samchain/econo-pairs-v1 huggingface dataset:
The model is closed by either a level rule 𝑖𝑡 = 𝜌𝑖 𝑖𝑡−1 + 𝜑𝜋 𝜋𝑡 + 𝜑𝑦 𝑦̃𝑡 or a difference rule ∆𝑖𝑡 = 𝜑𝜋 𝜋𝑡 + 𝜑∆𝑦 (𝑦̃𝑡 − 𝑦̃𝑡−1 )  19  All speeches are available online at www.bankofengland.co.uk/news/speeches  19  Endnotes 1  The policy decisions are explained in greater detail in the Bank’s February 2022 Monetary Policy Report. 2  Owing to some statistical weaknesses, the official series for the UK terms of trade, which is based upon the import price time series, does not reflect this deterioration. The discussion in the text is based on an economic assessment of the evolution of UK import and export prices over recent months. ‘Divine coincidence’ here refers to the property of new Keynesian macroeconomic models that implies there is no trade-off between the stabilization of inflation and the stabilization of the welfare-relevant output gap in the conduct of monetary policy. See Blanchard and Galí (2007). See the Bank’s November 2021 Monetary Policy Report. 3  4 5  7  We do not have comparable survey results for the period prior to the financial crisis, so a longer time series comparison is not possible. How one such wage equation accounts for the movements in underlying pay growth since 2011 is shown in Chart 3.7 of the Bank’s February 2022 Monetary Policy Report. For an overview, see Issing (2002). 8  For a critical review of this characterisation, see Currie (1985). 9  For an example, see Svensson (1999).

One – perhaps extreme – characterisation of such robust control thinking starts from the adoption of a so-called MINIMAX strategy to monetary policy decisions.16 Even if it is too abstract to offer a practical guide to monetary policy, it can act as a device to help clarify some ideas underlying the policy debate. The MINIMAX approach involves choosing the policy setting which works best in the worst circumstances that you might face across the possibilities of how the economy behaves. More precisely, if we characterise uncertainty as being reflected in a set of different possible models of the economy, policymakers seek to minimise the welfare cost in that model where those welfare costs are highest, given the observed developments in macroeconomic data. The intuition here can be understood using a recent practical example. Most new Keynesian macroeconomic models have more than one steady state. But the inflation targeting literature originally focused on developments around one of those states, namely – and of course unsurprisingly – that defined by the inflation target itself. But in the face of deflationary risks and the aftermath of the global financial crisis, another steady state – one characterised by the zero lower bound on nominal interest rates, the liquidity trap and the threat of persistent deflation spiral – could no longer be ignored. Since this other steady state entailed lasting deviations from the inflation target, the threat of falling into it weighed heavily on central bank thinking.
ASEAN is committed to pursue market openness within this region, but also wants to remain deeply integrated within the global economy. A ‘Global ASEAN’ is not an oxymoron – rather it is a declaration of our inclinations, aspirations and direction for the future. Rather than a narrow pursuit of openness for its own sake, experience taught us that balance, readiness and inclusiveness is critical for the success for an open market economy. As a group, ASEAN has been very mindful of the stage of financial and economic development of individual countries. 1/6  BIS central bankers' speeches  ASEAN pursues ‘smart’ integration that is based on the readiness and capacity of member countries. From the global financial crisis to the present We are now entering a decade after the Global Financial Crisis (more apt to be called Trans Atlantic Financial Crisis) and two decades after the Asian Financial Crisis. The implementation of unconventional policies and a prolonged period of low interest rates, led to financial and economic distortions, some severe, around the world. Emerging markets, including Malaysia, witnessed large waves of capital inflows into capital markets, primarily in search of better yield. For our onshore domestic market, we saw the ringgit strengthening following the demand for ringgit assets. Between 2011 to 2013, the ringgit traded at its strongest levels since the Asian Financial Crisis, between 2.90 to 3.30 against the US dollar. FX trading volume also increased, contributing to the overall liquidity of the onshore FX market.

It corrupted the idea of market openness and the liberalisation process. Such destabilising risks bear upon the integration process among financial markets of this region. Developing long term solutions through the Financial Markets Committee Addressing the speculative impact of the NDF market is only part of the solution. Of greater importance is the need to put in place sustainable long-term solutions. With this in mind, the Financial Markets Committee (FMC) was established in 2016, and tasked with the responsibility to look into the overall development and strategy for the Malaysian financial market. The FMC also looked into the factors that caused imbalances in the demand and supply of foreign currencies in the domestic market, including the reduced capacity of the market to provide liquidity to intermediate the portfolio adjustment by non-residents. The underlying motivation of the FMC is to create a deeper and more liquid onshore market that will enhance its capacity to intermediate these flows and strengthen our resilience against excessive volatility. Despite the havoc caused by episodes of volatility from the opaque, unregulated and value destroying activities of the NDF market, the FMC in identifying the possible remedial measures have concluded that market based mechanism and solutions is still the best way forward. Through close consultation with various stakeholders, including corporate entities and small and medium size enterprises, the FMC developed a series of targeted initiatives to develop the onshore financial market.
A version of the equation of exchange suitable for transforming economies should therefore take into account on the left side not only money in the narrow and broader sense but also estimates of different kinds of quasi-credit. Textbook knowledge says that the constancy, or at least the predictability of velocity either in income or in transaction terms, turns the equation of exchange into the quantity theory of money. At this point, last year’s speaker, Dr Tietmeyer, had again a more favourable position, because he could rely on the predictable and the longer-term change in the income velocity of the German mark. In the Czech Republic the velocity is neither constant nor reliably predictable yet. In the first stage of economic transformation the income velocity declined in line with the increasing transaction demand for money. Only later on did velocity start to stabilise and recently we have observed some increase in velocity. Last but not least, one must point out that, even in the quantity theory applied in advanced market economies, there is a certain “black box” connecting the quantity of money on the one hand and its effect on prices and quantities on the other. Between a change in monetary aggregates and offsetting changes in other variables, there is a transmission mechanism, with its specific features determined by the institutional framework in which it operates.

Some transactions are not registered at all, for example, those in the underground economy, some imports and so forth. The decomposition of nominal GDP into a change in real output and a change in the price level is not a trivial exercise even in advanced market economies. But in these countries, e.g. in Germany or USA, the prediction of real GDP rests on more solid grounds - one knows approximately what is the “potential output” as the starting point for some guessing as concerns the development in the medium term. In transition economies, in the period of deep structural changes, the estimate of both real GDP and potential output is much more difficult. BIS Review 25/1997  -7-  The traditional unidirectional link from money to income is blurred in advanced market economies by the existence of many forms of financial assets with different degrees of liquidity. In transforming economies, the scope for reserve assets (Treasury bills) and investment assets (bonds, shares) is still limited but is widening step by step, thus weakening also the links between the money stock and expenditure flows. What is probably even more important, at least in the Czech Republic, is the financing of receivables and current liabilities through quasi-commercial credits (inter-enterprise indebtedness). There is a scope, created by enterprises themselves, for offsetting the potential effects of monetary stringency on spending plans.
So, what about the question I raised earlier on about whether the two financial systems of the country have a working relationship that maximises the mutual benefits of the two jurisdictions and therefore is in the best interests of the country? If you want an honest answer from me, it would I am afraid not be one in the affirmative. There seems to me considerable scope for a co-operative, complementary and interactive working relationship between the two financial systems, in which, as I said earlier, relative strengths are exploited and relative weaknesses addressed, and synergies maximised. The further question then is how such a working relationship should best, and realistically, be developed. It is quite natural to think that developing such a relationship between the two financial systems could be left to the market. While this is theoretically possible, it assumes that market forces are allowed to work freely across the two financial systems, which is not always the case. In merchandise trade, this is by and large true, and as a result the two economic systems specialise in areas in which they have respectively comparative advantage in producing. But in the provision of different services, as in the case of financial services, there are restrictions limiting the working of market forces, for example, restrictions on access of service providers to the other system and restrictions on the mobility of the user of services across the two systems.

As the fundamental role of the financial system is financial intermediation, or the channelling of funds from those who have a surplus of it to those in need of it, the comparison should usefully be made in respect of the three channels of financial intermediation, namely, that of banking, equity and debt. The total assets of the banking system of Hong Kong are equivalent to 21% of those of the Mainland. You may think that this is not high; but if you put this along with similar comparisons for population, which is only 0.5%, or gross domestic product, which is 8%, you can appreciate the significance of the banking system of Hong Kong in the context of the country as a whole. What is more, the quality of assets in the banking system of Hong Kong is superior and the efficiency in financial intermediation, in mobilising savings in the form of deposits into the hands of borrowers who are credit-worthy, is also a lot higher. Capitalisation of the equity market of Hong Kong is 2.6 times that of the Mainland. The amount of funds raised in the past ten years in Hong Kong, through Initial Public Offerings (IPO) and other fundraising activities, is nine times that on the Mainland. The turnover value in 2005 was about 1.5 times that on the Mainland, and Hong Kong also has an active derivatives market, which traded 25 million contracts in stock futures and options last year.
In most central bank legislation, the central bank’s primary purpose is limited to the responsibility for maintaining price stability and for performing tasks relating to financial stability, in some cases supplemented by a more general objective, such as underpinning the government’s economic policy. In some central bank acts, however, high employment is included as one of the central bank’s primary objectives, as is the case in the US. A so-called dual mandate was established for the Federal Reserve, where the objectives of full employment and price stability are put on an equal footing. In practice, monetary policy conducted by a central bank with a dual mandate will not necessarily differ from that of a central bank operating a flexible inflation-targeting regime. A central bank with a flexible inflation-targeting regime will also be concerned with the level of employment. In the draft of the new central bank act, maintaining monetary stability is the primary objective. The proposal does not provide for a dual mandate for monetary policy. This is a wise choice. Even though the difference between inflation targeting and a dual mandate is probably small in practice, there are good arguments for keeping price stability as the primary objective of monetary policy. This will clearly define the main role of monetary policy. In the practical conduct of monetary policy, the central bank will always be faced with a trade-off between different considerations.

The main themes from that exercise were outlined in the BSB’s first Annual Review published earlier this year. 35 Following several episodes of misconduct in wholesale capital markets, the Fair and Effective Markets Review (FEMR) was launched in 2014 to assess their functioning, overseen by the Bank, HM Treasury and the FCA. It reported last year, making a number of recommendations including the establishment of a FICC Markets Standards Board (FMSB). 36 The FMSB came together last year with a remit to provide guidance on appropriate standards of conduct in wholesale markets. Encouragingly, most of the major players in wholesale markets have joined the FMSB. Regulators will use these standards to inform their judgements under the expanded Senior Managers Regime. At an international level, the Financial Stability Board (FSB) agreed in early 2015 a work-plan to reduce misconduct risk, including in the area of key market benchmarks. 37 Following a recommendation in FEMR, work is underway to develop a global code of conduct in the foreign exchange market. Also in 2015, the G30 issued a report on Banking Culture and  34  For further details see http://www.fca.org.uk/consumers/financial-services-products/insurance/paymentprotection-insurance/refunds. 35  See BSB (2016). 36  See FEMR (2015). FICC here refers to Fixed Income, Currency and Commodity markets. 37  FSB (2015). 8  BIS central bankers’ speeches  Conduct. 38 And in the same year, the New City Agenda published its assessment of progress towards improving culture among UK banks. 39 This is good progress.
But, given insipid and uncertain demand, not a few firms seem to have temporarily suspended part of their capacity: whether by putting part of their workforce on short hours or closing down a production line. This makes it likely that supply conditions are going to depend heavily on the path of aggregate demand. If demand recovers robustly, firms are likely to bring some capacity back on line. If, on the other hand, demand proves anaemic, then suspended-capacity is more likely to be permanently scrapped. Under the first scenario, inflationary pressures could be weaker than would otherwise be the case in a recovering economy. Under the latter scenario, inflationary pressures would be greater than otherwise in a stalled economy. I do not want to go so far as saying that the path of aggregate demand won’t affect inflation, but it may not be quite as potent as usual. Viewed more broadly, provided we do not take risks with inflation – as we must not and will not – the robust-growth path would plainly be preferable as it would avoid wasteful impairment of the economy’s productive potential, and so of living standards in the years  2  See Blinder Alan S. (1987), “Credit Rationing and Effective Supply Failures” Economic Journal, June 1987, 97, 327–52. BIS Review 21/2010  3  ahead.

The main shock to financial stability and monetary policy would be if asset prices were to drop sharply at the same time as the growth of real disposable income slows down at the end of the aluminium-related investment boom. Lending developments As I mentioned before, lending growth is a cause for concern, both for financial stability and the Central Bank’s inflation target. Domestic lending grew at a brisk pace in 2003 and this development appears to be heading in the same direction this year. Total domestic lending by deposit money banks over the twelve months to the end of January increased by about 23%, which is above a rate consistent with longterm price stability and economic stability. The period 1998 to 2001 provides a recent example of the consequences of heavy credit growth. Both arrears and loan losses rose in the wake of the credit boom, leading to a temporary tightening of the commercial banks’ and savings banks’ foreign funding. While the recession and the ensuing strain on the financial system are now over, it can be partly ascribed to relatively favourable economic conditions and the consequently sharp turnaround in the exchange rate of the króna that financial companies only sustained minor setbacks. Proportionally, the highest growth in deposit money banks’ lending has been to foreign borrowers, but foreign currency-denominated lending to domestic entities has also surged, by more than 45% over the past 12 months.
But that does not tell us whether the experience of the last year or so points to a change in the underlying economic fundamentals that existed before Covid. This is a key question in judging the path of growth after this year and whether higher inflation will be transitory. Our current view, as set out in the May Monetary Policy Report, is that the economy will revert to the lower average underlying growth rates that we have seen since the financial crisis, other things equal. This will be accompanied by the continuation of low equilibrium interest rates around the world, which tend to be influenced by structural factors such as ageing populations and persistently low productivity growth. Reverting to the pre-Covid pattern of lower trend growth will bring its own challenges, and there is a strong argument for not accepting this state of affairs as either inevitable or acceptable. Stronger growth in potential supply supported by stronger investment and productivity growth will make the Covid recovery easier. The Covid shock has required an increase in public and business debt to smooth the impact. This is a necessary and sensible response. But that cost has to be managed, and it will be easier to do that with a higher trend rate of growth, boosted by stronger investment. Although business investment recovered from a low base following the financial crisis, it was weak in the period prior to Covid. Improvements in automation appear to have led to only modest gains in productivity and output.

Andrew Bailey: It’s a recovery, but not as we know it Speech by Mr Andrew Bailey, Governor of the Bank of England, Mansion House, London, 1 July 2021. * * *  Introduction Lord Mayor, there has been nothing usual about the last sixteen months. Even long-standing neighbours like the Bank and the Mansion House have had to resort to video conferences rather than popping round for a word. And one of the trickiest issues for all of us is dress code and etiquette – is this a ties on or off video, who knows? I can admit that I don’t seem to be a very good predictor of dress code. But you did throw me not long ago Lord Mayor, when we had a video call about an hour before we were both speaking at an event, and I can reveal that you were dressed in a Mansion House bomber jacket. So, white tie to black tie to bomber jacket. I should say that by the time of the event, the Lord Mayor had changed into something more conventional. The story so far Conventional is not a word I have used about the performance of the economy in the last sixteen months. Last calendar year, UK GDP declined by an annual growth rate of 9¾%, and based on our last forecast in early May we expect it to grow by 7¼% this year. It’s more meaningful to express the level of activity relative to the end of 2019 (pre-Covid).
Monetary policy and exchange rate intervention  Last October, when I was invited to the House of Representatives to analyze the exchange rate, I said there are three major principles in monetary policy conduct. The first is that the Central Bank is not indifferent to exchange rate movements. Compliance with our constitutional mandate demands adopting measures to orient the economy toward full use of its resources and ensuring a balance of payments that is sustainable over time. The international price of our currency is a very important variable in the Chilean economy’s performance, as it affects growth, inflation and the external accounts, and ultimately our monetary policy decisions. For example, in recent months the appreciation of the peso has  3  helped attenuate inflationary pressures stemming from narrowing output gaps. This has been an input in our decisions so, were it not for the strengthened exchange rate, our monetary policy interest rate would probably be higher than it actually is. A second principle is careful assessment of our decisions’ effectiveness, costs and benefits. We make no decision without being technically convinced that it will be effective and convenient for the economy as a whole. Acting otherwise would only erode our reputation and credibility, indispensable elements for achieving our objectives at the lowest social cost possible. Finally, a third principle is that the Central Bank of Chile does not use the exchange rate to target inflation.

28.10.2020  A trail-blazer at the pinnacle of the Spanish financial system “Diversity and Enterprise” conference, Federación Asturiana de Empresarios Margarita Delgado Deputy Governor  Good morning, I feel very honoured to have been invited here today by the Business Equality Committee of the Federación Asturiana de Empresarios (FADE), one of Spain's first employers' associations to approve a plan establishing equality as a strategic priority in its corporate and human resources policies. Initiatives that bolster and give visibility to female leadership, such as those implemented by FADE with the support of the Committee, are key to ensuring diversity. Gender balance must be a priority at all organisations, both public and private. Rest assured that we at the Banco de España embrace this commitment, and I think it is fair to say that we have made significant headway in recent years. In fact, early this year the Gender Balance Index 2020, produced by the Official Monetary and Financial Institutions Forum (OMFIF), ranked the Banco de España first for gender equality among the world’s central banks (scoring 91.67 out of 100). In 2019 we achieved near-parity between men and women in our workforce, and in the last three years we have increased the participation of women in management positions. With eight members, female representation on the Governing Council has reached 50%.