samchain/econo-pairs-v1 huggingface dataset:
(2016), Cost-benefit analysis of leaning against the wind: are costs larger also with less effective macroprudential policy?, IMF Working Paper, 16/3, January. Taylor, A. (2015), Credit, financial stability, and the macroeconomy, NBER Working Paper, 21039, March. Tinbergen, J. (1956), Economic policy: principles and design, North-Holland. Page 16/16  Credit, debt and growth  Fritz Zurbrügg Vice Chairman of the Governing Board Swiss National Bank Collegium generale Berne, 1 November 2017  Debt vs. credit  Debt:  debere = to owe  Credit:  credere = to believe, trust creditum = that which is entrusted in good faith  2  1 November 2017  Collegium generale | Fritz Zurbrügg | © Swiss National Bank  Contents  Part 1: Why are loans useful from an economic perspective? Part 2: Under what circumstances is lending detrimental to an economy? Part 3: What role do central banks play in the credit cycle? 3  1 November 2017  Collegium generale | Fritz Zurbrügg | © Swiss National Bank  Part 1: Why are loans useful from an economic perspective?

(2013), When credit bites back, Journal of Money, Credit and Banking, supplement to vol. 45/2. Jorda, Ò. et al. (2016), Macrofinancial history and the new business cycle facts, NBER Working Paper, 22743, October. Keynes, John M. (1936), The general theory of employment, interest and money, Macmillan. Kindleberger, C.P. and R.Z. Aliber (2005), Manias, panics, and crashes: a history of financial crises, 5th edition, Basingstoke: John Wiley & Sons. Koo, R.C. (2011), The world in balance sheet recession: causes, cure and politics, Realworld Economics Review, 58. Levine, R. (2005), Finance and growth: theory and evidence, Handbook of Economic Growth, 1A, Elsevier, pp. 865–934. Page 15/16  Minsky, H.P. (1992), The financial instability hypothesis, The Jerome Levy Economics Institute of Bard College, Working Paper, 74, May. Modigliani, F. and R.H. Brumberg (1954), Utility analysis and the consumption function: an interpretation of cross-section data, In: Kurihara, K.K. (ed. ), Post-Keynesian Economics, Rutgers University Press, pp. 388–436. Reinhart, C.M. and V.R. Reinhart (2010), After the fall, presented at the Federal Reserve Bank of Kansas City’s on Macroeconomic Challenges: The Decade Ahead, Jackson Hole, Wyoming, 26–28 August. Reinhart, C.M. and K.S. Rogoff (2009), The aftermath of financial crises, The American Economic Review, 99/2, Papers and Proceedings, pp. 466–472. SFBC (1998), Annual Report 1997. Shiller, R.J. (2000), Irrational exuberance, Princeton University Press. Smets, F. (2014), Financial stability and monetary policy: how closely interlinked?, International Journal of Central Banking, 10/2, pp. 263–300. Svensson, L.E.O.
The wealth effect tends to be symmetric, in the sense that economic activity is stimulated by rising asset prices to much the same extent as it is checked when asset prices fall. Neither are wealth effects usually all that great. Problems arise when they coincide with an expansion of credit. The effects may then be asymmetric in that they are more extensive when asset prices fall. The balance-sheet effects lead to loan losses and, in more serious cases, to the suspension of payments. In the worst case there will be a financial crisis. The situation today does not resemble what happened in the second half of the 1980s, as can be seen from Diagram 1. Asset prices have indeed risen strongly in recent years but credit has not grown to the same extent. It seems that at least to date in the present upswing, Swedish banks and their customers have had another approach to the provision of credit and to borrowing. A pause may be called for here to take a look at monetary policy’s attitude in principle to asset markets compared with markets for goods and services. The inflation targeting policy that has been introduced in Sweden and other countries in the past decade has in many cases had the purpose of mastering recurrent overheating in product and labour markets. It might be said, somewhat improperly, that the policy aims to avoid the “bubbles” that have tended to arise in these markets from time to time.

To date, the inflation targeting policy must be said to have done well on the whole in this respect; today, the inflation target seems to function as a credible benchmark, a nominal anchor, for price and wage formation. That wage formation does not yet seem to have been fully adjusted unemployment in Sweden remains high - is another matter. It probably has more to do with structural factors. For asset markets, however, there is no such clear benchmark. So neither is there anything to prevent psychological factors - irrational exuberance, if you like - from continuing to inflate various asset prices beyond what is reasonable in relation to underlying economic conditions. The path of the American stock exchange in recent years demonstrates that low inflation is often not sufficient to ensure a restrained development of asset prices. That this can be seen as something of a dilemma is understandable. Does this imply that monetary policy should in fact be used more than hitherto for actively and directly countering sizeable price increases in asset markets? There is no obvious answer to that question but the dominant opinion at present is that the answer should be no. This is because central banks would find it difficult to identify true bubbles in the development of asset prices and judge the BIS Review 127/1999  4  appropriate measures correctly. Still, I would like to leave the door ajar. Situations may arise that are hard to foresee today and where monetary policy may need to play a part.
Until we are confident that our various formal models adequately capture the risks that we in the Executive Board are concerned about, we will have to continue relying heavily on judgement when taking such effects into account in the conduct of monetary policy. Let me reflect a bit on what in my mind has brought about this stance. On the one hand we normally talk about inflation targeting in a two year time perspective, on the other hand there are risks associated with credit and asset prices that may lead to substantial deviations from the forecasted inflation and output paths. The judgement issue then becomes one of meeting or not meeting the target at the two-year horizon versus the risk of costly deviations both within and beyond the normal forecast horizon. Such deviations are likely to be low probability events but with high costs in inflation and real terms should they occur. We know that these developments are very hard to predict using the standard models we normally rely on but I do believe it is our responsibility ex ante to reflect on how to avoid future negative outcomes. The nature of such outcomes will vary depending on what part of the asset market that generates the risks, the market microstructure available for sorting out a problem in an efficient manner and the extent to which monetary policy is able to counteract the risks. Here we certainly can deepen our understanding of how different imbalances unwind and what the costs are.

Against this backdrop, we continue to expect the economy to grow by around 1.5% in 2019. As is the case with the global economy, the risks for this scenario remain to the downside. In particular, an unexpectedly sharp slowdown internationally would quickly spread to Switzerland. Exchange rates, interest rates and inflation expectations  Let me now move on to address monetary conditions – that is to say, exchange rates and interest rates – as well as inflation expectations. My comments here relate to the developments since our last news conference in December, and not just those during the past quarter. Monetary conditions are similar today to six months ago. The Swiss franc remains highly valued. The situation on the foreign exchange market is still fragile. When the trade dispute between the US and China escalated again in May, the Swiss franc and the Japanese yen appreciated. Both currencies are sought after as safe havens in periods of uncertainty. In light  Page 4/5  Berne, 13 June 2019 Thomas Jordan  News conference  of the high valuation of the franc and the fragility of the situation, our willingness to intervene remains necessary, as does the negative interest rate. This brings me to the development of interest rates since December. At the beginning of the year, the US Federal Reserve signalled that it would be patient with regard to raising interest rates further.
10 The fact that capital flowed from emerging economies with great growth potential to the United States – where it was apparently used to a large extent to finance investment in housing – indicated that this was not a case of capital seeking a higher marginal return but rather of an excessive provision of credit. At the same time as the US households became increasingly indebted, major currency reserves were built in, for example, China. It was at this time that Ben Bernanke spoke about a ”global saving glut”. 11 There were, however, good reasons why the level of saving was high in many Asian countries. Following the crisis in Asia in the early 1990s, the countries wanted to build up currency reserves to protect themselves against future stoppages in capital flows. Research indicates that countries that had reduced their vulnerability in this way were also hit less hard by the latest crisis. 12 Furthermore, there were, and still are, weaknesses in the social safety nets of several of these countries which mean that households have to save in order, for example, to be able to afford medical costs in the future. China also has an ageing population as a result of the one-child policy, which may also justify a high level of saving. There have been claims from the United States, however, that the substantial current account surplus is largely due to the fact that China's currency is undervalued and thus indirectly favours Chinese exports and production that competes with imports.

Willem F Duisenberg: From the EMI to the ECB  Speech by Dr Willem F Duisenberg, President of the European Central Bank, at the Banque de France’s Bicentennial Symposium, Paris, on 30 May 2000. *  *  *  Ladies and gentlemen, it is a great pleasure to address such a distinguished audience on the occasion of the Banque de France’s bicentenary. Surviving for two hundred years in a sometimes turbulent economic and political environment constitutes a notable achievement. I am pleased to be able to congratulate my French colleagues and the Bank itself on this significant accomplishment and look forward to their continued success in the future as part of the Eurosystem - our name for the European Central Bank (ECB) and the eleven national central banks that introduced the euro in January 1999. The long history of the Banque de France stands in stark contrast with the youth of the institution I represent today. Tomorrow the ECB will complete its first two years of existence. During this time, the introduction of the euro and the subsequent conduct and implementation of the single monetary policy have, in my view, been a remarkable success. Most importantly, the basis for lasting and credible price stability throughout the euro area has been solidified. Price stability has, in turn, helped to create an environment where economic activity and employment can flourish. Economic prospects in the euro area are better now than at any time for more than two decades.
The case there for moral hazard is not entirely obvious to me at least as long as (1) such a reduction is a measure used to steer short-term inter-bank rates close to the target level and (2) as long as the rate of the borrowing facility is in any case close to the target rate – e.g. one percentage point or less – so that a reduction has no substantial impact on the profit and loss accounts of banks. In this regard, the recent money market tensions have confirmed the importance for the effective liquidity management of banks of enjoying unimpeded access to borrowing facilities. The fourth potential moral hazard issue is a widening of the set of eligible collateral in a central bank’s monetary policy operations. Admittedly, this type of measure could have moral hazard implications, particularly (1) if the general widening of the collateral set in fact targets a small number or, say, even a single bank under liquidity stress, which is rich in the specific type of additional collateral; and (2) if the central bank offers facilities, for instance a standing borrowing facility, to effectively refinance such collateral. This type of action invites moral hazard as it may indeed be decisive to establish whether the single bank fails or not, while at the same time sparing to the banks’ management and shareholders the substantial costs associated with resorting to real emergency liquidity assistance.

Expected liquidity conditions on the last day of the maintenance period, when averaging is no longer possible, anchor interest rates of that day, and – via the so called “martingale hypothesis” – also of the preceding days. The present turmoil shows, however, that at times of stress, the strength of the martingale hypothesis may weaken. Interest rates may no longer be necessarily linked to liquidity  2  In particular, the ECB has helped to overcome market disruptions by temporarily supplying liquidity, first via a sequence of four overnight fine-tuning operations; then via increased allotment amounts in the weekly main refinancing operations and, subsequently, also via two supplementary longer term refinancing operations, the renewal of which has been subsequently announced. BIS Review 143/2007  3  conditions on the last day of the maintenance period as banks do no longer regard reserve holdings across different days of the maintenance period as substitutes. Implementing monetary policy in these conditions can be challenging for a central bank, especially since it can not use its regular procedures for estimating the demand for liquidity – not least in the absence of any relevant empirical references. This is the main reason why the ECB conducted the very first of its fine-tuning operations during the turmoil (on 9 August) through a fixed rate tender with pre-announced full allotment. At that point in time, it was assessed that the market was in a better position than the ECB to judge which amount would bring interest rates back to the desired level.
There is a big difference though between a bank and a supermarket – you don’t entrust a supermarket with your hard-earned money or life savings; and if you are enticed by a supermarket promotion to buy something you don’t need, the loss is unlikely to be huge but this may not be case for investment or insurance products. You could lose your shirt. Therefore bank customers require protection not only on the safety of their deposits, but also in the way that they are treated as consumers and as investors. In terms of protecting the safety of customers’ deposits, the HKMA seeks to maintain prudential soundness of individual banks. We do this through the regulation and supervision of banks and, in the unfortunate event of a bank failure, through the activation of the Deposit Protection Scheme to safeguard customers’ deposits up to half a million Hong Kong dollars per depositor. In  BIS central bankers’ speeches  1  today’s speech, I propose to focus not on prudential supervision but on the protection of bank customers as consumers and investors. How do we protect bank customers? So the next question is : How do we protect bank customers as consumers and investors? The answer is the very same principle: “treat your customers fairly”. Now let me elaborate on how this can be achieved. First of all, when selling a banking product, such as a loan or a credit card the bank must ensure that the key terms and conditions are fair and equitable.

Clearly in this case the bank staff had little, if any, regard for the financial circumstances and the lack of investment experience of the customer; nor did the bank staff adequately explain the risks and penalty of early termination. This is a blatant breach of the customer’s trust. The HKMA cannot condone this kind of practice and will take necessary supervisory and disciplinary actions to protect the interests of bank customers. In this particular case, the bank agreed to cancel the policy and refunded the full amount of the first year premium to the customer and the bank staff concerned has been suspended by the HKMA from selling investment products for a period of three years. What do we expect bank consumers to do to protect their own interests? Justice upheld, sounds a happy ending. But there is always the other side of the equation. There is a commonly held view that the responsibility for consumer protection rests with banks, the regulators and the Government. I don’t think this is a helpful view if we want to promote consumer protection. True that banks owe their customers the duty to look after their interests and to treat them fairly. True that the Government should provide the legal framework and set the policies for protecting consumers. Equally true that regulators will use their powers to enforce the consumer/investor protection requirements. But an important piece is missing from the jigsaw.
We believe that the Solvency II Own Risk and Solvency Assessment, the ORSA, will help give us a better understanding of an insurer’s business. It is therefore logical for us to make early adjustments to our existing regime to incorporate the ORSA under ICAS plus. This will mean that UK insurers are better prepared for the introduction of Solvency II. To monitor the on-going appropriateness of internal models, we have introduced the use of early warning indicators based on metrics that are independent of the model calculations. In cases where the indicator’s threshold is breached it will trigger an immediate supervisory  4  BIS central bankers’ speeches  response; a capital add-on is, in all but exceptional cases, likely to be the most effective way to restore compliance with the Solvency II calibration requirement (i.e. 99.5% over a one-year period). Importantly, we expect that where internal models are used for regulatory capital purposes, they should contribute to prudent risk management and measurement. And they should be updated regularly in order to reflect the insurer’s risk profile and not just to ensure compliance with the letter of our requirements. My view is that we still have a good way to go to make the Solvency II regime manageable in its use and implementation. I have to say that I think the early design did not come up to the mark in this respect.

As you will no doubt know, quantitative easing aims to depress a range of longer-term yields and raise asset prices, so boosting demand. Our analysis suggests that our first £ billion of asset purchases reduced the yields on gilts and corporate bonds by around a percentage point2. Studies for the United States, using a similar methodology, find comparable effects from the Federal Reserve’s large-scale asset purchases, which is comforting. The asset purchases also have the effect of boosting banks’ holdings of the most liquid asset, central bank reserves, which may be of particular value at the current juncture. While one cannot be confident about the impact of our earlier purchases on the real economy, our analysis points to a peak effect on output of 1½–2 per cent and of ¾–1½ percentage points on inflation. At this juncture at least, we have no reason to believe that, suitably pro-rated, the current phase of purchases will be greatly different in their effect on either asset markets or on the real economy. 2  For a summary of the evidence, including references to related studies, see Michael Joyce, Matthew Tong and Robert Woods (2011), “The United Kingdom’s Quantitative Easing Policy: Design, Operation and Impact” Bank of England Quarterly Bulletin, 51(3), 200–212. BIS central bankers’ speeches  3  Several commentators have suggested that the effectiveness of quantitative easing could be enhanced by spending the newly created money on something other than government debt.
Out and proud – a note-worthy cause Speech given by Sarah Breeden, Executive Director, UK Deposit Takers Supervision  LGBT The Network of Networks (TNON) breakfast, Bank of England 25 July 2019  I would like to thank Zane Jamal, Nick Strange and Eoghan McArdle for their help and assistance in preparing this speech 1  All speeches are available online at www.bankofengland.co.uk/news/speeches  I am very pleased to welcome you all here to this cross-industry employee Network of Networks (TNON)1 event at the bank for banks that is more famously known as the Bank of England. Being a bank for other banks is just one of our roles. For many people, we are known best for printing Sterling banknotes. On that theme, I am sure that many of you are aware that just last week we announced that the new face for our next 50 pound note will be Alan Turing - father of computing and artificial intelligence, the basis of our modern economy, and a gay man persecuted for his sexuality2. The response to this news from the Lesbian, Gay, Bisexual, Transgender plus (LGBT+) community has been incredibly positive. Speaking personally, I was thrilled to hear it given my role as executive sponsor of the Bank’s LGBT+ and Allies network. Building on this positive momentum, I want to use my opening remarks today to set out what more we can do to support this community.

Meanwhile, it is clear that all models – no matter how good they are – need interpretation from the perspective of the events that the moment poses and in the view of the dominant phenomena of time. Dear participants, COVID-19, coupled with the issues it has caused and the restrictions taken to contain it, continues to dominate both our economic and social life and activity. It has also certainly become an important part of the analysis and research work of the central bank. This is not a surprise. I think that the shock triggered by the pandemic and the related effects will continue to be part of the research agenda for a long time, even after the pandemic is over. However, recent developments show that the research agenda of the central banks have been enriched by the study of other risks, such as those related to climate change and environmental protection, demographic risks, digitalisation and digital currency. These have been identified as big and long-term challenges to both the global economy and the authorities of every country. The Bank of Albania has started to work on to establish the infrastructure for modelling and analysing these phenomena. It is crucial to not think of these topics only for the purpose of testing assumptions or academic discussions, but rather to consider them in the concrete framework of policy making and decision taking. I am confident these topics will become important themes for discussion themes in our Research Workshop in the future.