samchain/econo-pairs-v1 huggingface dataset:
Moreover, mortgage delinquency rates, even in the most serious category, have started to fall, and data that tracks changes in the proportion of borrowers who are delinquent and then become current versus becoming even more delinquent is encouraging (Charts 9 and 10). Finally, the less serious delinquencies for credit card, auto and student loans have been trending lower, though not the more serious delinquencies (Chart 11). Of course, these recent improvements have come in the context of the stabilization in unemployment and house prices. To ensure that the more favorable trends in household balance sheets continue, the economic environment needs to become more supportive. We should recognize that there is still considerable uncertainty about the level of the saving rate and configuration of household balance sheets that will prevail in the coming years. It is possible that households now perceive the world to be a riskier place than they did before and will want to have more “rainy day” funds. More saving may also be needed to meet higher downpayment requirements for home purchases. Thus, while we may be far along in the adjustment process, it is difficult to judge just how much further we have to go. Turning now to the issue of credit availability, there is no question that credit conditions are still tight.

More broadly, the clearer and more credible the framework governing purchases, the greater the likelihood that market participants would act in a manner that helped the Fed achieve its objectives. In particular, the more confident market participants are in the Fed’s ability to exit when the time is right, the more effective its purchases will be in stimulating the economy. Suppose the Fed was indeed successful in reducing long-term interest rates further – what then? Some claim that lower rates would have no effect on economic activity – that the Fed would be “pushing on a string.” This is too dark a view. Although the responsiveness of demand to reductions in interest rates is probably lower in a world in which balance sheet constraints are important, the responsiveness is not zero. I believe that it remains significant. Even in today’s challenging circumstances, lower long-term rates would support the economy through a number of channels. Lower long-term rates would support the value of assets, including houses and equities and household net worth. Lower long-term rates would make housing more affordable and support consumption by enabling households to refinance their mortgages at lower rates. This would increase the amount of income left over for other spending. Of course, this channel can be made more powerful to the extent that further progress can be made in efficient mortgage debt restructurings that allow households with negative equity in their homes to take advantage of the drop in mortgage rates.
24  As President Draghi recently noted, “In other political unions, cohesion is maintained through a strong common identity, but often also through permanent fiscal transfers between richer and poorer regions that even out incomes ex post. In the euro area, such one-way transfers between countries are not foreseen…”  BIS central bankers’ speeches  9  Chart 1:  Chart 2:  House prices(a) rose significantly during the boom years across euro area periphery countries and in the UK  UK private sector swung sharply into surplus when the crisis hit but now back close to balance…  (a) Nominal house price indices. Source: OECD. Source: Eurostat (ESA 95 definitions). Chart 3:  Chart 4:  … while Irish private sector surplus endures  Aggregate euro area debt has not fallen relative to GDP since 2007  Non-financial private sector General government  30  Other (incl rest of world)  20 10  Net saving  Per cent of GDP  0  -20 -30 2002  2004  2006  2008  2010  2012  Source: Eurostat (ESA 95 definitions). 10  -40  Net borrowing  -10  Source: Buttiglione, L, Lane, P, Reichlin, L and Reinhart, V (2014) “Deleveraging, what deleveraging?”, Geneva Reports on the World Economy, 16, Centre for Economic Policy Research.

They will benefit all member states in the single market. However, they will take time to design and longer to implement, and they will have no impact on the burden of the debt overhang that already exists. For complete solutions to both current and potential future problems the sharing of fiscal risks is required. It is no coincidence that effective currency unions tend to have centralised fiscal authorities whose spending is a sizeable share of GDP – averaging over a quarter of GDP for advanced countries outside the euro area (Table 1). I have already discussed how parts of the UK have benefitted from fiscal risk sharing. The euro area also stands out from federal systems like the US, Canada and Germany. In those systems, the impact of localised shocks to income is reduced by between one tenth and one fifth by centralised fiscal transfers (Chart 6). Without this risk sharing, the euro area finds itself in an odd position. As the Presidents of the European Council, European Commission, Eurogroup and European Central Bank argued in their report, European Monetary Union will not be complete until it builds mechanisms to share fiscal sovereignty. Possible options for sharing fiscal risks range from a transfer union to a pooled employment insurance mechanism. The latter would appear to be an opportunity to combine the current enthusiasm for labour market reform with the longer term imperative to build elements of an efficient transfer union. And it would ensure risk sharing was based on cyclical, rather than structural, labour market positions.
The gains are shared between owners and workers. Real wage growth in Norway has been considerably higher than productivity growth. But the economic picture for Norway may be changing. We cannot assume that Norway’s terms of trade will continue to improve. Investment in the petroleum sector is levelling off. Output growth in the mainland economy has slackened. When activity in the petroleum sector eventually declines, there will also be a need for economic restructuring in Norway. The business sector will have to seek new markets, where competition may be intense. Restructuring may prove particularly demanding given Norway’s high cost level. Although restructuring will be a gradual process and may lie some years ahead, Norway may find that sustaining growth and keeping unemployment low in the coming years may become a challenge more on a par with that facing other economies today. The economic policy framework matters. Fiscal policy follows the fiscal rule, which aims to ensure a sustainable level of petroleum revenue spending over the long term. In the event of  2  BIS central bankers’ speeches  major aggregate demand shocks, fiscal policy, in line with the fiscal rule, can be used to alleviate the situation in the short term, as evidenced during the recent financial crisis. But an imbalance arising from a cost level that is too high and weak competitiveness cannot in the long term be addressed by means of an expansionary fiscal policy. This approach could, on the contrary, amplify the problem by crowding out businesses.

The US economy in particular is on the road to recovery. Financial market participants see opportunities, not just problems. However, in a number of emerging economies volatile capital flows are creating problems. High debt growth and rising house prices may constitute a risk. The recovery abroad is fragile. The key policy rate is also low in Norway. Our inflation target is slightly higher than that of other European countries. As a result, inflation and nominal interest rates in Norway are also slightly higher. But prospects for a persistently low interest rate level internationally will inevitably also have consequences for Norway. The real interest rate in a small open economy cannot in the long run differ substantially from that of our closest trading partners. Given the prevailing long-term interest rates abroad, it will likely take a number of years for interest rates in Norway to move up towards a level that was previously considered to be normal. When the drafters of the Constitution gathered at Eidsvoll 200 years ago, there were no private banks in Norway. It was not until the latter half of the 1800s that a private banking system truly came into being. Norges Bank acquired its present-day role as lender of last resort. With private banking came banking crises. The 1899 crash in Christiania triggered the first serious banking crisis in Norway. A real estate bubble in the capital burst and house prices plummeted. It took more than 100 years for real house prices in Oslo to return to their pre-crisis level.
Indeed, since the linkages among cash, securities, and derivatives markets have become so close, a failure - either by a provider itself or by a major participant - is very likely to cause disturbances affecting different markets at the same time. In addition to collateralisation, the appetite for securities has been forcefully stimulated by the changing needs of private and public wealth owners: the ongoing institutionalisation of the savings process, the facilitation of direct market access through internet technology, the disintermediation of the banking system due to credit risk considerations and the relative decline in attractiveness of bank deposits. On the supply side, the corporate sector has been increasingly relying on bond financing rather than on traditional bank borrowing. In the US, private debt securities amount to about USD 7 trillion. The ratio of bank credits to GDP has remained more or less stable at around 10% for the last 50 years, while the ratio of bond financing to GDP has risen sharply from 15% in 1985 to 25% in 2000. Bond financing within the European corporate sector has also caught up, strongly supported by the inception of the euro at the beginning of 1999. In short, the supply of securities is bound to grow further; cyclical ups and downs are likely, but the trend will point upwards. Notwithstanding obvious differences between economies, it is generally true that the corporate sector will make further progress in exploiting the potential advantages offered by open capital markets. The European corporate bond market seems an especially interesting case.

Furthermore, a fragmentation of the global economy would probably lead to more frequent bottleneck situations, since changes in demand would once again increasingly affect domestic economies and it would be less possible for these changes to be absorbed by the global economy. As a result, inflation and the economy would also become more volatile again. All of this means that monetary policy would have to be focused on tackling inflation more frequently and intensively than in recent years. Moreover, the use of monetary policy instruments could also be affected. Would the traditional instrument of interest rates be used again more often, or would unconventional measures continue to play an important role in countering the impact of adverse disruptions? This primarily depends on whether the neutral interest rate remains low or returns to a higher level. Both of these developments are conceivable. The neutral level of interest rates could rise and the traditional interest rate policy could return to the fore if there were to be a reduction in the investment of savings from the emerging economies in the advanced economies. The neutral level of interest rates would also rise if defence spending and investment in energy infrastructure were to increase government debt or if inflation were to remain high. On the other hand, however, the neutral level of interest rates could also persist at the low level of the past 15 years if there were to be an increase in saving due to the geopolitical uncertainty or if inflation were to decline again.
Nominal interest rates on loans and deposits are rising. However, given the current level of inflation and inflation expectations, monetary conditions remain neutral in the meantime. This is evidenced by the persistently high growth rates in lending, as well as the still slow rise in deposits. Businesses and households continue to demonstrate high demand for loans. Nonetheless, the increase in unsecured consumer lending has started to slow down, which was promoted by additional macroprudential limits on high risk loans imposed on 1 October. As regards ruble-denominated time deposits, their growth in November—the first ten days of December continued, but its pace is still as slow as in October. On the one hand, higher interest rates make time deposits a more attractive savings instrument. On the other hand, banks artificially limit depositors’ opportunities to use these new, more profitable offers. Banks offer different deposit terms for the so-called ‘old’ and ‘new’ money. There are barriers in the form of fees that depositors need to pay to transfer their funds from one bank into another. We believe that such differentiation, or to be more exact, discrimination is inappropriate and have already proposed a number of initiatives to eliminate it. We hope that legislative authorities will support 2/4  BIS central bankers' speeches  our ideas. This will not only protect bank customers’ rights, but will also make the deposit channel of the monetary policy transmission mechanism more efficient in the future. Speaking of risks, proinflationary ones still prevail.

The rise in SWFs is closely linked to the global macroeconomic imbalances that have characterized the world economy since the mid 1990s. Since these imbalances are unlikely to unwind in the near term, SWFs are likely to keep growing disproportionably for some time. The rapid rise of SWFs has undoubtedly brought a number of benefits. One of them has recently become particularly evident. Against the backdrop of the current market turmoil, SWFs have been a welcome source of capital, strengthening the vulnerable balance sheets of some of the world’s largest financial institutions. I will return to this important point at the end of my lecture. But the investments made by SWFs have also given rise to considerable political controversy and media coverage. Slide 2 provides a sample of some of the most pertinent recent headlines. The political controversy does not derive from the fact that SWFs are new. They are not. Political leaders are anxious because the rapid rise of SWFs and their increasing visibility as large investors in mature markets challenge some long-held assumptions about how the global economy works. In the process, the investment decisions of SWFs run the risk of triggering defensive reactions in mature countries. If left unchecked, this process could feed financial protectionism, which would clearly be to the detriment of global economic welfare. To provide some context, I will first describe the rise of SWFs. I will then discuss in more detail what I view to be the primary challenge arising from SWFs.
The core survey also asks for expectations about unemployment, interest rates, the stock market, credit availability, taxes, and government debt. In addition, respondents are asked to report their expectations about several labor market outcomes, including changes in earnings, the perceived probability of losing their current job or leaving it voluntarily, and the perceived probability of finding a new job. Moreover, respondents are asked about the expected change in their household’s overall income and spending. As I will describe in more detail below, these expectations questions are fielded at various time horizons and with various formats, including both point forecasts as well as density forecasts based on probabilistic questions. The second component of the SCE contains a supplementary “ad hoc” module each month on special topics.13 Finally, SCE respondents also fill out longer surveys each  9  See Delavande, Giné, and McKenzie (2011a) for a comprehensive review. 10  See Mahajan et al. (2008), Giné and Klonner (2007), McKenzie, Gibson, and Stillman (2013), Attanasio, Meghir, and Vera-Hernández (2005), Attanasio and Kaufmann (2009), and Delavande, Lee, and Yoong (2012). 11  More precisely, respondents are asked to assign probabilities to a set of mutually exclusive and exhaustive ranges of continuous outcomes. 12  The SCE survey instrument is fielded by the Demand Institute, a nonprofit organization jointly operated by the Conference Board and Nielsen. 13  Three such modules are repeated every four months, leaving three “floating” supplements per year on topics that are determined as the need arises.

Joseph Yam: Mortgage-backed securities programme in Hong Kong Speech by Mr Joseph Yam, Chief Executive of the Hong Kong Monetary Authority, at the signing ceremony of the Bauhinia MBS Programme of the Hong Kong Mortgage Corporation Limited, Hong Kong, 30 October 2003. *  *  *  Ladies and gentlemen, let me first offer a very warm welcome to all of you to this signing ceremony to mark the successful conclusion of the second series of mortgage-backed securities issued under the Bauhinia MBS Programme of the Hong Kong Mortgage Corporation. The issue size this time is $ billion. It is the largest residential MBS issue in Hong Kong, so far. Ladies and gentlemen, as you are aware, the HKMC is committed to developing a deep and liquid MBS market in Hong Kong as an effective means for enhancing the availability of competitive mortgage finance in Hong Kong for homebuyers. The success of this initiative will also benefit both the financial market and the future development of the HKMC as a major financial institution. For the financial market, MBS provide an efficient channel for long-term funds from the capital market to supplement bank financing of long-term mortgage loans. They also help banks to better manage the liquidity and maturity mismatch risks inherent in their mortgage business. Development of an active MBS market will broaden the product range of the financial market and further develop Hong Kong’s role as an international financial centre.
Lars Nyberg: House price developments and monetary policy Speech by Mr Lars Nyberg, Deputy Governor of the Sveriges Riksbank, at Evli Bank, Stockholm, 19 December 2005. *  *  *  Thank you for your invitation to Evli Bank. I intend to devote the bulk of my speech to a subject that has been under discussion for a fairly long time but that nevertheless has not become less topical or important, namely the developments in the housing market and the rise in household debt. These factors have potentially significant implications for both of the tasks assigned to the Riksbank – both the assignment of safeguarding financial stability and the monetary policy objective of price stability. That of course means that they also have consequences for the efforts to keep the real economy in good balance. Thereafter, I intend to say a few words about the current monetary policy situation and the decision that we took a few weeks ago to leave the repo rate unchanged. As you know, the Executive Board on that occasion – incidentally for the first time in over one and a half years – was not unanimous in its decision. Since I was one of those with a different opinion it may be appropriate for me to elaborate somewhat on my line of reasoning. I want to underline, however, that it was a question of subtle differences in our assessments which there is no reason to overdramatise.

As you know, we in the Executive Board decided to leave the repo rate unchanged at our latest monetary policy meeting. At the same time, however, we were in agreement that the Swedish business cycle is fairly close to the point at which it is reasonable to give monetary policy a less expansionary stance. Although we all endorsed the outlook for inflation and the economy in the Inflation Report a number of us were of the opinion that it provided scope for somewhat different interpretations of exactly when the interest rate needs to be raised. I myself and two other members  2  4  For a more detailed overview of the debate; see Bean, C. (2003), "Asset Prices, Financial Imbalances and Monetary Policy: Are Inflation Targets Enough? ", speech at a BIS conference on "Monetary Stability, Financial Stability and the Business Cycle", 28-29 March 2003, Basel, Switzerland. (http://www.bankofengland.co.uk/publications/speeches/2003/speech200.pdf)  BIS Review 88/2005  interpreted the analysis in such a way that we deemed an increase of 0.25 percentage points to be warranted already at the time of the monetary policy meeting. Allow me to say something about the reasons that, in my opinion, suggest that it would have been appropriate to take a first step towards less expansionary monetary policy at the beginning of December. One is that there hardly can be any doubt now that we are in the midst of a strong, stable cyclical upswing.
The US Federal Reserve started tapering asset purchases last year, resulting in a slight, renewed increase in long-term interest rates. Chart 4: GDP for trading partners Growth among our trading partners picked up in the latter half of 2013, particularly in the US. Although euro-area growth has also improved, unemployment and debt levels remain elevated. Emerging economies are growing at a clearly faster pace than advanced economies, but the pace has slackened somewhat. A number of emerging economies have  BIS central bankers’ speeches  1  been affected by capital outflows and currency depreciation. The tapering of asset purchases by the US Federal Reserve has likely also contributed to these developments. Countries with large current account deficits are particularly hard hit. Chart 5: Consumer prices abroad Inflation has fallen in many countries over that past few years. Euro area inflation fell to a very low level in 2013, fuelling fears of deflation. However, a portion of the decline in inflation is related to developments in food and energy prices. Furthermore, the decline has been most pronounced in periphery countries. In those countries, negative or very low price growth reflects a need for improving competitiveness. In the core countries, such as Germany and France, inflation has remained on a steadier course. Long-term inflation expectations seem to be firmly anchored in most advanced economies. Chart 6: GDP for Mainland Norway Growth in the Norwegian economy slowed through 2013. The slowdown was most pronounced in the construction and oil supplier industries.

Should the outlook for inflation or economic activity show a pronounced change, we still have monetary policy leeway – in both directions. BIS central bankers’ speeches  3