samchain/econo-pairs-v1 huggingface dataset:
The longer interest rates are held down by temporary factors, the greater may be the risk that households perceive the low rates as a permanent phenomenon. Even if they cope with interest expenditure when interest rates turn upwards, many households may be obliged to cut back consumption substantially, which would tend to dampen demand. At the same time, higher interest rates can subdue the increase in house prices. If the higher interest rates are accompanied by an increased supply of dwellings, that could also tend to hold house prices back. Even the demographic age structure may have a slight restraining effect on the future housing market. The population in active age groups grew throughout the 1990s but since 2000 there has been a minor reversal. The increased proportion in retirement may enlarge the supply of sizeable apartments and houses. However, changes in the composition of supply and demand occur slowly as a rule and are unlikely to lead to any drastic price adjustments. Moreover, higher interest rates will probably coincide with higher growth and increased household income, which by themselves counter the factors that subdue price developments. Assessing the magnitude of the overall effect will be difficult but most things suggest that prices will not fall sharply even if interest rates move up. Why has saving been so high? Historically, increased debt and rising house prices have been accompanied by a higher consumption ratio.

As global liquidity conditions are normalised – following the unprecedented easing of interest rates by major central banks – financial markets could experience bouts of volatility as a range of asset classes are repriced and this could impact negatively on various interest-sensitive industries. 5. In addition, the reform of the global financial system has to be carefully thought through, calibrated and sequenced. It is important that regulatory reforms do not become politicised, with a rush to adopt simple rules that seem to solve the problems. Specific measures, each of which is sensible, may collectively create unintended outcomes and stymie the nascent economic recovery. In this regard, the Basel Committee’s Quantitative Impact Studies will provide an important basis for us to take a more holistic view of the required changes. 6. So far, most of the discussions have been framed around the theme of “how do we prevent a similar crisis from happening again.” Clearly, we must look back and learn from the crisis. But we must not fight the last war. We must also look forward. In the years ahead, significant restructuring of the global economy is necessary. Hence, I believe a more fundamental question to frame the discussion is: “Given the economic changes and challenges ahead, how do we make the global financial system more resilient and at the same time supports economic restructuring and sustainable global growth?” 7. It is therefore critical to get the nexus between the financial system and the real economy right.
This rate was more moderate than in the first two quarters, when the decline was 1.6% and 1.1%, respectively. The fall-off in activity, which stood at 4% compared with the same period a year earlier, was the result of the marked weakness of national demand, particularly private spending. Only the public components of domestic demand retained positive growth rates, due partly to the inertial component of certain expenditure items (such as purchases of goods and services) and partly to measures adopted to mitigate the decline in demand, such as the State Fund for Local Investment. And, as has been the case since the opening quarters of 2008, the strong contractionary effect on activity exerted by the fall in domestic spending was lessened by the positive contribution of the external sector, largely due to the notable decline in imports. The strong contraction in demand in recent quarters is helping correct some of the imbalances that had built up in the Spanish economy during the boom period. These include the excesses in the real estate sector, high private-sector debt, the external deficit and the inflation differential. However, the adjustment is operating through a considerable decline in activity and the marked destruction of the general business and employment fabric, which is giving rise to a sharp increase in unemployment. The previous strong concentration of resources in the real estate market is diminishing most rapidly, with an acute decline in housing starts.

At the same time, in connection with public spending, primary spending has held at a high growth rate in recent years, attaining levels that cannot be sustained for much longer and which, therefore, it will be necessary to reduce. In turn, the deterioration in the budgetary position is taking the form of a rapid increase in public debt and, therefore, too, in the amount of resources needed to meet the payment of the interest burden. It should also be stressed, as various recent past episodes in some developed countries show us, that the dynamics of rising debt can prove difficult to reverse. All the more so when some factors that helped towards its reduction in the past, such as lower interest rates and the high growth of nominal GDP, can no longer be counted on. The need to reverse the high structural deficits and to prevent the risks linked to debt dynamics from materialising thus evidences the fact that there is no more room for expansionary budgetary policy. Given the fiscal imbalance that has built up, it will be essential to devise a transparent and credible budgetary consolidation strategy for the medium term that will require the adoption of ambitious measures, especially on the expenditure front. In a setting in which the recovery is still uncertain, the necessary fiscal adjustment should be designed in such a way as to minimise the potential adverse effects on economic growth.
Page 1  The PRA's future approach to policy − speech by Vicky Saporta Given at the City & Financial Global event  Page 2  Published on 27 September 2022  Vicky explains how regulation that is strong and responsive can avoid unnecessary trade-offs between competitiveness and resilience. The Financial Services and Markets Bill 2022 introduces new powers and a new secondary objective on competitiveness and growth for the PRA. Vicky argues that the PRA can use these new powers to regulate responsively, and better tailor rules to the needs of the UK. Vicky sets out the PRA’s intention to take a proactive approach to the new objective. She explains that as a global financial hub, the UK’s competitiveness in financial services rests on its skilled workforce, and its deep and specialised markets. Vicky argues that the UK economy has more to gain by having a regulatory regime that is open to international business, nondiscriminating, predictable, transparent, responsive to threats and opportunities rather than in weakening standards to attract business. Speech Introduction The Government’s Financial Services and Markets Bill introduces important changes to the PRA’s powers and responsibilities. It does so to implement reforms identified by the Future Regulatory Framework for Financial Services Review, or the ‘FRF Review’. The reforms will move financial regulation back to a British style of regulation based on the Financial Services and Markets Act of 2000, which we refer to as ‘FSMA’. Most technical rules will be made by regulators accountable to Parliament.

This will broaden rule-making powers for the PRA, as requirements which are now in statute will be replaced by new elements of our Rulebook, which we will have the power to change. The FSM Bill also introduces a new objective. The PRA’s primary objectives will remain the safety and soundness of firms and, for insurers, an appropriate degree of protection for policyholders. We will keep our existing secondary objective to facilitate effective competition in markets for financial services. But alongside these we will have a new secondary objective to facilitate, subject to alignment with relevant international standards, the international competitiveness of the UK’s economy and its growth in the medium to long term. We know it is important that we explain what we think these changes will mean for our policymaking. We also want to hear how other people think we should approach our objectives and use  Page 3  new powers. That is why on 8 September we published a discussion paper setting out our vision for the PRA as a strong, accountable, responsive, and accessible rule maker. [1] Today I am going to explain how those principles will guide us as we seek out new opportunities to pursue all our objectives; including competition, competitiveness, and growth. In particular, I will explain how rules that are strong and responsive can protect resilience and facilitate competitiveness at the same time. Taking our new competitiveness objective seriously will not mean entering a regulatory race to the bottom.
We are experiencing a challenging historical period at a global level and I am fully confident in the capacities of Europe and of EMU to surmount the difficulties of the time. BIS Review 45/2010  3

It is in the interests of firms and the people of the United Kingdom, whose interests the Bank of England exists to serve, that we have that debate and that it be informed not by caricatures of each other’s positions, but by a shared understanding of both the costs and benefits of the capital element of prudential regulation, as well as its place in the wider regime. I would like to thank Alan Sheppard, Anthony Brown, Charlotte Gerken, David Humphry, and Manuel Sales for their help in preparing these remarks. 1. https://www.gov.uk/government/publications/solvency-ii-review-call-for-evidence 2. Letter from Sam Woods: Solvency II Risk Margin 3. Ask not what the economy can do for insurers – ask what insurers can do for the economy - speech by Anna Sweeney  Goldilocks and the three pillars: how much capital is just right? ‐ speech by Anna Sweeney | Bank of England  Page 5  Anna Sweeney Executive Director, Insurance  Sign up for latest updates  Goldilocks and the three pillars: how much capital is just right? ‐ speech by Anna Sweeney | Bank of England  Page 6
In our most recent forward guidance we have said that we will maintain our policy interest rates at current levels – including our negative deposit facility rate – until at least through the summer of 2019; Our fourth instrument is the provision of liquidity and credit to banks. The second series of TLTROs are still outstanding, as is FRFA. Such operations could be considered again – possibly with different terms – if warranted. So our quartet will shortly become a trio but the tune will remain strong. The score, however, will change over time and we should continue to play in a harmonious way. In sequence: in my view, we should reduce the rate of reinvestment only after the first increase in interest rates. And so, we are not obliged to rush, as early as at our December meeting, to set out the precise length of our reinvestment period. We should also play the trio in synergy, I would even say in symphony. 1/3  BIS central bankers' speeches  Like any orchestra, we need to be able to adapt the normalisation of our monetary policy tempo (allegro or andante) and intensity, according to economic data. In short, we are very clear about our objective – normalisation following non-standard policies – and about our sequence, but we should remain very pragmatic along our path. Another and somewhat related challenge – as monetary policy cannot be the only game in town – is the continuation of structural reforms in countries where they are needed.

For example, putting some temporary restrictions on cross-border movement of capital could give some but not complete independence of monetary policy. But how do we reconcile independence and co-operation? In my view, we can and should act to enhance co-operation between public authorities, based on at least two elements: Ruling out any currency war, as we clearly stated at the meeting of the International Monetary and Financial Committee in Bali last month. I quote the unanimous communiqué: “[We] will not target our exchange rates for competitive purposes”. Trade multilateralism is at risk, but financial and monetary multilateralism still stands fast. Second, as the G20 Eminent Persons Group (EPG), led by Tharman Shanmugaratnam, rightly stressed in its recent report, we need to put in place a reliable Global Financial Safety Net (GFSN) before the next crisis and co-ordinate its different layers. This should include an “IMF standing liquidity facility”. The GFSN is the best insurance we can get against the risks created by economic divergence and it comes at a limited cost. I know that Governor Kuroda is very committed to this issue too. ** Let me conclude by quoting a Japanese proverb: “A frog in a well knows nothing of the great ocean” [“I no naka no kaeru taikai-o shirazu”]. In these uncertain times, the temptation is to look inwards, but that would be exactly the wrong thing to do.
A substantial share of the graphics and publishing industry is characterised by natural protection against foreign competition. Excluding border trade, distributive trades are exposed to foreign competition only to a limited extent. Exposure to international competition is a source of learning, innovation and development for industries. It is essential, in my view, to maintain a broad internationally exposed sector in the 3  Operating margin is defined as operating result as a percentage of operating income. 4  Gross margin is defined here as the difference between retail price and purchase price for meat products and is to cover profits and all costs other than the meat raw material (see NILF)(2001). 5  See Boug, P. and Naug, B. (2001). 12  BIS Review 47/2001  mainland economy. At the same time, constructive unrest in retail and service industries and other sheltered industries, with new entrants, mergers and demergers, could also promote efficiency and lower prices. Conclusion The operational mandate for monetary policy is to stabilise inflation around 2½ per cent. Prices for goods and services that are set by commercial and service enterprises are an important component of the consumer price index. It has therefore been a pleasure for me to provide this assembly with a presentation of how Norwegian monetary policy is conducted. Thank you for your attention. BIS Review 47/2001  13

This firm anchoring of expectations and various measures of underlying inflation trends confirm that price developments over the medium and longer term will be in line with price stability. In 2010, HICP inflation is likely to remain positive and below 2%, in an environment of sluggish demand in the euro area and elsewhere. Since last October, the Governing Council of the ECB has eased monetary policy significantly and rapidly, but also provided unlimited liquidity to the banking system and implemented “non-standard” enhanced credit support measures, which aim at ensuring that the monetary policy impulse deriving from the decrease in central bank rates is efficiently transmitted to the real economy. It is encouraging to observe that these policy actions, together with the substantial fiscal stimulus being implemented by governments and their measures aimed at supporting the banking system, are progressively having a visible positive impact on the growth performance of the euro area. In time, they should lead to a normalisation of conditions in financial markets and the recovery of the economy to a path of sustainable growth. And this leads me to some final remarks on the conference theme – “planning an exit strategy” – which is crucial. An exit strategy will need to have three elements: an exit from the environment of exceptionally low interest rates and unlimited liquidity provision; an exit from the extensive government support measures to the banking system, and an exit from the substantial fiscal stimulus.
On the other hand, there are those who reject these arguments and argue that the reduced effectiveness of monetary policy at the ZLB and during a credit crisis makes this the only effective macroeconomic policy weapon at the current juncture. Whatever the resolution of this debate, however, the traditional arguments against activist fiscal policies seem likely to still obtain once normal times return. 2. The choice of monetary instrument. Given the above, monetary policy is likely once more to take on the primary role in short-term aggregate demand management once normal times return. But the apparent effectiveness of asset purchases at altering longer-term yields opens up the possibility that they could become part of the monetary toolkit in normal times. We argued in Section 3 that despite its apparent effectiveness, there were good reasons to return to exclusive reliance on a shortterm policy rate in normal times and after any asset purchases during the crisis have been appropriately unwound. 3. The monetary transmission mechanism. The crisis has brutally exposed the limitations of conventional macroeconomic analysis ignoring the role of financial intermediaries. While the existing literature contained a strand focussing on the role of financial frictions – including those on the broad credit channel – they generally focussed on those that arose from the behaviour of borrowers. The crisis has illustrated the need to take seriously the incentives facing the intermediaries themselves.

Second, the need for accountability and credibility may encourage a central bank to target average inflation over a number of years, offsetting a period of above-target inflation with a subsequent period of below-target inflation. And in some countries, such as Australia, the objective is explicitly defined as being “over the cycle”. But, as already noted, average inflation targeting approaches price-level targeting as the horizon extends to infinity. Third, optimal policy under uncertainty may lead to some correction of price-level deviations. For instance, suppose that a shock has caused inflation to move above target. As time passes and the central bank seeks to return inflation to target, it is possible that further shocks push inflation away from the intended path or that tighter monetary policy fails to return inflation to target as quickly as expected. With the usual concave objective function, the policymaker should prefer to err on the side of inflation undershooting its intended path, rather than risk departing even further above target. Consequently, in the presence of uncertainty, the monetary authority will seek to return inflation to target more rapidly and may even aim to keep inflation below target for a period. For more on this, see Kamenik et al (2008). Whatever the explanation for the trend-stationarity of the price level, these results suggest that existing policy frameworks have delivered something quite close to price-level targeting in practice. That suggests the welfare gains from making the extra step may be limited, particularly when there are costs to changing the framework.
In his annual address in 1988 the then governor of the central bank formulated the role as follows: “However, should financial institutions find themselves in a position that could affect general confidence in the credit market, Norges Bank - cognisant of its responsibility as the central bank - is prepared to take such measures as are necessary to bolster market confidence in our financial system.” During the banking crisis the division of responsibility between the government authorities and Norges Bank was clarified. If “necessary measures” prove to be solvency support, the guarantee funds, and as a last resort the government, shall provide such support. Norges Bank will of course play an active role in any situation where financial stability may be threatened. This role must be exercised in close cooperation with the Banking, Insurance and Securities Commission and the Ministry of Finance. 7. The current situation  Before I sum up, I would like to make some brief comments on today’s risk outlook. During the turbulence in the autumn of 1998, investors fled to liquid and safe investments. The interest rate differential between safe and risky instruments widened markedly. The difference is still wide. This reflects uncertainty among investors. The increase in interest rates in Norway in the autumn of 1998 led to a contraction in credit growth that was far too high at the time, particularly in the corporate sector. Investment started to fall. Even if debt servicing costs increased in the short run, the risk of even higher debt in the future was reduced.

The legacy of those losses has likely limited the banking sector’s ability to extend new loans during this expansion, as banks acted in a highly precautionary way to accrue capital that had been depleted as well as to add to their previous capital levels. The need for banks to repair their balance sheets following the financial crisis contributed to the far slower growth of outstanding bank loans during this expansion when compared to previous long expansions. Real outstanding loans to businesses, which are dominated by bank loans, declined more in this recovery than in previous recoveries (Figure 4). On the household side, real outstanding residential mortgages, which are largely originated by banks, have declined through most of this expansion while they grew steadily in previous expansions (Figure 5). Consumer credit has risen at a modest rate in this recovery – comparable to that of the last cycle (Figure 6). This category includes auto loans, credit cards and other consumer debts that are mainly originated by banks. But it also includes student loans where the federal government is the dominant lender. Student loans have risen robustly during this expansion, and have driven much of the rise of overall consumer credit. We will have much more to say about them later in today’s briefing. The U.S. financial system relies more heavily on capital markets than other advanced economies. Bonds and other negotiable debt instruments are an important source of funding to credit-worthy corporations.