samchain/econo-pairs-v1 huggingface dataset:
It shouldn’t be so sure”, column in the Washington Post, 6 September, https://www.washingtonpost.com/news/wonk/wp/2016/09/06/larry-summersthe-fed-thinks-it-can-fight-the-next-recession-it-shouldnt-be-so-sure/ Woodford, Michael (2020), Effective Demand Failures and the Limits of Monetary Stabilization Policy”, NBER Working Paper No. 2776. 12 [15]  Diagram 1: Policy rates at the lower bound Per cent 3  3  2  2  1  1  0  0  -1  -1 10  12  14  16  Sweden  Euro area  18 USA  20 UK  Sources: National central banks and the Riksbank  Diagram 2: Inflation forecasts below target Per cent, yearly inflation 3,5  3,5  3  3  2,5  2,5  2  2  1,5  1,5  1  1  0,5  0,5  0  0 10  12  14 UK, CPI  USA, CPI  16  18 Euro area, HICP  20  22  Sweden, CPIF  Sources: BOE, ECB, Federal Reserve and the Riksbank Note. Inflation refers to the CPIF, the HICP and the CPI. Annual data. Inflation forecast for USA refers to the median of the members of the FOMC's individual forecasts. The euro area’s inflation forecast refers to the forecasts by ECB and Eurosystem employees.

The fact that interest rates have fallen, and are now at historically low levels, means that the level where the central banks’ policy rates are “neutral”— that is, neither expansionary nor contractionary – has also developed in a similar manner. The relationship between the neutral interest rate and monetary policy can be illustrated with the aid of Figure 4. The neutral interest rate is represented by the broken line. When central banks conduct monetary policy via the policy rate, they change it in the way described in the solid line. An interest rate that is lower than the neutral one stimulates demand and inflation, while an interest rate that is higher than the neutral one has the opposite effect. Central banks cannot set interest rates independently of the neutral interest rate, but must take it into account. As the neutral interest rate is currently at a historically low level, the central bank's policy rate needs to be very low to have an expansionary effect. This has meant that policy rates in many countries today are at or close to the lower bound, and would have been even lower if this had been considered possible. In other words, monetary policy is currently being squeezed from two sides — the pandemic and fall in demand that is subduing inflation on the one hand, and the conditions that make it difficult to cut the rate to counteract this on the other. 2 Skingsley (2016).
•  Several Asian regulators, such as China, India, Philippines and Singapore, have set capital requirements that exceed the Basel III standards. •  And banks in China, India, Thailand, Hong Kong and Singapore were already subject to liquidity requirements prior to Basel III. Second, Asia’s financial systems emerged from the last crisis less affected than their global peers, with much of their financial resources and businesses intact. BIS central bankers’ speeches  3  •  A focus on traditional banking helped Asian banks avoid the fall-outs from the collapse of complex, structured products and risks from outsized trading desks. •  This, together with their strong deposit funding, means that Asian banks do not need to deleverage or withdraw from markets in order to meet the more stringent capital ratios or new liquidity requirements. Asian banks have been able to fill the financing gaps that opened up as global banks concentrated on repairing their balance sheets back home. •  According to BIS data, between 2008 and 2014, the share of Eurozone banks in international claims on Emerging Asia more than halved to just 15% whereas the share of Asian banks almost doubled to 60%. If Asian banks continue to maintain strong buffers and manage their risks well, they are wellplaced to thrive and grow in the new regulatory environment. Technological innovation A third major force shaping Asia’s banking landscape is technology, specifically digital technology. This could prove both transformative and disruptive in a region where banking penetration remains low.

Ravi Menon: Whither Asian banking? Opening address by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the Symposium on Asian Banking and Finance, jointly organised by the MAS and the Federal Reserve Bank of San Francisco, Singapore, 28 May 2015. *  *  *  Dr John Williams, President and CEO, the Federal Reserve Bank of San Francisco, Distinguished guests, colleagues, ladies and gentlemen, Good afternoon. And a warm welcome to Singapore and to the Symposium on Asian Banking and Finance, jointly organised by the MAS and the Federal Reserve Bank of San Francisco. Banking systems have returned to a more stable footing since the Global Financial Crisis. •  Banks are holding larger capital and liquidity buffers than before. •  Their return on equity (ROE) continues to recover. According to a McKinsey survey of the 500 largest banks in the world, their ROE averaged 9.9 percent in the first half of 2014, within a whisker of the long-term average of 10 percent. But these overall numbers mask wide variances in performance across banks and geographies. •  Banks in Emerging Asia report average ROE of about 15%. •  Among advanced economies, US and Canadian banks lead the pack with ROE of over 9%, compared to about 2% for their Western European peers. Asian banks have strengthened their position since the Global Financial Crisis.
At such a meeting, Malta's method of participation in ERM II, including the central parity rate, would be agreed. The way would then be open to join the mechanism. ERM II is characterised by a standard fluctuation band of +/- 15 per cent per cent. How relevant do you expect such a band to be for Malta? The system allows so much flexibility to ease the burden of transformation and structural reforms in those Member States which still have a relatively long way to go before they reach average EU levels of development and whose exchange rate may not yet, therefore, have reached an equilibrium level. The standard band represents the maximum exchange rate flexibility that can be availed of, depending on individual country circumstances. The existence of the bands should not, therefore, give rise to the expectation that the exchange rate will automatically fluctuate to this extent. In the case of Malta, for example, the economy has already achieved a relatively high level of real and nominal convergence and one would, therefore, expect that the daily rate should remain close to the central parity rate. Indeed, given the crucial role that exchange rate stability plays in the highly open Maltese economy, and the significant credibility attained by the Maltese lira under the existing basket peg, the authorities would like to preserve the important positive effects of the current arrangement, namely exchange rate stability, during ERM II. Will participation in ERM II entail a change in the level of the lira/euro exchange rate?

Before it can adopt the euro, a member state should have fulfilled the convergence criteria, known as the Maastricht criteria, on the interest rate, inflation and public finances, achieved a high degree of structural similarity with the euro area and completed the necessary logistical, administrative and legal preparations. Details of these preparations were explained in an article which was published in the June 2003 edition of the Bank's Quarterly Review. The Treaty, however, does not specify a target date for the completion of these preparations. Neither does it specify a date for entry in ERM II. You have pointed out on several occasions that you are in favour of an early adoption of the euro. What are your arguments for that? What are the implications of a delayed entry? The importance for Malta's small, open economy to lock in, at the earliest practical opportunity, the increased economic security and credibility which this step implies is indeed acknowledged by all the experts the Bank has exchanged views with. This is because the euro offers the prospect of being anchored in the relative safety of the world's largest economy. This would not only mean reduced exchange rate risks and less uncertainty for Maltese economic agents and their foreign business partners but it would also eliminate the need to maintain higher interest rates to compensate for the element of risk associated with the small size of the Maltese economy.
John taught Tiger about opportunity costs. Immediately afterwards, Tiger left college and joined the pro tour. Clearly, a decision that paid off. But back to John Taylor again. Today, he will talk about ‘Ideas and Institutions in Monetary Policy Making’. Before giving him the floor, I will briefly introduce him. Born in Yonkers, New York, John Taylor earned his A.B. from Princeton University and his Ph.D. from Stanford. He taught at Columbia University from 1973–1980 and at Princeton University from 1980–1984. And since 1984, he has been teaching and researching at Stanford. John is the perfect economist. He is outstanding as a researcher, policy advisor and teacher. In acknowledgment of his exceptional services, he has received a number of prestigious awards for excellence in all these three fields. Let me say a few words about each of these areas, beginning with John Taylor the researcher. His research topics range from work on rational expectations to wage and price dynamics, macroeconomics, econometrics, fiscal policy, and, of course, monetary policy. He has written an impressive number of influential articles in leading journals and important books. It is impossible to summarise his research in a few sentences. Therefore, I will limit myself to two topics. The first topic dates back to the second half of the 1970s, when John initiated a research strategy that would have a profound and lasting impact on our profession. It was a time when the new-classical macroeconomists were claiming that monetary policy was powerless when it came to steering the economy.

BIS central bankers’ speeches  At today’s oil price, it may be necessary to use about NOK 80 billion of the GPFG’s return to finance the structural non-oil budget deficit. 7 In the course of three years, spending of oil revenues has increased by as much as in the 10 previous years. In the budget for 2016, spending of oil revenues is estimated at more than 7 percent of mainland GDP. Spending is well below 4 percent of the GPFG’s value, which is the assumed – but highly uncertain – real return. The 4-percent fiscal rule no longer functions as an effective long-term guideline for fiscal policy. The fall in oil prices will reduce Norway’s national wealth. The GPFG may be close to its peak. Future returns are also uncertain. Against this background, increased spending is not a viable path to follow. Management of the Government Pension Fund Global (GPFG) It is now 20 years since Minister of Finance Sigbjørn Johnsen made the first capital transfer to the Government Petroleum Fund, as the Government Pension Fund Global was aptly named at the time. Since its establishment, NOK 3.5 trillion has been transferred to the GPFG. GPFG capital has almost doubled, and is now the equivalent of around NOK 1.3 million per inhabitant. The return on investments accounts for a substantial portion, close to a third, of GPFG capital. Nearly every year, Norges Bank’s management of the GPFG has outperformed the market average. It would appear that the pattern is too consistent to be due to chance.
Across Upstate New York, the cycle of recession and recovery has been much less pronounced than in the nation, which means that the region has been more stable in recent years than many other places around the country. This has been particularly true in Buffalo, which experienced an employment decline of about 3½ percent during the downturn – a significant loss, to be sure – but well below the over 6 percent decline that occurred nationally. One reason why Upstate New York weathered the storm better than the nation as a whole is the resiliency of its housing markets. Like much of Upstate New York, Buffalo’s housing market has proven to be more stable than many other parts of the country. In fact, since the peak of the national housing market in early 2006, home prices in the Buffalo area have increased by about 10 percent, compared with a decline of more than 30 percent nationally. As a result, the drop-off in economic activity that is connected, directly and indirectly, to the performance of the housing sector has not been as severe here as in many other places around the country. 1  As measured by the 12-month change in core PCE deflator. 2  See for instance, the behavior of the three- and six-month changes in the core PCE deflator.

Real GDP expanded at a 3.0 percent annual rate in the fourth quarter of 2011, the fastest growth since the first half of 2010. The average monthly job gain was 212,000 in the first quarter of 2012, up from 164,000 in the fourth quarter. Sales of light-weight motor vehicles were about 14 ½ million at an annual rate in the first quarter, the best quarter for vehicle sales in four years. Survey measures of business activity have rebounded from their dips in the middle of last year, and are now at levels that typically indicate solid overall growth. Even housing starts have firmed somewhat in the last few months, although they remain at depressed levels. While these developments are certainly encouraging, it is still too soon to conclude that we are out of the woods. To begin with, the economic data looked brighter at this point in 2010 and again in 2011, only to fade later in those years. Moreover, the United States experienced unusually mild weather over the first quarter, with the number of heating degree days more than 20 percent below the average of the preceding five years, which may have pulled forward some economic activity and hiring. In this regard, the somewhat softer March labor market report that was released last Friday may reflect the earlier positive influence of the mild weather on job creation in January and February, although other less sanguine interpretations are also plausible.
At any rate, our projections for next year assume that these expectations will recover and provide support, together with many other factors, to a rebound in economic growth. Let me now share with you our baseline scenario and the main risks we have identified in the reports we present today. BIS central bankers’ speeches  1  Macroeconomic scenario Inflation brought surprises all throughout 2014 by being unexpectedly high. Earlier in the year, the Board assumed that inflation would be at 3 percent at year’s end, partly because the accumulated depreciation would have a limited effect on inflation, in line with historical patterns. Such evaluation was modified as actual data showed higher than expected transmission to final prices. So, as soon as June the inflation forecast was revised significantly upward. In recent months, such transmission has been in line with expectations. However, the sharper depreciation of the peso and some specific elements – in particular, the rising price of some fresh fruits and vegetables – pushed inflation up above projections. These increases reversed somewhat in November, helped by the drop in fuel prices, which should continue to play a part in lowering inflation over the coming months. Private inflation expectations also posted significant changes during the year, consistently with the aforementioned surprises (figure 1). Regarding output, in the third quarter both domestic demand and GDP grew less than forecasted in September, although the surprise was milder than it had been in the second quarter.

Thus, any surprises in the evolution of the US monetary policy could affect  4  BIS central bankers’ speeches  financial conditions – like they did in May of 2013 –, raising credit costs in world markets, reversing portfolio flows and depreciating emerging-country currencies against the US dollar. The beginning of a new cycle of quantitative expansion by the European Central Bank, plus similar announcements by the Bank of Japan, might reduce the likelihood and impact of these volatility episodes, depending on how these unconventional policies ultimately reflect in global lending conditions. A different risk has to do with the slowdown of emerging economies resulting in reduced capital flows. This because their assets become less attractive, all the more so in Latin America. A scenario in which the recent drop in commodity prices is prolonged or intensified, or where doubts about China’s performance resurge strongly, might trigger this kind of event. The scene may become more complex if at the same time long-term rates go up in the US, increasing the cost of external funding. It should also be considered that an increase in the cost of external financing could put upward pressure on local long-term interest rates. The decline in external and domestic long-term interest rates has motivated bond issues in both markets and local demand for type-3 mutual funds.
The banks are therefore also vulnerable to disruptions in the financial markets, particularly the international financial markets. Low interest rates increase risks Global real interest rates have been low for a long period of time and have been falling since the mid-1990s, see Figure 7. 33 This can also increase the risks in the financial system. The low interest rates namely risk triggering a “search for yield”, that is, investors abandon safe investments in favour of riskier ones that have a higher yield. For investors with a predetermined nominal required rate of return, the search for yield may be particularly attractive. 34 It is also the case that if investors find themselves in an environment with low interest rates and low risk over a long period of time, they may become used to this environment and not notice that conditions have changed. They may underestimate future risks and therefore refrain from compensating themselves sufficiently for the risks entailed in a particular investment. The low interest rates also contribute to increasing both housing prices and household indebtedness, even if the interest rates are not the only factor behind them. Prices in the Swedish housing market have been rising for a long time and the high prices stand out, even in an international comparison. Swedish housing prices and household indebtedness in relation to disposable income have risen by more than 100 per cent since 1995, see Figures 8 and 9. 32 See Nilsson et al. (2,014). 33  See Lundvall (2020).

For the Riksbank’s part, this means that we need to continue our work on modernising our money so that it is better suited to a digital economy, that is, to continue our work with the e-krona. We also need to update the infrastructure for payments. One should not have to wait several days for a payment to be executed. We will therefore offer what are known as ‘instant payments’, that is, payments that are executed directly, 24/7. We also need to invest more resources in cyber security and crisis preparedness so that the payment system can withstand shocks. It is important not least to continue the international collaboration we have with other central banks and with the Bank for International Settlements (BIS). There we are working on simplifying cross-currency payments and analysing digital central bank money (also known as CBDC, Central Bank Digital Currency). It is therefore very pleasing that the BIS’ new Innovation Hub will soon open in Stockholm. These hubs are a means of ensuring that the central banks have good cooperation with one another and keep up to date with the rapid technological developments currently taking place. New participants entering the payment market This development is clearly visible in the payment market. New technology and new legislation has made it easier for other types of company than banks to compete in mediating payments. Consumption patterns are also changing, for instance, in that it is becoming increasingly common to shop online rather than in physical shops.
Second, unlike interbank funding, central bank refinancing over a 30-day horizon would not count as an outflow in the denominator of LCR, as it always benefits from a 100% rollover rate. As a result of these two features taken together, this could increase demand for central bank refinancing. Banks could exploit regulatory arbitrage opportunities by posting non-HQLA as collateral, which would lead to an increase in the LCR.12 While this also  9  An exception is Hilberg and Hollmayr (2011). They extend a New-Keynesian model introducing an interbank market and allowing the central banks to alleviate the liquidity shortage on the interbank market varying haircuts on eligible assets; see B. Hilberg and J. Hollmayr (2011), “Asset prices, collateral and unconventional monetary policy in a DSGE model”, European Central Bank working paper series, No 1373. For a discussion on collateral used in private transactions see G. Gorton and A. Metrick (op. cit.) and J. Geanakoplos (2010), “The Leverage Cycle” in D. Acemoglu, K. Rogoff and M. Woodford, eds., NBER Macroeconomic Annual 2009, vol. 24, pp. 1–65, University of Chicago Press. 10  Bindseil (2013) discusses how the collateral framework can interact with liquidity regulation; see U. Bindseil (2013) “Central bank collateral, asset fire sales, regulation, and liquidity”, mimeo, European Central Bank. For a description of the Eurosystem collateral framework, see the ECB website, http://www.ecb.europa.eu/ paym/coll/html/index.en.html.

The interaction between the collateral framework and liquidity regulation is of great importance, especially for the Eurosystem.10 Let me illustrate this. A possible strategy for euro area banks to meet their LCR requirements is to increase their reliance on central bank funding using non-HQLA collateral. This is due to two features of the LCR calibration, which are of particular relevance for the ECB. First, the LCR and the Eurosystem’s monetary policy framework differ as regards the definition of qualifying assets. The stock of HQLA accepted in the LCR is narrower than the stock of assets which are eligible as collateral for the Eurosystem’s monetary policy credit operations. For example, asset backed securities (ABS) and uncovered bank bonds are accepted as Eurosystem collateral, but do not qualify generally as HQLA in the LCR. In addition, the LCR and the Eurosystem’s collateral framework differ as regards haircuts that are applied to specific categories of assets.11 Thus, there is no alignment between the definition and the risk assessment of liquid assets and the central bank’s collateral framework. This is justified by the different purposes of liquidity regulation and of the central bank’s collateral framework: the collateral framework protects the balance sheet of the central bank and, without prejudice to this objective, can support monetary policy transmission to the economy, which calls for a broader range of eligible assets, especially in such a diverse region as the euro area. This is also justified by the global nature of the LCR while central banks frameworks are all different.