samchain/econo-pairs-v1 huggingface dataset:
The main purpose of QE is to extract more duration risk from the bond market; indeed, term premia have already been successfully compressed – the term premium on a 10-year OIS is estimated to be significantly negative at around -60 to -100 bp. I also think that the significant strengthening of our forward guidance, the consequent prolongation of the reinvestment period for the very important stock of QE assets – 2600 billion euros –, and the DFR cut, were already a powerful and consistent combination. The forward guidance now states that we expect rates to remain at their present levels, or lower, until the inflation outlook robustly converges to a level sufficiently close to, but below, 2%, and this convergence has been consistently reflected in underlying inflation dynamics: our forward guidance is now strongly “state based”, reflecting our enhanced commitment to reach our objective. This is significant progress that has been overshadowed by the arguments over QE. For me, it is not a question of a shifting balance between hawks and doves – I have never found ornithological categorisation to be of much help in designing monetary policy. It is a question of pragmatic and objective economic analysis, which takes market expectations as useful indicators but is not dependent on them. But whatever the debate in the Governing Council has been, let us now look forward and stress one simple message that has unanimous agreement: monetary policy has, once more, done its duty.

As a practical application of this framework, consider the Federal Reserve’s commitment to tailoring and ensuring that supervision is scaled appropriately to the risks associated with different types of institutions.8 Recent examples could include the stress testing distinction between large, complex firms and large non-complex firms; expanded eligibility for the 18-month exam cycle; relief from supervisory assessments, stress testing requirements, and other prudential measures for bank holding companies with less than $ billion; the Bank Exams Tailored to Risk (BETR) program; and the multi-agency proposal to better align prudential standards with the risk profile of large institutions.9 Tailoring allows different firms to operate with different parameters of the policy regime. The largest, most systemically important firms, for example, impose larger potential risks to society than other firms, which implies a different risk/return trade-off and policy mix than for smaller institutions. Without the ability to tailor the regime to reflect the risks associated with different types of institutions, we would likely be left with a one-size-fits-all approach that is not optimal for any type of firm or for the financial system as a whole. Discussion Issues The simple framework that I just described is just that—simple. The real world is much more complicated, and I’d like to spend a few minutes discussing some practical issues. 3/7  BIS central bankers' speeches  Understanding the Trade-off The chart presented above is clearly illustrative and actual policy analysis requires detailed estimates of the potential benefits and costs of each component and the cumulative effect.
For this reason, it is of utmost importance to have an accurate diagnosis of the factors that limit the potential growth of the Spanish economy. In this respect, the diagnoses available tend to be unanimous in emphasising, first, the low productivity growth in comparison with other European countries and, second, the insufficient utilisation of labour. With regard to the lack of productivity growth, it is sometimes argued that the reason lies in our productive structure, insofar as industries in which the growth rate of this variable is more modest have a comparatively high weight. This argument has some merit. However, careful examination of the available evidence shows that relative productivity growth in Spain is lower in most industries. This is something that economic policies need to address  8  See Box 9 of the “Quarterly report on the Spanish economy”, Economic Bulletin 3/2020, Banco de España. 19  if we wish to raise the potential growth of the Spanish economy and, thus, the present and future well-being of our citizens. The cornerstone of any strategy to improve productivity growth, and thereby boost the opportunities of all citizens and the transition towards a more sustainable economy, should focus on two areas in which Spain has a worrying shortfall: human capital and technological capital. As regards human capital, Spain’s relative disadvantage with respect to more dynamic European economies should lead to a rethink of the institutional design of the educational system, including a far-reaching review of the curriculum content and the system of learning itself.

Also, for firms with non-viable business models, an orderly market exit should be available, since this would result in a more efficient allocation of resources. To achieve these aims, the introduction of improvements in the operation of in-court and outof-court insolvency procedures would be desirable for greater efficiency and speed. In this same respect, in the case of the income support measures for the workers and households most affected by the crisis, their possible extension should be combined with an improvement in active labour market policies and in the training available to unemployed persons and workers, in order to maintain their employability and facilitate their reallocation within the labour market and avoid long-term unemployment. Apart from these short-term actions, an ambitious structural reform agenda is urgently needed, to increase the economy’s potential growth, which was already low before this crisis. And, at the same time it is necessary to design a credible strategy for a gradual sustained reduction in fiscal imbalances, to be implemented when the pandemic is over and the economic recovery has firmed. Such a strategy is particularly important and appropriate for a country like Spain, which has faced this crisis with public finances in a more vulnerable position than in other European economies.
In the area of product development for example, collaboration within the banking group can be explored to offer a more comprehensive range of products and gain greater scale such as the offering of microfinancing and microtakaful as a composite product. Moving forward, collaboration beyond traditional sectors; and into competitive industries, such as retail, communication and oil and gas should be advanced as it opens up and extends our outreach to form new alliances. Joining forces with other industries will allow us to embark on a faster learning curve, while equipping ourselves with new skill sets. This will enable the intended business objectives and outcomes to be met within a short period of time. A recent example of such collaboration between a few domestic Islamic banks is the establishment of the Investment Account Platform. The test of the collaboration however, lies in its strength and sustainability in pursuing the intended outcomes. At the regional level, there is also potential for industry players to collaborate through the Islamic Infrastructure Investment Platform or (I3P) that is now still at the proposal stage. Through this regional dialogue platform, collaboration may be fostered between financial institutions, regulators and ministries from APEC economies with multilateral institutions and academic experts to explore measures that can expand cross-border investments by Islamic financial institutions. In particular, the potential for Islamic pension funds and takaful to finance infrastructure projects in APEC economies can be explored. In realising the virtues of Islamic finance, it also warrants Islamic banks to progressively strengthen its intermediary functions.

For the future, on the most appropriate way to reduce the intensity of our accommodation when it becomes warranted, two principles should in my view guide us: these are prudence and effectiveness. We need to be prudent, because the recovery is still fragile. This amounts to asking whether the adjustment of inflation towards our target of below, but close to, 2% would continue without our monetary stimulus. At present, the ECB’s Governing Council does not think this is the case. Underlying inflation, without oil and food prices, remains below 1% and should, according to our forecasts, gradually pick up to 1.8% in 2019 according to the pace of wage increases. We also need to be effective, in the sense that, among our combination of various instruments, we should withdraw last the measures that are mostneeded to secure a sustained adjustment in the path of inflation consistent with our target. We will continue to assess the situation with great pragmatism. There is no predefined split between the doves and the hawks on the Governing Council, as is sometimes claimed. I am confident that our future strategy, as the present one, will be the result of a collective discussion and a cohesive decision. b. Institutional framework In parallel, the institutional framework of the euro area has been improved in response to the crisis. Member states have secured key steps to reinforce the resilience of the euro area for the future.
from assessing the resolvability of banks and drawing up resolution plans, to deciding on resolution schemes for failing banks and whether to make use of the Fund in such cases. These tasks are shared between the Board at the European level, which is directly responsible for all banks under direct ECB supervision and all cross-border banks, and the national resolution authorities, which are responsible for the other banks. However, the Board may at any time decide to directly exercise all the relevant powers under the Regulation with regard to any of the indirectly supervised banks. In addition, the Board also becomes directly involved whenever a resolution of an indirectly supervised bank will make use of the Fund. Finally, there is also an option for Member States to choose that the Board will be responsible for all banks in their jurisdiction. These features make the SRM a single system. The Single Resolution Board At the centre of the SRM there needs to be a single authority with operational independence and sufficient decision-making authority to take resolution action in the interest of the euro area and of the Union as a whole. This is achieved with the setting up of the Single Resolution Board. The Board will meet in two different compositions: the plenary and the executive sessions. The executive session will consist of a Chair, four independent full-time members and two observers from the Commission and the ECB, respectively.

There is also the effect of net exports, part of which we saw in the first quarter, resulting from both higher prices in dollars and the reallocation of internal resources derived from the real depreciation of the currency. Add that the developed world will perform better. Finally, there is the impulse coming from public spending, particularly investment, because of the low budget execution of 2013. In the opposite direction point the aforesaid deterioration in business confidence and the downward revisions to the investment project agenda made by the Chilean capital goods corporation for 2014. The 2014 current account deficit forecast is revised downwards mainly because of the foreseen deceleration in investment and a slight increase in savings because of lower private consumption. In the trade balance this is visible mainly in a downward revision to imports. Accordingly, the baseline scenario includes a current account deficit of 2.5 percent of GDP in 2014 (3.6 percent in March). The lower outlook for expenditure also implies that, at trend prices, the deficit will decline further, to 2.2 percent of GDP (3 percent in March) (table 2). The forecast path for inflation rests on several assumptions. For one, in that the passthrough from the peso depreciation to prices will be in line with its historical pattern. In addition, the Board uses as a methodological assumption that the real exchange rate (RER) will remain close to current values, as it is now within the range that is considered consistent  BIS central bankers’ speeches  3  with its long-term fundamentals.
A closer look at the figures reveals that the improvement has been most marked in manufacturing and particularly rapid in industries where computers are used most intensively. The upward shift in US productivity growth was preceded by an investment boom that gave pride of place to investment in IT-related capital. Since the 1980s, American investment in computer capacity has doubled in nominal terms; in relation to the dramatic price fall for computer capacity, the level has risen by a factor of more than twelve. To what extent, then, has the improvement in productivity come from IT? What are the mechanisms? Computers have clearly helped to make production processes more efficient and automated, just as new techniques have led to the creation of many new goods and services, from compact discs to tele-medication. But in order to understand the broader implications for the workings of the economy, one should perhaps heed Alan Greenspan, head of the US Federal Reserve, and single out the word “information”. When information flows more efficiently, there will be a better matching of supply and demand both internally and between firms, as well as less tied-up capital for coping with contingencies. In that firms can use IT to enhance “just-in-time” routines, they can cut the levels of stocks and working capital. Better information also paves the way for smaller production units and less bureaucratic structures. All these processes are now being further reinforced by the rapidly growing flow of information on the Internet.

For this and other reasons, the contribution from IT cannot be distinguished from other factors. 2. Implications for monetary policy  The implications that the new economy might be expected to have for monetary policy can be illustrated with the aid of a simplified notion of how the economy functions. In the long term, a country’s productive capacity is usually assumed to follow a comparatively stable trend. This trend rate of growth is determined by demographic factors, for example, together with, above all, the pace at which technical advances are made and incorporated in the production process. Thus, the fact that Sweden’s GDP per capita is now appreciably higher than in, say, the 1950s and even more so than a century ago is mainly explained both by our ability to develop new technologies and new modes of production and by the new technology that we have been able to import from elsewhere and introduce here. Monetary policy’s primary contribution is perceived today as being to ensure that the macroeconomic environment, mainly as regards inflation, is stable and predictable. A stable value of money and an efficient payment system are important preconditions for an efficient modern market economy. Monetary policy affects aggregate demand via interest rate adjustments. Policy is normally aimed at steering demand so that the economy remains as close as possible to its long-term growth trend, thereby avoiding unnecessary cyclical fluctuations. This also helps to keep the level of inflation stable. However, it is not only cyclical fluctuations around trend growth that influence inflation.
Mr. Carse reports on the initiatives taken concerning financial industries in Fujian, Hong Kong and Taiwan Speech by the Deputy Chief Executive of the Hong Kong Monetary Authority, Mr. David Carse, at the Symposium on the Financial Exchange and Cooperation of Fujian, Hong Kong and Taiwan, held on 8/8/98. I am pleased to be here this morning to welcome you to this Symposium. The Chinese Banks’ Association is to be congratulated for organizing this important initiative with the co-sponsorship of the Fujian Provincial Government and Chinatrust Commercial Bank. The idea of the Symposium, as I understand it, is to facilitate the exchange of ideas concerning the financial industries in the three regions and the exploration of cooperative opportunities between them. 2. Such an initiative could not have come at a better time. The current financial crisis is creating havoc among the Asia economies. Initially, the damage was felt in the financial sector. But the full impact is now being seen in the real economy as output and trade are crippled by higher interest rates, the burden of foreign currency borrowing and the credit crunch. The Mainland of China, Hong Kong and Taiwan have survived the crisis in better shape than most other economies in the region. But they have not been unaffected as events of this week have demonstrated in Hong Kong where we have witnessed further speculative pressure on the Hong Kong dollar. 3.

In this kind of uncertain economic environment, it is all the more important that we should be trying to maximize the opportunities to develop trade and investment links between neighbouring economies. That is why this Symposium is timely and important. The existing economic links between Fujian, Hong Kong and Taiwan provide a solid platform on which to build for the future. Taiwan and Hong Kong are already major trading partners with Taiwan’s exports to Hong Kong accounting for 23.5% of its total exports in 1997. Visitors from Taiwan also account for a significant proportion of the total number of visitors to the territory and thus make a major contribution to the tourist industry in Hong Kong which, as you will know, currently needs all the help it can get. 4. Trade between Hong Kong and Fujian is also growing rapidly in both directions and both Hong Kong and Taiwan are a major source of overseas investment into the Province. There are over 10,000 Hong Kong enterprises in Fujian. 5. The Hong Kong presence in Fujian includes a number of banks from Hong Kong, including Bank of East Asia. The same bank also maintains a branch in Taiwan which puts it in a good position to take advantage of the triangular trading links between Fujian, Hong Kong and Taiwan. In its role as an international financial centre, Hong Kong is also the host to a number of banks from Taiwan. The Taiwanese presence here consists of 4 licensed banks, 2 restricted licensed banks and 3 representative offices.
With new cohorts continuing to leave college with high debt levels and entering the housing market at older ages, we can anticipate an overall persistently lower home ownership rate than in the pre-recession period. So what is causing the withdrawal from home and car purchase markets? It is likely that rising student debt and an uncertain economic outlook have depressed demand. But most likely, declines in credit supply play an important role as well. Our analysis shows that average credit scores have fallen for student debt holders relative to those with no student debt. Clearly for the substantial and growing group of student loan borrows who are delinquent or have defaulted on their debt, access to credit is reduced through potentially long-lasting negative effects on credit scores. Better data is required to evaluate the extent to which the decline in car and home loan originations is concentrated among those delinquent on their student loans and those who dropped out of college, or whether it is more widespread among all those with student loans. The fast growth of student debt and delinquencies, and the associated withdrawal of student loan borrowers from mortgage and other credit markets have led to a renewed policy debate about the viability and optimality of our higher education funding model. Some call for increased federal and state support for higher education to reverse the recent trend towards shifting the cost of higher education to students and parents.

In addition, by restricting the availability of loans to those matches that are likely to succeed, the social benefits will be achieved at lower cost. While there is currently little underwriting of student loans in terms of individual or family wealth – which is as it should be – better underwriting of loans may result in higher preparedness standards for students. Just as importantly, it will require evidence, provided by the institution, of sufficient success in graduating students of a specific preparedness level and placing them into viable jobs with sufficient income to permit repayment of the loans. This unfortunately contrasts with the current student loan system. We see evidence of problems associated with the lack of careful underwriting standards for educational matches that are supported by student debt. For example, current performance for some degree programs and some universities are problematically weak, in terms of degree completion rates and loan repayment rates. There have been reports of some schools in cities with large minority populations and low-income residents who tried to build enrollment by encouraging academically under-qualified students to apply for loans that they would be unlikely to be able to repay, especially if they received a substandard education. These practices BIS central bankers’ speeches  7  undermine our commitment to financing effective higher education matches, and it is important that they be addressed. Conclusion Nothing in the analyses I discussed with you undermines the strong case for completing a college degree for prospective students who match well with a particular college.
Another consequence of using HP filters to find the trend-based GDP gap is that one risks interpreting an increase in growth that is due to a temporary rise in productivity as an increase in resource utilisation. But in a situation with sticky prices an increase in productivity may actually lead to a decline in resource utilisation as the increase in productivity makes it possible to use fewer resources to produce the same volume as before. If we were in such a case to use a trend-based output gap as a base, there is a risk that monetary policy would become contractionary when it needed to be expansionary. The difficulty with the trend-adjustment method is thus to distinguish from current developments what constitutes changes in the trend and what are deviations from the trend, that is, changes in resource utilisation. Flexprice gap A theoretically interesting measure of resource utilisation that has gained increased attention in the research on monetary policy is the so-called flexprice gap. This is a measure that relates actual output to potential output in an economy with entirely flexible prices and wages. The advantage of this measure is that it has a well-defined theoretical base. To calculate the flexprice gap one tries to determine the level of output that would be attained without some of the imperfections that the real economy suffers from.

Capacity utilisation in industry Index and percentage deviation from HP trend respectively, seasonally-adjusted data 5  100  4 95  3 2  90  1 85  0 -1  80  -2  75  -3  Statistics Sweden, actual capacity utilisation in industry (left scale) NIER, current capacity utilisation in manufacturing industry (left scale) GDP gap (right scale)  -4  70  -5 96  98  00  02  04  06  08  Note. Trend calculated using the Hodrick-Prescott filter. Broken lines refer to the Riksbank's forecasts. Sources: National Institute of Economic Research, Statistics Sweden and the Riksbank  Figure 6. Resource utilisation indicator Index and percentage deviation from HP trend respectively, seasonally-adjusted data 5  5  4  4  3  3  2  2  1  1  0  0  -1  -1 -2  -2 Resource utilisation indicator Hours worked gap Employment gap GDP gap  -3 -4  -3 -4 -5  -5 96  97  98  99  00  01  02  03  04  05  06  07  08  Note. Trend calculated using the Hodrick-Prescott filter. The standard deviation of the resource utilisation indicator is normalised to that of the GDP gap. Broken lines refer to the Riksbank's forecasts. Sources: Statistics Sweden and the Riksbank  BIS Review 66/2009  11