samchain/econo-pairs-v1 huggingface dataset:
I want to talk a little about how we have been able to grow relatively strongly over the past couple of years despite very weak productivity growth; but why that is unlikely to be possible over the coming years. And why we expect productivity to improve – albeit moderately – in the future. And in doing so I will also talk about why the UK’s productivity performance has been so puzzlingly weak, not just in the depths of the crisis and recession but in the recovery and expansion that has been underway since the middle of 2013; and whether the boom and bust of the financial sector can help us to understand the UK’s recent productivity performance. The importance of productivity Productivity growth matters hugely. In the end it is the key determinant of rising living standards. For 18 centuries – from the year 1AD to 1800 when the industrial revolution started – living standards in the West were fairly stagnant. It is because of the step change in BIS central bankers’ speeches  1  productivity growth launched by the industrial revolution that living standards are now 20 times higher than they were then. 1 Increases in population and the labour force can make the national economy bigger. But in the end only productivity growth – producing more output relative to input – can consistently raise GDP per person. Central banks like the Bank of England foster monetary and financial stability, which support investment and productivity growth.

If we do so, perhaps others too, could replicate some of those efforts which  BIS Review 133/2008  1  have been proved to be successful. Hence, there is an urgent need for us to create the awareness. We also have to enact the necessary laws. Sri Lanka has already passed the necessary laws for this purpose: so have many other countries. That is very important. Because, without the legal framework and the legal backing, our efforts will not succeed. Then, we have to build our own capacities. We have to have people who are trained and competent to deal with these challenges. Because, unless you have the competence, and the ability to recognize certain disguised transactions, the ability to see through the clever facades, and the ability to anticipate the next move of the terror financiers or money launderers, we would not be able to progress. Therefore, we have to diligently follow rules and detection principles. That is why this kind of conference is very important. My dear friends, we have to realize that money launderers and terrorist financiers are also smart. Your Lordship, they may also be having conferences of this nature, in their own way, to see how best they can be a step ahead of all of us, to ensure that they will be able to perform their own dastardly deeds more successfully. They will take advantage of calamities. On many occasions we have seen how that has worked. Earthquakes, droughts, civil strife, tsunamis, etc.
Kevin Stiroh: Introductory remarks at the Community Bankers Conference Remarks by Mr Kevin Stiroh, Executive Vice President of the Financial Institution Supervision Group of the Federal Reserve Bank of New York, at the Community Bankers Conference, Federal Reserve Bank of New York, New York City, 18 April 2018. * * * On behalf of the Federal Reserve Bank of New York, it’s my pleasure to welcome you to the 2018 Community Bankers Conference. This is the third Community Bankers Conference that I’ve attended since becoming the head of Supervision at the New York Fed and it is great to see the turnout continue to grow. This year we are fortunate to have nearly one hundred fifty representatives from community banks throughout the Federal Reserve’s Second District and more than forty regulatory colleagues from multiple federal and state agencies. Each year I look forward to this conference as it offers us, as regulators and supervisors, an unparalleled opportunity to exchange views and perspectives, to identify challenges and opportunities, and to promote a robust dialogue with senior managers and directors of smaller financial institutions in the Second District. This type of constructive engagement is critical for us as we work to promote a safe and sound financial system that supports a strong economy. The theme of this year’s conference—“Navigating Future Risks for Community Banks”—is centered on change, which is appropriate when one considers the broad set of forces transforming the U.S. financial system.

With respect to individual countries, we should continue working to strengthen the bilateral surveillance process. While focused on the country at hand, it would be important that bilateral surveillance be fully-informed by regional and global perspectives as well. Systemically important countries will clearly continue to deserve special attention. Operationally, our respective country teams will remain the focal points for our activities in individual members. At the same time, country teams will continue to draw upon specialized expertise where necessary, from both inside and outside of the Fund. To maintain overall coherence, it would be important for efforts to continue in the integration and sharing of information among country teams and specialized experts. Second, our work in financial sectors and capital markets. The IMF is the one international organization capable of carrying out financial sector surveillance universally and comprehensively. Further efforts will be needed to realize this potential, not least by deepening the IMF’s role in anticipating sources of instability in national and global financial markets, and in generating timely action to address them. The IMF will continue to help countries strengthen their financial sectors, including in following up on the findings of the Financial Sector Assessment Program (FSAP) exercises. One important aspect of this will be to help members adapt their prudential and administrative frameworks to benefit more from private capital flows.
The programme suggests otherwise, and I am confident that, as the day unfolds, you will be hearing plenty of evidence to show that there is a great deal of life left in this city and in the people who inhabit it. Step outside of this building and you will see it for yourself. I have tried to suggest in this address that both Hong Kong and the mainland stand to gain much from China’s accession to the WTO. Like most new developments on the mainland, WTO entry presents enormous opportunities for Hong Kong, providing that we prepare and position ourselves to make the best out of them. 7  BIS Review 68/2000

For sure, if there is a lesson to be had from the crisis, it is that there is always a risk of another crisis; we cannot easily repeat the famous “this time is different” approach. But we are now better prepared. As a general approach, the main challenge is to fully implement the reforms and to closely monitor their impact on the financial sector, and if necessary, fine-tune them.  The interrelation between monetary and macroprudential policies. Under general circumstances, monetary policy and macroprudential policy complement each other. But, as shown by the run-up to the global financial crisis, there might be periods in which achieving monetary policy goals does not necessarily guarantee achieving macroprudential goals and vice versa; low interest rates had an influence on financial imbalances and excessive risk-taking while inflation was contained and the real economy did not show overheating pressures. This is a tradeoff which central banks will have to deal with. It would help to design an institutional set-up that ensures synergies and consistency among monetary, micro and macroprudential policies, but also separates ex-ante analysis, probably through Chinese wall-type structures. 5/6  3. The fintech challenge   “Fintech” is gradually entering into the financial sector. Information technologies can have important implications in terms of increasing competition and redefining the relationship between consumers and suppliers of financial services, fostering efficiency gains, better financial inclusion and improvements in quality through tailored services.
The estimated impact on output would be, of course, negative, dampening real GDP growth by 0.1 to 0.8 percentage points in the first year; in subsequent years, the average cumulative impact suggested by these models would be roughly neutral (-0.3 to 0.2 percentage points in the second year; -0.1 to 0.4 percentage points in the third year). Needless to say, these estimates are surrounded by a high degree of uncertainty related to the model specifications and other factors, for instance, the assumed initial cyclical position of the economy, the nature of the oil price shock, and the possible existence of non-linearities in the transmission of the oil price shock to the economy. More importantly, these (and other comparable) simulations are based on the assumption that the monetary policy stance is given; that is, the central bank’s interest rates are assumed to be kept constant and not to be adjusted in response to the impact of the oil price shock on inflation. Of course, this assumption is made for the purpose of isolating the “pure” impact of the oil price shock. In reality, monetary policy has an important role to play in influencing the effects of oil price shocks on the economy. Oil price shocks present policy-makers with difficult choices as they simultaneously pose upside risks to inflation and downside risks to growth. In responding to oil price shocks, it is essential to understand that policy-makers cannot offset the real effects of oil price increases.

But the Czech Republic has a higher GDP per capita than Portugal (or Greece, for that matter, and many other countries in the euro area) and is getting closer and closer to Spain, a solidly developed country according to all measures. The Czech Republic also has a human development index comparable to that of Austria and Italy. In fact, living standards in the Czech Republic have been higher than those in Portugal for at least a quarter of a millennium, since the start of the industrial revolution (with the possible exception of a couple of decades centred on 1990). But once a country enters the euro area, it is almost automatically treated as a developed country, even in the eyes of the markets. Personally, I find that rather confusing. In practice, therefore, we observe that some nominally “emerging” countries (such as Poland, Israel and Singapore) have been dealing with exactly the same issues as the nominally developed ones. At the same time, some nominally developed countries (such as Greece) are dealing with problems typical of developing countries, issues including incomplete land registries and an insufficient basic ability to collect taxes. This confusion in taxonomy complicates our discussion a great deal, especially in the years of the crisis and its aftermath. The question at the beginning of the crisis was: who in Europe will prove to be most vulnerable to shocks? Many believed it would be Central and Eastern European countries.
It is, of course, difficult to say exactly how large the foreign exchange reserve would have to be to assist the banks with liquidity in a crisis situation. The amount could be either larger or smaller, but let’s assume that two-thirds of the reserve, that is SEK 200 billion, is available for this purpose. What does it cost to maintain a foreign currency reserve like this? And who should reasonably pay this “insurance premium”? Let us examine the cost first. One way of looking at the matter is that Sweden, as a nation, has borrowed SEK 200 billion more than we otherwise would have needed, and the cost for this, quite simply, is the average interest rate on the government debt. But this would be to disregard the fact that the Riksbank can actually invest the money we have borrowed via the Swedish National Debt Office in interest-bearing assets, let alone that choices are limited as the assets must have extremely good liquidity, that is to say that cash must be available at very short notice. If we assume that the difference between the deposit rate and the lending rate is about forty basis points, the annual cost for borrowing SEK 200 billion would thus be about SEK 800 million. Is this a lot or a little? This can be discussed, but, last year, the four major banks had a combined balance sheet total of SEK 11 300 billion and pre-tax profits of SEK 70 billion.

With regards to the extent to which financial stability conditions should be incorporated into monetary policy decision, one prominent view is that financial stability should be addressed mainly by macroprudential tools, and that, if effectively deployed, macroprudential tools can free up monetary policy to focus on price and output stabilization objectives. While this might hold true in some advanced economies, operationalizing macroprudential tools in practice—especially in emerging markets—has proved challenging. Limited experiences and complex interactions among various policy tools make calibrating macroprudential measures extremely difficult, not to mention the risk that these tools might inadvertently push some activities outside of the regulatory umbrella into shadow banking. My view, therefore, is that macroprudential tools are complements, rather than substitutes, for the broader monetary policy stance. Ladies and gentlemen, The three factors I have mentioned—inflationary pressure, growth, and financial stability—are factors that the MPC consistently looks at when deliberating monetary policy’s transition under the flexible inflation targeting framework. But before I make my concluding remarks, I would like to mention that when we are confident that economic growth is close to its potential and inflation will remain within our target range, the MPC can take a longer view. And this is when policy space should be taken into consideration. Two considerations are at play. First, history has taught us that a period of prolonged economic expansion comes with asset price bubbles and market correction and recession. A gradual, anticipated, movement in the policy rate reduces the risk and the size of such outcome.
As usual, the baseline scenario described above reflects the events that are believed to be most likely to occur with the information available at the closing of this Report. Logically, different events will lead to different macroeconomic conditions and, therefore, an MPR path that will also differ. Currently, the level of uncertainty is definitely higher than normal and, after assessing the probability of alternative scenarios, the Board considers that the balance  BIS Review 65/2009  5  of risks for growth is biased downward, and is unbiased for inflation. The main risks are associated, once again, to the complex global economic outlook. In the past few weeks, some signs of stabilization of the crisis in developed economies have begun to show up, with a marginal recovery of manufacturing output, exports and confidence indicators in different economies, particularly in Asia. It is possible that these signs may be just another stage in the volatility shown by the markets in the past several quarters, and new stressful situations may arise that could worsen the already precarious situation of the world economy. Meanwhile, if the rebound of stock markets and the reduced risk aversion are solid indications that uncertainty is fading out, a more widespread recovery of global output and demand may be seen in the short run at the global level. The materialization of some of these risks could have important implications on the domestic economy, mainly consumers and entrepreneurs’ expectations possibly taking longer than predicted to improve, or the economy quickly recovering from its current state.

Table 2 Economic growth and current account (annual change, percent) 2007  2008  2009 (f)  GDP National income  4.7 7.1  3.2 3.8  -0.75 to 0.25 -2.8  Domestic demand Gross fixed capital formation Total consumption Goods and services exports Goods and services imports  7.8 12.0 7.1 7.6 14.9  7.4 19.5 4.2 3.1 12.9  -4.7 -14.3 0.2 -1.7 -10.6  Current account (% of GDP)  4.4  -2.0  -1.8  (f) Projection. Source: Central Bank of Chile. BIS Review 65/2009  11  Figure 9 Effective inflation and inflationary outlook Inflation indicators  EES: Inflation expectations  (annual change, percent)  (annual change, percent)  10  10  8  8  6  6  4  4  2  2  0  0  -2  -2 01  02  03  04  05  06  07  08  7  7  6  6  5  5  4  4  3  3 2  2 02  09  CPI CPIX CPIX1 CPI minus foods and energy  03  04  05  06  Two years ahead  07  08  09  One year ahead  Sources: Central Bank of Chile and National Statistics Bureau (INE).
Mervyn King: Monetary policy developments Speech by Mr Mervyn King, Governor of the Bank of England, at the Lord Mayor’s Banquet for Bankers and Merchants of the City of London at the Mansion House, London, 17 June 2009. *  *  *  My Lord Mayor, Mr Chancellor, My Lords, Ministers, Aldermen, Mr Recorder, Sheriffs, Ladies and Gentlemen, It has been quite a year. A year to remember, but not to repeat. Since we last met, a financial panic swept through markets in September, several major financial institutions failed, and a remarkable collapse of confidence around the world led to unprecedented declines in industrial production and national output. World trade fell by almost 15% in six months, a faster rate of decline than in the Great Depression. Faced with this crisis, the Bank of England took extraordinary actions. Bank Rate was cut virtually to zero, and the Monetary Policy Committee embarked on a programme of £ billion of asset purchases. And in your own businesses you too have had to deal with what some have called a once-in-a-century event. Since the panic last autumn, overall output has fallen by around 3% in the United States and the United Kingdom, 6% in Germany, and 7% in Japan. The collapse of spending in these economies is having painful consequences. In less than a year, over 5 million jobs have been lost in the United States, almost 2 million in the euro area, and almost half a million here in the United Kingdom.

As a result, companies that can bypass the banks to access capital markets directly are doing so. Indeed, in the first four months of this year, more finance was raised in debt and equity markets than is normally the case in an entire year. Most companies, however, especially smaller and medium-sized enterprises, rely heavily on bank finance. And with current market sentiment it may take further additions to equity capital before the banking system will be able to supply credit at a price and on a scale to finance a sustained recovery. That is likely to take time. It is too soon to reverse the extraordinary policy stimulus that has been injected into the UK economy through monetary policy, the provision of liquidity support to banks, guarantees of bank funding, and fiscal policy. Nevertheless, it is not too early to prepare such “exit strategies” and to explain how they would work. The challenge facing the Monetary Policy Committee is straightforward in principle but difficult in practice. As activity returns to more normal levels, the outlook for inflation will pick up. And it is the outlook for inflation that will guide decisions on the pace and timing of a withdrawal of monetary stimulus. Reaching judgements on the outlook for inflation is never easy, and assessing their implications for policy will always be a matter of balancing risks. In contrast, the choice of instruments is simple.
As the cost of borrowing increased for certain governments, banks with exposures to this debt came under intense market pressure, ultimately leading to entire national banking systems losing market access. This in turn resulted in financial fragmentation and a serious disruption of the monetary policy transmission mechanism. As a consequence, cuts in key ECB interest rates were not being passed on to firms and households to the same extent in every euro area country. To arrest and reverse this development, two policies were introduced. First, to ensure banks could rely on longer-term funding, central bank liquidity was made available for up to three years, and the collateral that could be used to access central bank money was expanded. Second, the announcement of Outright Monetary Transactions (OMTs) in 2012 removed the euro area breakup risk that was being priced into government borrowing costs. Notwithstanding the success of OMTs in alleviating redenomination risk, the sovereign debt crisis set back the recovery and laid the ground for the third phase of the crisis. Banks in large parts of the euro area became less willing and less capable of keeping credit flowing to the real economy, producing a vicious circle of contracting credit growth and weak demand dynamics. Accordingly, headline inflation began to drift downwards, owing both to global energy and commodity price developments and to ongoing weakness in the core components.

Nevertheless, the ability to meet initial margins and variation margins can pose severe liquidity constraints for market participants, especially in non-banks financial institutions, and may thus exacerbate liquidity stress in the system. The proper calibration of haircuts is therefore essential so that in times of crisis they do not behave procyclically and do not have to be increased abruptly. Several international working groups are currently exploring the issues related to margin requirements, in particular in the context of the market turmoil observed in the early stages of the Covid crisis. More recently, the default of Archegos on its margin calls, at the end of March 2021, also highlighted the significant risks to which certain banks were exposed through their services to non-bank financial entities, through their prime brokerage activity. Both adequate dimensioning of margins, and requirements of high quality collateral prove critical. At the level of the European Union, the last step of the compulsory use of the initial margins will come into force in 2022 in application of the EMIR regulation, and should help contain such developments. And the ESRB issued in June 2020 recommendations to address liquidity risks arising from margin calls. Nevertheless, we should remain alert and critical in terms of supervisory actions and regulatory requirements to ensure that best practices are enforced. b) The second issue is the sovereign-bank-corporate nexus European banks’ ownership of sovereign debt has increased in the course of the year 2020.