samchain/econo-pairs-v1 huggingface dataset:
At the same time, the unemployment rate is at a historical low and, in some countries, it is so low that it will be increasingly difficult to recruit from the remaining pool of labour. All this means that we could see a more prolonged cost-push shock coming from wage growth. This is unlikely to prevent goods disinflation, since wages represent only around 20% of direct input costs for manufacturing firms. But wages make up around 40% of direct input costs for services providers, and services inflation accounts for almost two-thirds of core inflation. In parallel, firms’ profit margins continue to grow, in part because some are taking advantage of supplydemand imbalances to test consumer demand with large price increases – over and above their increase in costs. But in the absence of a persistent rise in market power[8], this can only continue insofar as demand remains resilient. Otherwise, firms will have to absorb cost increases in margins and price pressures will start to ease. This is where the third input comes in that we will use to assess the rate path, which is the strength of the transmission of our policy measures in restricting demand. Policy transmission We saw a large contraction in domestic demand at the end of last year and the latest data, such as retail sales, suggest that consumption has not yet rebounded. But this has not stopped cost increases from passing through. Short-term measures of momentum in core inflation – for instance the three-month on three-month rate – actually increased in February.

Norman T L Chan: SME Financing Guarantee Scheme Opening address by Mr Norman T L Chan, Chief Executive of Hong Kong Monetary Authority and Deputy Chairman of the Hong Kong Mortgage Corporation Limited, at the SME Financing Guarantee Scheme signing ceremony, Hong Kong SAR, 13 December 2010. * * * Good morning, I am very pleased to welcome all of you to today’s Letter of Intent Signing Ceremony for the launch of the SME (small to medium-sized enterprise) Financing Guarantee Scheme by the Hong Kong Mortgage Corporation (“HKMC”). SMEs are an important pillar of the Hong Kong economy and employment. In 2008, the collapse of Lehman Brothers caused credit crunch and market dislocation around the world. To mitigate the impact of the global financial crisis, the Hong Kong SAR Government swiftly rolled out a series of measures to “stabilise the financial system, support enterprises and preserve employment”. A key measure to help the SMEs was the launch of the $ billion Special Loan Guarantee Scheme in December 2008. By October this year, the scheme has helped more than 20,000 companies, with the approved loan amount exceeding $ billion, and helping to secure more than 330,000 jobs. With the recovery of the local economy and the improved financing and cash flows for SMEs, the Special Loan Guarantee Scheme will cease to receive applications from early next year.
However, the facility’s value in terms of monetary policy implementation wouldn’t necessarily be determined by the amount of usage. If the facility increases bargaining power for market participants, it could conceivably provide an effective floor for short-term rates, giving the Desk tighter control of money market conditions even with usage of the facility that’s low on average. At its September 2013 meeting, the FOMC unanimously approved a resolution that allowed the Desk to start an operational test of fixed-rate, overnight reverse repos.17 The exercise, which began on September 23 and is authorized to run until January 29, 2014, entails the conduct of a daily overnight, fixed-rate reverse repo auction in order to assess operational readiness to carry out such transactions. It therefore allows the Desk, its wide range of counterparties, and the tri-party clearing banks to utilize and fine-tune their procedures for end-to-end processing of trades, from posting of the rate to running operations, moving cash and collateral, unwinding the trade, and integrating information with accounting systems. Like other technical exercises, this one isn’t intended to materially affect the current level of shortterm interest rates. Accordingly, for the purposes of the exercise, each counterparty’s participation is capped.

The crisis brought on several important changes in the conduct of monetary policy with implications for money markets. The first was the easing in the stance of monetary policy, with the FOMC’s reduction in its fed funds target from a point target of 5¼ percent in mid2007 to a target range of zero to ¼ percent by December 2008, where it remains today. The second change was a shift to liquidity and monetary policy operations that resulted in a high level of excess reserves. In the initial year or so of the crisis, the Desk offset the reserveadding nature of the Federal Reserve’s loans to support the liquidity of a range of financial institutions and to foster improved conditions in financial markets by reducing other assets on the Fed’s balance sheet, notably holdings of short-term U.S. Treasury securities. By September 2008, however, amid a deepening crisis and widening policy response, the capacity to offset completely the increase in the balance sheet was effectively exhausted.5 Consequently, additional credit provision and the initiation of large-scale asset purchase programs, the latter of which continue today to support continued progress toward maximum employment and price stability, began and continue to cause reserve balances to grow. A third and related change in the conduct of monetary policy was the introduction of our ability to pay interest on reserve balances held by depository institutions.
From the international perspective, it seems that the overall situation is increasingly more supportive. Advanced economies, together with large emerging economies are in a phase of full recovery, underpinned mainly by the boost in aggregate demand. Interestingly, the euro area, which includes most of our trading partners, is experiencing an overall positive momentum concerning economic growth, and forecasts are optimistic. There is a broad consensus that the economies of the South East Europe region, in the first half of 2017, registered a satisfactory performance in terms of recovery; in the meantime, according to key indicators, such performance is expected to strengthen further in the third quarter of this year. Albania is no exception to the regional context. In the previous quarter, the economic and financial situation in Albania was set on a path of constant improvement. Growth and employment indicators followed an upward curve and expectations for 2018 remain positive. Consumption and foreign investments have contributed positively to economic activity and are expected to generate further increase in productivity and competitiveness. At the same time, income from the export of goods, and especially of services contributed to the reduction of the current deficit and the strengthening of the external position of the economy. The effects of the monetary policy have maintained the stimulating trend, aiming at closing the negative gaps of prices and output. Financial stability is also characterised by a positive situation.

Only little more than 12% are in the form of government securities, whereas the rest, around 6.5%, are invested in investment or private pension funds, accounting for only 0.1% of total financial system assets. Statistics show that only a small number of companies operate in other segments of the financial sector, and their activity in terms of the Domestic Product or of the financial market remains insignificant. Regarding the above, we may logically conclude that the financial market architecture may not be considered complete yet. Financial instruments with long-term maturities are rare, whereas the short-term ones outside the banking system are apathetic and fragmented, in terms of both products and markets. An outcome of such a financial architecture is a kind of added pressure on the banking system, depriving the economy of other financing alternatives, beyond what the banks offer. This vacuum may not be filled with strained efforts by the banking system. It has been broadly accepted that each segment of the financial market plays a complementary rather than substituting role. I could mention a number of examples to illustrate my point, but for the moment I would rather not, as in the next panels these issues will be discussed in greater detail by other 2/4  BIS central bankers' speeches  colleagues and academics during the day. Overall, the above elaboration regards investment-related financial institutions and financial instruments.
In order to illustrate some of the lessons learned from the crisis, I offer two different perspectives: first as a research economist trying to make sense out of the initial phases of the crisis in real time and mostly failing; and second as a central banker directly observing and trying to counteract the panic that took hold of global financial markets in September 2008. My observations will further underscore the absolute criticality of a central bank’s interactions with financial markets as a basis for properly diagnosing financial disruptions that threaten the economy and developing effective remedies. In an immediate response to the onset of the crisis in August 2007, the New York Fed began to hold an in-depth discussion every afternoon about the day’s developments. These discussions involved staff from all parts of the Bank and were usually led by Tim Geithner, the president of the New York Fed at that time. In addition to a summary of market developments, prices and liquidity conditions, staff would bring information from across a spectrum of financial institutions and market participants, the kind of information that throughout the crisis period would prove to be invaluable to policy makers. In addition to sharing information from across the Bank, discussions at these meetings would aim to synthesize diverse information gleaned from markets or if no synthesis was available generate new questions for the staff to gain intelligence on.

If housing prices are considered a problem, instruments such as loan-to-value restrictions, amortization requirements, a property tax, or restrictions on the tax deductibility of mortgage rates are examples of instruments that have much lower real costs and hence a considerable comparative advantage compared to the policy rate in affecting housing prices (Svensson 2010b). Flexible inflation targeting with mean square gaps (MSGs) – another step towards increased transparency The adoption of numerical inflation targets has entailed great progress for practical monetary policy and made it possible to measure and evaluate the target fulfilment of monetary policy  2  Such considerations could include evidence of the “risk-taking channel” as in Borio and Zhu (2008). Adrian and Shin (2010a, b) argue, in a model with such a risk-taking channel, that short interest-rate movements may have considerable effects on the leverage of securities broker-dealers in the market-based financial sector outside the commercial-banking sector. If we assume that the risk of a financial crisis increases as this leverage increases, and that policy rates affect leverage, then policy rates would affect the risk of a financial crisis (Woodford 2010b). However, new regulation is likely to limit excess leverage and limit the magnitude of these affects. The size of the market-based financial sector may end up being smaller after the crisis. In Europe, Canada and the Nordic countries, commercial banks dominate the financial sector. BIS central bankers’ speeches  3  in a much more efficient manner than before.
Employment in different sectors during the 20th century 80  80  70  70  60  60  50  50  40  40  30  30  20  20  10  10  0  0 1900  1910  1920  Agriculture  BIS Review 137/1999  1930  1940  1950  1960  1970  Public and private sector  4  1980  1990  2000  Industry  The employment trends in different sectors, as a proportion of total employment, shows the Swedish economy’s transformation during the 20th century. Three different stages are especially clear. Firstly, fewer and fewer people earn a living from agriculture over the years. Having provided employment for around 60% of the labour force at the beginning of the century, agriculture now engages only a couple of per cent. This change reflects a dramatic increase in agricultural productivity and thereby internal migration. The population in rural areas falls and large cities such as Malmö, Gothenburg and Stockholm grow. It is also primarily in these regions that growth is generated. Secondly, the shrinking agricultural sector is reflected in a corresponding increase in industrial employment. Manufacturing occupied over 30% of the labour force in the 1950s when this part of Sweden’s corporate sector was largest in terms of employment. Thereafter, the proportion of employed in this sector has fallen. Finally, the really dramatic development as regards increased employment is the expansion of the service sector.

Yves Mersch: Back to stable Speech by Mr Yves Mersch, Member of the Executive Board of the European Central Bank, at the Zahlungsverkehrssymposium, Deutsche Bundesbank, Frankfurt am Main, 29 May 2019. * * * The primary objective of the ECB is to ensure price stability. This is also the best contribution we can make to achieving sustainable growth.1 Since the launch of the euro, the ECB has delivered on this commitment and rendered price stability a reality, maintaining an average inflation rate of below, but close to, 2%. And that is why the majority of euro area citizens trust the euro.2 Their trust is contingent on the independence of the central bank. Independence is granted to central banks to prevent politicians from seeking electoral gain through measures which boost economic activity in the short term but damage the long-term health of the economy and the country. It is also recognised that legal tender needs to be issued by a public authority. In the case of the EU, it falls to the ECB to issue the euro and decide on the denomination of banknotes. We could not accept a situation in which, for anti-European or populist motives, certain euro denominations were not allowed to be used in some parts of the EU. This established consensus is being challenged by private initiatives triggered by technical innovation. We are seeing ever more solutions in search of a problem. Bitcoin and other crypto-assets claim to need neither trust nor the backing of a sovereign.
In turn, bid-ask spreads may widen, which could ultimately provide additional volatility and diminish liquidity further”. BIS central bankers’ speeches  have occurred in the correlations between various market participants’ trading activities, such as the use of passive investment strategies); and deepening our knowledge of the contributors to greater fragility of market liquidity. The FPC has asked for a full report on these issues when it meets in September and an interim report in June. Globally, the Financial Stability Board also has set priorities for its work, with which we are fully engaged. The intention is to understand and address vulnerabilities in capital market and asset management activities, focussing on both near-term risk channels and the options that currently exist to address them, the longer-term development of these markets and whether additional policy tools should be applied to asset managers according to the activities they undertake, with the aim of mitigating systemic risks. The PRA, as the UK’s prudential supervisor of major trading firms, will continue to develop its capacity to assess algorithmic or automated trading, including the governance and controls around the introduction and maintenance of trading algorithms, and the potential systemwide impact of crowded positions and market liquidity. We will assess the adequacy of existing risk measurement and management practices in capturing exposures from the large volume of intraday trading instigated by these algorithms.

The algorithms of automatic trading have rules embedded in their code such that quotes are immediately pulled if there is a severe market liquidity event. Moreover, the algorithms often have automatic rules that activate circuit breakers or socalled “kill switches” should the aggregate notional risk on a firm’s book exceed programmed limits. On 15 January, the algorithms acted quickly to pull the so-called “streaming prices” when liquidity in the reference market for these prices dried up. Where this did not happen simultaneously, it resulted in large open positions being accumulated by the banks, quite literally within seconds, as an overwhelming balance of client sell orders were automatically executed. Once pre-determined risk accumulation limits had been breached the algorithms instantaneously shut down. Whilst each algorithm, operating independently, may well have been quite prudently calibrated to protect the bank from building an exposure that exceeded its risk appetite, collectively, the impact on market liquidity was akin, albeit temporarily, to a cascading failure across a power grid. As a consequence, the foreign exchange market reverted to human voice orders as the substitute for automated trading. There were therefore outcomes that appear not to have been expected. So, at the risk of quoting Shakespeare inappropriately, all was well that ended (reasonably) well, but the risk that this would not be the outcome is too great to ignore. In summary, there is good evidence that financial market conditions have evolved in ways that reduce the likelihood of continuous market liquidity in all states.
Respectively, they refer to the clear specification of the objectives of monetary stability; the setting of policy appropriately to meet those objectives; and the implementation of monetary policy through the Bank’s operations in financial markets. Define Let me start with Define. The Bank’s responsibility for monetary stability dates back to at least the Bank Charter Act of 1844 when it was given a monopoly on issuing notes in England and Wales. In the intervening period the Bank’s monetary policy objective has taken many different forms that have varied in their degree of formality, clarity and success – including the gold standard, membership of Bretton Woods, monetary targets and the Exchange Rate Mechanism. For much of that period, the Bank’s monetary stability aims lacked definition. As the Governor has recently 1  noted , this changed with the Bank of England Act of 1998 which clarified – for the first time in three centuries – the Bank’s responsibilities. The ‘end’ for monetary policy was defined as maintaining price stability (specified in subsequent Remits as the pursuit of a symmetric 2% CPI inflation target) and, subject to that, supporting the economic policy of the government including its objectives for growth and employment. The means for getting there is the independent setting of monetary policy by the MPC. This represented a major step forward for the clarity, accountability and efficiency of monetary policy, as assessed by the 2013 review of the monetary policy framework by the Treasury.

Svensson, L E O (2009), “Flexible inflation targeting – lessons from the financial crisis”, speech at the workshop “Towards a new framework for monetary policy? Lessons from the crisis”, organized by the Netherlands Bank, Amsterdam, 21 September 2009. Taylor, J B (2007), “Housing and Monetary Policy”, NBER Working Paper No. 13682. 8  BIS central bankers’ speeches
The first thing to be said is that much more was involved than the imprudent extension of loans to a few poor US households. Rather, the unexpected losses on sub-prime mortgages and assets backed by them acted as a trigger for generalised doubts about the viability of a whole class of assets and a general reappraisal of risk premia, which had become unduly compressed at the tail end of the Great Moderation period. So the fundamental shock was a much larger one. But a number of amplification and propagation mechanisms also appear to have kicked in. Some of these positive feedback loops 8 have operated entirely within the financial sector. The most obvious is that the withdrawal of funding and/or the need to maintain adequate  7  Testimony by Ben Bernanke to the US Senate Banking Committee, 19 July 2007. 8  Numerous official-sector papers have insisted on referring to such mechanisms as negative feedback loops, because they generate a larger adverse impact on asset prices or the real economy from the original negative shock. But since they are amplifying, rather than stabilising, feedback loops, they should obviously be referred to as positive feedback loops. 10  BIS Review 101/2009  capital ratios prompted fire sales of assets.

The tours focused on the following topical areas: –  The role and functions of the BoZ;  –  The need to deal with licensed financial institutions;  –  Getting credit; and  –  The operations of a credit reference bureau. 47. The BoZ is planning to conduct the tours on a regular basis to address public misconceptions about the role of the BoZ in the financial sector. Future tours will also educate the public on how to detect genuine currency and how to invest in Government securities. The BoZ was requested to publish the names of licensed financial service providers in the print media on a more regular basis. Developments in banking, currency and payment systems 48. During the quarter under review, there was a continued improvement in the availability of electronic payment options. The number of Point of Sale (POS) terminals increased by 8.3% to 1,119 (third quarter 2010: 1,033). The volume of POS transactions also increased by 42.2% to 284,145 (third quarter 2010: 199,817). Similarly, the values of POS transactions increased by 32.6% to K113.9 billion (third quarter 2010: K85.9 billion). The  6  BIS central bankers’ speeches  Bank would like to urge members of the public to use Point of Sale terminals as they provide a more convenient, safer, efficient and cost effective way of making payments. 49. Further, the number of Automated Teller Machines (ATMs) increased by 4.5% to 489 ATMs (third quarter 2010: 468).