samchain/econo-pairs-v1 huggingface dataset:
Change in consumption relative to income among mortgagors with different mortgage loan to income ratios between 2007 (a)(b)(c)  and 2009 Total credit to UK real economy (a)  Lending to UK real economy from UK MFIs (b)  Percentage changes on a year earlier  Percentage point change in consumption to income ratio  0  20  Nominal GDP growth rate  -5  15 -10  10 -15  5 -20  0 -25  -5 2000 00  02  04  06  08  10  12  14  0 to 1  1 to 2  2 to 3  3 to 4  ≥4  16 Mortgage LTI ratio  Sources: Bank of England, Office for National Statistics and Bank calculations. (a) Twelve-month growth rate of nominal credit. Credit is defined here as debt claims on the UK private non-financial sector. This includes all liabilities of the household and notfor-profit sector and private non-financial corporations’ (PNFCs) loans and debt securities excluding derivatives, direct investment loans and loans secured on dwellings. (b) Sterling M4 lending by UK MFIs to the household sector and PNFCs. Data cover loans and MFIs’ holdings of securities. Seasonally adjusted. Sources: Living Costs and Food (LCF) Survey, ONS and Bank calculations. (a) Change in average non-housing consumption as a share of average post-tax income (net of mortgage interest payments) among households in each mortgage LTI category between 2007 and 2009.

This assessment of low inflationary risks is also supported by the declining trend in the growth rate of loans to the private sector. However, a continuation of strong M3 growth could call for a reassessment of monetary developments, especially if there is further evidence of a recovery in the euro area economy. BIS Review 9/2002  1  Regarding the second pillar, while actual euro area production growth in the fourth quarter of last year and in the early part of this year is still expected to be subdued, new data confirm our expectation of a gradual improvement in economic activity in the course of the year. Uncertainty as regards the global environment seems to be gradually decreasing. In the euro area, the economic fundamentals remain sound and financing conditions favourable. Together with higher growth in real income, stemming from the past and future declines in inflation, these factors should support overall demand. This assessment appears to be reflected both in recent improvements in survey data and in financial market developments. Although the timing and strength of the upturn remain uncertain, the overall evidence points to a resumption of economic growth. We also continue to expect no medium-term upward pressures on inflation. However, as already indicated on several occasions, annual inflation rates at the beginning of this year will be somewhat erratic. Preliminary HICP data for January 2002 confirm this expectation but should not give rise to concerns as regards the medium term.
Household credit demand is closely linked to developments in the housing market. House prices have risen by an average of around 9 per cent over the past 10 years. High and persistent house price inflation can contribute to holding up credit growth even after prices have levelled off. Since only a portion of the housing stock is sold each year, some dwellings will be sold at  16  BIS Review 11/2004  a higher price than they were last sold for a long period. This is one of the reasons why growth in credit to households has remained high even after house price inflation moderated in 2002 and into 2003. Chart 24. Household debt Annual growth. Per cent 25  25  20  December 2003  20  15  15  10  10  5  5  0  0  -5  -5  -10  -10 1983  1987  1991  1995  1999  2003  Source: Norges Bank  Chart 25. House prices and household debt Annual rise.

The Riksbank is one of the central banks that will need to take an active stance on whether or not to issue a digital currency first. We cannot wait any longer, and I shall now tell you what we intend to do in the coming years. We will need to work within three different areas at once. Firstly, we need to identify what technologies can be used. This includes investigating both decentralised and centralised alternatives. It is important not to exclude alternatives in advance and thus limit the room for manoeuvre. Perhaps what we need is a combination of centralisation and decentralisation? We also need to study what technical competence we have, and what we need. We need to investigate in what way payments in e-krona can be initiated: with smartphones, plastic cards or in other ways. The second area is what I call policy issues, where we study the potential effects on the Riksbank, the payment market, monetary policy, financial stability and so on. Here, we ask ourselves what properties an e-krona should have to best meet the needs we see in the economy. I discussed examples of these questions earlier. The third area concerns legal issues. Examples here are what opportunities and what flexibility the Riksbank’s current mandate allows us, how different laws affect the requirements we should make of an e-krona system and so on. Even if we intend to work within these different areas in parallel, there will be interdependencies that we must take into account.
However, it is likely that the distribution of income will be affected in terms of growing gaps between those with and without higher education. Wage shares have fallen in many countries, without any real explanation, while profits in the OECD area have been at an all-time high. Technological developments have led to both increased profits and increased demand for highly-educated labour in relation to less qualified. The possibility that increased competition from low-wage countries could be part of the explanation cannot be entirely ruled out. However, there is no support in the statistics to say that economies that are more dependent on foreign trade have higher unemployment than others. It is rather the other way round; that increased trade often goes hand in hand with lower unemployment and higher welfare. The rapid market growth in such large countries as China and India means that demand for goods and services produced in the old industrial nations increases. The investment in research and development in China and the transition to increasingly advanced production does not mean that "all jobs” will move there. Experiences from Europe’s trade exchange with Japan and Korea in recent decades indicates a different development. There one can see that an increasing percentage of trade has developed to become what is known as inter-sector trading, that is, one exchanges goods with one another that are produced using roughly the same technology.

Trade in goods and services now amounts to 5 per cent of the total cross-border currency flows, which can be compared with just over 30 per cent twenty years ago. Globalisation entails increased competition, which leads to a higher degree of specialisation and benefiting from comparative advantages. Each country and region must dispose of its total resources so that they do what they are best at compared with others. This international division of labour means that resources are used more efficiently and lead to greater productivity in the world as a whole. This is not a new phenomenon; it has been going on for a long time. What is new is the deregulated capital markets which enable capital to move quickly across national borders, and the fact that many more countries now participate in the international trade exchange. Since the 1980s, purchasing power per capita has more than doubled in the world as a whole. However, the increased welfare has not benefited everyone. The number of poor people, that is, those living on less than USD 2 a day, has actually increased by almost 300 million, to 2.7 billion people  1  The average customs tariff in the industrialised nations fell from 6 per cent in 1989–1992 to 3 per cent in 2001. BIS Review 35/2006  1  during the period 1981-2001. A positive note is that the number of extremely poor people, that is, those with less than USD 1 a day to live on, has declined by almost 400 million.
Chart: Early warning models for financial crises The chart shows estimated crisis probabilities for Norway based on various combinations of explanatory variables and trend estimation methods. A clear pattern is that crisis probabilities increased markedly in the years ahead of the banking crisis in 1988–1993 and ahead of the financial crisis in 2008–2009. Both of these periods featured rapid growth in credit and real estate prices, combined with a surge in banks’ wholesale funding ratio. The chart shows that the estimated crisis probabilities have declined since the financial crisis, although the spread between the predictions from different variants of the model is considerable. The relationship between the indicators and the probability of a crisis in the model is not linear. The greater the magnitude of the financial imbalances at the outset, the more pronounced the effect of an increase in credit growth or house price inflation will be. We have seen that financial imbalances often wind down in connection with crises. The ratio of household debt to GDP fell markedly in Norway in the wake of the 1990s banking crisis and it has fallen in countries such as Spain, the UK and the US after the financial crisis in 2008. In Norway, household debt has continued to grow faster than income, which may indicate that the vulnerabilities that built up prior to the crisis are still present. An assessment of systemic risk must include an analysis of both the probability and consequence of a crisis.

There will be deviations from these forecasts, even if they are well founded, partly because the economy is hit by  BIS Review 14/2002  1  unforeseen shocks from time to time. If fruit-growers' crops are attacked by insects, the price of apples will rise, if the dams are not filled with water, electricity prices may rise, and if cows in Europe suffer various diseases, the price of meat and certain other foodstuffs rises. If the Riksbank tried to make corrections for this type of temporary price disturbance, it would probably lead to large swings in monetary policy and unnecessary fluctuations in demand. It would therefore be wrong to give the impression that inflation will always lie at 2 per cent. On the other hand, it is important that the Riksbank constantly adapts the instrumental rate to ensure that the inflation forecast 1-2 years ahead is in line with the inflation target. This means that households and firms can rely on temporary deviations above or below this level being just temporary. One factor that could seriously undermine the credibility of the inflation target is if a higher rate of price increase led to large-scale demands for wage compensation. If wages and prices begin to chase one another upwards, as happened in the 1980s, everyone will lose out in the end. The importance of monetary policy for growth and vice versa The importance of monetary policy for growth is primarily connected to the need for stability in trade and industry and the labour market.
The relatively strong economic performance of the region of late is clearly tied to its stable housing markets. Upstate New York’s relatively slow economic performance and lack of population growth during the expansion in the 2000s supported only modest increases in home prices and sales during the housing boom. When home prices and sales began to decline quite rapidly in many parts of the nation, they held steady across the region. As a result, Upstate New York has largely been spared the boom-and-bust cycle in housing that occurred in other parts of the country. In fact, many of Upstate New York’s metropolitan areas even experienced home price appreciation during the housing bust, making these places among the best performing in the country during this period. Many parts of the country experienced severe housing busts, with sharp drops in housing-related activity (such as construction and purchases of major appliances). For example, in fast-growing places such as California and Florida, construction jobs grew to be a large share of employment, but the number of these jobs then plummeted during the recession. This dynamic did not occur in places like Ithaca, where the housing sector was small and thus, had few jobs to lose. Another part of the story is that homeowners in Upstate New York did not take on as much debt, and households have been less strained here than elsewhere. One reason is that home prices did not appreciate rapidly here, so homes remained affordable.

These measures recognize that to avert or contain future financial crises, we need a financial system that can withstand large negative shocks. First, market participants must not have incentives to take excessive risks. Instead, incentives should reward actions that support economic growth and financial stability. And financial firms must set aside enough capital and liquidity so that when things go wrong they can absorb losses with their own resources. Finally, if these buffers prove inadequate and a financial firm veers toward failure, the official  BIS Review 141/2010  5  sector needs the tools to wind them down in an orderly manner without having to make the terrible choice between a chaotic failure that harms the whole economy and a taxpayerfunded rescue. Conclusion I appreciate the opportunity to talk to you about how my job at the New York Fed ties in with your lives and work here in Upstate New York. The links are many, including   How the Fed’s dual mandate for full employment and stable prices guides our actions and affects your lives;    How we rely on understanding economic conditions in Upstate New York as input when we formulate our policies; and    How our efforts to restore financial stability have provided a more solid foundation for lending to households and businesses – including small businesses.
Last but not least, efforts to further international collaboration will need to be supported by a solid platform for co-operation and information sharing amongst regulators. Formal agreements between regulators on the scope of cooperation and information sharing will be helpful in this regard. Singapore, as a full member of the IFSB, and a signatory to MOUs with various GCC countries, is keen to explore further avenues for cooperation and collaboration. Underpinning all these, of course, is the need to continue to broaden and deepen knowledge and expertise on Islamic Finance among regulators and industry players. An investors' education platform to promote risk awareness of Shariah compliant products will also serve to reinforce market discipline by raising awareness of the characteristics and risks of Shariah products, as well as boosting demand for such products. Conclusion – opportunities for Islamic finance I would like to end on an optimistic note by reiterating the opportunities available in Islamic Finance. While we must expect the global economy and financial activities to slow in the coming months, the long-term structural improvements in Asia and the GCC will continue. Between Asia and the GCC, for instance, total trade grew by 17% annually since 2000 to exceed $ billion in 2006. 8 Total cross-border capital flows between Asia and the GCC are also predicted to increase from $ billion at end 2006 to $ billion by 2020. 9 Even if only half of these projections are realised, growth is still sizeable.

While these and other examples suggest that, in certain conditions, volatility can be exacerbated by option-driven or option-like trading strategies, related developments in global capital markets can at times help to dampen volatility. Notably, with the growth of the hedge fund industry, there are more short-term traders willing to take risk – in effect providing liquidity – when they perceive a temporary anomaly, as perhaps happened in the US bond market during summer 2003. That is somewhat less likely, though, when the prior trading strategies of funds themselves have become part of the underlying imbalance. This points up a useful lesson. That the major intermediaries – and the authorities – would do well to try to identify where there might be big structural short, or imbalanced, option positions in a market whose liquidity might be strained in stressed conditions. Sometimes, as for example in the US mortgage market, this amounts to identifying a structurally long position and asking whether the counterpart short positions are well distributed and how managed. Sometimes, as perhaps in the structured credit market, it may amount to asking whether there is anything that could trigger an exit by apparently long-term and passive holders of short option positions. For the firms themselves, this kind of analysis may be something that could be fed into stress tests developed in recent years to examine the effects of the exit of a dealer or major fund. Central banks rely largely on market intelligence.
Unfortunately, here in Turkey we did not live in such an  BIS Review 19/2006  1  environment. It was very difficult to predict money demand under a chronically high inflation environment as it was unstable. Moreover, the link between inflation and monetary aggregates was not stable neither. The final alternative was the choice of the inflation itself as the nominal anchor and that obviously refers to the “inflation targeting regime”. In addition to having an anchor, which is highly transparent, inflation targeting was viewed to be superior to all other monetary policy regimes because all available information is used in the monetary policy decision making process. Besides these features, Fred Mishkin (2000) for instance addresses the following favorable aspects of the inflation-targeting regime: “Because an explicit numerical target for inflation increases the accountability of the central bank, inflation targeting also has the potential to reduce the likelihood that the central bank will fall into the time – inconsistency trap. Moreover, since the source of time inconsistency is often found in political pressures on the central bank to undertake overly expansionary monetary policy, inflation targeting has the advantage of focusing the political debate on what a central bank can do in the long run.” On the other hand, as it is widely discussed in the literature, the success of the regime depends on the fulfillment of the necessary preconditions such as central bank independence, sound and welldeveloped financial sector and absence of fiscal dominance.

However, the inflation targeting regime was also “implicit” rather than “full-fledged”, reflecting the fact that the preconditions such as a strong fiscal position of the government and further stability in the financial markets were not yet fulfilled. During the last four years, sound monetary and fiscal policies together with structural reforms, changes in the institutional framework and adaptation of the economy to floating exchange rates, however painful this might have been, have resulted in remarkable achievements on the way to price stability. During this period, the monetary policy of the Central Bank put greater and greater emphasis on ensuring the credibility of inflation targets. To this end, the Central Bank has often publicly stressed the importance of continuing with a tight fiscal policy and completing structural reforms without delay or compromise. As a result, inflation targets have been reached for four years in a row, significantly enhancing the credibility of the monetary policy. I am so glad to be able to say that today inflation is at its lowest level in thirty-seven years. Annual CPI inflation, which was 73.2 percent as recently as January 2002, is now down to single digit figures; it stands at 7.72 percent as of end of 2005. This performance in disinflation has obviously positively affected the economy. First of all, economic growth rates have been positive again in the last four years. Not only they have been positive, but very high levels have been attained. Total growth in real terms since 2001 is 31 percent.
Michael C Bonello: The euro and beyond Welcome address by Mr Michael C Bonello, Governor of the Central Bank of Malta, at the Conference “EMU Governance and Euro Changeover – Malta on the Path to the Euro”, Valletta, 1 October 2007. *  *  *  Prime Minister, President of the European Central Bank, Mr. Jean-Claude Trichet, Commissioner for Economic and Monetary Affairs, Mr. Joaquin Almunia, Excellencies, Distinguished Guests, Ladies and Gentlemen, Malta’s forthcoming adoption of the euro represents the final step in the country’s integration in the European Union (EU) and is clearly a major milestone in its economic history. The presence here today of such a distinguished gathering indeed testifies to the importance of the occasion. I therefore would like to start by joining the Prime Minister in extending a warm welcome to President Trichet, Commissioner Almunia and our other guests from abroad, including the Governors and other senior officials of twenty-two national central bank members of the European System of Central Banks. Reaching this milestone has by no means been an easy task. At the level of macroeconomic policy, difficult decisions were called for, and taken, to start addressing existing imbalances and other impediments to growth in order to satisfy the Maastricht criteria. As for the logistics involved in preparing for the change of currency, a wide-ranging effort has been undertaken during the past two years to mobilise both the public and private sectors and to coordinate preparations at a national level.

In this regard it is helpful that in a monetary union the parameters within which action can be taken are defined in the sense that the interest rate and the exchange rate instruments are not available to governments, and fiscal policy can only be used for adjustment purposes within the limits set by the Stability and Growth Pact. Given the limited room for manoeuvre, therefore, any adjustments necessary in order for the Maltese economy to achieve the growth rates that will ensure a more rapid pace of convergence and to respond successfully to asymmetric shocks will have to take place in the real economy. And since in a resource-poor and open economy like Malta’s, growth must be predominantly export-led, the focus of policy must be on increasing the country’s international competitiveness. The starting position for addressing this challenge is relatively favourable. In the words of the Commission’s Convergence Report, Malta has achieved a high degree of sustainable convergence; and more recently, the IMF Article IV Mission Report concluded that The economic recovery is gaining traction, owing largely to cyclical strength and some structural change. The economy has indeed been growing at more than 3% for almost three years and broad-based reforms have helped to mitigate structural impediments in a number of areas.