samchain/econo-pairs-v1 huggingface dataset:
In the UK, relatively strong business investment growth in the past few years has only restored it to a level still shy of its pre-crisis share of GDP (Chart 12), and it is tracking below past cycles (Chart 13). 13  A fall in expected growth rates will tend to push down on expected future earnings, lowering equity prices and increasing the equity yield. At the same time, a fall in growth expectations will tend to be reflected in a lower expected path of risk-free rates, pushing down on bond yields. So a decline in growth expectations will tend to widen the spread between equity and bond yields. Since equity prices depend on earnings expectations at all future horizons, the equity yield (and hence the equity-bond yield spread) will be particularly sensitive to expectations about growth rates at long horizons  BIS central bankers’ speeches  7  Chart 9 Consistent downward revisions to GDP growth forecasts Actual GDP growth 2012 2014 2016  2011 2013 2015 2016  Per cent 8.0 Dotted lines = Emerging economies Solid lines = Advanced economies 6.0  4.0  2.0  0.0 2010  2011  2012  2013  2014  2015  2016  Source: IMF World Economic Outlook. Each line shows how forecasts for a particular calendar year have evolved over time. The diamond shows the eventual outturn.

Exacerbating the downturn is the continued economic weakness in Japan, the second largest market in the region. Reflecting the weak external environment, export growth in many SEACEN economies has fallen sharply. This has also undermined domestic demand. Challenges for Asia Concerns over the slowing growth in the US and the much weaker Japanese economy have hit regional currencies. Since end-2000, regional currencies have seen higher volatility. While the greater flexibility of exchange rates has reduced the risk of large speculative attacks, such fluctuations are not without risk. The challenge facing policymakers is how to ensure the greater exchange rate flexibility does not lead to greater financial system fragility. Aside from macro-prudential risk, financial regulators also faced challenges arising from the rapid changes in the global financial landscape. In particular, advancement in technology, investors' demand for shareholder value and customers' demand for integrated financial supervision have accelerated consolidation and globalisation of financial institutions and markets. The boundaries of the banking, insurance and securities industries are less clearly defined. This calls for a more harmonised and integrated approach to supervision of the financial system. Besides co-ordinating among the different regulatory bodies to address unsupervised risks, overlaps and gaps in their regulatory framework, there may be a need to re-look the way national regulatory and supervisory authorities are organised, to create greater synergies and enhance efficiency. At the international level, efforts are underway to strengthen the architecture of the international financial system.
I’ll begin with an overview of the market’s basic structure, including some historical perspective on how that structure has evolved over time. I’ll then turn more specifically to the subject of electronic and automated trading – a topic that has become increasingly important across many markets, including the market for U.S. Treasuries. I will then review the intraday volatility witnessed on October 15 of last year. As you all know, October 15 was a highly unusual day in the Treasury market, particularly given the very sharp round-trip in yields that took place mid-morning with no obvious immediate trigger. I will conclude with a few words on the updated best practice recommendations from the Treasury Market Practices Group (TMPG) in light of the changing market structure, and some observations on how you, as primary dealers, are expected to help promote the market’s efficiency and integrity. As always, the views I express are mine alone and do not necessarily reflect those of the Federal Reserve Bank of New York or the Federal Reserve System. Background The Treasury market is the largest and most liquid sovereign debt market in the world. There are about $ trillion in marketable securities outstanding, and primary dealers trade an average of around $ billion every day with their clients and with other parties.2 Treasury securities play a variety of roles in the U.S. economy. They are, of course, the federal government’s primary vehicle for financing the federal deficit and refinancing maturing debt.

“Dealer-to-customer” trading consists of direct transactions between broker-dealers and end-investors, and trading activity tends to be dispersed across both the most recently issued securities, known as “onthe-run” issues, and seasoned securities, known as “off-the-run” issues. The outright purchases of Treasury securities that the Desk conducts to implement monetary policy would fall into the dealer-to-customer category. Much of the trading between dealers, on the other hand, takes place on platforms that provide opportunities for market makers to trade anonymously with each other, with a broker sitting in the middle. Activity taking place over these platforms is often referred to as the “interdealer” market, since dealers have been its traditional participants. The vast majority of trading in the interdealer market has also tended to concentrate in on-the-run issues, given – and likely contributing to – their superior liquidity. This liquidity advantage is reflected in the tendency for on-the-run securities to trade at a slightly lower yield than might be predicted by a theoretical yield curve – a concept often referred to as the “on-the-run premium.”  3  At each Treasury auction, primary dealers are currently required to submit, at a minimum, their equally weighted share of the auction’s total offering size to ensure coverage. This is known as the “pro rata requirement.” In the past, dealers were required to account for 1 percent of secondary trading, but this requirement no longer exists. 4  The level of net marketable debt issuance is also affected by the Treasury’s need to borrow for student loans and other credit programs.
Elsewhere the commercial property in the UK looks to be at or close to its peak (Chart 17).The housing market is showing some glimmers of a slowdown in activity but prices are still rising fast, especially in London; indeed the rate of increase of house prices is higher today in nearly every region than it was last autumn. And there is no sign of a slowdown in corporate lending. Overall lending to PNFCs is accelerating (Chart 18), investment is high, and on a global basis we are seeing spectacular growth in the LBO market (Chart 19) and the emergence of lower prices and conditions with so called “covenant lite” loans. Against that background the question is whether we have done enough. In reaching a judgement, of course, we need to take account of the full range of information on the real and nominal economy. We know that the full impact of past increases in rates has yet to come through. Yet we cannot be sure how much of a restraint current rates will be at this point in the cycle. It is not surprising therefore that there are different views on the MPC or that those views change in response to more information. My stance in recent months has reflected a judgement on the balance of risks taking account of both probabilities and likely impacts.

Zeti Akhtar Aziz: Building institutions to support economic development Special lecture by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the SEACEN Conference on Central Bank Cooperation and Mandates “Building Institutions to Support Economic Development”, Sasana Kijang, Kuala Lumpur, 14 March 2016. *  *  *  Introduction It is my great pleasure and honour to speak at this conference in honour of Dr. Puey Ungphakorn on the subject of “Building Institutions to Support Economic Development”. The topic is highly relevant in the current environment which places greater demands on institutions given the significant structural shifts that are taking place in the global landscape and the changing character of the economic cycles that has brought with it a great many new challenges that need to be managed. Given that building institutions is about creating a positive environment for the economy to function, one that will shape the incentive structure that will drive economic activity and encourage the efficient use of resources, the new evolving environment would place a further urgency for institutional building. There is thus a great motivation for building effective institutions to serve this purpose. In particular, the urgency is for strong institutions that will transcend the passage of time and will ensure the path towards sustainable economic growth and development. Experience has shown us that institutions are pivotal to any economic success. However, institutional building is in itself an arduous task. And building institutions that are relevant for the future is even more challenging.
According to the data for 2020, the level of payments (the ratio of payments to accrued premiums) is extremely low: 10% in life and health insurance for mortgage borrowers, and no more than 5% for car and consumer loan borrowers. The level of payments in bank card insurance and mobile device insurance is also ultra-low — 4% and 1%, respectively. We have analysed cases in other countries — their payment levels are several-fold higher. This raises the following question: what are the benefits of these insurance policies and why should people pay for them? Of course, we comprehend that the level of payments is not the only criterion of the customer value. Nonetheless, it is an indicator that there are issues here to be addressed. What are we going to do? In the first place, we would tighten the requirements for disclosing information, specifically, the terms for receiving insurance compensation and the conditions for receiving returns on hybrid deposits and structured products, etc. Our regulation will set the benchmarks. First of all, the real terms of a product should conform to a customer’s expectations. For instance, insurance compensation should cover insured events that might actually occur in practice. Secondly, the execution of documents should not be excessively complicated for customers. Thirdly, the procedure to receiving insurance compensations and returns should be simple and convenient. We hope that the financial sector will itself seek to develop long-term trust-based relations with consumers and become customer-focused. The financial market requires trust.

We are going to develop our regulation in such a way as to encompass other non-core assets of credit institutions as well. According to our assessments, the total value of such immobilised assets 4/7  BIS central bankers' speeches  that have no requirements for repayment and are often liquid only to a limited extent already exceeds two trillion rubles. However, banks’ regulatory capital covers as little as 15% of these assets. I would like to reiterate that we do not want to limit market development, decrease Russian ecosystems’ competitiveness, and curb the deployment of innovations. Just the opposite. We believe that if banks develop ecosystem business, they should do this at the expense of their shareholders, rather than depositors and creditors. We are aware that other sectors of the financial market should also create conditions to offer comprehensive solutions to clients. For many years, we have been working towards elimination of regulatory arbitration, implementing a risk-based approach, and raising the requirements for financial stability, and now we believe that we are really prepared to switch to regulation by activity type. This approach implies that main regulatory requirements will be set not for a legal entity, but rather for the activity it carries out. What services will be covered in the first place? Payment services may be provided by nonfinancial and non-bank financial institutions. In our opinion, it is possible to combine the activities of a non-governmental pension fund and a life insurer.
The use of technology such as mobile and internet banking have enabled financial institutions to provide quality and affordable financial services to a regional SME client base. It is paramount for SMEs to embrace these technological enhancements. This includes the adoption of end-to-end supply chain management solutions that integrate the production and financial flows of SME activities, allowing for greater expansion into regional production networks. Together with digitalisation, the financial integration process will catalyse the convergence of institutional frameworks across ASEAN countries to create a more effective regional financing ecosystem. Such institutional infrastructures and instruments include credit guarantee schemes and credit and collateral registries. Another example is the ASEAN SME Working Group’s methodology for the ASEAN Benchmark for SME Credit Rating to facilitate the establishment of credit bureaus in ASEAN member states. Through these credit bureaus,  2  As estimated by the Asian Development Bank. BIS central bankers’ speeches  3  financial institutions would have wider access to reliable credit records of SMEs, thereby increasing the access to financing for the SMEs. The promotion of deeper financial inclusion can be regarded as the final mile in enhancing and enriching the regional financial integration process. The ASEAN Finance Ministers’ and Central Bank Governors’ Meeting in March this year elevated financial inclusion as a regional policy priority. Indeed, ASEAN will continue to coordinate and intensify efforts to advance financial inclusion, including addressing cross-border financing issues for SME trade financing and investments.

ASEAN: A growth centre in the global economy ASEAN has emerged centre stage in the global economy and has been recognised as one of the most dynamic regions in the world. The region has sustained high economic growth with a long-term average GDP growth of 5.3%, higher than the global growth average of 3.6%. Currently, as a single entity, ASEAN is the 6th largest economy in the world with a GDP close to USD2.5 trillion. With a projected annual GDP growth of 5.4% 1 over the next six years, the region is poised to reach an economic size of USD3.7 trillion by 2020, four times the size it was a decade ago. The strong growth and dynamism of the region is supported by its favourable demographic structure. With a population of more than 630 million people and a burgeoning middle class, ASEAN is rapidly transforming into a thriving hub for consumer demand. By 2020, ASEAN is expected to account for more than USD2 trillion of additional consumption. This is being reinforced by rising incomes in the region, with per capita income almost trebling in this recent decade. The rapid progress of economic integration in ASEAN has enabled the region to harness the benefits arising from the diversity and complementarities that exist across the ASEAN economies. Amid the strengthening of cross-border supply chains in the region, intra-ASEAN trade and investment activity have increased significantly over these recent 15 years.
BIS central bankers’ speeches  Chart 5:  Chart 6:  Gross and net global flows  US external balance sheet  Sources: Bank for International Settlements, IMF World Economic Outlook (September 2011) and Bank calculations. Source: Federal Reserve, US Bureau of Economic Analysis. (a) Sum of global current account surpluses. (b) Sum of global current account deficits. (c) Sum of global net purchases of foreign assets by residents. (d) Sum of global net purchases of domestic assets by foreigners. Chart 7: UK credit spreads  Source: Merill Lynch. BIS central bankers’ speeches  13  Chart 8: Figure 3 from Reinhart and Rogoff  Sources: Bordo et al. (2001), Caprio et al. (2005), Kaminsky and Reinhart (1999), Obstfeld and Taylor (2004), and Reinhart and Rogoff. Notes: As with external debt crises, sample size includes all countries, out of a total of sixty six listed in Table 1 that were independent states in the given year. On the right scale, we updated our favourite index of capital mobility, admittedly arbitrary, but a concise summary of complicated forces. The smooth red line shows the judgmental index of the extent of capital mobility given by Obstfeld and Taylor (2003), backcast from 1800 to 1859 using their same design principle.

First, longrun neutrality: that, in the long run, monetary policy changes do not have a bearing on real quantities and relative prices (such as the level of economic activity or the real interest rate), but rather affect only nominal variables. Second, if a monetary regime is credible, those longterm nominal variables should be “anchored” around a level consistent with policy-makers’ objectives. In a completely credible inflation targeting regime, there should not be a variation in long-term inflation expectations from the 2% CPI inflation target in the UK. The second possible channel is that monetary policy decisions could affect term or inflation risk premia. A simple test of the effect of monetary policy on long-term interest rates is to compare changes in forward interest rates with changes in short-term interest rates on policy decision days. Following recent work by Hanson and Stein on US data, an unexpected innovation to short-term interest rates is identified by looking at the change in “shock” to 3-month, 3-month forward rates on MPC decision days, and examining the reaction of forward interest rates at various maturities. The sample is restricted to end on 31st May 2007 to avoid effects from the financial crisis and QE as a monetary policy instrument. The change in short-term interest rates is then correlated with changes in forward interest rates at different maturities across the yield curve. There is a significant positive relationship between changes in short rates and distant forward rates.
José Manuel González-Páramo: The sovereign debt crisis and the future of European integration Speech by Mr José Manuel González-Páramo, Member of the Executive Board of the European Central Bank, at the Oxford University European Affairs Society, Oxford, 24 November 2011. *  *  *  Introduction Ladies and gentlemen, Thank you very much for inviting me to speak here this evening in the “City of Dreaming Spires”. The aims of the Oxford University European Affairs Society – fostering understanding of political, social and cultural issues across Europe – have never been more relevant than today. In the sovereign debt crisis, Europe faces one of its greatest ever challenges. The question is how to confront it. We should learn from the present and the recent past. And we should look forward, since future prosperity in Europe depends on our collective success in overcoming the crisis. Citizens in both creditor and debtor countries have to look beyond national interests. Ultimately, this can only be sustained through deeper common understanding and stronger sense of what it means to be European. The sovereign debt crisis will be the theme of my remarks today. I do not want to engage in the minutiae of the issue or signal any particular policy stance by the ECB. Instead, I would like to take a step back from the crisis and reflect on what it has taught us so far about economic and monetary union in Europe. Obviously, I concentrate explicitly on the euro area, i.e.

Eurobarometer surveys find cross-country majorities in favour of closer cooperation to end the crisis. And this is ultimately unavoidable, given the state of political union between countries that monetary union de facto creates. It is now a time for politicians to be bold and courageous, to recognise these trends, and to complete as soon as possible the great project begun 60 years ago towards “ever closer union”. Thank you for your attention. 8  BIS central bankers’ speeches
In several respects, developments in Sweden prior to the financial crisis reflect the international trend that has come to be called the great moderation – that is, a long period of stable growth combined with low inflation. The stable macroeconomic development – combined with the insight that the long-run development of the economy is determined by real factors – also affected the framework for monetary policy analysis. The models that came to be used by many central banks, including the Riksbank, were not primarily developed to capture long-run trends, but focused on cyclical fluctuations. Moreover, financial markets and credits played a subordinate role in the analysis framework at this time. An overall consequence of this was that monetary policy to a large degree had moved away from “norm-based thinking” towards “fine tuning”. One might say that there was also a kind of blind faith in the ability of monetary policy to govern the macroeconomy in detail: During which quarter would inflation exactly meet the target? But history repeated itself – economic crises put the current monetary policy framework to the test. The financial crisis: “Things abroad were not OK, but Sweden was OK” The global financial crisis that broke out in connection with the collapse of Lehman Brothers in September 2008 was in some ways the direct opposite of the Swedish financial crisis at the beginning of the 1990s.

Some say that macroprudential policy is a “blend of old and new” policy area, and even mention the Swedish credit regulations from the 1950s-1980s as an early example of macroprudential policy measures. 13 The “blend of old and new” also applies to the challenges 11  See, for instance, Borio, C. and White, W.R., “Whither monetary and financial stability? The implications of evolving policy regimes”, BIS Working Paper 147, 2004. 12  See, for instance, the speeches by Lars Nyberg “The mortgage market from a Riksbank perspective”, published on 11 November 2004, and “House price developments and monetary policy “, published on 19 December 2005, and my own speech “Introduction on monetary policy”, published on 26 October 2006. 13  See, for instance, Galati, G. and Moessner, R., “What do we know about the effects of macroprudential policy?”, DNB Working Paper no. 440, 2014. 6  BIS central bankers’ speeches  connected with the regulations. As I mentioned earlier, one reason for the deregulation of the Swedish credit market in the 1980s was that the effectiveness of the regulations was questioned. This was in turn because they were easy to circumvent. For example, the combination of a loan cap and negative real interest rates created large incentives for regulatory arbitrage, which led to the emergence of a “grey” credit market. A major challenge for today’s macroprudential policy is how one prevents “leakage” from regulations in a particular sector to other sectors not covered by the regulations.