samchain/econo-pairs-v1 huggingface dataset:
And there has been extensive work on labour market dynamics and frictions to establish the point at which the level of unemployment accelerates the rate of inflation which, for the same of simplicity, I will refer to here as the natural rate. 9  However for nearly 5 decades the essential framework of a labour market impacted by inflation expectations that clears with lags around a natural rate of unemployment over the business cycle (or trade cycle in Phillips’ original work) has played a fundamental role in modern macroeconomic models, including those used as part of their forecasting machinery by monetary policy makers, like the Bank of England. So for monetary policymakers the apparent disappearance of the link between pay growth and employment is, as I have said, one of the key puzzles of the post recovery economy in the UK and in advanced economies. It has of course attracted a great deal of attention. I am afraid I do not have the answer to the puzzle to give you here tonight. I suspect that for many years to come, economists in academe and elsewhere will be occupied - and arguing - about this period and revisiting (again) the established Phillips curve framework. But policy makers cannot just ‘down tools’ until we have a better understanding. So I do want tonight to look at some of the main candidate explanations and what they might mean for the policy maker.

It depends on the structure and the dynamics of the labour market – on the fact that some in the labour force will find it much harder to find employment even when the labour market is tight and on the fact that churn in the labour market will lead to frictional unemployment, even if there are unfilled vacancies, as it takes time for workers who have left jobs to find new ones. If the level of structural or frictional unemployment is reduced the natural rate will decline. Both are influenced by many factors. Structural unemployment, for example, can be (and in the UK almost certainly has been) reduced by changes to social benefits. Frictional unemployment can be reduced if the labour market becomes more efficient at matching unemployed workers to unfilled vacancies. 11  That would also push the natural rate down. Indeed, in its  review of the supply side of the economy in February of this year, the MPC appealed to evidence that secular improvements in the educational attainment of the workforce are likely to have improved the efficiency of the labour market and lowered trend unemployment and, as a result lowered the natural rate assumed in our forecast (Chart 7). Inflation expectations  The same effect of lowering the curve might be occurring, albeit via a very different mechanism, by the impact of inflation expectations on pay growth.
The rise in broad money during the pandemic and the current inflation So the lesson of history is that most movements in broad money occur independently of variations in the size of the central bank’s balance sheet. Nor are many of them driven by exogenous changes in supply with no accompanying shift in the demand for money. They’re not necessarily Friedman’s “helicopter drops” and accommodating them needn’t have any implications for asset prices or for demand. However, there may be times at which this is the more appropriate description. Arguably, the significant growth of M4 during the pandemic – and specifically the build-up of money in households’ bank accounts – counts as one such episode. Unable to spend during the lockdowns, but still receiving income (in part thanks to the government’s furlough scheme) households accumulated significant “excess deposits” (Chart 3). This was surely involuntary (hence the word “excess”) and was always likely to support the recovery of consumer spending once lockdowns were lifted. And monetary authorities – including the MPC – treated this issue very much through this somewhat “monetarist” lens. There was every reason to expect a strong recovery anyway, whatever the form of that additional wealth. As we emerged from the last lockdown in the spring of 2021 the level of consumer spending was still extremely low and, given the additional impetus provided by the rise in “W”, even equation [1], which makes no distinction between monetary and non-monetary assets, would have predicted a very rapid bounce-back.

Loans to the private sector have stabilised at growth rates somewhat above 5%, a rate of expansion which, in real terms, is broadly in line with the long-term average. Considering all the evidence relating to the first pillar, from a medium-term perspective, more liquidity is available than would be needed to finance sustainable, non-inflationary growth. However, given the current economic environment, we do not see the risk of this translating into inflationary pressure in the near future. Concerning the second pillar, recent short-term conjunctural indicators and survey data suggest that real GDP in the euro area has continued to grow only moderately in the third quarter of this year. This is in contrast to earlier expectations that a more pronounced upswing would occur in the course of this year. Obviously, the hesitant pace of economic expansion and current, lacklustre confidence reflect the significant degree of uncertainty that has been building up over recent months. This uncertainty is associated with geopolitical tensions, the evolution of oil prices and developments in stock markets. However, for the time being, the main scenario for the euro area remains that economic growth is expected to return to rates close to potential in the course of 2003. In fact, this expectation is consistent with all forecasts published by international organisations. Private forecasters, on the whole, also seem to share the same view. Moreover, financial markets have shown signs of stabilisation in recent weeks following a period of considerable turbulence.
Think for instance of a real European venture capital market to promote equity financing, which is the most effective way to finance innovative businesses at different stages of maturity (seed, venture, and growth). More specifically, progress towards a Financing Union for Investment and Innovation is needed in three key areas: -  First, completing the Banking Union. This means, as a priority, finalising the Banking Union’s second pillar, namely the single resolution mechanism. Within a strong Banking Union framework, banks in the euro area will thus be able to engage in cross-border consolidations on a sound and safe basis and therefore contribute further to reducing financial fragmentation. -  Second, thoroughly reviewing the incentive schemes for cross-border investments, notably by promoting further convergence of tax and  Page 4 sur 5  regulatory regimes. Enhancing the free movement of capital within the EU requires addressing a wide range of legal impediments, including enhancing the predictability of insolvency frameworks, eliminating fiscal biases that penalise equity, and further increasing the transparency and harmonisation of accounting rules for small businesses. -  Third, expanding the supply of financial intermediation services. This can take the form of new pan-European savings products and investment vehicles – more long-term and risk-oriented – or new market initiatives in green  bonds,  private  placement  or  securitisation  for  instance.

But the opportunity lies in its abundant resources: savings exceed investment by  Page 3 sur 5  EUR 350 billion per year in the euro area, which is more than 3% of GDP. An obvious way to boost growth in the EU is therefore to better steer our abundant savings towards the financing of investment and innovation across borders. We will thereby be able to address the persistent “investment crunch" that followed the financial crisis – the share of investment in GDP remains below its value at the turn of the century, standing at 20% in 2016 compared to 22% in 2000-2005. The success of this Financing Union lies in the capacity to provide businesses with more equity financing solutions, supporting the scaling-up of SMEs. Europe is lagging far behind in this area: such financing only represents 68% of GDP in the euro area compared with 128% in the United States in the fourth quarter of 2016. Naturally the building blocks of such a Financing Union already exist with the Capital Markets Union, which supports the diversification of private financing; the Juncker Investment Plan, which channels public and private investment into the real economy; and the Banking Union, which tackles the fragmentation issue. These initiatives have to be brought together into the Financing Union in order to go beyond administrative or bureaucratic borders, create synergies, and therefore give new impetus to this agenda.
Despite that, inflation has been above the target more often than it has been below – in fact, it has been below the target in only one month so far since the MPC was set up. As the benign effects of those temporary external influences on inflation start to wear off, the challenges facing the MPC will become, if anything, even greater than those in its first two years. If the time lags in the monetary transmission process mean that it is too early to judge the MPC on its inflation track record, then what other criteria for assessing its performance might be relevant? One measure would be expectations of future inflation. Following Gordon Brown’s announcement of Bank independence on 6 May 1997, inflation expectations in financial markets fell sharply. Chart 2 shows the expected inflation rate at different horizons implied by yields on conventional and index-linked government bonds. These expectations fell by about 0.5 percentage points on the day of the announcement. Since then inflation expectations have fallen further. Chart 3 shows the way in which two particular measures of inflation expectations have evolved since May 1997. The first of these measures is the expectation of inflation ten years ahead implied by bond market yields. The second is a Consensus Economics average of the expectations of inflation five years ahead held by economic forecasters. Since 1997, inflation expectations on both measures have steadily fallen towards the target, and the economic forecasters’ expectation has now become firmly anchored on the target.

WIBC Asia provides a valuable platform to bring together stakeholders in Islamic finance, from Asia and the Middle East, to foster stronger collaboration for sustained industry growth. I wish you fruitful discussions. Thank you. 2  BIS central bankers’ speeches
At the same time, however, the purchasing managers’ index for the service industries rose. According to new labour market data for June, the earlier positive trend continued for both the number of people in the labour force and the number of employed. Unemployment rose marginally in June, but monthly data is usually volatile and if one looks at the second quarter as a whole, unemployment fell somewhat more when compared with the first quarter than we had assessed in July. During the summer, inflation outcomes were published for June and July. CPI rose by 0.1 per cent in July, compared with the same month last year, at the same time as the underlying CPIF inflation rate was 1.2 per cent. This was somewhat higher than expected, mainly owing to an unexpectedly sharp rise in energy prices. BIS central bankers’ speeches  7  During the summer, new financial market statistics were also published for the month of June. The annual growth rate for lending to households was 4.7 per cent in June, that is, the same as in May. This means that the rate of increase in lending has remained more or less unchanged since last summer. Next monetary policy decision on 4 September A number of mixed signals have been received during the summer. While the volatility on the financial markets has declined, there is still some uncertainty over the strength of the recovery in the real economy.

Monetary policy needs a more long-term focus As I see it, we need to make it clear in the monetary policy analysis how monetary policy affects the risk of a financial crisis arising and how such a crisis scenario would look. As financial imbalances usually build up over a long period of time, this means that, in practice, we need to look beyond the three-year perspective that normally forms the base for our forecasts. Monetary policy is already forward-looking, but with a more long-term focus we could also include target attainment in the longer run. So, to what extent can monetary policy affect the probability of a crisis occurring? Well, it is mainly the effect of the repo rate on debt that is important in this context, as the probability of a financial crisis increases when indebtedness is high or when debt increase at a faster rate than normal.2 As the interest rate entails the cost of taking on debt, monetary policy has an effect on indebtedness. In the short-term perspective it seems as though the relationship between the repo rate and household debt is not very strong. However, if households expect the prevailing low interest rates to persist, and therefore increase their debts to unsustainable levels, the effects can be substantial.
The third candidate explanation is that central banks are the architects of the apparently low trend real rate by pushing up demand for long-dated risk free assets. This argument is, I think, largely mistaken for some of the reasons I alluded to earlier. QE will have affected the price and hence the yields on bonds. Indeed, that is part of the objective. Central banks make use of asset purchases when their preferred policy instruments run into their effective lower bounds. But QE will not have affected the natural rate. QE acts as a substitute for changes in Bank Rate, taking the effective or “shadow” policy rate – Bank Rate adjusted for the impact of QE – down below zero and towards the extraordinarily low natural rate. In other words, central banks are not causing low underlying interest rates, we are responding to them. Policy Implications  What are the policy implications in a world in which the natural rate remains around zero and all else equal will not rise back to close to pre-crisis levels even as headwinds abate? I think there are two main implications for central banks. First, and most obviously, if the natural rate is going to be lower on average then the same will be true of the policy rate.

Long-run structural economic factors are hard to estimate with precision and it can be even harder to forecast their development. For example, demographics are likely to reverse some of the increase in saving as dependency ratios increase and people in retirement spend their savings. When this will occur will depend on many factors, including how long older people are able to stay  4  The analysis by Bank staff was not the joint estimation of a single, structural model. Instead, it drew on separately estimated impacts of a variety of contributing factors - it’s possible that these might overlap. 4  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  4  in the workforce. What is, I think, safe to say, is that the trend real rate has gone down over the last few decades, driven by structural factors. To put it in historical context, the 10-year rate of interest in 1976 was 16%, but that has fallen to around 2½% today, reflecting very large structural changes since I left this university. Part of that fall is associated with much lower inflation rates today than were experienced in the 1970s. But also, since the early 1980s, structural factors have put downward pressure on both the expected real rate and term premia. Inflation premia are much lower now accounting for around 2½% and term premia, which are much harder to estimate, are probably around 0%, which leaves a trend rate of around zero.
'19  20 12  12  15  15 9  9  10  10 6  6  5  5  3  3  0  0  0  0  2019  2020  2021  2017  2022  2018  2019  2020  2021  (*) The bars of the 2018 surveys correspond to the months of September to December in consecutive order. The same applies to 2019, for the months of January to May. Sources: Ministry of Economy's Sustainable project management bureau (OGPS), and Capital Goods Corporation (CBC). Page 14 of 18  Figure 9 Interest rates on bonds and commercial loans (percent)  11 10 9 8 7 6 5 4 3 2  11 10 9 8 7 6 5 4 3 2  Commercial loans (*)  BCP-5 BCP-10 BCP-2 10  13  16  19  (*) Weighted average rates on all operations performed in each month. Sources: Central Bank of Chile and SBIF. Figure 10 Terms of trade (index, 2013=100)  108  Mar. '19 Report  104  108  104 Jun. '19 Report  100  100  96  96  92  92 13  14  15  16  17  Source: Central Bank of Chile. Page 15 of 18  18  19  20  21  Table 4 International baseline scenario assumptions Avg. Avg.

Besides, it has also estimated that roughly 8 trillion US dollars2 will be required to meet the infrastructure needs of Asia over the next decade. Although this amount is daunting, I believe that it can be fulfilled, given the current global capital surge and the fact that Asian savers put away around 7 trillion of US  1  2012, ADB website (http://www.adb.org/countries/gms/news-releases)  2  http://www.adbi.org/files/2009.08.31.book.infrastructure.seamless.asia.pdf pp.181  BIS central bankers’ speeches  1  dollars3 each year. Like directing the flow of flood to the right river so that it can become benefit for those living in the area, this overflowing capital can be harnessed to benefit needed long-term projects. 7. To meet the region’s financing requirements, we should look into new means to attract funding. Firstly, by promoting private sector participation in infrastructure development through public-private partnership (PPP). The PPP model can improve the efficiency of long-term projects by adopting the private sector’s expertise and reducing the burden on government budget. Although the PPP model has long been discussed, the implementation of this model is still a trial-and-error practice. Regardless, I believe that through clear governance and suitable regulatory framework, PPPs could promote private sector’s participation and bring in the untapped resources. Secondly, by customizing innovative financial instruments. This calls for inter-agency collaborative efforts to introduce innovative financial instruments which link specific funding requirements and market preferences. To name a few, Thailand has recently launched its first infrastructure fund to finance its sky train extension.
At the Riksbank we have therefore invested in developing competence within our field of responsibility for the oversight of the payment system, which plays a central role with regard to the functioning of the whole financial sector.

Such investments can be found in the emerging markets of Asia, especially in China. Although the dynamics are somewhat different in China, its tale of economic growth is as legendary as that of the Middle East. China has experienced a huge inflow of funds in search of growth opportunities and at the same time the Mainland authorities have been gradually opening up the country’s outward investment. As a Special Administrative Region of China, Hong Kong plays a pivotal role as the IFC of China in the course of financial liberalisation. Not only has it acted as a conduit for Mainland companies accessing international markets through IPOs, but also one of the largest sources of foreign direct investments for Mainland China. With the continuing financial liberalisation on the Mainland, Hong Kong is positioned as the most attractive destination both for investing into China and tapping China's funds. What are the challenges for us? Opportunities aside, we are of course aware that Hong Kong also faces challenges in developing Islamic finance. It is a fact that Hong Kong’s Islamic community is not big, but we are confident that the development of Shariah-compliant financial markets can take off even in environments in which the domestic Islamic community is relatively small, simply for the fact that investors nowadays are looking beyond domestic boundaries and traditional finances as financial activities gravitate towards the Middle East and China. Indeed Hong Kong’s relatively small population does not seem to undermine in any way our performance in the conventional financial and capital markets.
Turbo-charging sterling LIBOR transition: why 2020 is the year for action – and what the Bank of England is doing to help Speech given by Andrew Hauser, Executive Director, Markets  International Swaps and Derivatives Association/SIFMA Asset Management Group Benchmark Strategies Forum, London  Wednesday 26 February 2020  I am grateful to Sarah Hall for co-writing this speech – and to Amber Evans, Alastair Hughes, Wayne Leslie, Will Parry, Rhys Phillips, Edwin Schooling Latter, Dave Ramsden and Francesca Zwolinksy for their advice and comments. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches  Introduction 2020 is a critical year for LIBOR transition. Great progress was made in 2019, particularly in sterling wholesale markets – and I want to give special thanks to the part that ISDA’s support and leadership has played in that. But, with the finish line for LIBOR now clearly in view, there is still a lot of ground to cover – particularly in the cash markets. We need to see another decisive acceleration in effort in 2020 to ensure risk-free rates are adopted across the full range of sterling business, and LIBOR is left behind for good. The motor racing analogy is apt, because LIBOR transition is complex, fast-paced and – above all – a team effort. The green lights came on some time ago, and the private sector has been decisively – and rightly – leading from the front.

The work that CEMFI’s experts and our own researchers will carry out as they conduct these evaluations is also an example of the Banco de España’s commitment to this culture of evidence-based policies. In this way, we hope to establish a genuine technical hub specialised in the evaluation of public policies and programmes that can serve other areas of public policy. And, beyond this specific initiative, at the Banco de España we believe that we can also contribute to these aims by evaluating the actions taken in the exercise of our responsibilities and allowing the 1/2  BIS central bankers' speeches  research community to use our information. The data laboratory recently launched by the Banco de España (BELab) is a good example of this service to society, since it makes the microdata from many of our main databases available to researchers. So is the recent agreement between the National Statistics Institute, the Tax Agency, the Social Security System and the Banco de España, as holders of a significant amount of administrative information and granular data collected for statistical purposes, for the joint design of a collaborative data system to which researchers will have access, provided that the information is to be used for scientific purposes in the public interest. The challenge is for initiatives such as those we are seeing here today to become widespread, so that a genuine culture of evaluating public policies can take root, allowing their design and implementation to be improved on the basis of evidence. Thank you.