samchain/econo-pairs-v1 huggingface dataset:
By early March last year, 40% had been wiped off the value of the FTSE companies; corporate bond spreads were at their widest since the 1970s; and banks continued to hoard liquidity, with spreads in the interbank market still around fifteen times higher than their pre-crisis levels. The financial crisis began in earnest in the summer of 2007, when the burgeoning sub-prime mortgage crisis began to pile pressure on banks. But it intensified dramatically following the failure of Lehman Brothers in September 2008, leading to the most severe banking crisis in living memory. The Monetary Policy Committee responded aggressively, cutting Bank Rate from 5% to 0.5% – its lowest ever level – in just five months. But the need for further monetary stimulus was clear. In principle, it would have been possible to cut Bank Rate a little further, to zero or even to a small negative number. But the structure of many traditional mortgage lenders’ balance sheets meant that lowering Bank Rate even further was likely to eat into their profitability and so intensify the credit crunch. Exactly what the monetary loosening was trying to avoid. Instead, the Bank decided to vary the size and composition of its balance sheet to inject money directly into the economy. And so QE was born. Since then the economy has stabilised, household and business confidence have recovered, and financial market conditions have improved.

To do so, we must make global finance more resilient and fair. To make the system more resilient, funding and derivatives markets are being overhauled. Formerly risky areas of shadow banking, such as securitisation, are being transformed into sustainable market-based sources of finance. Financial institutions are being made stronger, with a seven-fold increase in the minimum capital requirements for the world’s largest banks. In the UK alone, major banks have raised over £ billion in new capital over the past few years and the Bank of England is now regularly testing their resilience to severe shocks. To make the system fairer, we should look to the insights of a third great Scottish figure, Adam Smith. Smith was a great advocate of competition. Its frequent absence in financial services has been corrosive. The most prominent examples are large, complex banks which privatise gains but socialise losses. The G20 summit later this year in Brisbane will be decisive in determining whether we can end too-big-to-fail. A more pernicious development has been the widespread rigging of some financial markets for personal gain. This has both diminished the effectiveness of markets and undermined trust in markets themselves. Adam Smith emphasised the importance of conduct, or what he referred to as “the established rules of behaviour,” by which “many men behave very decently, and through the whole of their lives avoid any considerable degree of blame.” 3 Those established rules of behaviour – social capital – underpin the functioning of the free market.
Second, external events – such as Brexit – can have effects that go beyond just their impact on global trade. Conversely, what we do in the United States has an impact far beyond our borders, and we need to take that into consideration in how we conduct and communicate monetary policy in the United States. Put simply, monetary policy is a two-way street, and we all need to be cognizant of that. As always, what I have to say today reflects my own views and not necessarily those of the Federal Open Market Committee (FOMC) or the Federal Reserve System. 1 The US economic outlook Despite the many twists and turns in the road so far, my baseline outlook for growth and inflation in the United States has not changed much in recent months. After a weak first quarter, real GDP continued to grow sluggishly in the second quarter. On the positive side, consumer spending rose more quickly during the second quarter. On the negative side, business fixedinvestment spending continued to disappoint, residential investment was weak and inventory investment was a substantial drag on growth. Looking forward, I expect economic activity to expand at roughly a 2 percent annualized pace over the next 18 months, appreciably above that of the past three quarters. Over the remainder of this year, the economy should continue to get some lift from consumption and from a fiscal policy stance that remains mildly stimulative. Moreover, I anticipate that residential investment will rebound from its decline in the second quarter.

If the FOMC did not make this adjustment, the stronger dollar could result in an undesired tightening of U.S. financial conditions. The expected forward interest rate paths in Europe and Japan have fallen considerably this year. If the FOMC had followed the median federal funds rate path from the December 2015 SEP projection, then the U.S. dollar would likely have appreciated much more significantly. Instead, the U.S. interest rate path has come down in tandem with the foreign interest rate paths and the dollar has appreciated only modestly. BIS central bankers’ speeches  3  This is a crucial point and I want to make sure there is no misunderstanding. The Federal Reserve is not targeting the exchange value of the U.S. dollar. What the FOMC considers are financial conditions broadly defined, because they affect the saving and investment decisions of households and firms. The dollar is but one component of these financial conditions. The level of short- and long-term rates, credit spreads, and equity prices are also important components of the financial conditions that we closely monitor. If international developments shift U.S. financial market conditions – including the dollar – then we need to take this into consideration in our U.S. monetary policy decisions. Third, I have found that market participants broadly appreciate that the FOMC needs to take a risk management approach in its conduct of monetary policy. There are at least two important aspects of this approach.
On the structural side, globalisation may have reduced the responsiveness of inflation to domestic cyclical conditions but empirical evidence for the euro area is not clear-cut.3 Other potential factors include demographic trends or changes in behaviour triggered by technological developments, which may contain price pressures, for instance through increased price transparency. However, even if these factors are somewhat more persistent, they should still not exert a permanent impact on inflation. Overall, the analysis indicates that the relationship between growth and inflation remains largely intact, even if it has temporarily weakened in recent years to the extent that the speed of adjustment in inflation towards our aim has been affected. Looking ahead, we anticipate that headline inflation will resume its gradual upward adjustment, supported by our monetary policy measures. At the same time, uncertainties continue to prevail. In particular, the recent volatility in financial markets, notably also in the exchange rate, deserves close monitoring with regard to its possible implications for the medium-term outlook for price stability. Therefore, while the strong momentum of the euro area economy has clearly strengthened our confidence in the inflation outlook, patience and persistence with regard to monetary policy is still needed for inflation to sustainably return to levels of below, but close to, 2%.

Mario Draghi: Hearing at the Committee on Economic and Monetary Affairs of the European Parliament Introductory statement by Mr Mario Draghi, President of the European Central Bank, before the Hearing at the Committee on Economic and Monetary Affairs of the European Parliament, Brussels, 26 February 2018. * * * Mr Chairman, Honourable Members of the Economic and Monetary Affairs Committee, Ladies and gentlemen, I am glad to be back at the European Parliament for my first hearing of this year before your Committee. The two issues you have chosen for today’s debate are very topical and I will address them in turn. I will first discuss the euro area inflation outlook and the main factors impacting on the relationship between growth and inflation. I will then emphasise the relevance of financial market infrastructures for monetary policy. In doing so, I will explain why the central bank of issue needs to have the necessary tools to address possible risks in a limited number of areas which are crucial from the perspective of its monetary policy mandate. Inflation, growth and the ECB’s monetary policy As I said in my introductory statement to the European Parliament plenary earlier this month, the euro area economy is expanding robustly. 1 Growth is stronger than previously expected and more evenly distributed across sectors and geographies than at any time since the financial crisis. According to the latest data, the euro area economy grew by 2.5% in 2017, reflecting strong domestic momentum in private consumption and investment.
In this vein, I must specify that, once Romania joined the European Union and the National Bank of Romania became a member of the European System of Central Banks, we are not only entitled, but also bound to present our viewpoint where we see that fundamental equilibria of the economy may be jeopardised by a particular development. Hence, I will refer to the NBR’s objective to ensure and maintain price stability and bring inflation rate down to a level compatible with its capacity as a member of the Eurosystem. Generally, a lower inflation rate is associated with a slower economic growth and even with recession. However, this phenomenon occurs only when there is a contradiction in the economic policy mix and when subdued inflation is not the primary objective of other policies, particularly fiscal and income policies. When the policy mix is balanced, inflation rate may be curbed while maintaining a sustained growth pace. Behind this development stand mainly foreign direct investment inflows which enhance the productive capacity of the economy and ensure the sustainable financing of a relatively high external deficit. In Romania’s case, the experts working with the central bank as well as the independent analysts estimated that the national economy may further rise at a fast clip amid alleviating inflationary pressures, even in the context of a current account deficit of 8-10% of GDP. Nevertheless, in order for capital inflows to continue, Romania’s economy must stay attractive.

This is particularly due to the profitability given by wide interest rate margins on the domestic market as well as to the fast-paced increase in lending via traditional banking products. Secondly, the overwhelming majority of banks operating in Romania, including those with foreign capital, are legal entities subject to NBR licensing, regulation and prudential supervision. Similarly to foreign bank branches having their main office in other EU Member States, these banks abide by the Basel II prudential and capital adequacy standards. Thirdly, some regulations issued by the National Bank of Romania have often proved more restrictive than the Basel II standards. More specifically, initial capital requirements for licensing a credit institution in Romania are almost twice as much as the minimum level laid down in EU regulations. Moreover, it is worth mentioning that the NBR representatives are part of the competent EU structures involved in the review and improvement of EU regulations governing the financial system architecture. Last but not least, the minimum reserve requirement ratios are still high at 20% on RONdenominated liabilities with maturities of up to 2 years and 40% on foreign currencydenominated liabilities. In addition to their contribution to curbing credit expansion, reserve requirements also play a prudential role in credit institutions maintaining an adequate liquidity level. Finally, let me point out the measures recently taken by the central bank with a view to ensuring sustainable credit growth in the longer-run. These measures are all the more useful amid the persistent turbulences on global financial markets.
The decoupling of the peso from the global trend of emerging currency strengthening with respect to the US dollar that began in mid-July, coincided with the building up of carry trade positions that used the peso as funding currency, and with increased dollar exposure of institutional investors. These aspects may have been favored by the low level of the monetary policy rate and the adoption of complementary monetary policy measures. Later, some of these operations eased, and the peso aligned itself with the path of other emerging markets’ currencies (figure 13). Considering the nominal exchange rate at the closing of this Monetary Policy Report, the real exchange rate (RER) is within the range of values believed to be consistent with long-term fundamentals, so the baseline scenario uses the working assumption that, over the long run, it will be close to where it stands today. This level is nearly 6% lower than at the statistical closing of the September Report, and thus has an important effect on the projected path of inflation in the coming months which will be taken into account in future policy decisions. 4  BIS Review 9/2010  Labor cost pressures show no significant changes. Y-o-y growth in nominal wages has continued to fall, responding to the drop in inflation. Real wages deflated by the CPI have increased but, if the implicit deflator in non-natural resource GDP is used, they fall. The annual variation of unit labor costs increased because of the sharp cyclical fall in measured labor productivity.

Helping students, couples, retirees, to go about their financial decisions carefully and not just taking life as it comes, can really help improve your quality of life, not just for ourselves, but for our families and loved ones. 22. I encourage everyone who is here, to spend a little bit of time going through the exhibitions, which has been very well put together. So once again, thank you to everyone who has been a partner of MoneySENSE in helping Singaporeans, and let’s do more in future to help everyone have the basic lifeskills of financial management. Thank you very much. 4  BIS central bankers’ speeches
In contrast, the Federal Reserve’s experience conducting sales of agency MBS is limited to a few small value exercises.30 Central banks that are currently buying non-sovereign assets in LSAPs have a similar lack of experience with sales. There may be separate lessons to be learned from selling agency MBS.31 Current FOMC guidance states that the sale of agency MBS is not anticipated, other than potentially to eliminate residual holdings well in the future, and that in the longer run, SOMA will consist primarily of Treasury securities. 32 From a practical standpoint, sales may be complicated in that they would likely be conducted through the sale of individual securities, not through the use of the TBA market, because the securities in the SOMA portfolio might be more valuable than TBA cheapest-to-deliver. 33 This complication could eliminate the liquidity advantage provided by transacting in TBA.34 However, it is prudent for the Desk to be prepared for a wide variety of scenarios, including sales or the need to purchase additional agency MBS. This flexibility is particularly important given the complex nature of agency MBS and the specialized knowledge and systems required to hold and transact in the agency MBS market. From an implementation perspective, the Federal Reserve is fortunate to have the option of implementing monetary policy in a large and liquid non-sovereign market with direct implications for existing and prospective homeowners. We have spent the past two days discussing monetary policy implementation in the long run.

This tool was last used in June 2010 to facilitate the settlement of Fannie Mae 5.5 percent coupons, which stopped being originated shortly after purchase because of a sharp drop in primary mortgage rates. 18 This number includes settled and unsettled agency MBS positions. SeeH.4.1 report on October 2, 2014. 19 For example, the Bank of England’s latest corporate bond purchase program targets purchases of up to £  billion of outstanding bonds, which is less than 10 percent of the estimated outstanding eligible corporate bond market of roughly £ billion. 20 At its highest pace, the Desk purchased more than $ billion of agency MBS in a given month. The last time  the Desk’s purchases exceeded $ billion per month was in June 2009. Since 2009, the Desk has improved its ability to execute agency MBS transactions. Beginning on March 2, 2010, the New York Fed began to use internal staff to execute MBS purchases. Beginning on April 9, 2014, the New York Fed began to increasingly conduct agency MBS purchases over FedTrade, its proprietary trading platform. Combined, these changes allow the Desk to conduct large-scale agency MBS operations with all of its counterparties. 21 This represents purchases between September 14, and October 13, 2016. On October 13, the Desk announced  plans to purchase $ billion in its reinvestment purchase operations between October 14 and November 10, 2016.
Mugur Isărescu: Some considerations of the impact of monetary policy on the economic convergence Speech by Mr Mugur Isărescu, Governor of the National Bank of Romania, at the Conference on Europe Economic Integration 2018 "How to finance cohesion in Europe? ", Panel 1 "The role of monetary policy in catching-up", organized by the Central Bank of the Republic of Austria (Oesterreichische Nationalbank),Vienna, 26 November 2018. * * * As prepared for delivery Ladies and gentlemen, I am honoured to join such a distinguished audience. After so many years spent as the Governor of the National Bank of Romania, today’s discussion gives me yet another opportunity to look back at the role that monetary policy has played in supporting nominal and real convergence in Romania. It is almost two decades since the Romania – EU accession negotiations had been opened (back then, in 2000, I served as the prime-minister). Romania has been an EU member for more than 10 years already. Allow me to share with you my view, shaped by the lessons learned over all these years, on the relationship between monetary policy and economic convergence. Let me first make a couple of considerations about economic convergence. First, while the nominal convergence criteria are deeply rooted in the minds of policymakers, the Maastricht Treaty also explicitly stipulates that “a high degree of sustainable convergence” is needed. Yet, this requirement seems to have been overlooked sometimes. Second, practical experience with euro adoption so far has proved that real convergence is also critical for success.

Turkey has a good record for structural issues. We have liberalized the trade and capital accounts of the balance of payments for about two decades. We have a flexible labor market. High domestic savings is one of the main characteristics of the economy. Market oriented economy is another aspect of the structural component of Turkey. Right now, Turkey has four important structural reforms on its agenda, not only as a part of the disinflation effort but also because they are essential for changing the environment. Thus, these structural reforms are vital for adapting to the changing global environment. They consist of reforming the banking sector, the social security system, agricultural subsidies, and privatization. Some of these reforms have already been approved by parliament, and the others are in the pipeline. The new Banking Act which was approved by parliament in June has the following four general objectives: •  to close the legal loopholes;  •  to implement the international supervisory regulations;  •  to assign the supervision of banking organizations to an independent agency; and  •  to make some adjustments regarding the process of founding and operating banks. In particular, the twenty-five Core Principles for Effective Banking Supervision drawn up by the Bank for International Settlements in 1997 have been endorsed in the amendments to the Banking Act. As a result, the amendments are consistent with modern principles of effective banking supervision.
For example, systemic firms subject to systemic leverage buffers in the UK can use their buffers with no distribution consequences. 7. The analysis suggests that in 2007, the UK CCyB rate would have needed to be set in the range of 3.5%–5% for the UK banking system to have had sufficiently large usable capital buffers to absorb losses that followed the credit boom without severely restricting lending to the real economy. A complementary analysis based on historical data on bank losses conditioned on elevated risks environment suggested a UK CCyB rate of around 5% could be warranted in these circumstances. See Bank of England Financial Stability Report ‘Financial Policy Committee Record and stress testing results’, December 2019 8. The last three shocks that hit the UK economy – the Brexit referendum, the Covid-19 pandemic and the RussianUkrainian war – did not originate in the financial system and were not related to the credit and financial cycle. 9. BCBS (2021), ‘Early lessons from the Covid-19 pandemic on the Basel reforms’  , Implementation report. 10. A bank with a preference for stable dividends is expected to be more concerned about a policy that reduces their control over those distributions and introduces volatility in pay-out profiles through the triggering of automatic restrictions. Such a bank would have incentives to reduce the likelihood of triggering these restrictions by building material voluntary capital surpluses over their regulatory buffers, potentially by constraining lending. 11.

Alongside the SMR and SIMR, there are also new remuneration codes. CRDIV sets a cap on the proportion of variable pay for bankers. There is a risk that this will simply increase the fixed element of pay, making it harder to adjust pay in the light of performance. The UK’s approach nevertheless has to reflect those rules. In addition, the UK has provided for firms to defer elements of pay for up to 7 years – and a further 3 years if conduct investigations are still ongoing. Firms will be able to apply “malus” to variable pay which has been deferred and not yet vested. So if misconduct is discovered or risk-taking turns out to have negative medium-term consequences, the firm can subsequently withhold those deferred elements of remuneration. The UK code also provides for the possibility of clawback of pay that has been vested. There has also been misconduct discovered in markets that were not previously subject to regulation, such in the setting of LIBOR or behaviour around foreign exchange fixes. The setting of major financial market benchmarks has now been brought within the regulatory perimeter. And the Bank of England, FCA and HMT conducted the Fair and Effective  10  PRA CP18/15, May 2015. Corporate Governance: Board Responsibilities’. 11  Parliamentary Commission on Banking Standards, June 2013. “Changing Banking for Good”. 10  BIS central bankers’ speeches  Markets Review12 which has made a series of recommendations to improve conduct and the functioning of markets going forward.