samchain/econo-pairs-v1 huggingface dataset:
Successive FOMC minutes recorded debates over how far these developments might reflect the impact of falling reserves levels and balance sheet normalisation more broadly. For the FOMC’s current Balance Sheet Normalization Principles and Plans, see https://www.federalreserve.gov/monetarypolicy/policy-normalization.htm 22 The larger and more volatile gap between total assets and the central bank reserves funding them in the US reflects a more important role for non-reserves liabilities, including banknotes (which account for over 40% of the balance sheet, reflecting global demand) and government deposits. 21  13  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  13  Published Federal Reserve analysis and policymakers’ discussion23 suggested that reserves remained clearly in the ‘ample’ zone, and ascribed upwards pressure on short-term interest rates to unrelated factors, including the changed pace of Treasury bill issuance and changing dynamics in the repo market. Nevertheless, in light of broader economic and financial conditions, the FOMC decided to announce a somewhat earlier end-date for normalisation than market participants had been expecting at the start of QT. That is expected to leave reserves initially ‘somewhat above the level … necessary to efficiently and effectively implement monetary policy’. Reserves will then be allowed to decline gradually to that level over time, as currency and other non-reserve liabilities grow. Chart 12: US short-term interest rates since 2014  Source: Bloomberg and Bank calculations  In our Discussion Paper, we described a somewhat different approach to handling the uncertainty intrinsic to estimating reserves demand.

Hence advances in AI are often associated with Big Data and the recent huge advances in the volume and variety of data available (see Figure 1). As the sophistication of algorithms and volume of data rise, the uses of AI in every-day life are expanding. Finance is no exception. In this speech I want to explore the impact of AI and advanced analytics more broadly, on the safety and soundness of the firms we supervise at the PRA, and how we are starting to apply such technology to the supervision of firms. In particular, I want to explore the seeming tension between the PRA’s supervisory regime that is firmly centred on human judgment, and our increasing interest and investment in automation, machine learning and artificial intelligence. II. CHANGING THE NATURE OF THE RISKS WE SUPERVISE  Like many other firms, banks are looking to harness the power and speed of AI. If you were to take some parts of the media at face value you might be tempted to conclude that a revolution is underway. There are plenty of examples of innovation to point to – from the use of ML-driven financial-market trading algorithms; to the introduction of online banking platforms that generate alerts to customers on trends and irregularities in their spending habits; to new apps that suggest switching utility providers to the cheapest provider.1 On closer inspection, however, the situation seems rather less revolutionary and more evolutionary.
Moreover, the composition of growth has been structurally desirable, focusing on exports and industrial expansion. This helps to establish a better foundation for a sustained increase in future consumption. A reduction of external debt has begun. Prospects for the coming years also look favourable. It seems that output can grow relatively rapidly by Swedish standards, accompanied by relatively low inflation. There is reason to emphasise, however, that what we see is hardly the final solution to our problems but rather important initial steps towards a more balanced development. For one thing, the positive trend in the Swedish economy does not yet apply at all substantially to the labour market. A downward adjustment in the rate of wage increases towards more reasonable long-term figures has begun but we do not know how permanent it will be. What will happen in the next round of wage negotiations if capacity utilisation at that time is high? Is the functioning of the BIS Review 66/1998  -6labour market in other respects sufficiently smooth for the adequate creation and filling of new job vacancies? This is a key question. If we do not succeed in finding good solutions in Sweden when it comes to wage formation and the workings of the labour market, in the longer run it will not be possible to permit such strong economic expansion as we have experienced in recent years. Another aspect of economic policy that, like the functioning of the labour market, is closely connected with the Riksbank’s domain is fiscal policy.

10  All speeches are available online at www.bankofengland.co.uk/news/speeches  10  Arrangements for shared supervision, therefore, need to be worked out carefully, subject to agreed procedures and, crucially, recognise the primacy of the lead supervisor. And, given the systemic importance of global infrastructure to many jurisdictions, they must above all be stable. And finally, these arrangements need to be reciprocal and proportionate. This means as I have said, the degree of assurance depends on the degree of risk. In areas for example where there is no cross-border activity, there is little need for assurance on cross border risk. In the end, both sides will need to make a balanced assessment. It is perhaps human nature on either side to want maximum control and minimum responsibility. But a stable and effective regulatory and supervisory relationship cannot be built on those lines. I am an optimist in this area. Of course, I expect some change. But I also believe we have a very solid foundation on which to build the broad supervisory and regulatory relationship necessary for the UK and the EU economies to continue to benefit from our cross border financial connections and from the integration of global and European markets that this encompasses. I am here talking, with our responsibility for financial stability in the UK, about the management of financial stability risk on both sides. I am not, to be clear, talking about trade negotiations.
Thus, after a decade of persistently low inflation and difficulties of central banks in reaching inflation targets, last year this trend reversed and we have been witnessing a return of inflation across almost all economies. About half of the emerging economies have inflation higher than 7%, which is the highest share in the last two decades. In North Macedonia, as a highly open and import dependent economy, inflation has reached 8.8%. Although supply shocks tend to be temporary and usually limited to price changes of a limited number of consumption items, the recent data points that price shock may be more persistent and more broadly based than initially anticipated. For example, in emerging economies, more than half of the items of the consumption basket have high inflation, including services that tend to have more persistent effect. More persistent and broad-based price changes may lead to "backward-looking" inflationary expectations, as was the case before 1990, affecting the wage-setting process. In fact, the latest Consumer Survey of the EC indicates that inflation expectations in most of the CESEE economies have already picked up. So, how temporary and how strong the effects can be? According to the latest IMF forecast, the current crisis may result in higher global inflation by 3.6 p.p. with stronger effect in emerging economies, where it is estimated to average close to 9%. In a regional context, expectations go up to 8.0%.

The slower catching up of the region is not a new phenomenon as it came on the surface right after the global financial crisis. Most of the post transition real convergence (around 60%) occurred in the 5-year period preceding the GFC, against the backdrop of the remarkably growth-conducive global context, rising globalisation and trade integration, as well as favourable terms of financing. Afterwards the convergence slowed down, and it took twelve years since 2008 up to the pandemic to achieve the pace pertinent for the five years pre GFC period. Now, with the global environment becoming highly uncertain, risk of deglobalisation and supply chains defragmentation becoming more certain, and tightening of the global financial conditions already in place, faster real convergence seems even more complex issue. In this vein, there are estimates that crisis has adversely affected growth potential of the CESEE region with average decline of 0.7 pp in 2020. 3/4  BIS - Central bankers' speeches  What are the main structural hurdles that prevent lifting of the growth potential and resilience? Growth accounting framework reveals that in the last decade the slowdown was mostly through the total factor productivity, while the growth in the region became more reliant on capital accumulation. Given the wide capital stock gaps compared to the more advanced countries, the accumulation of capital is warranted, and preferable way to grow. Yet, the fact that the other sources of growth seem to be muted, gives ground for concerns.
Examining the background and reasons why households borrow more today than before is important in my view, as it enables us to understand how household indebtedness is linked to financial stability. One can say that the period with a regulated market was one extreme, which was then replaced by another extreme, namely a free market with in principle unlimited access to global capital. The credit market was strictly regulated until 1985 and there was relatively little degree of freedom for the institutions offering mortgages. Deregulation was in many respects necessary and desirable. However, the development we have seen since 1985 has created vulnerabilities in the financial system against which we must be vigilant. The funding of housing purchases has in principle moved entirely into the banking system, while the banks are to an increasing degree funding these mortgages short-term on the financial markets.2 Swedish banks’ market funding amounts to around SEK 3,500 billion, of which SEK 2,100 billion, or 60 per cent, is in foreign currencies. This means that the banking system is now more sensitive to shocks than during the period with regulation. A necessary condition for the banks to be able to finance Swedish housing is that market participants, investors and credit rating agencies have fundamental confidence in Sweden, in Swedish banks and in the Swedish housing market. If this confidence were to fail because investors considered the risks linked to household indebtedness had increased, the banks could find it difficult to obtain funding, or their funding would cost more.

Naturally, we wish to avoid this. But at the same time, I think it is important to begin to take action. In the long run, it is no sustainable for debts to continue increasing at the same pace as today. So why does the Riksbank care about household indebtedness? The Riksbank is concerned about household indebtedness partly because international confidence in the Swedish housing and mortgage markets are necessary conditions for our financial system to function smoothly. Financial developments in turn are linked to developments in the real economy. The indebtedness of Swedish households can thus affect the Riksbank’s conditions to carry out its statutory tasks, price stability and financial stability. It is therefore important that the Riksbank continues to follow developments, analyses and highlights risks linked to household indebtedness. 8  See Barclays 2012. (Over-promising? Encumbrance at European Banks, Barclays Capital Equity Research. 9  See Financial Stability Report 2013:2, Sveriges Riksbank. 8  BIS central bankers’ speeches
In this regard, the Bank of Zambia and the financial service providers under its regulation and supervision are pleased to be part of the celebrations for International Women’s Day 2008 Distinguished Ladies and Gentlemen, our country has made great economic strides in the past few years. We have had positive economic growth averaging 5% in the last five years. The macroeconomic environment has stabilised with the achievement of single digit inflation as well as reduced interest rates. In addition we have seen increased investments in the mining and other productive sectors. This improved environment presents great opportunities  BIS Review 29/2008  1  for our country for both men and women. As you all know, women have from time immemorial taken centre stage in the running of small and medium enterprises ranging from agriculture, mining, and tourism, to manufacturing as well as cross border trading. All these economic activities need financing in order to grow and contribute to our country’s Gross Domestic Product. Ladies and Gentlemen, this brings me to the theme of International Women’s day for this year and that is “Financing for Gender Equality”. At the international level, commitments have been made on financing for gender equality and the empowerment of women by governments all over the world. A large number of governments have taken initiatives to integrate gender perspectives into their national budgets in order to reflect the differentiated needs of women and men. At a national level, Zambia is committed to financing for gender equality.

However, I believe all of us who have experienced this environment have emerged with a very different lesson learnt. Indeed, we cannot overstate the extraordinary potential this setting offers to an institution such as ours which has always valued, and legitimately so, the soundness of its judgement. With that conviction, we should devote most of our efforts to forging closer insertion, collaboration and coordination-based links with our European partners with an essential aim in mind: to reinforce our weight and ability to influence decision-making. This is a challenge and it is also an opportunity, but it is above all a responsibility to support, from the vantage of the Banco de España, the project for European construction. The second objective has to do with our contribution to financial and macroeconomic stability. After an unprecedented financial crisis, the reputation of economic policymakers, of central banks in particular and, indeed, of the economics profession as a whole was enormously dented. 4/5  Testifying to this were the regulatory and institutional changes set in train to prevent similar situations from recurring. However, the real test, where we place our social prestige and credibility on the line, will involve us truly being able to identify risks and vulnerabilities in due time, being able to issue warnings about them and, within our remit, being able to act to mitigate them or to contribute decisively to other players acting when they must.
It was an occasion on which responsibilities were well-defined and thus the accountability for the actions was clear; for the Bank, to introduce the FLS to support lending by bank and likewise to introduce the extended repo operations for the FSA, to loosen liquidity requirements and adjust capital buffers to incentivise net new lending. The key message here is that if the banking system is sufficiently capitalised against future losses, it can play a full role in counter-cyclical policy which seeks to respond to and lean against the conditions of the day. That is the essential use of forward-looking judgement, done with the explicit objective in mind of using financial regulation as a counter-cyclical tool. At present the Bank of England is pursuing two important objectives: seeking to increase the resilience of the UK banking system, and, supporting the creation of credit in the UK economy. Let me say a few words therefore about the announcement last week to extend the Funding for Lending Scheme and modify its terms. It is almost a year since we designed and began the implementation of the current FLS. That was done against the backdrop of a much more febrile environment in the euro area in terms of sentiment and a real concern that the risks arising from the euro area situation were affecting the costs of funding for UK banks and therefore their lending and the economy more broadly.

The crisis has been a searing experience for banks and regulators, precisely because at times they have both failed to fulfil this central objective of maintaining safety and soundness and hence the continuous supply of critical services to the public. For what is now not far short of three years we have been working to change the approach to financial regulation in the UK. We are still working to do that of course, but the difference is that for the last four and half weeks we have been doing so within the new regulatory framework of regulation – we are doing it now as the Prudential Regulation Authority and the Financial Conduct Authority. The prompt for this change of approach has been the severity of the financial crisis, a crisis that has been through a searing phase of prudential problems – failing banks – and more recently a conduct phase as the misdeeds and unacceptable behaviours of the past have been revealed. On a personal note, recently when my appointment was announced, I was described a number of times as a veteran of the Bank of England. It was for me a moment of home truth; 28 years is quite a long time in one place, even if the term veteran sits uncomfortably. But it reminded me that the UK is on its fourth system of financial regulation during that time.
I’ll have more to say about market discipline and its role in the evolving framework of regulatory capital in a few moments. Role of supervisors While effective bank level management and meaningful market discipline are crucial elements of an overall strategy for promoting and preserving financial stability, neither can substitute for the critical 5  BIS Review 27/2000  role played by official supervision. While banks perform functions that are indispensable to the success of any market economy, these same functions, by their very nature, introduce risks that are capable of undermining the prospects for such success. This reality was acknowledged by Adam Smith over two centuries ago in his seminal tract The Wealth of Nations. And it is with this fundamental reality in mind that governments have long recognized that banking and other financial institutions must be subject to at least some form of regulation and official oversight. The reasons for official supervisory intervention in the banking system, and in the financial system more generally, can be summed up as promoting financial stability and minimizing systemic risk. This is a broad mandate - one that encompasses the responsibility to ensure that markets operate in a fair, transparent and efficient manner, and that participants comply with the rules of the game. Indeed, supervisors bring a number of comparative advantages to the table that enable them to play this critical role in the broader supervisory framework. First, supervisors have clear incentives to monitor risks to the financial system as a whole.

Indeed there have been many comparisons to the Great Depression. Yet, compared to the 1930s, an importance difference today is that news spread across the globe far more rapidly. Even rural households in China and India can now access this stream of bad news, real-time, through satellite televisions and the internet. The hyperefficiency of information flows has in itself introduced new uncertainties as sentiment shifts rapidly and abrupt loss of confidence becomes self-reinforcing. Crisis response: decisive action needed How do we deal with this crisis? Despite its scale and unprecedented nature, it may be instructive to study the pattern of responses in previous crises. In past crises, the responses typically go through several overlapping phases. Initially, there is a lack of appreciation of the scale and severity of the problem. This then gives way to fear and panic as the problem becomes stark. Next, anger sets in, and a hunt for culprits begins. As the financial and  2  BIS Review 30/2009  economic stresses take root, pessimism sets in. If remedial actions are seen to be tentative and lacking in conviction, recovery is delayed and interrupted by bouts of renewed panic. It may take some time before the hard realities are accepted, and a level-headed search for viable solutions sets the path for recovery. Elements of these have been played out in the current crisis. Initially, the "subprime" issue was regarded as a manageable problem, confined to a small segment of the US housing market. Then it triggered seizure in the wider credit markets.
Jarle Bergo: The economic outlook and household debt Address by Mr Jarle Bergo, Deputy Governor of Norges Bank (Central Bank of Norway), at the annual meeting of the Association of Norwegian Finance Houses, Gardermoen, 27 May 2005. The discussion of the economic outlook is based on Inflation Report 1/05 and the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 25 May. Please note that the text below may differ slightly from the actual presentation. The references and the  Charts in pdf-format can also be found on the website of the Norges Bank. *  *  *  The economic outlook The Norwegian economy is growing at a solid pace and growth is likely to remain high. The recession was mild after the previous period of expansion culminated in 2002. The period of relatively high cost inflation in Norway came to an end without production being impacted to the same extent as during the recessions in the early 1980s and around 1990. One of the reasons for this is probably that low inflation in the 1990s and current monetary policy have anchored expectations of low and stable inflation among economic agents. Inflation has been low in recent years. Inflation measured by the CPI-ATE reached its lowest level in the first months of 2004. Inflation picked up through the autumn. The depreciation of the krone since the beginning of 2003 has contributed to these developments.

At the same time, higher asset prices provide scope for raising larger secured loans. When negative news appears and spreads, investments do not match expectations and the sentiment is reversed, asset prices fall. Banks’ security is reduced. Borrowers experience problems in servicing their debt. Demand and income developments are weakened and banks’ losses increase. The sharp rise in house prices and household debt has increased the interest in the interplay between monetary policy and the stability of the financial system. Financial stability and price stability are mutually reinforcing. Financial stability facilitates a stable supply of credit and stable capital flows and underpins the transmission mechanisms for monetary policy. Price stability strengthens financial stability. Low and stable inflation provides households and enterprises with a clear indication of changes in relative prices. This makes it easier for economic agents to make the right decisions and leads to greater price stability in financial and property markets than would otherwise be the case. Developments in credit and asset prices have an influence on inflation. We take this into account in our interest-rate setting. We are also aware of the potential risks to financial stability. The current low interest rates make it easy to service debt. The household interest burden, i.e. interest expenses after tax in relation to the sum of interest expenses and disposable income, is low despite strong growth in debt. The interest burden will increase, however, when the interest rate reaches a more normal level. Only 14 per cent of household loans are fixed-interest loans.