samchain/econo-pairs-v1 huggingface dataset:
The FPC has a crucial role both to scan the financial system for threats to that resilience, and to ensure by recommendation, or in some situations direction, to those bodies such as the PRA and FCA directly charged with institutional regulation, that mitigating actions are put in place. It is therefore quite natural that the FPC is interested to know that the PRA is conducting stress testing of insurers, and to know whether those tests are appropriate to the objectives of financial stability. Moreover, the FPC needs to question whether, even if individual firms are doing the right thing, the system as a whole is resilient. This is the essence of macro-prudential regulation. It can, and should, ask questions which transcend firm level supervision, such as whether the level of inter-connectedness of participating firms is a cause of excessive weakness in its own right. We want the public to have confidence in the financial system, and let’s face it in some areas we have a lot of hard work to do. Now, to do that, we have to build a better understanding of the new regime and what we are trying to do to achieve our statutory objectives. The old ways of doing things were surrounded by some mystique and a lot of privacy. There is a need for appropriate privacy because the firms we regulate embody important private interests, and those are crucial to a functioning market economy. Regulators do not run firms; that is not our job.

Bank of France reports industrial output continued to increase in all sectors in February 1997 BANK OF FRANCE, MONTHLY BUSINESS SURVEY, 17/3/97. In February, according to the business leaders surveyed by the Banque de France, industrial output continued to increase in all sectors. The capacity utilization rate rose slightly. Overall demand grew at a moderate pace. There was strong demand from foreign markets, particularly from northern Europe, including Germany and the United Kingdom, and from the United States and Asia. The rise in the dollar and in sterling reinforced the competitiveness of French products. Growth in demand on the domestic market was much more moderate. Order books are deemed to be satisfactory in all sectors, with the exception of the food-processing industry, where they declined slightly and appear to be insufficient. Inventories of finished products are still somewhat above normal levels. In particular, they are considered to be above desired levels in the food-processing, intermediate goods and automobile sectors. In the coming months activity should continue to increase in all sectors, with the exception of the automobile sector. Commodity prices were stable overall. However, price rises were recorded in certain parts of the intermediate goods industry, such as the rubber and plastics, metal-working, and wood-processing sectors, and in the food processing industry owing to the appreciation of the dollar. Intense competition prevented these increases from being passed on to sales prices, which scarcely changed, except in the automobile sector, where they declined. The business leaders surveyed continued to be cautious in their investment plans.
The SNB’s expansionary monetary policy contributed to the depreciation of the Swiss franc over the course of the year and thus also supported the economy. Inflation is currently negative, due to the appreciation of the Swiss franc following the discontinuation of the minimum exchange rate and to the reduction in commodity prices. We expect it to return to positive territory in 2017. We will keep our options open should other measures be necessary to fulfil our mandate. But, as always with monetary policy decisions, we need to carefully weigh up the pros and cons to serve the interests of the country as a whole. In the wake of the financial crisis and the use of unconventional measures, central banks have become the focus of intense public interest. Various reform proposals are being discussed and we welcome these public debates. New ideas need to be seriously considered and evaluated. The intentions behind the sovereign wealth fund and sovereign money projects are commendable. But, on closer examination, the drawbacks outweigh the benefits in both cases. Finally, on behalf too of my colleagues in the Governing Board, Fritz Zurbrügg and Andréa Maechler, I would like to take this opportunity to thank our employees for their hard work and dedication. We would also like to thank our shareholders for their solidarity with the SNB and for their loyal support.

I see this as a reasonable possibility, and therefore I think it might be possible that the decline in reserve balances has pushed up overnight rates a bit over time. 17 At this point, I see no evidence that we are at, or close to, the “steep” portion of the demand curve. 18 Let’s run through some places where evidence of such a possibility might be found. To begin with, if we were closing in on the “steep” part, I might have expected to see more above-IOR lending in the unsecured overnight markets, as at least some banks each day found themselves short of reserves and had to borrow them from another bank. In fact, the amount of such above-IOR lending remains low as a share of the overnight bank funding market, as shown in Figure 9. 19 I might also have expected to see shifts in bank payments behavior—for example, more daylight overdrafts or more effort by banks to “optimize” their payment flows— but I have not seen this either. But, most fundamentally, I might have observed a day-to-day relationship between shifts in the stock of reserves and overnight interest rates. Figure 10 shows a scatterplot of daily changes in reserve balances against daily changes in the spread between the IOR rate and the effective federal funds rate; there is no visible relationship. 16  The classic paper on this topic is Poole (1968).
The main thing to understand is that, even if domestic monetary policy has some bearing on real interest rates, at least for a while, it is not their ultimate determinant. In the end real rates are driven to their natural level by deeper economic forces. The policy rate is but one expression of those forces. 8  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  8  Chart 9: Long term real interest rates are  With open capital markets, and for a small economy  determined globally  like the UK, one can actually go further than that: it’s unlikely that any domestic factor, whether monetary policy or anything else, can be the predominant influence on longer-term real interest rates, as these are determined globally. Consistent with this, longerterm real interest rates are tightly correlated internationally (Chart 9). In particular, they all share the same downward trend over the past couple of decades. With inflation relatively stable in all these countries, it’s hard to believe central banks were doing much else than simply following a similar  Sources: King and Low (2014), Rachel & Smith (2015), Bloomberg, Consensus Economics, IMF, Thomson Reuters Datastream.7  decline in the neutral rate of interest – the level consistent with stable inflation. It’s also hard to believe that, whatever its cause, UK real rates could have escaped this decline. 8  As I say these points have been made before . And in making them again, I don’t want to underplay the potential significance of pension fund deficits.

It is another matter that things may not go quite as quickly and become as widespread as the greatest optimists foresaw just a year or so ago. People in Sweden do not suddenly stop going to shops just because websites make it possible to buy clothes, shoes, cars and food, for example, on the internet. Alternatives in the form of mail order firms, newspaper advertisements and the telephone have been available for many years, yet many people still prefer to do their shopping in the traditional way. But it does seem very probable that computers in various forms will render many production and purchasing processes increasingly efficient as time goes by. The effects of the new technology will occur in various parts of society. It is easy to think of a number of uses. And as the innovations become cheaper and cheaper, there will be growing incentives to  2  BIS Review 90/2001  apply them in many economic activities. The price of computers, for example, has fallen in the past four decades by around 20 per cent a year. In literal terms, that means that a computer which costs 10,000 kronor today would have cost almost 50 million kronor in the early 1960s. So prices have fallen dramatically. Our own history clearly shows that the combination of major technical breakthroughs and a sizeable price fall can lay the foundation for outstanding economic growth.
Because the quantity of funds to be injected is known in advance, this mechanism poses fewer complications for our ability to reduce volatility in the fed funds rate around the target. The auction facility and other measures we have taken to address market liquidity problems do not directly address the balance sheet or capital constraints facing financial institutions. Nor can they be expected directly to reduce the perceived risk in exposure to other financial counterparties. But by providing a more effective form of access to liquidity, these new measures can help reduce the uncertainty that gives institutions the incentive to secure liquidity in ways that might lead to a further deterioration on market conditions. Major financial institutions in the United States and elsewhere entered this period of adjustment with capital substantially above the various regulatory thresholds. These capital cushions have enabled banks to expand their balance sheets as they have met contingent commitments and as the economics of other non-bank financing vehicles have deteriorated. This has been an important part of the adjustment process in markets. We have also seen some early steps by a range of different institutions to bring new capital into the banking and financial system. This is a healthy development. It reduces the need for further asset sales to preserve capital ratios. And it gives those institutions that acted earlier and on a more substantial scale the flexibility to play a greater role in markets and in the economy going forward.

Finally, let me say something about future challenges in this area that are of special relevance to today’s conference and to the research agenda in which you are all engaged. We are already involved in a coordinated review with other central banks and supervisors of how we should adapt policy and supervision in the wake of this financial crisis. Two issues are of particular interest in the context of this conference. The first relates to the incentives we create, through regulation and supervision and other policies, for influencing how financial market participants manage liquidity risk. Several aspects of the existing capital framework and other parts of the policy and regulatory  2  BIS Review 149/2007  framework affect these incentives. In addition, the evolution of the financial system has altered the role and importance of liquidity provision by banks and how that provision of liquidity responds to different types of stress to the financial system. The second issue relates to the tools that central banks have at their disposal for providing liquidity in ways that do support our monetary policy objectives. Do we need additional instruments that would better enable us to mitigate marketwide liquidity problems? And how can we mitigate the moral hazard risk inherent in such instruments? Efforts are underway to address these issues both within the Fed and among our central banking colleagues around the world. We will be looking both to financial market participants and to the academic community for advice.
In my regular visits, I have criss-crossed the Province and come to realise how important is the business community as the agent of change and reconciliation. It is a challenge to which you continue to rise with spirit and determination. And it is why I enjoy coming here to meet with you, to learn about your progress, and to appreciate the extraordinary beauty of the Province. I am conscious that there are significant differences between the economies of Northern Ireland and the rest of the United Kingdom. Tonight, however, I want to focus mainly on the economic outlook for the United Kingdom as a whole. What are the Bank of England’s diagnosis, prescription and prognosis for the UK economy? At one level, the diagnosis is self-evident. Growth has been much weaker than most commentators expected. In fact, according to the official figures, there has been barely any growth at all over the past 2½ years. Unemployment, at a rate of almost 8%, is markedly higher than the level of around 5½% before the crisis. And inflation, despite its fall over the past fifteen months from over 5% to around 2½%, remains above our 2% target. Living standards have been squeezed for longer than at any time in living memory.

There were also inadequacies with regard to credit granting. Large loans were made to new customers, new sectors and new geographical areas. This type of lending strategy is not wrong in itself, but it requires that the credit-granter has done his homework and is aware of the possible risks. In some parts of the banking world, they talk about credit-granting according to the church tower principle, i.e. that loans should be primarily made to customers living and active close by. How this principle was applied in connection with investments in Atlanta or Brussels is not easy to see. In addition, the banks contributed to their customers building up a comprehensive credit exposure in foreign currencies, regardless of whether or not they had matching income in their loan currency. As the krona exchange rate was high, some borrowers chose to take out loans in foreign currencies that had a lower nominal interest rate. The risks with this strategy became evident after the krona’s rapid fall of almost 25 per cent in six months, calculated from when the krona was allowed to float in November 1992. When the banks’ borrowers found that their debt amounts had increased by up to 25 per cent, calculated in kronor, many of them were unable to meet their obligations and the banks’ loan losses increased further. These actions by the banks are actually quite remarkable.
But given the strong contractionary tendencies in the economy, we decided that further stimulus was needed. So in March, we announced a programme to purchase £ bn of public and private financial assets, financed by issuing extra Bank of England reserves – an action going by the unlovely description of Quantitative Easing. And at our meeting at the beginning of this month, we upped the total amount of purchases to £ bn, about half of which have so far been made. The ultimate aim of these measures is to boost the annual rate of growth of nominal spending in the economy, which has been roughly flat over the past year, to a level consistent with a sustainable level and rate of growth of real activity and inflation meeting our target. Quantitative easing has been described in some quarters as “printing money”, though it is not literally that. It is more akin to us buying the asset with a cheque drawn on the Bank of England, which the seller then deposits with his own bank. As a consequence, the quantity of bank deposits in the economy goes up, while the claims that the banks hold on the Bank of England also increase. The immediate impact of these purchases should be to drive up the price of the assets that we are buying, or equivalently to reduce their yield. That is indeed what we have seen, with gilt yields falling nearly ½ percentage point when the programme was initiated.

Jean-Pierre Roth: Once a student, always a student Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank, at the University of Bern, Switzerland, 9 February 2006. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  Like all decisions relating to the future, monetary policy decisions involve numerous uncertainties. Economic researchers are divided as regards both the effects of monetary policy and the form that this policy should take. There are a number of competing models in economic theory, and their policy recommendations often vary. Relationships that have been stable in the past may change at any time, due to the fact that the structural equations used in economic models are not based on the laws of nature. The Swiss National Bank's monetary policy concept takes account of these uncertainties. Our inflation forecast is a key element in this concept and combines the results obtained by a variety of different models. Research is extremely important in our changing world. We can only be sure of identifying new developments as early as possible and basing our monetary policy decisions on a solid foundation if we engage in constant research. BIS Review 9/2006  1
Given a stock market climate already depressed by the ongoing correction of the bubble that affected the technology and communications sector, this lack of confidence further propelled the downward trend on the equity markets, which favoured the fixed-income markets. Moreover, the crises in certain emerging economies continued, especially in Latin America, and this also contributed to the general risk-aversion of investors on international financial markets. A key feature of recent developments in the world economy is that the aforementioned shocks, whose common denominator is their impact on agents’ confidence, affected all the developed economies and some of the emerging ones almost simultaneously. This highlights how, in an increasingly globalised world, the transmission channels on which expectations turn (and which exert a key influence on the financial markets) are extremely rapid. All economies, especially the most developed ones, are prone to the impact of this type of disturbance, whose origin may be very remote and whose relationship to a specific national economy’s fundamentals may seem far-removed. The loss of confidence stemming from the aforementioned shocks was, in turn, amplified by various deep-seated imbalances in the world economy which have not been corrected or have even worsened, including most notably the US current-account deficit and persistent deflation in Japan. These underlying weaknesses stoked up uncertainty and a climate of mistrust in various segments of the world economy, all of which contributed too to checking and postponing the onset of recovery.

It also involves patrolling the frontiers of our powers and  6  Id. at 483. 7  Dodd Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111–203, 124 Stat. 1376 (2010). 8  12 U.S.C. § 5365. 9  12 U.S.C. § 5365(a)(1). 10  12 U.S.C. § 1842 (c)(7). 11  Ben S. Bernanke, Chairman, Board of Governors of the Federal Reserve System, September 18, 2013, Press Conference. BIS central bankers’ speeches  3  recognizing where and when the rule of law forecloses options. This is essential to the credibility of the central bank, a concept closely connected with the public’s trust. To conclude, I hope these remarks about financial stability also reflect on what our legal colleagues have accomplished at the ECB. In this regard, I pay tribute to the leadership of Antonio Sáinz de Vicuña, and to his work not only in presiding at the birth of the euro, but guiding the ECB to take the extraordinary actions necessary to preserve the euro. As President Draghi accurately forecast, they have been enough. Antonio, as you step down as general counsel, I congratulate you on the accomplishment of the mission, and applaud you for a job well done. Thank you, ladies and gentlemen, for your kind attention. Disclaimer: The views expressed are the views of the author and do not necessarily reflect the views of the Federal Reserve Bank of New York, or any component of the Federal Reserve System. 4  BIS central bankers’ speeches
William C Dudley: New York City's return from the brink Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Lotos Club, New York City, 19 October 2016. * * * It is a great pleasure to have the opportunity to speak here this evening at the Lotos Club, one of America’s oldest and most distinguished literary clubs. I am, of course, very happy to participate in tonight’s public affairs dinner and to accept the Lotos Award of Distinction. Tonight I would like to take a moment to discuss some of New York City’s recent history and its return from the economic brink. Aside from being a story of historical interest, I believe there are lessons embedded in New York City’s experience that are relevant to other cities and municipalities that find themselves struggling today. As always, what I have to say reflects my own views and not necessarily the views of the Federal Open Market Committee or the Federal Reserve System.1 Given the historical relevance of today’s date, it seems appropriate to start by recalling what happened on this day 29 years ago. In what has come to be known as “Black Monday,” the U.S. equity market suffered one of its steepest one-day drops in history, with the Dow Jones Industrial Average falling 508 points—a decline of more than 20 percent. This capped one of the worst weeks ever for the U.S. stock market.

One consistent source of strength for the city has been immigration. Over this period, New York City benefited from a sizable influx of immigrants, which more than offset out-migration in many neighborhoods. To illustrate this, let’s take a look at one such neighborhood in Brooklyn, Sunset Park, that was losing residents to the suburbs in the 1960s and 1970s. As property values fell, new migrants from Puerto Rico, the Dominican Republic and Central America moved in. By 1990, Hispanics comprised about half of all Sunset Park residents. These new residents developed a thriving community, which boosted property values. There was also an influx of Chinese residents, and part of Sunset Park has come to be known as Brooklyn’s Chinatown. There are many other examples where immigrants revitalized whole neighborhoods: Russian and Ukrainian immigrants in Brighton Beach; Chinese and Korean immigrants in Flushing; and Indian immigrants in Jackson Heights, just to name a few. So, has it been all good news for New York City in recent years? Certainly not. Many challenges remain. One by-product of a strong economy and real estate market has been a decline in housing affordability, and an increase in homelessness. It is estimated that there are over 60,000 homeless people in New York City today—almost double the number from 10 years ago and more than four times as high as in the early 1980s. Moreover, poverty rates remain high in many parts of the city, and the education system can certainly be improved.