samchain/econo-pairs-v1 huggingface dataset:
One example of this is a repo rate path that initially coincides with the grey repo rate path, but then from the middle of 2012 onwards changes over to the yellow path given by market expectations. It may very well be the case that an even lower repo rate path provides an even better outcome for inflation and unemployment. However, more careful analysis and alternative forecasts are needed before the best repo rate path can be established, particularly because so much of the analysis at the most recent  10  BIS Review 158/2010  monetary policy meeting focused on what I consider to be the unrealistic main scenario in the Monetary Policy Report. Given this, I therefore considered at the meeting that the grey repo rate path shown in Figure 9a, with an unchanged repo rate at the meeting and then a gradual rise to a level of 2.7 per cent at the end of the forecast period, which is roughly mid-way between the main scenario and market expectations, would be a reasonable compromise for now, until a new review is made prior to the next monetary policy meeting. Such a discussion could well result in a lower repo rate path.

This is a dangerous situation, as continued price increases then become a condition for continued mortgage increases and to uphold consumption. But this is evident in a low saving ratio. The saving ratio at the end of the 1980s was strongly negative. This indicates that households were living above their means, which is an unsustainable situation. This was also the case in the United States before the recent crisis, when the saving ratio was very low and consumption was funded by higher mortgages. The situation in Sweden now is quite different. House prices may rise or fall because of changes in the real economy. The consequences for monetary policy of a fall in house prices need not be so problematic. If this led to a fall in consumption, it would be a demand shock, which would cause lower inflation and resource utilisation. However, this could to a large degree be counteracted by more expansionary monetary policy, particularly if a relatively high percentage of borrowers with variable-rate mortgages meant that monetary policy had a greater impact. 3 Levels are more important than growth The main message in the most recent Monetary Policy Reports and Updates has been that the Swedish economy is strong. GDP growth is good and unemployment has begun to fall. This has justified raising the repo rate. But at the same time, the levels of GDP, investment and exports are still low, compared with the pre-crisis levels. At the same time, the level of unemployment is much higher.
Lags, trade-offs and the challenges facing monetary policy Speech given by Ben Broadbent, Deputy Governor, Monetary Policy  Leeds University Business School 6 December 2021  I’ve received helpful comments from colleagues at the Bank of England. I’d like to thank Fabrizio Cadamagnani for his help in preparing the speech. The views expressed are my own and do not necessarily reflect those of the Bank of England or other members of the Financial Policy Committee or the Monetary Policy Committee. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  Good morning! Thank you for asking me to speak to you today. It’s a great pleasure to do so in person, something I haven’t been able to do for almost two years. Virtual meetings are all very well – and were clearly indispensable during the worst of the pandemic – but I think there’s something missing if that’s the only way in which we ever talk to each other. It’s an additional pleasure to be in Leeds. As you may know, as part of a plan to increase our staff presence across the UK we announced earlier this year we’d be setting up a new hub right here in Leeds. I’m coming here at an extraordinary time for the economy in general and for monetary policy in particular. Annual CPI inflation rose to over 4% in October, with the jump in domestic energy bills the single most important contributor to the change on the month.

Without appropriate selection criteria, there could be a poor redistribution of limited productive resources, keeping low-productivity firms running or providing support to companies that do not need it. Also, an inadequate design could unintendedly leave out viable firms that face solvency problems. Heterogeneity across firms in terms of pre-crisis productivity, profitability and indebtedness, and the asymmetric sectoral impact of the COVID-19 crisis suggest that the potential impact of such support programmes can differ significantly depending on their specific design. Thus, the allocation mechanisms of public support should be properly designed to selectively channel the aid to those viable firms with solvency challenges. In parallel, it is also pertinent to consider the way in which private initiatives and the reform of debt restructuring procedures can also help preserve the business continuity of viable firms. Debt restructurings can be carried out through formal insolvency proceedings in courts of law or also through out-of-court proceedings, either through pre-insolvency legal mechanisms or through private renegotiations. Court proceedings tend to be lengthy and costly processes, reducing the business value of the firms involved and often leading to their liquidation, and the success of private renegotiations in out-of-court proceedings can be limited, among other aspects, by collective action problems.
Similarly, Bank Rate may be increased more rapidly than anticipated if economic developments raise the outlook for inflation significantly.” Later on, in the summer of 2015, we described guidance about future interest rates, more succinctly, as “an expectation, not a promise”. The time inconsistency of optimal policy: why “low-for-long” guidance may not be as powerful as simple models predict So why, in view of the power of the policy apparent in Chart 4, hasn’t this committed form of guidance been used more often? In their 2015 paper, Del Negro and co-authors claimed that, while it had helped ease monetary conditions, the Fed’s post-crisis guidance had had significantly less impact on demand and inflation than predicted by theory. Their explanation was that, in the real world, demand is less sensitive to forward interest rates than the theory presumes. That’s probably true. Certainly the very simplest models, in which a drop in forward rates five years ahead (say) does almost as much to stimulate spending as a same-sized cut in the current rate, surely exaggerate the impact. But there may also be a more fundamental problem with the policy. It’s intrinsically “time inconsistent” (to use the technical term). From today’s perspective, in the face of a risk of deflation, it would be better if you could persuade people that you will keep policy loose for an extended period, even in the event that inflation rises above target.

Zeti Akhtar Aziz: Raising standards in Malaysia’s financial services industry Remarks by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Centre of Excellence (ACE) Ground Breaking Ceremony, Kuala Lumpur, 22 February 2016. *  *  *  It is my very great pleasure to be here on the occasion of the ground breaking ceremony to the ACE – A Centre of Excellence. ACE is a very much welcomed industry led initiative to raise the level of capability and professionalism for the work force in the Malaysian financial services industry. Our financial services industry continues to be reshaped and transformed by several major forces of change that range from the new demands of consumers and businesses to the rapid advancement in technology, the global regulatory reforms and the continued globalisation of finance. On the domestic front we are also seeing the continued rapid expansion of the domestic financial services industry, and the deepening of regional economic and financial integration. Given the paramount role of the financial system in supporting our real economy we require a financial system that will best serve our economy. It not only needs to be effective and efficient and thus competitive but also robust and resilient. Going forward, operating in this highly dynamic environment will become increasingly more challenging. Today the Malaysian financial industry employs more than 150,000 people, and requires approximately 73,000 new hires over the next 10 years.
Thanks to the proceeds from oil activities, income and wealth in Norway have risen rapidly over the past 25 years. This chapter of our history is unlikely to repeat itself. It will take some doing for Norway to find a similar source of economic prosperity and growth for the next 25 years. In the recent past, the contributions from the GPFG to government finances have also increased. Now the GPFG is close to its peak, and the contributions from the GPFG are not likely to become much larger than they are today. Even though Norway will continue to be among the world’s wealthy countries, we will likely see an increased resemblance between Norway and its neighbours in future. In 1988, the average bank lending rate was above 16 percent. Lending rates remained in doubledigits until well into the 1990s. Today, residential mortgage rates are at a record low – below 3 percent. We seem to be entering a period of slightly higher interest rates, which may increase interest burdens and curb household borrowing. Regardless of what happens in the years to come, however, interest rates cannot fall as far as in the past 25 years. Those who borrow today must consider whether they are taking on an amount of debt they can live with over time. The rear-view mirror will be poor guidance going forward. Experts and economists like myself have been mistaken before, but there is one thing I am quite sure about: Nothing grows forever. Expectations shift.

Memoranda of Understanding regulating these interactions will be prepared in the coming months. Conclusion To conclude, it is unavoidable that the existence of the SSM will alter the functioning of the ESFS. This is, after all, the most significant development in financial supervision in the history of the European Union. However, I am confident that the changes brought by the SSM will strengthen the ESFS, and will overall enhance the quality and consistency of supervisory and regulatory practices across Europe. The more Member States that are involved in Banking Union, the greater these positive effects will be. Thank you for your attention. BIS central bankers’ speeches  3
Financial markets in the first quarter of 2012 were serene, reflecting relatively low premiums of liquidity and inflation risks. The interest rate in the interbank money market has followed swiftly the recent key interest cuts. The transmission of eased monetary policy signals is also observable in the deposits market, while it is expected to be transmitted in the future also in other market segments, conform to the time lag of the transmission mechanism. In the primary market, government security yields showed upward trend reflecting developments in relevant structural factors of the demand and supply, without signalling added risk or inflation premiums. Verified developments insofar, change the basic projections for economic developments in the future. Year 2012 is expected to be influenced by unfavourable developments in the global economy, which may affect the Albanian economy as well. Foreign demand is expected to provide lower contribution over the course of the year, impacted by economic slowdown in our trade partners. Fiscal policy orientation towards further consolidation of fiscal parameters limits the space for a substantial fiscal stimulus to foster the economic activity. Under these circumstances, private domestic demand remains determinant for aggregate demand increase in the future. Overall, analyses suggest a better performance of private consumption and spending, helped also by the eased monetary policy stimulus. Estimates of the Bank of Albania suggest that, in the course of the year, demand growth below the potential of the economy will continue to exercise low inflationary pressures from the demand side.

In the immediate future this includes: (1) implementing, fully and rapidly, the measures agreed upon at the 21 July meeting of the Heads of State or Government of the euro area; (2) adopting sustainable fiscal policies and growth-enhancing structural measures so as to achieve or maintain credibility of sovereign signatures in global markets; and (3) enhancing the coordination and consistency of communication. Authorities must act in unison with a total commitment to safeguard financial stability. Supervisors should coordinate efforts to strengthen bank capital, including having recourse to backstop facilities, taking benefit from the possibility of the European Financial Stability Facility to lend to governments in order to recapitalise banks, including in non-programme countries. I thank you for your attention. 4
This may give rise to considerable challenges in terms of the Government’s and the Storting’s (Norwegian parliament) ability and will to maintain a firm fiscal stance. Under a system designed to maintain exchange rate stability, it is important that the authorities actually manage to implement fiscal policy in such a way that pronounced and undesirable cyclical fluctuations do not occur. During the last cyclical upturn, fiscal policy has been relatively tight, but the tightening element became weaker as growth gained momentum. Fiscal policy should have been tighter in 1996, 1997 and 1998. Another lesson from this period is that investment in the petroleum sector should be managed better in order to avoid fluctuations in the mainland economy. One cannot expect the central government budget to be able to counter the shocks to the mainland economy originating from the wide fluctuations in demand from oil companies. 2) Internal instability Fiscal policy has not had a sufficient stabilising effect on the economy in recent years. This has given rise to a dilemma for the social partners involved in the income settlements. Moderate wage settlements made a substantial contribution to achieving broad-based employment growth from 1992. In the period 1993-1998, employment rose by more than 250 000, while unemployment fell from about 6.5 per cent to below 3 per cent, the lowest rate BIS Review 10/1999  –3–  recorded for 10 years. Whereas 20 unemployed were competing for each vacancy at the employment offices in 1993, the ratio was reduced to a little more than 2 in 1998.

This problem was even more acute in the case of those firms, mainly SMEs, that relied in only a limited number of lenders facing 1  Beck, T., and Levine, R. (2002) “Industry growth and capital allocation: Does having a market- or bank-based system matter?”, Journal of Financial Economics, 64, 147 – 180; Gambacorta, L., Yang, J., and Tsatsaronis, K. (2014) “Financial structure and growth”, BIS Quarterly Review, March 2014, 21 - 35. 2 López-Espinosa, G., Mayordomo, S., and Moreno, A. (2017) “When does relationship lending start to pay”, Journal of Financial Intermediation, 31, 16-29. 3 Tengulov, A. (2016) “The Impact of Borrowing Diversity on Firm Value, Financing and Real Decisions”, Working Paper SSRN 2361401. 4 De Fiore, F. and Uhlig, H. (2015) “Corporate Debt Structure and the Financial Crisis”, Journal of Money, Credit and Banking, 47, 1571‑1598. 3/6  financial problems since their ability to switch to a new lender was not always easy due to asymmetric information problems.5 Given the generally low level of diversification of liabilities of European firms, and the risk this poses for the corporate sector to face shocks affecting the bank lending channel, there seems to be some room for a higher role of capital market financing in Europe. Moreover, European financial markets not only are less developed than their US counterparts but they are also less integrated.
Within the context of the exercise of the asset quality review the non-performing exposures of the banks were increased by € billion, out of which come, of course, the € billion that have to be adjusted. Another measure of the strictness of the exercise is given by the fact that the combination of the AQR with the stress test results in a drop in the median capital ratio of the banks of 4 percentage points, which is higher than in previous exercises. And in terms of billions, this means that the exercise leads to a decrease of € billion overall for all the banks, out of which € billion corresponds to the capital shortfall, meaning the banks that came below the threshold of 5.5%. But this is a measure of the strictness of the exercise that it had such an impact on the balance sheet of the banks, and it’s a usual measure of the impact of such types of exercises. But it’s also a measure of the resilience of the system because, in spite of this drop of € billion, the vast majority of banks stayed above 5.5% and were able to support such a shock, and still have a capital ratio above the threshold. And let me underline that the threshold of 5.5% is well above the regulatory minimum, because as you know the regulatory minimum for common equity capital ratio will be in 2018 4.5%, so we have chosen a more demanding threshold.

The AQR itself resulted in a gross impact on asset values in need of adjustment by € billion, € billion of which did not generate a capital shortfall. So if you add up the € billion with the € billion shortfall, you get the overall impact on the banks of € billion coming from the comprehensive assessment. This you can compare with the expectations in the market. I just quote two examples of publications by investment houses of September, the more recent ones, of two big investment banks. One made calculations for a sample of 37 banks and found that, considering the measures already taken by the banks, the shortfall would be zero, and three banks would fail. The other one considered a sample of 34 banks and concluded that, taking  BIS central bankers’ speeches  1  into account the capital measures taken by the banks in 2014, zero banks would fail and the capital shortfall would be zero. This compares with our result that out of the 25, 12 banks have already taken measures in 2014 that are enough to cover their shortfall. But there are then 13 banks that still have either to exactly apply their restructuring downsizing as it is foreseen in their plans with the European Commission, or they will have to come up with ways to increase their capital. So this is an important explanation of the meaning of the results that we have.
Stefan Ingves: Evaluation of the Riksbank’s monetary policy and work on financial stability 2005–2010 Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank and Chairman of the Basel Committee on Banking Supervision, to the Riksdag Committee on Finance, Stockholm, 31 August 2011. *  *  *  The Riksdag (the Swedish parliament) and the people of Sweden must be able to see that the Riksbank is doing its job well. It is therefore necessary for them to have good insight into our work and for the Riksdag to be able to make regular evaluations of this work. The evaluations are also important for the Riksbank to be able to develop and improve its analyses. We have already said on several occasions that we consider it an excellent initiative by the Committee on Finance to regularly commission highly-qualified external experts to evaluate our work. Today, when we are to discuss the second evaluation of this type, I would therefore like to begin by thanking Professors Goodhart and Rochet for carrying out this work on behalf of the Riksdag Committee on Finance. We also welcome the Committee on Finance’s decision to give the evaluators the task not only of assessing how we conduct monetary policy, but also how we manage the task of promoting a safe and efficient payment system, that is, what we have interpreted as our responsibility for financial stability in Sweden.

We at the Riksbank prefer to present our more detailed views on the evaluation during the consultation rounds, so today I intend to make a few more general comments. Regarding financial stability – we need clear legislation and efficient institutions I do not believe that anyone would still doubt that the risk of a financial crisis is a very real risk that we must learn to live with and to manage in the best possible way. It is probably also quite clear what is at stake here – a financial crisis could entail substantial costs for society. We must therefore learn from the experiences of the crisis and ensure that we are as wellequipped as possible to face any new crises in the future. This requires in an initial stage taking an overall approach to both crisis management and crisis prevention work, something that the government’s recently-appointed financial crisis commission has been tasked to deal with. Ultimately, the goal is to establish effective legislation and efficient institutions. The financial crisis that we have lived with over the past few years has tested institutions and legislation to breaking point, in Sweden and abroad. This has highlighted some old weaknesses in the legislative framework, and we have also discovered some new deficiencies. Even before the Committee on Finance’s evaluation was published, the Riksbank pointed out a number of weaknesses that require attention in a proposal to the Riksdag.1 It is therefore gratifying that Goodhart and Rochet clearly point out largely the same weaknesses.