samchain/econo-pairs-v1 huggingface dataset:
At its very first meeting the Committee debated the merits of “gradualism” in adjusting interest rates. Although the debate attracted some interest, looking back over ten years it is hard to see that it had any practical impact. As chart 8 shows, there is no obvious persistent trend in the frequency of rate changes over the lifetime of the MPC. Economic conditions have determined the number and direction of rate changes. There is some indication that the number of changes was lower in the second than in the first five year period. But that reflected the size and nature of the shocks over the respective periods, and also the building of credibility which meant that market anticipations of future actions allowed the Committee to offset shocks by smaller changes in interest rates. It is striking that the MPC is in the middle of the ranking of the major central banks by the number of interest rate changes a year – see table 3. My view, therefore, is that it is the economic data which lie behind the debate and decisions of the MPC. Do you agree? To answer that question the Bank of England asked the Society of Business Economists (SBE) to carry out a survey of its members. The aim was to discover what kind of information was of most use to private sector economists in trying to understand the future path of interest rates at different horizons, and how the communications of the MPC were perceived as part of that process.

Secondly, Estonia has avoided volatile short-term capital flows due to strong fiscal stance. While these "soft" policy principles support crisis prevention by providing relatively stable and transparent environment, the resilience of the system depends ultimately on the actions of market participants themselves. The task of the authorities is to provide an adequate regulatory framework and to undertake maximum effort for the supervision of the implementation of these regulations. There is another interesting, albeit still debated issue – to what extent should the supervisors rely on banks' internal risk control models and ratings. Estonian banking supervisors have taken relatively forward-looking approach in that respect by increasingly relying on risk-based approach of supervision. At the same time, and having in mind rapidly developing economy and currency board arrangement, we believe that our banking system should have also robust liquidity buffers as well as sufficient capital to withstand the fluctuation of asset prices. Therefore, we have set relatively high reserve requirement half of what the banks can meet by the holdings of high-rated foreign assets. We will further adjust the system of reserve requirements in the future as monetary policy framework will converge towards the eurosystem principles. Finally, I would like to stress that as an essential element of the safety net, the Deposit Insurance Fund is functioning well and has proved its usefulness already two years ago. The immediate task for Estonian authorities is to introduce the investor protection scheme for the other parts of the financial system.
The analysis also captures the notion that credibility is endogenous and adversely affected by delaying reform implementation. 18  For more on the importance of front-loading structural reforms see speech by Cœuré, B., on “Structural reforms: learning the right lessons from the crisis”, at the Bank of Latvia Economic Conference 2014, Riga, 17 October 2014. 19  Blanchard, O., and F. Giavazzi (2003), “Macroeconomic Effects of Regulation and Deregulation in Goods and Labor Markets.” Quarterly Journal of Economics, Vol. 118, February 2001. 20  See for example Burda, M., and J. Hunt (2011), “What Explains the German Labour Market Miracle in the Great Recession?” NBER Working Papers No. 17187, June 2011; and Brenke, K., U. Rinne, and F. Zimmermann (2013), “Short-Time Work: The German Answer to the Great Recession.” International Labour Review Vol. 152, Issue 2, June 2011. 21  Di Mauro, F., and M. Ronchi (2015), “Centralisation of wage bargaining and firms’ adjustment to the great recession: A micro-based analysis.” CompNet Policy Brief, No. 8. May 2015. 22  See for example Forni, L., A. Gerali, and M. Pisani (2010) “Macreconomic Effects of Greater Competition in the Service Sector: the case of Italy.” Macroeconomic Dynamics, 2010; or Faini, R., J. Haskel, G. Navaretti, C. Scarpa and C. Wey (2006), “Contrasting Europe’s Decline: Do Product Market Reforms Help?” in Boeri, T., M. Castanheira, R. Faini, and V. Galasso (eds. ), Structural Reforms Without Prejudices, Oxford University Press.

4  BIS central bankers’ speeches  raise GDP per capita by about 11% after ten years for the average EU country. In the US, which starts from a more favourable position, the benefit would be under 5%. 10 And it is not difficult to understand why the benefits of reform could be so high in the euro area. High levels of structural unemployment, compounded by high numbers of underemployed and discouraged workers, imply a latent potential in our economies for a major positive shock to labour supply (Chart 5). We also have scope for a large catching-up in terms of productivity growth. TFP has increased by only 1.5% between 2000 and 2014 in the euro area, far below the 10.9% increase in the US over the same period (Chart 6). The type of policies that could release this upward shock to potential growth are not just those focused on price flexibility. They include, on the labour supply side, policies aimed at providing job search support for the long-term unemployed and requalification for the low skilled. And on the TFP side, policies that encourage the reallocation of resources – which could be powerful in the euro area given the wide and skewed distribution between the least and most productive firms 11 (Chart 7) – and policies that accelerate the diffusion of new technology, where the euro area on the whole lags some way behind the US (Chart 8). There are many other examples one could give.
For example, our stress test last year encompassed a wide range of UK macroeconomic risks and associated losses that could be associated with Brexit, including a disorderly exit, with UK GDP falling by almost 5%, falls in commercial and residential property prices of over 30%, Bank Rate increasing by 4 percentage points and unemployment rising to 9½%. UK banks were able to withstand that stress and still have more than adequate capital to maintain lending to households and businesses. To be clear, the Bank of England is confident that major UK banks have the balance sheets and liquidity positions to withstand a cliff-edge Brexit. 19  An alternative scenario that would also require a tighter path for policy is weaker supply growth. 18  All speeches are available online at www.bankofengland.co.uk/speeches  18  For risks that private financial institutions cannot self-solve, the Bank of England is working with HMT to find solutions. For example, the Government has led by committing to put in place if necessary a temporary permission regime to ensure that EU firms can continue their activities in the UK for a limited period after withdrawal. 20  And where the issues are cross border, the Bank is working with the ECB to manage risks in the period around Brexit related to financial services, through a new technical working group chaired by President Draghi and myself. A more disorderly transition, or a materially different end state from our assumption, would have implications for monetary policy.

6 7  6  All speeches are available online at www.bankofengland.co.uk/speeches  6  expected to be gradual and, even once spare capacity had been absorbed, the appropriate level of Bank Rate was expected to be materially below the pre-crisis average of 5%. Out of that guidance came the phrase ‘limited and gradual’, so often repeated it has now become part of the monetary policy furniture. Importantly, it is widely recognised by UK households and businesses whose expectations of rate increases have remained well anchored as the recovery has progressed (Charts 3b and 3c) as well as by financial markets (Chart 3a). Similar guidance was subsequently adopted by the FOMC and ECB. 8  Chart 3: Households and businesses have consistently expected increases in interest rates to be gradual and limited a) Historic UK Bank Rate tightening cycles Cumulative change, percentage points 2.0 1.8 1.6  September 1994  September 1999  November 2003  October 2006  1.4 1.2 1.0  August 2006  0.8 0.6 May 2018 Inflation Report market interest rate path  November 2017  0.4 0.2 0.0  Months since first increase in Bank Rate Sources: Bank of England, Bloomberg Finance L.P. and Bank calculations. Notes: Tightening cycles since the start of inflation targeting in 1992. Tightening cycles are shown up to when interest rates reached their highest level before they were next reduced. The curve is estimated using instantaneous forward overnight index swap rates in the 15 working days to 2 May 2018.
Market participants do not anticipate a rise in key rates in the US, the euro area and the UK until the end of 2010. The interest rate differential between Norway and trading partners has increased. The krone exchange rate has remained fairly stable through winter, although it is somewhat stronger than projected in October. The krone is expected to remain at about the current level to the end of the third quarter and then gradually depreciate somewhat thereafter. BIS Review 38/2010  1  Growth in the Norwegian economy came to a halt in autumn 2008, and Norway entered a downturn in early 2009. The decline appears to have ended in the second quarter of 2009. Capacity utilisation is lower than normal, but the downturn seems to be relatively mild. Activity has been underpinned by substantial interest rate cuts combined with higher public spending and high oil investment. Fiscal policy was very expansionary in 2009. Petroleum revenue spending increased sharply, and by close to 3 per cent of mainland GDP. Revenue spending will rise further this year. Our projections are based on information from the final budget and the projections in the National Budget for 2010. In line with this, the level of the structural, non-oil budget deficit is maintained at this level to the end of the projection period. According to the fiscal rule, the fiscal deficit should be reduced to about 4 per cent of the capital in the Government Pension Fund Global (GPFG) when the economy resumes a normal level of activity.

From my viewpoint as a central banker, I hope that banks indeed seize on this opportunity, because I think it would ultimately lead to a more robust banking sector as a whole. For example, European securitisation markets would improve risk-sharing among banks: one can imagine a world where small, local banks originate loans while larger, global banks securitise and market them. And a true CMU would also mean convergence of some parts of insolvency law and deepening of markets for distressed debt, which would help banks work through NPLs more quickly in future and hence increase the resilience of the banking sector to shocks. Moreover, if bank finance declines in importance over the longer-term, that might also encourage some much needed consolidation in the banking sector, which would in my view be beneficial for the real economy. We see at the moment that overcapacity hinders the recovery of bank profitability, as weaker banks distort competition and make it difficult for other banks to re-price loans.4 Whether all this materialises, however, hinges crucially on how far-reaching the CMU project really is. The Commission’s Action Plan for CMU has put forward many areas for further work, but each will take years to implement. What type of CMU will ultimately emerge therefore remains to be seen. I am sure Commissioner Hill will give us more guidance on this tomorrow. 3  Ryan, R., O’Toole, C. and McCann, F. (2014), “Does bank market power affect SME financing constraints?”, Journal of Banking and Finance.
Due to the past few years’ wage settlements, households have strengthened their financial position at the expense of private and public enterprises. House prices have edged up after stagnating earlier this year. Household borrowing has moderated somewhat, but is still high. Against this background, growth in private consumption is expected to be fairly high in the period ahead. Consumer spending on goods is rising, pointing towards growth in private consumption this year on a par with our projections in the June Inflation Report. 1  Mainland GDP is projected to rise less than trend growth this year and to reach trend levels in 2004. In 2005, GDP growth is projected to be higher than trend growth. Investment activity in mainland Norway is low. Investment in the petroleum sector is rising, but a large share of the increase in demand is being met by imports. Public consumption increased sharply in 2002, but there will be little stimulus to the economy from the public sector this year. Growth will mainly be fuelled by private  1  Projection in Inflation Report 2/03 based on assumptions concerning forward rates and a gradually declining krone exchange rate. BIS Review 38/2003  3  consumption in the second half of this year and into 2004. We expect that investment in mainland enterprises will gradually pick up from a low level. In order to set an appropriate interest rate, it is important to be be able to form a reasonably accurate picture of the economic situation.

2  Based on assumptions concerning forward rates and a gradually declining krone exchange rate. 3  Based on assumptions concerning forward rates and a gradually declining krone exchange rate, and an assumption that monetary policy easing will not translate into stronger wage growth. 4  BIS Review 38/2003  Capacity utilisation in the Norwegian economy is now neither abnormally high nor abnormally low. However, available statistics indicate that economic growth came to a halt during the winter. A global upswing will contribute to stronger growth in Norway. Growth is sluggish already, however, with stagnation in many business sectors. Since inflation is also low, a low interest rate is appropriate now. But it is always a question of weighing one consideration against another. Since December last year, monetary policy has been eased to a greater extent and more rapidly than has been customary. Following this phase of substantial easing, uncertainty with regard to economic developments in the period ahead has been somewhat greater than normal. With the easing that has been implemented, we must be particularly alert to changes in private consumption, wage growth and the krone exchange rate. If households expect the interest rate to remain low, private consumption may increase more than has been assumed. House prices and household borrowing may again accelerate. However, increased slack in the labour market and declining migration to the largest towns will reduce these effects. The risk of stronger growth in household demand must be weighed against the sluggish developments in the business sector.
Meanwhile, October's Economic Expectations Survey (EES) anticipates a one-year inflation of 6.3% and a two-year inflation of 3.9% (7.0% and 3.8% in September). Inflation insurance contracts have shown some increases in the last few weeks, consistent with the greater pressure implied by the rise in the exchange rate. As of December of this year, they expect the annual CPI increase to be around 12.7%, somewhat above what they expected at the beginning of last month. On other hand, breakeven inflation implicit in the fixed income market has declined in recent weeks. Activity and demand  August Imacec showed a null annual growth. Excluding mining activity, there was an annual increase of 1.3%, with a monthly rise of 0.7% in the seasonally adjusted series. This increase in the total Imacec contrasted with market expectations, which anticipated an annual drop in the indicator. It should be noted that sectors with a high impact on the dynamics of activity and demand, such as construction, industry and commerce, among others, continue to contract as expected. There are service sectors that show greater resilience. This is explained by specific factors, such as the low base of comparison in the provision of education services, the persistently greater dynamism of activities linked to business services, and the greater added value of energy generation, given the greater rainfall this year. On the demand side, the available indicators suggest that the adjustment of private consumption is taking place broadly in line with our forecasts.

Elvira Nabiullina: Speech - Federation Council’s Financial Market Development Board meeting Speech by Ms Elvira Nabiullina, Governor of the Bank of Russia, at the Federation Council’s Financial Market Development Board meeting, Moscow, 8 December 2020. * * * Good afternoon, dear Speaker and fellow colleagues, There is no denying the fact that the financial sector plays a critical part in the context of our efforts to deliver on the national development agenda. Financial intermediaries and the stock market work to ensure that savings transform into investment, businesses obtain the resources they need for development, and consumers gain the tools to grow their wealth. It is within our regulator’s mandate to oil the gears of all these mechanisms and make sure the financial sector provides excellent performance. This means that the costs of businesses and consumers related to their financial objectives should go down. And this means, as the Speaker has mentioned, that we should secure the emergence of long-term money. My deputy, Sergey Shvetsov, is here today to tell you more on our financial market agenda. In my opening remarks, I would like to expand on a number of key points in our operations as a regulator, which have, in my view, major implications. It would be fair to say that this year has spurred transformation in the financial sector. Among key developments are accelerated digitalisation, the Bank of Russia’s switch to soft monetary policy, falling interest rates in the economy, pandemic-induced borrowers’ problems and a large volume of restructured loans.
In a situation of stress, individual banks hoard rather than lend liquidity. The system then co-ordinates itself on a low liquidity equilibrium. Liquidity then has negative spillovers, imposing negative externalities; illiquidity is a public bad. And with asset prices and liquidity falling and haircuts rising, the credit multiplier becomes self-reinforcing downwards. Given these pro-cyclicalities, there have been recent proposals by both policymakers and academics to regulate collateral requirements.1 This is one possible arm of so-called macroprudential policy. Within the UK, haircuts on secured financing or OTC derivative transactions have been identified as one possible tool for executing macroprudential policy.2 The UK’s new interim Financial Policy Committee, housed in the Bank of England, will provide advice to government on possible macroprudential tools over the next year or so. The debate on haircuts as a policy tool is live internationally too. In a recent speech in Atlanta, US Treasury Secretary Tim Geithner proposed the introduction of international minimum standards for margins on derivatives transactions.3 This would be akin to the international minimum standards for capital adequacy introduced through the Basel agreements. Since 1934, the US authorities have had regulatory powers to impose minimum margin requirements on lending against equity and some other assets – so-called Regulation T. But these policies have not been used actively, with minimum margins unchanged since 1974. To date, analysis of the macroprudential role of haircuts has been largely descriptive.

A further important feature is the expectation that, where available, asset managers and owners will make disclosures of the aggregate greenhouse gas (GHG) emissions embedded in their investment portfolios. Achieving broad coverage will take time and obviously depends on adoption by issuers. Implementation  We are pleased that all Task Force member organisations, companies with market capitalisations of around $ trillion and financial institutions responsible for assets of $ trillion, have today announced their support for the disclosure recommendations. 5  With better disclosure, a market in the transition to a 2-degree world can be built. That market will expose the likely future cost of doing business, of paying for emissions, and of changing processes given both those charges and tighter regulation. And it will help smooth price adjustments as opinions change, rather than concentrating them in a short, dangerous space of time. Early disclosure rules allowed 20th-century financial markets to grow our economies by pricing risks more accurately. The spread of such standards internationally has helped lift more than a billion people out of poverty. Climate-related disclosures could be as transformative for 21st-century markets. 5  Bloomberg data and Bank calculations using market capitalisation as at 12 December 2016 and assets at end-2015. 6  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  6
The fastest pace of sales in the previous business cycle was 17 million units for all of 2005. While there may be some additional upside potential to these sales given the quite long period over which they were depressed  2  BIS central bankers’ speeches  relative to fundamentals, it seems unlikely that they will continue to grow at the rate they have over the past few years. Housing is another area where the upside risks are likely to be less than what we might expect under more normal conditions. We have seen an impressive recovery of multi-family housing starts over the past few years. However, starts of single-family homes continue to languish at relatively low levels despite the fact that home prices have risen substantially over the past two years and mortgage rates remain quite low. Mortgage lenders continue to be extremely risk averse and mortgage credit to those with lower credit scores is still significantly constrained. There is nothing on the horizon that would lead me to believe that situation will change in a material way any time soon. Lastly, over the past few months the exchange value of the dollar has appreciated while growth prospects of key trading partners, particularly the Euro Area, have dimmed. Of course, the appreciation of the dollar is likely due in part to increasing confidence that growth prospects in the U.S. have improved. Therefore, this development does not mean we should abandon the consensus forecast.

Those technological giants (Alipay and WeChat pay) grew so big to build their own ecosystems, a walled garden where fragmentation of the market happened. The terms platformisation and super-apps were coined there. The state then intervened to retain control over the system and to build a one, common, integrated payments system accessible to everyone. To level the playing field. In countries where cash is almost out of use, and the private sector provides digital payments at scale, the financial stability concerns paved the way for the CBDC entry. This is why Swedes started it - to provide a backstop to private payment rails and to render it as a central point of conversion between private digital currencies – a monetary anchor. But what are the main drivers for developing the CBDC here in the eurozone? What drives the ECB and the CNB to follow this path? Because, in essence, and let me be honest here, if we want to pursue our monetary goals, we do not need a new form of money. By affecting the cost of funds, we can do our monetary job well. So, what is it that drives us towards the CBDC, or better to say, towards the digital euro? THE DIGITAL EURO The main reason behind the digital euro project is the declining use of cash. Cash was the most frequently used payment method at the point of sale (POS) in the euro area in 2022 and was used in 59% of transactions, down from 79% in 2016 and 72% in 2019.