sequester’s impact takes hold and more economic data come in, giving us a clearer picture of the forward momentum of the economy. Inflation, as measured by the personal consumption expenditure deflator, is currently well below the Federal Reserve’s objective of 2 percent. There is substantial slack in the labor market and in the markets for goods and services, and underlying measures of inflation are subdued. Moreover, peoples’ expectations of inflation remain well anchored at levels consistent with our 2 percent longer-run objective.
For instance, when I look at the negative growth of the last quarter – minus 1.2 per cent in France – one comforting aspect was that three-quarters of the decline was due to a reduction in  4  BIS Review 29/2009  inventories. So that was of course much better for the future because it means that once the inventories are back to the required level, to the level that corporates want to have, production starts up. So it is difficult to comment without seeing all the explanations. For the time being I have the feeling that our situation will be relatively, slightly better than that of some of our neighbour countries. What was one of our weaknesses in the past – that is a strong reliance on domestic demand and domestic consumption for growth, and certain weakness in net exports – has become a strength in the downturn. Exports have fallen, like in Germany, but their weight in GDP is much lower, so that it has hit the economy less. The consumer spending trend has remained positive. Compared to countries like Spain or the UK the average indebtedness of households was lower, so that the effect of the turmoil on consumer spending has been also relatively lower than in other countries. For all these reasons we felt that we had some slightly better resilience, but we must remain prudent. FT: Should Germany do more in terms of fiscal stimulus? CN: I think that they have decided on a second package that is sizable.

I would certainly agree that we should not blur the distinction between monetary policy and fiscal policy. That does not mean there is not a good understanding. The fact that governments have taken all the actions that they have taken to support the financial system is extremely important for central banks. It is certainly easier to accept a broad range of collateral when you know that the banking system as a whole is backed by the clear declaration by governments that they will not let a systemic institution fail. FT: This position of the ECB appears to assume there is no risk of deflation. But do you think that the risks of deflation have increased, given the sharp contraction in economic growth that we have seen? CN: Of course one should always remain prudent. We know that, given the evolution in prices of energy and non-processed foods, it is likely that we will have a few months toward the middle of the year with slightly negative inflation figures. But that is very different from the persistent decline in prices that characterises deflation. I do not think personally that the risks of deflation are very high in the euro area for several reasons. One is that we have increased liquidity by a considerable amount. In both the US and the euro area, central banks have increased liquidity in the system in one year by roughly the same amount, proportionately, as the Bank of Japan did in the early 1990s’ banking crisis in five years.
Some analysts estimate – and at the Banco de España this appears to be a technically reasonable estimate – that, owing to the labour reforms, the economic growth threshold for job creation may have been lowered, which should impel the start of a correction in the unemployment rate with what are still moderate GDP growth rates. As regards private-sector debt, Spanish households strongly increased their debt in the expansion preceding the crisis; their debt ratio rose from less than 70% of gross disposable income in 2000 to close to 130% in 2007 and 2008. Non-financial corporations moved on a  2  BIS central bankers’ speeches  similar path, which lasted longer over time, with their debt ratio climbing from over 60% of GDP in 2000 to a peak of over 140% in 2010. Here, too, there are signs of correction. Since 2010, households’ and firms’ debt has fallen by almost 10 pp and 20 pp, respectively. Admittedly, though, such restructuring is slow as a result of weak nominal growth in household and corporate income. But the soundness of the recovery will unquestionably also depend on the progress made in normalising financing flows. Since 2009, outstanding credit extended by our banking system to Spanish non-financial corporations and households has been contracting uninterruptedly. As at September 2013 it was 5.4% lower than a year earlier, but the decline was more marked for firms than for households: a decline of somewhat more than 9% for the former, and of 4.5% for the latter.

The sensitivity of wages to the cyclical situation has stepped up since mid-2012 which, in principle, suggests the labour market is functioning more in step with developments in the economy and the clearly declining trend of inflation. Indeed, in September the consumer price index posted a year-onyear rate of 0.3%, resuming a favourable difference vis-à-vis our European partners. The excessive dependence of the Spanish economy on the construction sector in the previous expansion no doubt entailed a factor of vulnerability. From the onset of the crisis in 2008, the deterioration of this sector was continuous; from then to the second quarter of this year, its real value added posted a cumulative decline of more than 40%, far higher than that recorded by the market economy as a whole, which did not exceed 10%. A major challenge facing the Spanish economy today is to have other industries, other than construction, take up the baton in terms of the creation of value added. And here, too, there are positive signs in recent quarters. The industrial sector achieved moderately positive growth in the second quarter, helped no doubt by the sound performance of exports. And the same occurred with the services sector. Despite the containment of labour costs and while bearing in mind that the data show a less adverse trend in unemployment, this is the most serious of our macroeconomic imbalances and that showing most resistance to correction.
UK banks will be required to hold a CCyB of 2% of UK risk-weighted assets when risks are around standard – that is when risks are neither particularly elevated nor subdued.26 We can use the GDP-at-risk model to provide a lens for understanding the risk environment: for example, the 35th to 65th percentile of the historical distribution of GDP-at-risk (see Chart 4) is a range of around -0.8 to 0.8. 25 At the time, the FPC also noted that there were gaps and shortcomings in the measurement of risk-weights (for  example, risks associated with defined benefit pension fund deficits were not captured). In light of this, the FPC judged at the time that the appropriate level of Tier 1 capital requirement for the UK banking system was 13.5% of risk-weighted assets, based on existing measures of risk weights. In December 2019, the FPC reviewed the judgements underpinning this assessment, and confirmed that its 2015 benchmark remained appropriate. 26 In December 2019, the FPC announced that it was raising the level of the UK CCyB that it expects to set in a standard risk environment from the region of 1% to the region of 2%. Consistent with this, and given its assessment that risks were standard, the FPC raised the CCyB from 1% to 2%. This takes effect with a one-year lag, and so will become a binding constraint from 16 December 2020. For further information, see the December 2019 Financial Stability Report.

10  All speeches are available online at www.bankofengland.co.uk/news/speeches  10  FIGURE 4: Haircut schedule for LIBOR-linked collateral  This graduated approach reflects the clear feedback we received from firms on our discussion paper last year. It is intended to give firms the incentives, certainty and time they need to prepare for LIBOR transition, replacing LIBOR-linked collateral with risk free rate alternatives and maintaining drawing capacity throughout. Careful analysis suggests that this should be a manageable task in the time available, but we will monitor this closely and continue to work with impacted firms on their plans. Concluding remarks  I began my remarks by comparing LIBOR transition to a motor race. For some, I know it may have felt at times more like a Le Mans endurance race than a Grand Prix. But dawn is at last approaching – and the finish line is drawing nearer. For sterling markets in particular, 2020 is a critical year. The announcements we have made today, coupled with the huge efforts going on right across the private and public sectors, demonstrate I hope that, working together, we can keep sterling markets at the forefront of LIBOR transition. Thank you. 11  All speeches are available online at www.bankofengland.co.uk/news/speeches  11
The credit easing package and expanded APP has been effective too in reducing wholesale funding costs for banks, allowing banks to pass on better funding conditions to their customers. Since summer last year the average cost of borrowing for euro area non-financial corporations has fallen by around 70 bps, and by 90 bps and 110 bps for NFCs in Spain and Italy, respectively. The latest evidence from the July Bank Lending Survey confirms the improvement in credit conditions. During the second quarter of 2015 credit standards continued to ease for firms, and even more so for households. Reflecting the endogenous relationship between credit supply and demand, credit demand also increased among both groups driven mostly by the low level of interest rates. The impact of the expanded APP on bank funding costs has been partially reversed by the recent market repricing. Here, however, the credit easing package and our broader asset purchases could act as complements, in particular the Targeted Long-Term Refinancing Operations. For the APP, the ECB defines the volume of liquidity it would like to inject, but cannot determine the price; for TLTROs, we define the price of the liquidity, but banks determine the volume. One tool can therefore act as an automatic stabiliser for the other. Indeed, as wholesale funding costs for banks have risen, so has the attractiveness of the TLTRO. This substitution effect accounts in particular for the higher participation in the fourth operation by banks in less vulnerable countries.

Peter Praet: The ECB’s asset purchase programme – the impact so far Speech by Mr Peter Praet, Member of the Executive Board of the European Central Bank, at the Eurofi conference, Luxembourg, 9 September 2015. *  *  *  The ECB’s expanded asset purchase programme has met with our initial expectations. First of all, it has strongly signalled the ECB’s commitment to deliver its medium-term price stability objective, which has in turn been reflected in an upward shift in inflation expectations at all horizons. In keeping with this, any second round effects on inflation from the steep drop in oil prices last year appear to have been forestalled, and the tightening of medium-term real rates we saw towards the end of last year has been reversed (though the path of real rates implied by markets has recently steepened noticeably). More generally, the signalling effect of the APP has been visible in solidifying business and consumer confidence underpinning a broadening economic recovery. The expanded APP, together with our credit easing package launched in summer 2014, has also had a positive impact on both market and bank credit dynamics. The cost of marketbased debt fell to historically low levels in the early part of 2015, and though it has risen in recent months, financing flows have remained robust. This implies a “first order” monetary policy effect from our interventions.