samchain/econo-pairs-v1 huggingface dataset:
At the same time, growth has not been lower than before; rather it has been quite a bit higher (see Figure 3). From this perspective, I think that one must say that inflation targeting has been a great success. CPIF inflation of 1.8 per cent on average is a good result An assessment of monetary policy cannot merely be based on an analysis using hindsight and comparing inflation outcomes with the target. There are a number of reasons why  1  From 1993 to 1995, monetary policy was aimed at preventing the temporary inflationary impulse that arose in connection with the krona being allowed to float becoming entrenched and leading to an increase in the underlying rate of inflation. 2  BIS central bankers’ speeches  inflation may deviate from the target, despite monetary policy being conducted accurately. It is therefore necessary to modulate the analysis and see which factors explain why CPI inflation has on average undershot the target. The prices in the Swedish CPI include a component that reflects households' mortgage interest expenditure. When mortgage rates rise, this component contributes to pushing up CPI inflation and, vice versa, when mortgage rates fall, it pushes down inflation. Normally, the variable mortgage rates follow the development of the repo rate fairly closely. This means that when the Riksbank cuts the repo rate to increase activity in the economy and gradually bring up inflation, the initial result is that CPI inflation falls, that is to say, the direct impact on inflation is "in the wrong direction".

Household debt ratio Debt as a percentage of disposable income 350  350  Finland France Germany Portugal Italy Ireland Spain Denmark United States United Kingdom Sweden  300  250  300  250  200  200  150  150  100  100  50  50  0  0 95  97  99  01  03  05  07  09  11  Source: OECD Figure 6. Unemployment Unemployed as a percentage of the labour force, index, 2007 = 100 350  350  Ireland (-40.5 percent) Spain (-22.5 percent) Denmark (-23.4 percent)  300  300  United States (-22.7 percent) United Kingdom (-13 percent) Sweden (-0.0 percent)  250  250  200  200  150  150  100  100  50  50 00  02  04  06  08  10  12  Note. The figures in brackets refer to the fall in real house prices from the peak to the trough. Source: OECD  BIS central bankers’ speeches  17  Figure 7. No new target for monetary policy Inflation  Unemployment (u)  Scenario 1 Scenario 2  After the forecast period  After the forecast period  u*  2%  Scenario 1 Scenario 2  Slow adjustment to the inflation target and long-run stable development Rapid adjustment to the inflation target but build-up of imbalances that are corrected  Figure 8.
For the banks, it was a case of heads I win, tails you – the taxpayer – lose. This cheap funding fuelled lending. Banks got bigger. In the UK, their balance sheets rose from around one-half to more than five times our national income in a generation. As the banks got bigger, so did the implicit subsidy – by the time of the crisis it reached many billions of pounds a year. The bigger banks became, the more they were seen as too important to fail, and the surer markets became that the taxpayer would bail them out. But there are only so many good loans and investments to be made. In order to expand, banks made increasingly risky investments. To make matters worse, they started making huge bets with each other on whether loans that had already been made would be repaid. The seeds of the eventual downfall of the financial system had been sown. As loans and investments went bad, those seeds started to sprout. In August 2007 came the moment when financial markets began to realise that the emperor had no clothes. The announcement by the French bank BNP Paribas that it would suspend repayments from two of its investment funds triggered a loss of confidence and a freezing of some capital markets. A month later, the crisis claimed its first victim when Northern Rock failed. In the months that followed, there was a steady procession of banking failures culminating in the collapse of the American bank Lehman Brothers in September 2008.

François Villeroy de Galhau: New Year wishes 2023 New Year wishes to the Paris financial centre by Mr François Villeroy de Galhau, Governor of the Bank of France and Chairman of the Autorité de contrôle prudentiel et de resolution (ACPR), Paris, 5 January 2023. *** Allow me to extend my warmest wishes for 2023 on behalf of the Banque de France and the ACPR. I don't know if I dare wish you, or wish us, a year free of shocks after those of 2020, 2021 and 2022. This past year has been marked by a climate of uncertainty, exacerbated by Russia's war in Ukraine and the energy crisis. It has also seen increased financial market volatility, compounded by the turmoil in the cryptoasset universe. In this unstable environment, I would like to make two double wishes for 2023: 1) Less inflation and more stabilisation. Activity has, until now, proved more resilient than expected, which is good news; however, inflation must not become entrenched. It is the number one concern for French people, and defeating it is our number one mission. It fell in December to 6.7%, which is encouraging but still not enough. It should peak in the first half, before declining towards 4% by the end of this year. But our forecast, and our commitment, is that inflation should be brought down towards 2% by end-2024 to end-2025.
15  In 1980 bank deposits accounted for 45% of total financial assets, currently their share dropped to 30% (McKinsey Global Institute 2005 – ibidem). 16  It is called the Feldstein-Horioka puzzle, after the two economists, who were the first to empirically prove its existence (Feldstein, 2005). 17  Feldstein M. Monetary Policy in a Changing International Environment: The Role of Capital Flows, NBER Working Paper 11856, 2005. 6  BIS Review 32/2006  growth of cross-border capital flows. What does that mean to the monetary policy? If domestic and foreign financial assets are treated more and more as perfect substitutes, domestic interest rates, especially mid- an long-term ones, are determined on the global market, and thus the influence of particular central banks on their level is weakened. This phenomenon is already observed in the USA. Although the key interest rate of the central bank has been raised from 1.00% in 2004 to 4.75% at present (i.e. by 3.75 percentage points), long-term interest rates, which are more important from the aggregate demand perspective, have remained roughly unchanged 18 . As a result, the effect of tightening the monetary policy on the aggregate demand has been significantly contained due to lack of response from long-term interest rates. In the world of global financial markets nobody seems to be surprised by the fact that during the session of the Federal Open Market Committee (FOMC 19 ) of the American Federal Reserve, the eyes of the entire financial market are fixed on its Chairman. Why is that?

Under Dr Richard Hu as Chairman, and Mr J Y Pillay and Mr Lee Ek Tieng as Managing Directors, MAS set about establishing the high standards of financial regulation and supervision that Singapore has become known for, while dealing with crises from Pan El to Barings. 6. The arrival of then Deputy Prime Minister Mr Lee Hsien Loong as Chairman and Mr Koh Yong Guan as Managing Director in 1998 launched a wide-ranging liberalisation of the financial sector in the midst of the Asian financial crisis. 7. And MAS built on those reforms while navigating the financial sector through the 2008/2009 crisis under the leadership of Mr Goh Chok Tong as Chairman and Mr Heng Swee Keat as Managing Director. 8. We thank the past management and staff of MAS at all levels. They are the unsung heroes who made it all possible. Highly professional, and driven by a strong sense of public service, they did not hesitate to do what was right even if it was unpopular. 9. In crisis after crisis – be it the speculative attack on the Singapore Dollar in 1985 or the global financial crisis in 2008 – staff of MAS worked long and hard behind the scenes, keeping our exchange rate strong, our banks safe, and the system sound. Next, we thank our partners in government 10. MAS could not have done it alone. If Singapore government had run persistent budget deficits instead of chronic surpluses, outcome would have been very different.
And in the Express & Star, you have the most successful regional paper in the country. Sport, too, plays an important role in the life of the Black Country. Next summer twelve schools in the Wolverhampton and Walsall areas will be participating in Chance to Shine – a new campaign to regenerate cricket in state schools, and of which I am proud to be the President. Given that in business the need to work in teams is of the essence, it is sad that competitive team sport in our schools has declined. The aim of Chance to Shine is to give young people from all our communities, boys and girls, a chance to experience – before the world of work – what it is like to be in a team, and  BIS Review 112/2006  1  to learn how to win and how to lose. Last summer Chance to Shine enabled almost 50,000 children to play competitive cricket for the first time. Young people need role models and sport is perhaps the most important source of them. Of the many Black Country sports men and women who have been role models down the years, there is one whom I would like to single out tonight – Vikram Solanki. Born in Rajasthan, Vikram moved to Wolverhampton as a small boy, and became the finest and most exciting batsman to emerge from the area for a long while. Now captain of Worcestershire, one could not think of a better role model to bring communities closer together.

Against a background of firm growth and a limited margin of spare capacity, and with inflation above the target, the MPC judged last week that an increase of 0.25 percentage points in Bank Rate was necessary to keep CPI inflation on track to meet the target in the medium term. So that is where we are now. Where will interest rates go next? I do not know. And the reason I do not know is that we do not take our decisions in advance, but wait to see how the economy unfolds and then take our decisions one month at a time. The Black Country is where it all began. But now we must look to the future. The Black Country has entered a new era. And you are making it happen. I have explained how the MPC sees the prospects for the economy. If we can retain the degree of stability that we have seen now for more than a decade, then you will have the opportunity to start and expand businesses that will compete for Black Country business awards in the years to come. The winners tonight are shining examples, and I know you are all looking forward to finding out who they are. It has been a pleasure to come back to where it all began for me. And, whether or not you are one of the lucky few to win an award tonight, I wish your business every success. 2  BIS Review 112/2006
The AQR itself resulted in a gross impact on asset values in need of adjustment by € billion, € billion of which did not generate a capital shortfall. So if you add up the € billion with the € billion shortfall, you get the overall impact on the banks of € billion coming from the comprehensive assessment. This you can compare with the expectations in the market. I just quote two examples of publications by investment houses of September, the more recent ones, of two big investment banks. One made calculations for a sample of 37 banks and found that, considering the measures already taken by the banks, the shortfall would be zero, and three banks would fail. The other one considered a sample of 34 banks and concluded that, taking  BIS central bankers’ speeches  1  into account the capital measures taken by the banks in 2014, zero banks would fail and the capital shortfall would be zero. This compares with our result that out of the 25, 12 banks have already taken measures in 2014 that are enough to cover their shortfall. But there are then 13 banks that still have either to exactly apply their restructuring downsizing as it is foreseen in their plans with the European Commission, or they will have to come up with ways to increase their capital. So this is an important explanation of the meaning of the results that we have.

The second point I wanted to make is that the conclusion of the exercise was preceded by a significant amount of front-loaded measures taken by the banks. Since July last year SSM banks have undertaken various measures to strengthen their balance sheets by more than € billion, including € billion of capital increases. These front-loaded measures are part of the overall successful outcome of the exercise. Some of the measures taken in 2013 had an impact on what could be detected by the exercise, and so reduced the results of the exercise accordingly. And some of the measures taken in 2014 count for the mitigation of the capital shortfalls that were found. Third point, the comprehensive assessment provides the ECB SSM with substantial information on the banks that will fall under its direct supervision and will help its efforts in creating a level playing field for supervision in the future. And fourth, the repairing of the banks’ balance sheets that will follow the results, and the resilience revealed by the vast majority of the banks in spite of the severity of the exercise, guarantee that the economic recovery will not be hampered by credit supply restrictions coming from the banking sector, provided that there is enough aggregate demand. I will now go through the slides. Let me underline the main results of the exercise. A total of € billion capital shortfalls were identified across 25 participating banks as a joint result of the AQR and the stress test.
In particular, the collapse in demand after the demise of Lehman Brothers was so sudden and deep that there was no way that monetary policy could in practice have been relaxed early enough, and by a large enough amount, to prevent it. It is, though, a moot point whether policy would have been set even more stimulatory during the latter part of 2009 if we had been operating under a nominal income growth target, given that we were implicitly expecting a rather slow recovery in nominal income growth. Given how stimulatory policy already was, I suspect that we might well have taken the view that it was simply not feasible to get nominal income growth back much faster. The unexpected weakness of nominal income growth in the past year or so does, however, serve to highlight a more significant difference between an inflation target and a nominal income growth target. A remarkable feature of the current cycle has been the juxtaposition of a weak recovery in output with robust growth in employment. One possible explanation is that the financial crisis has led to a fall, possibly temporarily, in the underlying rate of growth of supply. If that is so, then a fixed nominal income growth target would obviously go hand-in-hand with a higher inflation rate, whereas a fixed inflation target would be associated with lower nominal income growth. But this hardly provides an argument in favour of a nominal income growth target.

As I noted earlier, that reflects the preponderance of adverse cost shocks, which we have largely accommodated, whether by accident or design. But the concentration of such shocks runs the risk that the MPC is no longer seen as taking the target seriously. Having a target in which the acceptable deviations from target are in effect hardwired in might reduce that risk. 6  See, for instance, the forecast errors box on pp.48–9 of the August 2010 Inflation Report. 7  See Bean (1998). BIS central bankers’ speeches  3  Against that, a nominal income growth target has two drawbacks. The first is that the data for nominal income is less timely than that for inflation and subject to revision, sometimes significantly so. Chart 2 shows the first estimate of nominal income growth, together with the current vintage of data; one should not take comfort from the concordance between the two series in the recent past, as the recent data have not yet had much opportunity to be revised! The average absolute revision over 1993–2009 is a full percentage point. Now the susceptibility to revision is hardly a knock-out blow. After all, the data on growth and employment are also subject to revision and recognising that the data are an imperfect guide to reality is part and parcel of setting policy. But the susceptibility of the data to revision would make it somewhat harder for the public to understand the MPC’s objectives and for Parliament to hold us to account.
William C Dudley: Ending too big to fail Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Global Economic Policy Forum, New York City, 7 November 2013. *  *  *  It is a great pleasure to have the opportunity to speak here today. My remarks are going to focus on what is called the “too big to fail” problem. As you are aware, this problem arises when the failure of a large, complex financial institution threatens to cause such significant disruption to the financial system and the economy that these potential costs are judged as too severe to bear, leading to government intervention to prevent the failure. As a result, the firm, by being too big to fail, gains an implicit guarantee at the taxpayers’ expense that it does not have to pay for. I think there is broad agreement that such a regime is unacceptable in several respects. The first problem is that it creates an uneven playing field between large and small financial firms, with larger financial firms gaining a funding advantage from the perception that they may be too big to fail. The second problem is that this funding advantage creates incentives for financial firms to become bigger and more complex. The third problem is that there is a positive feedback loop.

As the banking system becomes more concentrated and complex, that just increases the financial stability risks, making the too big to fail problem even more acute. So what should we do about it? Today, I will evaluate three broad sets of choices: 1) Building a credible resolution regime and more resiliency in the financial system that together reduce the systemic costs of failure sufficiently so that large, complex firms can be allowed to fail; 2) taking steps, such as tougher prudential standards, that further reduce the probability of failure of such firms; and 3) breaking up the too big to fail firms so that no firm is so large that its failure would threaten financial stability in the first place. To summarize, I conclude that building a credible resolution regime is necessary but not sufficient. Even if the single-point of entry resolution framework proposed by the Federal Deposit Insurance Corporation (FDIC), which I very much endorse, is fully perfected, the costs of resolution for the largest systemically important financial institutions (SIFIs) will still be significant. I will argue that at least as much effort should be made to lower the risk of failure of such large, complex firms. Not only does this include higher capital and liquidity requirements, which we are implementing, but also building incentives into the system so that firm managements will act more forcefully and much earlier to put their firms on more solid ground before they encounter greater difficulties.
These developments may also affect the rate of technological progress in the long run if, for example, they lessen the incentive to engage in innovative activities. And we cannot forget the risk of the observed increase in unemployment translating into a parallel increase in structural unemployment, an issue I will deal with later in my speech. Therefore, structural reforms appear to be the only available tool to avert the risk of the crisis exerting more permanent effects on both the level of output and the growth rate of the economy. Second, structural reforms cannot be seen in isolation from the other measures that are needed, in particular those stemming from the exit strategies, but rather as a necessary complement to them. As an example, the dramatic increase in fiscal deficits and government debt levels during the crisis, exacerbating fiscal sustainability concerns for a number of economies, would worsen if output losses were permanent and constrained government revenues and expenditures in the future. By the same token, growth-enhancing structural reforms may smooth acceptance of the fiscal adjustment or even reduce its magnitude if they prove to be effective. Past experience shows that structural reforms are often adopted in times of economic crisis or prolonged episodes of slow or negative growth. This contrasts with the generalised view that it is easier to cope with these reforms, since their costs are generally less painful, and distributional effects less visible, when the economy is strong and income is growing rapidly.

This is best illustrated by the following statistics: •  According to the Bank for International Settlement's triennial survey in 2004, our average daily foreign exchange turnover was close to $ billion, which was the sixth largest in the world;  •  On average, transactions settled through the various RTGS systems in Hong Kong amounted to $ billion each day in 2005;  •  New debt securities issued in 2005 amounted to $ billion; and The total amount of funds raised through IPOs reached $ billion in 2005. 3. Our treasury markets have done well in servicing the financial businesses behind these impressive numbers. Further globalisation of financial markets and financial liberalisation on the Mainland will likely place new and increasing demands on our treasury markets. We need to move with the times, if we are to maintain our status as an international financial centre, and I think the establishment of the TMA provides a good mechanism for us to do so. In my view, there are four key areas which the TMA should focus on: professionalism, market development, codes and standards, and publicity. 4. The professionalism of market practitioners contribute significantly to the competitiveness of a financial centre. An important area of work of the TMA is therefore to enhance the professionalism of the practitioners in the Hong Kong treasury markets.