samchain/econo-pairs-v1 huggingface dataset:
In other words, in trying to divide up the cake more equally we could, if we are not careful, end up reducing its overall size. The trick it seems to me is to find ways of having our cake and eating it which some forms of government intervention can, as I say, achieve. But that’s a great deal easier said than done. I only thank my lucky stars that I am not a politician! Where then do the financial institutions of the City fit in to all of this? Well, money changers have never been exactly popular. That is partly because of a perception that while the rest of the community earn their living making things, bankers simply make money - and what’s more they make money by using “our” money. But it is partly because of a perception that people who work in the financial services industry are pretty heartless people anyway. In fact financial intermediation is a critically important component of a market economy. Behind the popular - or perhaps unpopular - image of erratic and speculative, short-term, financial market trading, which is in fact an important element in the process of price discovery - the essential role of financial intermediation is to gather together our collective financial resources - our savings if you like - and to direct their investment into those activities in which they can be most productivity employed.

Benoît Cœuré: Interview in Le Progrès de Lyon and EBRA newspaper group Interview with Mr Benoît Cœuré, Member of the Executive Board of the European Central Bank, conducted by Mr Frank Viart of Le Progrès de Lyon and published by EBRA newspaper group (L’Alsace, Les Dernières Nouvelles d’Alsace, Le Républicain Lorrain, L'Est Républicain, Vosges Matin, Le Bien Public, Le Journal de Saône-et-Loire, Le Progrès de Lyon, Le Dauphiné Libéré and Vaucluse Matin) on 11 November 2016. * * *  Seen from Frankfurt, what is your reaction to the election of Donald Trump? It is certainly a major event. It is not for the ECB to assess the political consequences. But it holds a lesson for Europe: in a world where shocks are increasing, Europe must keep control of its destiny. For Europe to be strong in terms of defence and security, it must have a strong economy. And for the economy to be strong, reforms are needed in every country and the euro area must function better. Could the ECB’s monetary policy decision in December be influenced by this election result? It is too early to say. In the short term we are closely monitoring the reaction of the financial markets. Excessive volatility must be avoided. Looking ahead, we will assess the consequences of Mr Trump’s election for the global economy and for the euro area. The recovery in the euro area is strengthening. This was visible following the UK referendum. In France, interest rates are historically low.
But one thing is clear: everyone, in or out, has an unambiguous interest, if EMU does go ahead, in doing everything we can to make it a success. And it is equally clear that those countries that participate in Monetary Union have a similar unambiguous interest in the economic prosperity of countries remaining, at least for the time being, on the outside. Larry Summers, the Deputy Secretary of the US Treasury, writing about EMU in the Financial Times on Wednesday, said: “The US is well served when Europe is vibrant economically and working to open its markets and strengthen its ties with the global economy.” He might have been speaking for all of us here in Europe, in or out, recognising that we have a mutual, and reciprocal, self-interest in each other’s economic well-being. So my general point is this. Whatever the outcome on EMU, it is vitally important that we continue to maintain, and strengthen, positive and constructive relationships throughout the European Union area -- and indeed beyond -- in our national and collective interests. For the UK, in particular, if we were to opt out of the first wave, that certainly means that during our EU Presidency, over the critical first half of next year, we must -- as I am quite confident we will -- do everything we possibly can to ensure that the procedures leading up to the historic decisions run smoothly and that the decisions themselves are timely and, hopefully, harmonious.

One channel for the creation of such imbalances is the increasingly open conflict between the fiscal expansion of the past two years and the ongoing global trend of monetary policy tightening. The two policies must work in sync. The medium and long-term aspect of the fiscal consolidation topic is related to the structural reforms to be carried out in the country. A disciplined regular budget with a realistic medium-term macroeconomic and fiscal forecast will provide the framework needed to accelerate structural reforms in relation to investment, the labour market, perhaps the most serious medium-term risk to our economy, education, social security, social assistance, health care, not forgetting of course energy security. To conclude, let me summarise what I want to say. Bulgaria is not in a bad position, yet, in terms of joining the euro area. A large and important part of the road has already been covered through the accession of our country to the European Banking Union and of the Bulgarian lev to the European Exchange Rate Mechanism. In order to complete this process successfully, several groups of tasks need to be completed. First, it is necessary to meet the nominal convergence criteria, with a focus on inflation, which is actually the only criterion we are currently not meeting. Second, it is necessary to fulfil pre-accession commitments in the  4/5  BIS - Central bankers' speeches  areas of the non-banking financial sector, anti-money laundering measures, the management of state-owned enterprises, and the insolvency framework.
The reaction of financial markets is a wakeup call to all countries that sooner or later government finances must be put on a sustainable path. The main measures implemented so far at the EU level are mainly short-term oriented to fight of the liquidity crisis and associated contagion risks. A large assistance package has been established jointly by the EU and the IMF for Greece. To ward off the risk of contagion, the EU has put in place the European Financial Stabilization Facility (EFSF) while the IMF has committed to provide significant bilateral funding. Overall, the funding secured amounts to 750 bn Euros. This significant amount is justified by the high risk of international spillover effects. Additional support to ward off this contagion risk was given by the European Central Bank which decided to intervene in the euro area public and private debt market in order to restore an appropriate monetary policy transmission mechanism. 4 These measures provide essential backstops. By adopting them, the governments of the EU member states and the European authorities have unequivocally stated their intention to safeguard the Euro. While this was a crucial first step, initial market reactions suggested persistent scepticism. The uncertainty regarding the health of the balance sheet of European banks is high and is keeping tensions on financial markets elevated. It is not only the exposure of European banks towards mainly peripheral EU countries that is a concern to market participants.

As there are so many ways of measuring resource utilisation one might think that it would be appropriate to take a broad approach and make an “overall assessment” based on a large number of indicators when making decisions about monetary policy. It is, however, generally accepted that an inflation targeting policy in which target attainment is measured using a large number of different measures of inflation does not work very well. It is often possible to find a measure of inflation that is reasonably close to the target and almost any monetary policy can be justified with the help of a clever choice of index. Therefore, if the target and target attainment are to mean anything, one measure of inflation must primarily be used. 2  BIS central bankers’ speeches  Similarly, I also believe that it does not work well to use a large number of different measures of resource utilisation. It is also often possible to find at least one measure that comes fairly close to normal resource utilisation and almost any monetary policy can be justified with the help of a clever choice of the measure of resource utilisation. This problem is in fact worse for resource utilisation than for inflation. This is because measures of resource utilisation also require us to make an assessment of the normal level for the measure concerned. For the output gap and the hours gap it is a case of determining the level and forecast for potential GDP and potential hours worked.
The output gap remains negative, so that there is no pressure on wages and prices in the foreseeable future. The outlook is favourable, since we expect that the gradual recovery of the economy in Europe will stimulate demand for Swiss exports. We anticipate growth of 1.5–2.0% for the current year. Dangers of a prolonged low-interest period What do these tentative global economic developments mean for monetary policy? Most central banks maintained their very expansionary course and the various unconventional measures. These measures were largely uncontested as long as they served to stabilise financial markets and the banks and subsequently to stimulate the economy. However, the longer the current low interest rate period continues, the greater the associated risks can be. I would now like to talk about two of these risks – the increasing price distortions in various investment categories and the decreasing motivation to undertake structural reform measures. Increasing price distortions: The very low interest rates affect aggregate demand in the economy both directly and also via the wealth effect. One of the effects which expansionary monetary policy abroad encourages is the quest for yield and, with it, the transfer of assets into more risky investments. However, low interest rates can result in misallocation on financial markets, particularly when they persist for a long period of time. It is possible that  4  BIS central bankers’ speeches  risks may be misjudged and, as a result, relative prices distorted.

Consequently, my statements last year were devoted to the growth in foreign currency reserves and the associated challenges. Today I would like to discuss the question of whether a return to normal is on the horizon either for monetary policy – initially in the US – or for financial markets. Although various signs on the financial markets point in this direction – including the calming of the bond markets in Europe’s peripheral economies, record highs on stock markets and the rise in long-term interest rates since mid-year – other observations are less encouraging. Global economic recovery is merely sluggish and the risks for growth are still to the downside. Unemployment, particularly in the euro area, is very high and many structural reforms have been postponed. Against this background, financial markets are not expecting any of the major central banks to raise their reference rates before 2015. In answering the question above, I will begin by talking about developments in financial markets, with a special focus on the Swiss franc. Then I will discuss monetary policy at the US Federal Reserve and its first attempt to bring about a restoration of normal conditions. Afterwards, I will give a brief presentation of the economic situation with a focus on Europe. In conclusion, I would like to draw your attention to the dangers associated with a prolonged period of low interest rates.
As a result of this risk, the Desk requires primary dealers to post collateral, or margin, in response to changes in the market value of the security  11  For example, in January, the Desk decreased its purchases of 30-year fixed-rate 3.5 percent coupon MBS relative to projected issuance as a result of concerns about the near-term availability of this coupon for settlement and increased its purchases of 3 percent coupon MBS. 4  BIS central bankers’ speeches  contracts for the level of supply of the securities that the Desk expects to be delivered. When implied financing rates reach levels notably below the general level of short-term interest rates, thereby signaling supply concerns, the Desk sells dollar roll contracts to postpone settlement of that outstanding purchase.12 Our dollar roll activity is consistent with the guidelines laid out by the Treasury Market Practices Group (TMPG), an industry group sponsored by the Federal Reserve Bank of New York.

7  The Desk also has the ability to execute agency MBS trades by other means. 8  Of course, this maturity distribution could change as part of the Committee’s ongoing assessment of the efficacy and costs of asset purchases. 9  For more information on the TBA market, see Vickery and Wright (2013). BIS central bankers’ speeches  3  MBS backed by new loans into the TBA market because of the market’s liquidity and because the TBA market is a forward market, which allows originators to hedge the risk associated with locking in loan rates with new borrowers.10 The Desk concentrates its TBA purchases in “production coupons,” since the yields and prices for production coupons are directly related to the primary mortgage rate. In general, the Desk purchases MBS in the TBA market across different agencies, maturities, and coupons in amounts that are roughly proportional to anticipated issuance of those securities. Issuance of new TBA securities varies over time, based on the level of refinancing and home purchase activity. Moreover, because the coupon at which new MBS are originated depends on the overall level of interest rates, the possibility of future fluctuations in the primary mortgage rate makes it difficult to determine well in advance which coupons will be issued. As a result, the Desk is not able to provide the same detailed guidance about the composition of its MBS purchases as is possible with Treasury purchases.
Economic activity growth was generated by agriculture, industry sectors and some branches of the services sector, while the construction sector fell sharply. BIS central bankers’ speeches  1  From the viewpoint of aggregate demand, the second quarter’s economic growth was mostly supported by the foreign demand, while the domestic demand remained sluggish. Consumer spending, though higher than in the first quarter, did not return to past year’s rates of increase. This component of the domestic demand remained influenced by the perceived uncertainty, lacked dynamisms in the labour market and slowed available income. Confronted with a low ultimate demand for their products and in the presence of spare capacities and relatively tight lending terms, private investments also remained low. In particular, during the first half of the year, the low private investment level reflected households’ low demand for housing. Public spending and fiscal stimulus were also weak, reflecting the consolidating fiscal policy and observing the fiscal restrictions required by law. Fiscal consolidation, which is based mostly on reduced expenditure, is illustrated through the downward trend of budget deficit over the period. The budget deficit resulted about ALL 25.7 billion during the first three quarters of the year, down by about 19%, y-o-y. Until September, the realised expenditures were about 0.2% lower than a year earlier, while the budget income increased 2.3%. The data on developments in the external sector of the economy show Albania’s significantly improved external position.

Although there is a considerable stock of equity in owner-occupied housing, with banks tightening the supply of both secured and unsecured credit, consumers will find it more difficult to borrow to finance spending. So in 2008 it is likely that a less buoyant housing market will go hand in hand with slower growth of consumer spending. Tighter credit conditions mean that, as a nation, we are likely to save more of our income this year than in the recent past. In the short run, that will slow economic activity, possibly quite sharply. And there is a risk that weaker activity and lower asset prices could result in another round of losses for banks and a further tightening of credit conditions. The adjustment which not only the British but the world economy is experiencing is necessary as the imbalances, between spending and saving and between domestic demand and trade, unwind. As part of a longer-run rebalancing of the UK economy, an increase in our national saving rate, both private and public, is necessary. The low level of national saving is apparent from the current account deficit – our new net borrowing from overseas – which in  2  BIS Review 8/2008  the third quarter of last year was, relative to GDP, the biggest in the past fifty years and the largest in the G7. It is possible to run a current account deficit for a considerable period. Australia, for example, has done so in every year since 1974.
Chart 8). We do not have similar surveys of households, but it is safe to assume that they would likely favour even lower inflation. The public reaction to the recent rise in inflation clearly demonstrates that there would be little understanding among the general population for a higher targeted rate of inflation. A second possible adjustment would be to target an average inflation rate over a given period. Overshooting and undershooting inflation rates would have to be compensated for over time. This could better stabilise longer-term inflation expectations in that the aim would be a steady development in the level of prices. Why do we not compensate for past deviations from price stability? The Swiss economy has proven in the past that it can deal well with temporary inflation shocks, and that longer-term inflation expectations are well anchored. Compensating for past deviations from a targeted average value would only be possible with massive additional volatility in prices and output, especially given the strong global shocks to which Switzerland is exposed. Such an approach would also find little acceptance among the general public. The third possible adjustment relates to the choice of a point target instead of a range when defining price stability. This could help anchor inflation expectations more precisely and thus better stabilise inflation. Why do we refrain from adopting a point target? Having such a precise goal would unnecessarily complicate monetary policy implementation for the SNB.

Of course, besides the influence of monetary policy, this development of the real economy also reflects structural factors such as the strong resilience of the well-diversified Swiss economy and the flexible labour market. Companies had to make considerable efforts to adapt to the difficult conditions after each appreciation surge, which may have enhanced the flexibility and efficiency of the Swiss economy even further. The increase in the population as a result of immigration made a positive contribution to growth as well. Furthermore, during the pandemic in particular, there was also a rapid and targeted fiscal policy response. II. New constraints The pandemic and the war in Ukraine have fundamentally changed the constraints on central banks. In particular, inflation has risen strongly in many countries over the past year, and uncertainty has also increased markedly in many respects. The SNB, too, is at present confronted with an inflation rate that is significantly above the range we equate with price stability. As in recent years, inflation in Switzerland is currently lower than in many other countries. Besides the strong Swiss franc, the energy mix in Switzerland has thus far also helped to keep inflation comparatively low. Nevertheless, the current level of 3.4% is still the highest inflation our country has seen since the 1990s. Furthermore, there are signs that inflation is increasingly spreading to goods and services that are not directly affected by the pandemic or the war in Ukraine.
Second: It is important for the growth potential in the economy that we maintain a broad sector in the mainland economy that works under intense competition so that we maintain and strengthen the incentive to acquire knowledge and to be innovative. Third: It is important that we bear in mind the issue of distribution across generations and that we manage the wealth as an asset. BIS Review 13/2003  5  1. From petroleum to financial wealth Per cent of total wealth  8  Petroleum wealth  7  Financial wealth  6 5 4 3 2 1 0 1999  2030  Source: Long-term programme 2002-2005  2. A Demographic Challenge 1000 persons 3000  Ratio 4 Number of persons in labour force (left-hand axis)  2500  3 labour force / pensioners (left-hand axis)  2000 1500  2  1000 1 500  Number of pensioners (left-hand axis)  0 1970  0 1980  1990  2000  2010  2020  2030  2040  2050  Source: National Budget 2003  6  BIS Review 13/2003  3.

The challenge, now, is to calibrate and phase in the new framework in a way that does not impede the recovery and does not contradict our macroeconomic objectives. In the long run, we want stronger balance sheets in the banking system but too high capital requirements could have negative effects, reducing loan supply and, paradoxically, fostering risk-taking in order to keep a high return on equity. In the immediate future, disorderly deleveraging is one of the main downside risks to the recovery process. A macroeconomic assessment of the reforms is underway and will help us strike the optimal balance. The broader point here is that the proposed reforms may have significant macroeconomic consequences and these should be factored in when designing and implementing them. A critical issue put forward relates to the behavior of banks with respect to the capital buffers that they retain on top of the existing minimum. If banks target buffers above the regulatory minimum, which is an endogenous market outcome, they may need to raise even larger amounts of equity than what can be expected by just looking at the current package. We know from empirical studies that weaker capitalized banks typically exhibit weak loan growth compared to other better-capitalized banks. We also know that banks may find it less costly to adjust loan volumes and loan pricing than capital, as frictions in the market for bank capital make the latter option more expensive.