samchain/econo-pairs-v1 huggingface dataset:
BIS Review 34/2002  3  ‘With the economy on the turn, the MPC has to sift mixed evidence… It would be remarkable if eight intelligent, well-briefed economists could be of one mind.’ But this point is not always readily understood, even by the most astute commentators. In July 1998 the Financial Times suggested: ‘…the MPC bears a closer resemblance to a post-graduate seminar than to a forum for strategic decision making… To put [several] economists in the same room is to invite what one commentator has called paralysis by analysis.’ And in the same month, The Times described the MPC as ‘a committee bursting to the brim with individual opinions’ implying that ‘periods of badly co-ordinated and erratic behaviour are only to be expected’. But it is precisely the exploration of alternative views about what is happening in the British economy, and the discussion of these views by the Committee in a spirit of investigation not advocacy, that is central to the pooling of knowledge through which committees reach decisions that are superior to those taken by individuals. I think that is increasingly understood by commentators, and helps to explain why split votes are now regarded as normal and not a source of great excitement. It is, nevertheless, important that there are no ideological differences among Committee members that would make rational debate difficult, and, in this respect, the Committee has so far been fortunate. A famous 1970s laboratory experiment also showed the value of a frank exchange of views within a 5 committee.

And the ECB’s transparency, ethics and good governance frameworks have been harmonised, strengthened and extended to all members of the Governing Council and Supervisory Board.3 But it is important to me that our focus on connecting with the people we serve continues and grows stronger – in particular by improving the ways in which we communicate with the general public. And this is why your role in the Parliament is so important: you make sure that the people’s voice is heard by the ECB and the ECB’s voice is heard by the people. Communication is a two way street and it is vitally important for democracy, a founding principle of Europe. It is in this spirit that I will approach this hearing – and those we will have together in the future. The current economic situation and monetary policy Let me start by looking at the current economic situation in the euro area, before moving on to the longer-term questions for monetary policy about which you have enquired. Euro area growth remains weak, with gross domestic product growing by only 0.2%, quarter on quarter, in the third quarter of 2019. This weakness has been mainly due to global factors. The world economy outlook remains sluggish and uncertain. This lowers demand for euro area goods and services and also affects business sentiment and investment. As the sector most directly exposed to these global developments, the manufacturing industry has been suffering the most.
Indeed, high global liquidity is also the consequence of strong productivity growth, low inflation and improved government savings, especially in the United States, which has resulted in the strongest growth in world trade in decades. 6. With well-behaved inflation, the ample international liquidity has resulted in a global stock market boom in the 1990s, in both Europe and the US, as well as emerging markets in Latin America and Eastern Europe. But this has also caused a global compression of interest rate spreads and record levels of new issuance in both domestic and international bond markets. Such narrowing of spreads did not reflect the potential credit and market risks associated with the emerging markets. So when investors finally realize that the emerging markets are carrying more risks than they have assumed, the risk premium as measured by the yield spreads will widen sharply to reflect this. BIS Review 109/1997  -2-  7. This scenario was complicated by the fact that the flood of global liquidity has been largely channelled to the bond, equity and property markets of East Asia. Buoyed by optimism about the Asian miracle growth of the last decade, both domestic and foreign investors committed the classic “fallacy of composition”. Initially, each individual may perceive a high return and increase their investments in assets, leading in aggregate to excess demand and a market overshoot. A reversal of perception leads to a sharp market correction, which is exactly what is happening not only in Asia, but globally.

First, because financial markets are so highly integrated, central banks need to cooperate closely in order to master the problems. Second, incentive schemes in banks that have given particular priority to rewards for risky behaviour should be changed, and the instruments for measuring risks need to be reassessed. The way in which the Swiss National Bank steers the Swiss franc money market, however, has proved its worth, with the three-month Libor being successfully held inside the target range. In this way, the real economy has been protected from the upheaval on the interbank market. BIS Review 31/2008  1
Today’s monetary policy is based on the experience gained by Norway and other countries, over the past 30 years in particular, and on the results of extensive macroeconomic research. Important lessons are: –  Inflation is a monetary phenomenon. A country with a national currency can choose the level of its own inflation. Inflation in a country is not something that drifts in with the wind from abroad. –  If monetary policy is to function effectively, an institutional framework is required to reinforce confidence that overriding weight is assigned to long-term objectives. The institutional framework and guidelines for monetary policy in Norway reflect developments in other countries. This is of particular importance for a small country because of the considerable influence international operators have on developments in our country. Rules can anchor expectations, but they must be credible and robust to disturbances to international and domestic economic developments. Inflation targeting is in practice a flexible rule that can stabilise expectations and at the same time provide room for adapting to the abrupt shifts our economy is exposed to. Thank you for your attention. 10  BIS Review 36/2004

Accessibility means it is easy to get hold of cash when you need it, that it is not too expensive or complicated to acquire a card or online banking services or that the mobile network has good cover if I want to use mobile payment or banking services. The same reasoning also applies, of course, to the recipient of a payment. Willingness to accept various types of payment may be undermined by factors such as technical problems, high costs and difficulty in depositing daily takings. Accessibility is also closely linked to uniform payments standards. The methods of payment should be predictable and this is the case if  1  By hijacking a card, we mean skimming and similar activities where the card data is secretly scanned and then used for fraudulent purposes. BIS central bankers’ speeches  1  we all agree on how payments will be made. The more of us that are in agreement the better, as we can then make use of the network effects and economies of scale that are inherent in the mediation of payments. For instance, this type of unanimity means we can be fairly certain that it is possible to pay by card or in cash at the nearest shop. The reason for a positive attitude towards innovation and development is that they enable us to have safe, efficient and accessible payment services.
Mark Carney: Enabling the FinTech transformation – revolution, restoration, or reformation? Speech by Mr Mark Carney, Governor of the Bank of England and Chairman of the Financial Stability Board, at the Lord Mayor’s Banquet for Bankers and Merchants of the City of London, Mansion House, London, 16 June 2016. *  *  *  Given the tragic murder of Jo Cox MP on 16 June, at the Mansion House dinner in lieu of this speech, the Governor paid tribute to Ms Cox and the highest standards of public service she represented throughout her life. 1. Introduction  My Lord Mayor, Chancellor, My Lords, Ladies and Gentlemen. Let me begin by thanking Andrew Bailey for his outstanding record of public service during his 31 years at the Bank of England. Andrew is an extraordinary public servant who has devoted his entire professional life to serving the people of the United Kingdom. During his career, he has worked across all of the Bank’s policy areas, combining leadership and innovation to deliver consistently the Bank’s policy objectives. His work in helping to manage the crisis and then to develop the post-crisis regulatory framework has been exemplary. He has made the Prudential Regulation Authority (PRA) a highly respected and effective regulator and built a team of exceptionally dedicated colleagues. I would like to thank Andrew for his counsel and support since I joined the Bank and wish him every success in steering the Financial Conduct Authority (FCA) at this vital time in its history.

From my point of view, to be successful, the new strategy of the EPC requires that two main conditions are fulfilled. The first condition is to make sure that the pan-European instruments are attractive for consumers. As regards this first condition, I just would like to draw your attention on one point: in order to be really attractive, the pan-European payment instruments need to be the “best of breed” that is to say that the service level to be provided should converge towards the best service levels in Europe. The second condition is that infrastructures are ready to support the critical mass effect expected in terms of adoption by customers of pan-European payment instruments. The 2010 deadline for infrastructures to be “SEPA compliant”, as recommended by the Eurosystem, is therefore very important. This “SEPA compliance” of infrastructures implies in particular that interoperability between all retail infrastructures is ensured. Defining and enforcing requirements for interoperability can certainly be part of the self-regulation space claimed by the EPC. In line with its supportive stance of market efforts, the Eurosystem, as Jean-Claude Trichet has already explained to you this morning, stands ready to assist the banking industry in the definition and implementation of such requirements. To conclude, I would like to stress that it is essential that the efforts put together by the banking industry since 2002 bear their fruit so that the SEPA becomes shortly a tangible reality for citizens, companies and other economic agents.
Since then, we have motored ahead and put in place that new regime for credit unions. But we have not forgotten about banks. In fact, despite the huge pressures of the Covid crisis we have taken care to preserve one vital part of our work programme: our plans to bring in a simpler prudential regime for small banks and building societies. A new style of regulation  The reason we have kept up work on this topic is that our exit from the EU provides us with the first opportunity we have had in a long time to make real progress on it. 1  But before coming to that, let me make a few brief points about the broader regulatory scene as we exit the EU. I should say first that, despite the fears sometimes articulated by politicians in the EU, we have absolutely no intention of weakening prudential regulation in the UK. It would be mad for us to do any such thing only a decade or so on from a crisis in which the British taxpayer footed the bill for one of the biggest banking disasters in history, with a financial sector around ten times the size of our economy, and with clear evidence in front of us that the post-2008 reforms have allowed the banking system to support the economy through the Covid crisis so far. You only have to ask yourself the question “How would the financial system have fared if Covid had hit in 2007?” to appreciate this point.

9  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  9  Figure 1B: Improvement in performance after adding Governance scores  Figure 1A naturally led us to ask whether there are other measures which can better anticipate problems at smaller banks and building societies. We know that the quality of governance is vitally important, so we repeated our experiment, adding PRA supervisors’ judgements about the quality of a firm’s governance. We found that adding judgements about governance reduced our false alarm rates more often – and by more – for small firms than for large. This of course doesn’t mean governance isn’t important at larger firms – the opposite is true in our view. But it does suggest that supervising governance can be even more important for small firms. Source: Bank of England and Bank calculations. Notes: Balance sheet data as of July 2007, taken from historical regulatory returns (see Sebastian J A de-Ramon, William B Francis and Kristoffer Milonas, ‘An overview of the UK banking sector since the Basel Accord: insights from a new regulatory database’, BoE Staff Working Paper No. 652 (2017)). Supervisors’ scores for Governance from historic FSA records (see Joel Suss and Henry Treitel, ‘Predicting bank distress in the UK with machine learning’, BoE Staff Working Paper No. 831 (2019)). To test the robustness of our findings to definitional choices, results are shown for two different definitions of “Large” and six different definitions of distress.
It is a lot easier to keep things straight and be happy if your public persona and private persona are not in conflict – you are one integrated person. Being true to yourself also means facing up to problems and mistakes early. Early on in my career as a professional economist, I got involved in writing a paper about tax reform with the head of the firm’s research department. The night the paper went to the printers, I woke up with complete clarity that there was a mistake in the paper. The mistake did not affect the conclusions of the paper. It just slightly changed all the numbers and was obscure enough that no one would probably catch it. What to do? I decided to take my medicine. I walked into the office of my co-author the next morning and said that we needed to throw out the 10,000 copies of the paper that had been printed. The head of research – Leon Cooperman – was known for his – let me say this delicately – strong personality. But rather than blowing up at me, he said fine, let’s fix it. Facing up to the error must have actually worked in my favor since I won his respect. A few months later, he introduced me to Robert Rubin – who, as you know, went on to become the U.S. Secretary of Treasury. And through Robert Rubin I met all sorts of interesting people in the Clinton administration.

The central projection in February’s Inflation Report was for inflation to return to close to the 2% target over the coming two to three years, conditional on the market’s expectation of further cuts in Bank Rate. But nor does the strategy determine a definite path for Bank Rate over the coming months. Each of us on the MPC must form a judgment month by month on which of the risks to the inflation outlook – from financial conditions or from rising costs – is proving more potent, and so a judgment on the degree to which we can set a course that underpins demand. Since the February Inflation Report, oil prices are around 10% higher, and sterling’s exchange rate around 4% lower, so the immediate cost pressures are worse. The good news is that, in the labour market, nominal earnings growth has so far remained subdued, notwithstanding the rise in near-term inflation expectations revealed by a range of surveys. BIS Review 38/2008  1  This is perhaps suggestive of the adjustment in real take-home pay made necessary by the sharp increase in firms’ costs due to the further rises in commodity prices. In manufacturing, firms’ input costs have risen sharply over the past twelve months; and output price inflation has reached nearly 6%. A big question is to what extent competition amongst retailers will dampen the pass through into retail prices. Anecdotally, retailers still sound as though they are competing fiercely on prices, and driving down other costs in order to maintain their margins.
A third reason is that households’ ability to service debt has not deteriorated at the same rate as their debt has increased. Households pay much less for their loans today than at the beginning of the 1990s and therefore can afford to take on larger debt. In the early 1990s households’ interest payments comprised around 10 per cent of their disposable incomes, while they only constitute 4 per cent today (Figure 4). 2  BIS Review 67/2004  Households’ assets have also increased in value. Since the mid-1990s the value of households’ financial assets - equities, bonds and other savings - has risen by about 70 per cent. And this has occurred despite the price decline in the equity market. All in all, households’ debts have increased at more or less the same rate as their assets (Figure 5). This development could be seen as satisfactory from the point of view of stability because households don’t need to rely on their incomes only; they also have assets that they can realise and pay their debts with if necessary. We base our regular analyses on data for the household sector as a whole. However, it’s not certain that individual, indebted households also have enough income or assets. To make sure of this, we took a closer look last spring at the indebtedness and the ability to service debt of different income groups, based on data for 2000 and 2001.

If this has boosted loan demand, the successful policy of inflation targeting has been partly responsible. But so far this is just a hypothesis. It is important, however, for households to feel certain about how large their future payments will be. An international comparison suggests that household demand for home loans depends on how the market is structured and particularly on the availability of instruments for households to manage their interest rate risk. Demand mounts in line with the opportunity to manage risk. In the United States and Denmark, households can fix the interest rates on their mortgages for long periods and also refinance these fixed-rate loans at a reasonable cost should interest rates fall. In Denmark, households’ debt ratio is more than 180 per cent, compared with 120 per cent for Swedish households. This is despite the fact that the country has roughly the same proportion of homeowners as Sweden. The supply of mortgages has increased, too. According to the new capital adequacy rules, Basel II, mortgages will be given a lower risk-weighting than today, which means that banks’ capital requirements will be lower if they hold a large proportion of mortgages. The adjustment to this has started already, thus toughening the competition and depressing lending rates. Households have also become an increasingly important borrower group for the major Swedish banks. Lending to households now comprises a little more than 40 per cent of the banks’ total lending.
There were several reasons why I did not think it was a good idea. First, our forecast was that inflation would remain below the target in the near term, and was not expected to stabilise at 2 per cent until late 2022. Of importance here was also the fact that I could not see any appreciable upside risks for the inflation forecast either. Second, as I saw it, an increase in the interest rate in the near future could hardly be expected to lead to a greater probability of the downward trend in inflation expectations reversing. This worried me quite considerably as it can affect the inflation rate on which the labour market organisations base their forthcoming wage negotiations. Third, I felt there was reason to worry about the consequences of both the Federal Reserve and the ECB increasing their monetary policy stimuli while in Sweden, if the announced rate rise were to be implemented, we would be going in the opposite direction. Many analysts also interpreted the signals from the meeting in October as the Riksbank viewing the abolition of negative rates as an end in itself. This applies not only to analysts in Sweden but also internationally. A couple of examples are articles from Bloomberg and in the Financial Times, in which the authors argue that the Riksbank has now realised the problems of negative interest rates and is therefore keen to get away from them.

As we have established, the latter disciplinary mechanism did not work well for Sweden. So all that remained was to test an inflation target. My firm conviction is, as I have already touched upon, that the political system clearly supports the system with an inflation target of 2 per cent and a floating exchange rate, and my perception is that the same applies for a large majority of the Swedish people. It is reasonable to assume that they therefore also expect the Riksbank to do what it can to maintain confidence in the inflation target. It would be odd if the idea was for Sweden to, on the one hand, have an inflation target but that, on the other hand, it was not so important for the target to be credible, nor for the Riksbank to try to ensure that this was the case. If the view is that confidence in the inflation target is important, it follows, or at least should follow, that there is an acceptance that, when the Riksbank conducts an expansionary policy to maintain confidence in the inflation target, the krona exchange rate will be affected. This occurs via the normal exchange-rate channel of monetary policy, that is to say, a low interest rate in relation to abroad makes it less profitable to hold financial assets in Swedish kronor than in other currencies. The demand for kronor then decreases and the krona exchange rate depreciates.