samchain/econo-pairs-v1 huggingface dataset:
In the labour market, the gap is narrower, although still negative, of -0.7% and -0.8%, respectively, depending on whether it is measured in terms of total hours worked or number of people  11  See M. Obstfeld and H. Zhou (2022). “The Global Dollar Cycle”, Brookings papers on economic activity, BPEA Conference Drafts, September 8-9. 12  Non-resident tourism recovered across the board in the tourist-issuing markets, although more modestly in the case of non-European, particularly Asian, tourism. 5  employed, compared with the related slightly positive gaps (of 0.6% and 1.7%) observed in the euro area. The latest indicators show that activity has slowed Q3 data point to a rapid slowdown in the euro area countries. The Purchasing Managers’ Indices (PMIs) signal a contraction in manufacturing in the big euro area economies, while the Services PMIs point to a considerable slowdown, with a contraction in Germany and Italy. Looking to the coming months, the worsening outlook for households has prompted a downward adjustment to their plans to spend on consumer durables.13 Also, the rise in energy prices is having a very uneven impact. The decline in spending is proving more acute among households with a smaller liquidity buffer. These are mostly lower-income households which are also more exposed to energy price fluctuations. In Spain, employment’s momentum started to wane recently, albeit more so at the start of the quarter.

The TPI seeks to ensure that our monetary policy stance is transmitted smoothly across all euro area countries, a prerequisite for the ECB to be able to deliver on its mandate. The ECB’s actions over this period must be understood in light of the new monetary policy strategy approved in 2021, which establishes a symmetric medium-term inflation target of 2%. This medium-term orientation means that rather than basing our decisions on the latest inflation figure, or even the inflation that we expect for the coming quarters, we base them on our projections over a two or three-year horizon. This is because our actions affect inflation very gradually, reaching their maximum impact after about two years. Maintaining a medium-term horizon in the definition and attainment of the target is particularly important in the face of certain kinds of shocks (such as adverse supply-side shocks, which push inflation and activity in opposite directions in the short term). Needless to say, predicting inflation over a two or three-year horizon is a very challenging task. Especially in a setting as uncertain as the current one. With this in mind, we use various indicators, such as surveys of professional forecasters and financial market prices. Key data include the ECB staff projections, which, in turn, draw on a huge store of economic and monetary analysis. These projections have gradually revised medium term inflation upwards. Thus, in September the average inflation forecast for 2024 stood at 2.3%, above our target and the December 2021 projections (1.8%).
You may remember that there was a small Licensed Specialised Bank called Pramuka Bank, which failed in 2002. It was only in 2007 that the deposits of the Pramuka Bank were transferred to a new Savings Bank. In 2009, 8 financial institutions faced liquidity problems, mainly due to the collapse of the parent company of a particular group. Most of those financial institutions are still undergoing restructuring, as agreed with the Central Bank. In 2013, another small NBFI, namely, CIFL faced liquidity problems mainly due to mismanagement and non-commitment to corporate governance. The Central Bank is now in the process of restructuring this company under the consolidation programme. The important message that I want to share with you is that although the NBFI that failed in 2013 accounted for only 0.35 per cent of the assets of our financial sector, the publicity it created resulted in a huge uproar in the financial market and the economy. You can clearly see that transmission of information has become speedier in the recent years and such information is easily and widely accessible now compared to the past. The Managing Director of the IMF, Christine Lagarde also highlighted this fact when she recently spoke on “New Multilateralism for 21st Century”, from which I quote “We are living through a communications revolution, because information travels at lightning speed from limitless points of origin.

Following the above forum, the first round of one-on-one meetings were held between 17 and 23 January 2014, with the Boards of Directors and senior management of banks and NBFIs, chaired by the Governor, to discuss their business plans under the newly announced plan and further clarify specific issues pertaining to particular institutions. Action 2: Communicating the mandate and time frame In line with the objectives of the financial sector consolidation programme, we provided the banks and NBFIs with a mandate to form internal steering committees to ensure a strategic fit by choosing a suitable partner and to ensure smooth transition to the new arrangement so that the process would ultimately generate synergies in the industry. Further, the relevant banks and NBFIs were requested to align their immediate future business expansion, new recruitments and other capital expenditure with the new developments and to submit periodic progress reports to the Consolidation Unit. We also requested the banks and NBFIs to formulate strategies to work in line with the time frame suggested by the Central Bank, which basically requires all consolidation plans to be submitted by 30 June and completed by end of 2014. Although this time frame was subject to criticism by some, we simply know by practice that unless we have a reasonable deadline, no plan would be effective. However, we maintained some flexibility in the time frame for the completion of mergers and acquisitions that are of a complex nature.
Lessons must be learned from these episodes, most importantly by non-banks themselves, but also by: their counterparties; market infrastructure; their regulators; bank supervisors; central banks; and the global regulatory community as we continue our global efforts to ensure the resilience of the system of market-based finance. Transparency is an important first step. That enables the necessary next step of ensuring non-banks’ positions and interlinkages with the rest of the financial system can be comprehensively stress tested and understood in a system-wide manner. Non-banks themselves can use that understanding to increase their resilience and liquidity preparedness. Dealer banks and prime brokers equipped with better data on clients’ overall leverage and positions can strengthen their risk management. Given the need for a macroprudential perspective, our journey to better resilience of market-based finance must not end there. I’d like to thank Renée Horrell for assistance in drafting these remarks. I would also like to thank Naoto Takemoto, Gerardo Martinez, Pelagia Neocleous, David Baumslag, Pierre Ortlieb, Konstantin Wiemer, Edd Denbee, Daniel Wright, Will Rawstorne, Niki Anderson, Andrew Hauser, Lee Foulger, James Talbot, Sasha Mills, Jon Relleen, Andrew Bailey, Jon Cunliffe and Carolyn Wilkins for their helpful input and comments. The views expressed here are not necessarily those of the Financial Policy Committee. 1.

[2]  What does this episode remind us about the risks from non-bank leverage? Leverage is an integral part of the economy. It allows households to borrow to buy houses and smooth consumption. It allows companies to invest in projects or to smooth cashflows. It allows banks to finance these activities. In the non-bank financial system, leverage is used: to facilitate trading; to invest in companies and infrastructure; and to arbitrage price discrepancies and so improve the efficiency of financial markets. [3] Leverage is created in different ways. Its most obvious form is to borrow money to buy assets – ‘financial leverage’. But it arises also through ‘synthetic leverage’ using derivative instruments. This allows users to adjust risk profiles through a relatively small initial outlay, with future gains or losses contingent on changes in underlying market prices. Those future gains and losses create financial obligations – a form of contingent ‘hidden’ leverage if you like. It’s clear that leverage is a key function provided by the financial system in support of a thriving and productive economy. But it comes with inherent risks that need to be managed. A common factor across all the uses of leverage I have just described is that it can increase the exposure of the leverage taker to underlying risk factors – whether that be house prices, earnings, interest rates, currencies or asset prices. It follows therefore that leverage can amplify shocks to each of these risk factors.
Page 1  Inflation is a ‘wicked problem’ − speech by Huw Pill Introductory remarks given at the Warwick Think Tank, Warwick University  Page 2  Published on 16 February 2023  Speech Good evening everyone. It is a great pleasure to be here at the Warwick Think Tank today. Thanks to the organisers for the invitation to participate. I am sure that you have many questions about the outlook for the UK economy. We all do. I am looking forward to discussing those in a moment. But before we turn to that discussion, I thought I would kick-off with a few remarks about the framework within which monetary policy works. The first thing to say is that the objective of monetary policy in the UK is very clear. The Bank of England’s Monetary Policy Committee (MPC) has the objective of price stability. Through achieving price stability, monetary policy creates an environment in which firms and households can make the longer-term plans and investment decisions that generate the innovation, dynamism and productivity that ultimately drive growth and prosperity. Price stability has been operationalised in the form of an inflation target of 2% for the consumer price index (CPI). This target holds at all times. The MPC therefore needs to achieve this target on a sustainable basis: it is not a target for one moment or horizon, but must be achieved on an ongoing basis over the medium term.

Given my assessment of the data as they stand and recognising the substantial policy tightening already implemented, in my view the MPC’s current priority must be to ensure we see the job through, so as to return inflation to target on a sustainable and lasting basis. It remains premature to declare victory over the unacceptably higher rates of inflation we have seen recently. Continuing to raise rates at the pace and magnitude seen over the past year would eventually – and perhaps soon – imply that monetary policy had cumulatively been tightened too much. Nevertheless, given where we stand, I still choose to emphasise the MPC’s need to be watchful for signs of greater-than-expected persistence in inflationary pressure. And I would flag the need for the Committee to maintain a readiness to act to address any such persistence should it emerge. We have long signalled how we assess the potential for inflation persistence: by looking at the strength of corporate pricing power along supply chains, by evaluating the tightness of the labour market, by weighing up wage developments and their implications for services price inflation. The past few days have yielded some new information along these dimensions. Tuesday’s labour market release pointed to signs that the UK labour market loosened a little in the fourth quarter, in line with the narrative underpinning the MPC’s February Monetary Policy Report.
Today’s flexible inflation targeting regime establishes a firm framework for monetary policy and provides clear guidelines on how monetary policy is to respond in different situations. The fiscal policy authorities can thus internalise the monetary policy response pattern. This is only natural, since the mandate for monetary policy was laid down by the Government and the Storting. In other words, the proper framework is in place for delegating interest rate decisions, but the central bank’s response pattern must be known, so that the fiscal authorities can take this into account. Game situations that may arise with an independent central bank with an inflation target are further discussed in Leitemo (2000) and in Steigum (2000). Norges Bank analyses the inflation outlook three times a year in its Inflation Report. The Executive Board discusses the economic outlook at a separate meeting three weeks before the Inflation Report is presented. The following day, the Executive Board summarises its discussions and assesses the consequences for monetary policy for the next four months. This assessment constitutes an important internal reference when the Executive Board later makes a decision regarding the interest rate. It will also provide the basis for our external communication through speeches and the media. The key rate is assessed by the Executive Board every sixth week. Monetary policy decisions are announced in a press release followed by a press conference.

Despite the weakened krona, the decrease in exports was extremely severe. It is natural to ask why. One explanation is that a large part of the decline in world trade affected investment goods and durable consumer goods such as cars. The purchase of these goods could easily be postponed when the crisis broke out. Such product groups represent an important part of Sweden’s exports. In could thus be said that Sweden was impacted particularly severely due to the composition of its exports. As I mentioned in my introduction, Sweden is a small, open economy that is highly dependent on exports. During 2009, GDP fell by over 5 per cent, the sharpest decline since the Second World War. Even if the krona was heavily weakened, this was not enough to prevent a major fall in exports. On the other hand, there are many indications that the weakening of the krona contributed strongly towards preventing inflation from becoming excessively low. Unlike abroad, where inflation became negative, inflation in Sweden remained around the target even during the most acute phase of the crisis (see Slide 6). Note that inflation in Sweden here disregards changes in mortgage interest expenditure – it is measured using the CPIF. This approach corresponds better with the way that inflation is measured abroad. 2 Developments in Sweden during the financial crisis differ in several regards from the crisis we experienced during the 1990s, when major problems were present in the Swedish economy before the crisis erupted.
Reforms to the Banking System There now appears to be widespread agreement that efficiency needs to be improved in the banking system in order to lower costs and make domestic banks more competitive in relation to foreign competitors, which will seek a market share in Iceland. It is necessary to take advantage of the opportunity provided by the incorporation of the state banks into limited liability companies and the prospective sale of shares in them. Certain goals need to be kept in mind. Effective competition on financial markets needs to be secured, although the merger of institutions should not be excluded if it can improve efficiency and profitability. The important question arises whether the state as owner of three strong institutions should take the lead in the necessary restructuring or whether powerful institutional investors are needed to do the job. Foreign investors with experience in banking are one option. The latter approach may, however, prevent the Treasury from realizing the full value of its assets in the banking institutions. The wide distribution of share holdings will also undoubtedly be an issue in the debate. This is by no means a simple matter and desirable goals may not be fully consistent. The main goal must be to ensure effective competition and efficiency improvements in the operation of credit institutions.

Higher living standards cannot be created by politicians out of thin air. As one of my predecessors, Mr Lino Spiteri, wrote recently, “They don’t make magic wands that work any more.” In the real world, a key precondition for prosperity is higher productivity. It should, therefore, be our common task, but particularly that of the political class, to promote policies and practices that are conducive to a more efficient use of the nation’s scarce resources. BIS Review 113/2006  5
On the demand side, there can be little doubt that the increased demand caused by the integration of China and India in the world economy is a once in a century historical event. On the supply side, there has been a significant increase in exploration  2  BIS Review 61/2006  investment since 2002. 2 It remains to be seen whether the increased supply will be sufficient to bring prices down significantly. The depletion of easy-to-mine resources has contributed to a significant rise in extraction costs. Other factors might also push in the same direction: for instance, it is possible that the internalisation of external mining costs, previously born by society as a whole (i.e. through the degradation of the natural environment), might contribute to commodity prices remaining at elevated levels. With regard to gold, on the other hand, I am doubtful that the main source of uncertainty is related to surprises in future mining supply or fabrication demand. As I mentioned before, absent new vast discoveries, investment demand will arguably continue to dominate future gold prices. Third argument: today's commodity investment boom is structural and will be long-lasting Let's turn our focus to investment demand. In recent years, institutional and private investors appear to have rediscovered commodities as an asset class. According to some market estimates, investment in commodities has surged tenfold since 2003 and amounted to USD 120bn in May 2006.

Miguel Fernández Ordóñez: Overview of the Spanish economy in 2006 Address by Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, to the Governing Council of the Bank of Spain on the occasion of the presentation of the Annual Report 2006, Madrid, 14 June 2007. *  *  *  Ladies and gentlemen, In 2006 the behaviour of the world economy and of the European economy in particular provided a highly favourable setting for the continuation of the Spanish economy’s 13-year-long expansion. The world economy grew by 5.4% last year, up even on the high rates of the previous two years, this being the most dynamic three-year period of growth for more than 30 years. The strong increase in oil prices in the first half of the year and the less expansionary stance of macroeconomic policies did not check this dynamism, which was moreover compatible with the containment of inflation rates worldwide and with a more favourable financial market performance. The geographical distribution of growth was more balanced and more favourable for the Spanish economy. The notable recovery in the euro area, along with economic firming in Japan, offset the slowdown in the United States. The contribution of the emerging economies to the global expansion, with China and India to the fore with growth of around 10%, remained a key factor. Latin America also grew satisfactorily and its inflation fell to all-time lows, against a backdrop of generally prudent macroeconomic policies which have contributed to a further reduction in the region’s financial vulnerability.
It also permits appropriate account to be taken of the endemic pro-cyclical characteristics of the financial system and of boom-bust cycles in asset prices, and to consider under very specific, exceptional circumstances a policy of carefully leaning against the wind, despite the wellknown intrinsic difficulties of identifying misalignments in real time. The role of forecasts in policy making Inflation forecasts are at the centre of inflation targeting strategies. Policy discussion and communication are organised around the forecast process, and decisions are often explained on the basis of deviations of the inflation forecast from an inflation target at a  5  See, for instance, W.R White (2006): “Is Price Stability Enough?” BIS Working Paper, No 205. 6  Remarks at the Conference on Central Banks in the 21st Century, Banco de España, 8-9 June 2006. 4  BIS Review 132/2007  specific time horizon. The numbers, including the baseline scenario and risks, are owned by the policy-setting committee. The Eurosystem also produces macroeconomic projections. These are based on a combination of models and experts’ technical judgments and are owned by staff, rather than by the Governing Council. Twice a year, in June and December, projections are produced by the staff of the Eurosystem under the responsibility of the Monetary Policy Committee, which is one of the Eurosystem Committees composed of senior staff from the ECB and the national central banks.

As a consequence, conduits and structured investment vehicles (SIVs), which were borrowing in this market to finance their holdings of asset-backed securities, started facing difficulties to refinance themselves. Tensions spread to the interbank markets of most OECD countries, as banks began hoarding liquidity to meet their liquidity support commitments with conduits and to put the underlying assets on their balance sheets. Moreover, banks curtailed interbank lending because of uncertainty surrounding the potential exposures of their counterparties. Since the summer, the global economy and the euro area have entered a period of increased financial market volatility, significant re-appraisal of risks and market nervousness. The Governing Council of the ECB is paying great attention to these market developments and, in particular, has acted swiftly to provide the liquidity that was needed to permit an orderly functioning of the money market, to reduce the volatility of very short-term interest rates around the minimum bid rate of the main refinancing operations, and to contain the risk that tensions in these markets would propagate through the banking system. The Eurosystem will continue to play its part to consolidate a smooth return to a normal functioning of markets. The Governing Council is also monitoring very closely the macroeconomic effects that the recent episodes of financial unrest may have on the prospects for the euro area economy. Sound fundamentals and the expected robust global growth should support a relatively favourable medium-term outlook for economic activity.