samchain/econo-pairs-v1 huggingface dataset:
This is well above the average of nearly $ a barrel experienced over 2010, but at the same time still well below the peak of $ a barrel that occurred in mid July, 2008. The recent volatility in oil prices, as the chart shows, is quite striking. Sharp increases have been followed by sharp decreases. This is one reason we may not want to overreact to price changes – they could be transitory. Figure 2 shows the movements in oil prices – their percent change from a year earlier, in the top line – relative to the change in compensation (the lower line), since 2000. Oil prices have risen recently, but based on the history captured in this chart, one would not expect much of a response in wages and salaries. This, of course, is one reason why consumers feel worse off after an oil supply shock. Prices at gas stations in Massachusetts are now around $ a gallon, yet most people’s need to drive cars has not changed much if at all. So income available for buying other goods and services has been squeezed by the increase in oil prices.3 Some softness in measures of consumer confidence suggests that consumers tend to be less confident about the future when oil prices rise. If consumers pull back spending as a result of a supply shock, it has the potential to be a drag on the economy.

Because my analysis suggests that recent food and oil price increases have their roots in concerns about wheat harvests in Russia and oil production in Libya and the like, I do not believe that monetary policy is the appropriate tool to respond to these disruptions. While many observers see food and energy prices rising and assume the Fed should tighten policy – raise the cost of money and credit – to head off inflation, I would suggest taking a step back and recognizing that tighter U.S. monetary policy will do nothing to stabilize Libyan oil production, reduce uncertainty about political stability in the rest of the Middle East, or increase the wheat harvest in Russia. BIS central bankers’ speeches  1  In fact, tightening monetary policy solely in response to contractionary supply shocks would likely make the impact of the shocks worse for households and businesses. To see why this is so, it is important to keep in mind how supply shocks affect the economy.1 First, supply shocks can lead to increases in food and energy prices that slow economic growth. For example, because a person’s need to drive may not be very flexible, spending on gas consumes a bigger portion of their budget. So an oil shock tends to force consumers to reduce their spending on other goods and services as they absorb higher oil costs.2 Second, while the prices of goods directly affected by the supply disruption increase, other prices in the marketplace may be unaffected – at least initially.
Miguel Fernández Ordóñez: A decade with the euro Speech by Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, at the Conference “10th Anniversary of the entry of Spain into the EMU”, Bank of Spain, Madrid, 27 February 2009. *  *  *  Let me first welcome you and thank you for being here today at the Banco de España headquarters for this conference commemorating the tenth anniversary of the creation of the Economic and Monetary Union (EMU), of which Spain was a founding member. I particularly appreciate Professor Rojo joining me here for these opening remarks. He was the architect of the enormous effort of persuasion and economic and monetary policy action that secured Spanish access to the Union. He was the Governor of the Bank from the signing of the Maastricht Treaty until 2000, when the project had become a reality and when, to many people’s surprise, the Spanish economy had successfully completed a rocky road to convergence. A celebration like today’s without the presence of somebody so closely involved in this project would have been incomplete. Thank you, Ángel. For a country such as Spain, which has frequently been a late arrival at defining events in modern history, having been a founder member of this key project of European integration is a landmark. It demonstrates Spaniards' willingness and ability to contribute actively to European construction and, therefore, to the present and future welfare of its citizens.

For better or for worse, we are increasingly exposed to developments in other countries. The banking crisis taught us how costly financial crises can be. We brought the crisis on ourselves. Many other countries have experienced similar problems. The root of the crises can be traced back to overly zealous financial market participants with reduced risk awareness. The authorities’ role is to prevent crises in the financial system and - if they still occur - handle them with a view to reducing the adverse effects and the likelihood of their recurring. In view of the globalisation of financial markets, international cooperation in this area is crucial. The financial system is also important with regard to Norges Bank’s conduct of monetary policy. By setting the terms for banks’ deposits/loans in the central bank, Norges Bank influences the level of interest rates. Monetary policy is also dependent on financial stability. However, monetary policy is not the topic today. I will focus on the issue of financial stability. 2. What is financial stability? Financial stability is the absence of financial crises. The root of a crisis is that exuberance, optimism and greed take precedence over risk and return considerations when investment decisions are taken. The price of financial assets and property rises. Bank loans and household and corporate debt increase. As a result, all agents become more vulnerable if the situation is perceived as taking a turn for the worse. This may in turn trigger a plunge in property and equity prices.
Moreover, the disruptive potential of innovation is likely to exacerbate an already complex environment as decision-making becomes more opaque and new roles and responsibilities are introduced. For example, what will effective governance and risk management look like? Do artificial intelligence and machine learning introduce new model risk? Or operational risk? Or conduct risk? What does it mean to supervise or regulate conduct if decisions are made by selflearning algorithms? More broadly, what culture and conduct risk will be embedded in technology-driven financial services in the future? These are hard questions for financial firms and for the official sector, and our approach to the reform of financial industry culture will need to address them. Conclusions To return to the beginning of this discussion, culture reform in finance is a complex problem. Causal relationships are difficult to isolate, linkages are constantly changing, and accurate prediction is impossible. That does not mean that we are powerless, or that we should accept complexity as an excuse for not trying to foster change. Rather, we need a long-term commitment that brings the appropriate tools and approaches to bear. The costs and potential consequences of market failures associated with misconduct risk and culture suggests that it is vitally important that we do so. Both financial firms and the official sector should focus attention on investigating and asking questions to better understand the underlying drivers, motivations and risks behind the behaviors of individuals and groups.

The UK Banking Standards Board (BSB), for example, provides one lens on assessing culture change for a broad crosssection of financial service firms operating in the U.K.10 I believe diagnostic tools like this are an important part of the cultural assessment toolkit. Moreover, firms and the official sector need to evaluate a wide range of behaviors, signals, and outcomes to draw the most robust conclusions about the depth and pace of culture reform. I think it is critical for both firms and the official sector to continue to experiment with new approaches to assessing culture change, to collect and build new forms of data and measurement, to develop qualitative assessments to complement quantitative ones, to use new techniques and technology to understand how a firm’s culture and conduct are changing, and to continue adapting and course correcting to a sustainable business strategy as the operating environment evolves. Influence Fostering productive behavioral change is at the heart of culture reform. Behavior, in turn, is driven by a multifaceted set of factors including incentives, cues from peers, observations about leaders, and formal policies and procedures. Most of us are not experts in human behavior, so I believe we should be open to incorporating lessons from behavioral economics and other social sciences into programs to mitigate conduct risk and promote cultural change. Behavioral economics blends psychology and economics to provide insight into why individuals may behave in a certain way and make decisions that may not be in their own economic best interest.
And from August 2024, the largest commercial banks active in retail payment transactions will be offering their customers the possibility of receiving instant payments. However, for instant payments actually to be available to commercial banks’ end customers, private sector solutions are still needed. According to surveys, many commercial banks are also planning to offer the possibility of sending instant payments from August 2024 onward. Competition among commercial banks should ensure that efficient payment solutions are offered to end customers, for example in ebanking. What do instant payments mean for the two-tier financial system? Instant payments settled in central bank money are an example of how our first principle – the division of labour between the central bank and the private sector in the two-tier financial system – enables successful implementation of innovations. With the introduction of instant payments, the end customers of SIC participants will also be able to settle their payments securely, quickly and in central bank money. In Switzerland, the irrevocable and secure transfer of value in central bank money in real time has to date only been possible for participants directly connected to the SIC system. This expansion of the group of participants brought about by instant payments corresponds to our second principle: the secure settlement of payments in central bank money. What about our third principle, the seamless integration of payment methods and forms of money? It is precisely here that we find the most significant innovation prompted by instant payments.

See Panetta, F. (2022), “A digital euro that serves the needs of the public: striking the right balance”, introductory statement at the Committee on Economic and Monetary Affairs of the European Parliament, Brussels, 30 March and ECB (2022), “Digital euro – Privacy options”, presentation to the Eurogroup, 4 April. 4. Panetta, F. (2022), op. cit. 5. Consumers are already increasingly turning to non-cash payments. Only 20% of the cash stock is now used for payments, down from 35% 15 years ago. See Zamora-Pérez, A. (2021), “The paradox of banknotes: understanding the demand for cash beyond transactional use”, Economic Bulletin, Issue 2, ECB, Frankfurt am Main. 6. We are accustomed to using private and public forms of money interchangeably. Euro banknotes and coins are legal tender in the euro area, and cash is the only form of public money to which everyone can have direct access. Confidence in private money – bank deposits, credit cards and e-payment solutions – rests on the ability to convert it, at par, into public money. This allows payment systems to run smoothly and commerce to flow. 7. Panetta, F. (2021), “Central bank digital currencies: a monetary anchor for digital innovation”, speech at the Elcano Royal Institute, Madrid, 5 November. 8. Panetta, F. (2021), “The present and future of money in the digital age”, lecture at Federcasse’s Lectiones cooperativae, Rome, 10 December. 9.
At the New York Fed, we have created a number of specialized examination teams, including some that are focused on various sets of compliance requirements, such as AML. Closing Given the critical importance of communication, I would like to finish by highlighting some of the key obligations for supervised institutions and for supervisors in communicating effectively with one another. Some of these points are intended to reinforce principles I touched upon earlier. •  First, as representatives of supervised institutions, it is critical that you maintain a strong channel of communication with your regulators, particularly when problems arise. From our perspective at the Federal Reserve, we do not like to be surprised. If you find a serious problem, let us know about it when you find it, rather than either 1) assuming you should hold off telling us anything until you have completed what might be a multi-month investigation and figured out exactly how you will deal with it - or even worse - 2) assuming you can sweep the problem under the rug and we will never find out. It is much better that you advise us of a problem, rather than having us discover an issue that you have been aware of for some time but have chosen not to share with us. •  Our mindset is not to play “gotcha” on the problem, but rather to weigh the severity of the specific problem with the effectiveness of how your control processes worked. Did you discover the problem yourself?

William L Rutledge: Supervisory perspectives on compliance for international banks operating in the United States Remarks by Mr William L Rutledge, Executive Vice President of the Federal Reserve Bank of New York, at the Conference of State Bank Supervisors and the Institute of International Bankers, New York City, 25 July 2006. *  *  *  Thank you, Larry. Let me add my welcome to those of you coming from abroad. I am sure that the people who are here for an extended tour of duty will find New York City an exciting and engaging place to live and work. And in particular, your area of professional concentration – compliance - has never been more challenging and important. I am sure that message has been evident in the presentations already today and will be a clear point coming through in my remarks. This afternoon, I will offer various observations on the development and nature of supervisory expectations for compliance, particularly as they relate to international banks. I will speak about what I view as the drivers of compliance challenges, and about the implications of these challenges for the supervised firm, for supervisors and, very importantly, for communication between us. Drivers of compliance challenges Let me begin by singling out two types of drivers of compliance challenges today. First, the dynamics in the global financial services markets have unequivocally led to an increase in inherent compliance exposure.
Are the 16 million unemployed people in the European Union merely an equilibrium, on the one hand, and a statistic, on the other? But for most people the labour market is the market where – for better or worse, in sickness or in health – they sell their time and their skills at a market price. That price determines, in large part, their opportunities and economic welfare. Wage rates have a much greater significance in influencing the distribution of real incomes than do the prices of almost anything else. As a result, the labour market cannot be divorced from broader social and political considerations. If their terminology and language are sometimes insensitive, what do economists have to offer by way of ideas about unemployment? The prize for the most important idea and most insensitive terminology surely goes to Milton Friedman for the concept of the natural rate of unemployment. I shall discuss shortly the significance of this idea for monetary policy. But for a more elegant advocacy of a similar position it is necessary to delve further back in history. This month sees the 75th anniversary of the publication of what Milton Friedman described as John Maynard Keynes’ best book: A Tract on Monetary Reform. It is undoubtedly one of the most persuasive polemics ever written on the subject of monetary policy. To coincide with publication in December 1923, Keynes gave a lecture to the National Liberal Club in which he talked about “the triple evils of modern society”.

But this does not imply that there is some magical threshold defining “acceptable” and “unacceptable” rates of earnings growth. In the short run, the link between earnings growth and inflation is complicated by a whole host of factors, including exchange rate movements, cyclical variations in productivity and profit margins, irregular bonus payments, and one-off adjustments to tax rates and other “wedge” effects. It is true that given the UK’s historical levels of annual productivity growth of around 2% and the inflation target of 22%, it would be a cause for concern to the MPC if average earnings increased by much more – or much less – than 4.5% a year over a prolonged period without there being a corresponding change in trend productivity growth. That is not because the Committee has a view about the appropriate level of pay awards. It is not our job to second-guess what businesses should or should not pay their employees. Nor is it because we think earnings growth causes inflation – inflation is a monetary phenomenon. Rather it is because sustained earnings growth much above or below these rates may indicate that the level of utilisation in the labour market has reached a level inconsistent with the inflation target. The June meeting of the MPC drew particular attention to the rise in headline earnings growth as measured by the Average Earnings Index. But that should be viewed against a background of increasing concern about the tightness of the labour market.
Luis M Linde: From restructuring to transformation Speech by Mr Luis M Linde, Governor of the Bank of Spain, at the 6th Financial Meeting “From restructuring to transformation”, organized by Expansión/KPMG, Madrid, 20 October 2015. *  *  *  Firstly, thank you very much for the invitation to open this 6th Financial Meeting organised by Expansión-KPMG. This meeting is now a classic in our calendar and always provides the occasion for interesting reflections and discussions. One year on from the start-up of the Banking Union, the European financial system can be said to have been strengthened, though this clearly does not mean that it is not facing major challenges and problems. I would sum up the key features here in the following six points: 1. First, following the balance sheet analysis and the stress tests of institutions subject to ECB supervision, and the start-up of the Single Supervisory Mechanism, today there is more awareness of Europe’s banking system and of its greater reliability. 2. Second, solvency levels have been shored up: Europe’s banking system is now sounder. 3. Third, in my opinion, is the greater transparency achieved regarding the situation of the major European banks. And this, together with the Single Supervisory Mechanism and the strengthening of solvency levels, has helped pave the way for banking mergers and consolidation, which were far less conceivable before the start-up of the Banking Union. 4.

A characteristic of the current situation in the euro area is the trend towards disinflation. The ECB expects to end this year, 2015, with a positive – but very close to zero – inflation rate. The risk of deanchoring medium-term inflation expectations does not seem imminent, but even so, the tendency in recent months is once again somewhat worrying. The phenomenon of inflation-free growth we are experiencing is one of the most noteworthy features of global economic developments in recent years, and a subject of debate and analysis by international economic organisations, academics and experts. The course of energy prices and globalisation are undoubtedly explanatory factors, but the phenomenon is admittedly one that poses many questions and, consequently, difficulties for economic policy. ECB measures For several years ECB monetary policy has striven to resolutely support economic recovery through standard and non-standard measures. After exhausting the standard measures, in September 2014 the ECB announced its quantitative easing programme with two new components: the asset-backed securities (ABS) purchase programme and the covered bonds purchase programme. Subsequently, in January this year an agreement was reached to extend the programme to include public securities. As at 30 September 2015, the assets acquired by the Eurosystem under the expanded purchase programme amounted to slightly more than € billion, a substantial amount of which (almost 72%) comprised government bonds. The programme has helped enhance monetary policy transmission, by reducing the fragmentation of European financial markets, and provided for lower borrowing costs for households and firms.
Business cycles have also diverged in other ways. The turnaround abroad, which started in the US in 2000, seems to have been related in particular to overinvestment in the business sector, exaggerated expectations concerning future earnings and equity market bubbles that burst. There have been examples of this in Norway too, and the Norwegian economy has over time been influenced by weak external developments. However, other factors seem to have been more instrumental in generating the turnaround in the Norwegian economy. The high rate of economic expansion is now beginning to ebb away as a result of self-regulating mechanisms and a tightening of monetary policy following overheating in the labour market. Wages and costs rose sharply in Norway but more moderately in other countries, even during the period of strong growth in the second half of the 1990s. In the course of the autumn and winter, it became apparent that developments in the global economy are weaker than we and many others had expected. Many central banks have responded by reducing interest rates further. Interest rates in the US, Europe and Japan are unusually low. Interest rates in the US have not been at such a low level since the 1960s. In the last half of the 1990s, when both Japan and Europe experienced sluggish growth, the US functioned as a global growth engine.

They point to the “Great Depression” in the 1920s and to Japan’s “lost decade” as cases in point. And they argue that big policy mistakes surrounding those episodes would have been avoided had the Federal Reserve Board and the Bank of Japan paid closer attention at the time to credit developments and, more generally, to financial conditions. These lessons from economic history are even more relevant nowadays, when a range of innovations in financial markets have enhanced the possibilities for intermediaries to take and trade risk, thereby challenging the ability of prudential authorities to guard against excessive risk taking. In recent years, the global economy has experienced the strongest sustained period of growth since the early 1970s. This impressive expansion has taken place, despite significant commodity price increases, against the background of relatively subdued global inflation and, throughout most of this period, a benign outlook within the horizons typically covered by forecasts. Better monetary policy has in turn been praised for its contribution to this formidable setting. It has been argued that firmer anchoring of long run inflation expectations was responsible for the marked decline in inflation persistence and the more favourable short-term Philips curve trade-off. With inflation expectations well anchored, any given shock to inflation – coming from aggregate demand, energy prices, or the foreign exchange rate – would have a smaller effect on expected inflation and hence on trend inflation.