samchain/econo-pairs-v1 huggingface dataset:
Failure would suggest a degree of political dysfunction that could undermine U.S. economic leadership and could encourage global corporations and investors to invest elsewhere. Make no mistake: Credible fiscal consolidation will not be painless, no matter what form it takes. The burden will be felt across many sectors of the economy and we must expect that the resulting fiscal drag will exert some restraint on economic growth. Nevertheless, there is no reason why a carefully crafted plan would need to put the economic recovery at risk. A credible plan, after all, would likely have very positive effects on confidence. In particular, I believe that business investment would respond positively to a credible plan. More generally, reducing uncertainty over future tax rates, entitlements and other spending programs has to be a positive development in terms of reducing uncertainty that can constrain economic activity. By clarifying the rules of the road, a credible fiscal plan is likely to reduce the incentive of households and businesses to delay spending and investment. This would likely offset fiscal drag to a meaningful degree. 6  BIS central bankers’ speeches  Conclusion To sum up, while it is still too early for a precise estimate of the economic impact of Sandy, I expect a negative impact on fourth quarter national and regional economic growth, but a minimal long run effect nationally and regionally. This has happened during a period where too many people remain without the jobs that they need to help support their families and themselves.

I know I will fall short in fully acknowledging all the hardship that our fellow citizens have endured – including devastating losses of loved ones, homes, communities and livelihoods – as well as widespread misery caused by flooding and disruptions to power, fuel, food, transportation and other services across the region. Nor will I be able to fully commend the ways in which family members, neighbors, co-workers and strangers have helped those in need. I am deeply moved by the evidence of people reaching out and pulling together across the region. At the New York Fed we are committed to supporting the recovery process. In addition to our economic analysis, we are convening our advisory groups and other regional contacts to receive first-hand accounts of the impact on communities, families and businesses and to assess other ways in which we may help. For example, we are holding a clinic in Staten Island to help people obtain information about different types of financial support that is available. We’re also encouraging banks to show appropriate flexibility when dealing with small business and other borrowers impacted by the storm. After my remarks, I’ll be happy to answer any questions you have about what the Fed does and why, and about the economic outlook. But I won’t comment specifically on the upcoming FOMC meeting next month. As always, what I have to say reflects my own views and not necessarily those of the Federal Reserve System or the Federal Open Market Committee, also known as the FOMC.
I will then highlight the financial risks that go hand-in-hand with the changes underway (II). Finally, I would like to emphasise that a safe move towards a more diversified intermediation model as we see it developing cannot be achieved without further financial integration at European level. To that end, advancing the European regulatory agenda is of prime importance (III). 1. From  bank-centric  financial  intermediation  towards  unbundled  financial  intermediation in the digital era To date, in Europe, we have been accustomed to a bank-centric intermediation model. However, this model is being increasingly challenged by new players emerging in the digital era, the so-called Fintechs and Bigtechs, as well as by the growing weight of the asset management industry. We thus need to prepare to new intermediation models, which can be classified in four categories:  2/9  -  The traditional banking intermediation model for certain financial services, like mortgages;  -  A non-bank financial intermediation model (formerly known as “shadow banking”) performed by the asset management industry, to finance in particular the corporate sector;  -  A re-intermediated model, in which Fintechs and Bigtechs intermediate the banks, on the retail segment in particular;  -  And a fully disintermediated model supported by the blockchain and the peer-to-peer economies. Let me first discuss the new models stemming from the digital era (A) and I’ll come back afterwards to asset management (B).

For example, if an asset bubble has caused a buildup of debt that now needs to be reduced significantly, then lower interest rates that ease financial conditions may not stimulate aggregate demand very much. Separately, in a protracted zero bound episode, the monetary policy impulse may become attenuated over time. Lower interest rates may make financial conditions easier, lifting wealth, and encouraging households to shift spending from the future to the present. But when the future arrives, spending may then be lower as a consequence. The linkage between financial conditions and economic activity may vary depending on how long the accommodative monetary policy regime has been in place. So what are the implications that stem from the fact that financial instability can impair the efficacy of monetary policy? I think there are at least three major implications:   The central bank has a strong stake in preventing financial instability.   When financial instability occurs, the central bank has an important role in taking steps to mitigate that financial instability. This includes ensuring that credible liquidity backstops are available and forcing banks to strengthen themselves, for instance by raising additional capital.   The stance of monetary policy needs to be judged in light of how well the transmission channels of monetary policy are operating. When financial instability has disrupted the monetary policy transmission channels, following simple rules based on long-term historical relationships can lead to an inappropriately tight monetary policy. Let me now consider each of these implications in turn.
There is, I have to say, a sense of déjà vu here, in that twenty years ago, coming out of the recession of the early 1990s there was a concern about SME lending. Then, too, it was hard to untangle lack of supply and lack of demand as causes. A lot work was done then, including by the Bank of England, to seek to understand better the causes of the problem. This time, there remains a need for such work, a point that I will come to in a moment. But, as the central bank, we have this time put our toolkit to work more directly. It is important here to be clear on the role of a central bank. Our role is to ensure access to credit – to take steps to unblock the supply of lending. Although we can have some influence over the supply of credit generally, as we have with the FLS, it is not for us to judge the credit risks of, and hence the access to and price of credit (in terms of the risk premium above the risk-free rate) for individual borrowers. Coming out of the crisis, we want to see the market economy restored and functioning. We have recently announced an extension to the Funding for Lending Scheme, so that drawings are now possible until early 2015. We expect that this should provide confidence to scheme members to expand their lending to the real economy by virtue of them having greater confidence in their future access to funding.

The evidence in credit creation is so far mixed, which is not in my view a mark of the failure of policy since this operates with a lag. But it does indicate that all of us should go on looking for changes that will help. The distribution and information issues around SME lending identified by Kate and her colleagues are one such area, and in my view more focus needs to be put on the consequences of debt overhangs linked to commercial property in those parts of the market where there are problems. Thank you  4  BIS central bankers’ speeches
And focus the message on the needs of those shaping our economy, companies and households, not those trading financial instruments. This is the direction the forward guidance puck, in my view, needs now to travel. Whatever Next? From September I am moving a mile west from one roughly 270-year old building to another – the Royal Society of Arts (RSA). The RSA is an 18th century Enlightenment institution. Like the Bank, it has delivered large and lasting social change by combining brains and hands. Although no longer in the public sector I will remain a public servant, seeking social change on some of the signature issues of the day - good work, fair education, lifelong skills, natural capital, place and belonging, good governance. Before I start, I shall be writing a book for students on Why Economics Matters. If history is any guide, it is unlikely to trouble the bestseller list. I have written extensively about the failures of economics, which are well captured by Robert Heilbroner’s “mathematics has brought rigour to economic, but it has also brought mortis.” Yet, more than at any time in my professional life, economics really does matter, especially to young people writing the next chapter. The aim of any job is to leave the place slightly better than when you arrived. While I can claim no credit, the Bank I leave is a far more transparent, powerful, analytical, agile, engaged, diverse and meritocratic institution than the one I joined.

26  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  26  Stamp, J (1931), ‘The Report of the Macmillan Committee’. The Economic Journal, 41(163), 424-435. Stock, J H and Watson M W (2002), ‘Has the business cycle changed and why?’, NBER Macroeconomics Annual, 17, 159-218. Schularick, M and Taylor, A M (2012), ‘Credit Booms Gone Bust: Monetary Policy, Leverage Cycles, and Financial Crises, 1870-2008’ American Economic Review, 102 (2): 1029-61 Woodford, M (2012), ‘Methods of Policy Accommodation at the Interest Rate Lower Bound’, Federal Reserve Bank of Kansas City Symposium, Jackson Hole. 27  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  27
As we saw in Chart 1, the pre-crisis period saw a considerable increase in leverage in the financial sector, leaving banks and similar institutions highly exposed when optimism evaporated. Bank funding costs and credit default swap spreads then rose substantially, symptomatic of investors’ doubts as to whether they would get their money back (Chart 5). Funding costs have recently fallen back in the wake of policy initiatives, such as our Funding for Lending Scheme, though doubts still linger. So, quite independently of any tightening of regulatory requirements, there has been market pressure on banks to make  BIS central bankers’ speeches  5  balance sheets safer. That, in turn, has encouraged them to direct their supply of loans to just the more credit worthy borrowers. Moreover, elevated funding costs have also put upward pressure on the loan rates charged to borrowers, offsetting the impact of lower policy rates. The drag from these factors – heightened uncertainty and de-leveraging – has been augmented by two further factors. First, higher prices for oil and other commodities, on the back of firm growth in the emerging economies and adverse supply developments, implied a deterioration in our terms of trade, imparting a further drag to the growth in real incomes. Second, as MPC members noted frequently in the years before the crisis, the composition of UK demand needed to re-balance away from domestic demand towards net exports in order to shift the current account into balance.

The introduction of euro notes and coins will have additional positive effects on the economic development in Europe, as it will be easier to compare prices and confidence in the new currency will be strengthened. Moreover, the euro is to be regarded positively not only with regard to the Swiss economy but also Swiss monetary policy. The Swiss export sector will profit from lower transaction costs, and currency devaluations - as previously implemented by some European countries in order to improve their competitiveness - will be a thing of the past. Swiss monetary policy will benefit from the fact that a large economic bloc now exists in Europe which pursues similar goals in terms of monetary policy. All in all, exchange rate fluctuations between Switzerland and the EMU countries should thus remain below the levels seen before the launch of the euro. Furthermore, the markets will realise in due course that there is no reason why the Swiss franc, with regard to the role as a safe haven currency, should be assessed differently than the euro. This realisation should reduce the risk of sharp appreciations. As a result of the introduction of euro notes and coins, the euro will increasingly be used as a means of payment in the tourism sector and the hotel and restaurant industry as well as in foreign trade, to some degree simply as a substitute for the D-mark.
Some technologies may not materialise quickly enough to prevent uncontrollable and irreversible environmental changes from happening, and solutions that do not rely strictly on technology may also be needed. Focusing only on the climate challenge, for instance, reducing energy demand is critical to achieving ambitious mitigation. Therefore, even though technological innovation is crucial given the magnitude of the task upon us, we will also need to learn frugality (for instance by limiting superfluous or conspicuous consumption), as Pope Francis' Encyclical recommand us for example, or – if you prefer – a form of self‐restraint, as emphasised by Professor Dasgupta in his review on the Economics of Biodiversity. Moreover, while technological innovations will still be crucial to decrease our use of energy and resources, they may not always lead to more production and growth. Widespread use of electric bikes for urban transportation, for example, could reduce our dependency on individual cars in urban areas, but by the same token it could also dampen growth prospects in the automobile sector. Likewise, technology makes it possible to organise various meetings online rather than have participants travel thousands of kilometres, but a diffusion of such norms could also translate into less growth. My point here is not be exhaustive, but rather to show that framing the debate in simplistic ways (e.g.

Lee Hsien Loong: Credibility, confidence, dynamism: MAS in the new economic and financial landscape Address by Mr Lee Hsien Loong, Deputy Prime Minister of Singapore and Chairman of the Monetary Authority of Singapore, at the MAS 30th Anniversary Conference, Singapore, 20 July 2001. *  *  *  Introduction It is a great pleasure for me to welcome you to MAS’ 30th Anniversary Conference. We are honoured to have with us so many distinguished central bankers, financial supervisors, market participants and economists. A new economic and financial landscape is emerging. Financial markets are becoming globalised; cross-border capital flows are larger and faster; financial institutions are consolidating and restructuring on a massive scale; and new and complex financial products are emerging, driven by technology and market pressures. Amidst these upheavals, MAS’ goals as a central bank remain unchanged: low inflation for sustained economic growth, and a sound financial sector for markets to grow and thrive. MAS is a unique organisation – it is the only institution in the world that combines responsibility for monetary policy with supervisory oversight of the entire financial sector – banking, insurance and securities. In addition, it has the task of promoting the development of Singapore as an international financial centre. I shall describe how MAS has met its responsibilities in these three areas over the past 30 years, some of the key events that have shaped our policies, and how we intend to move forward in the new economic and financial landscape.
However, two members of the Executive Board remained responsible for tabling proposals for decision in issues of monetary policy and financial stability. This was also changed later, so that these two were no longer responsible for tabling proposals for decision, but only acted as spokespersons. When Irma Rosenberg left, the role of spokesperson for monetary policy disappeared, and when Lars Nyberg leaves at the end of this year, the role of spokesperson for financial stability will also probably disappear. The Executive Board has also decided to assign the Governor to assume managerial responsibility for the Heads of Department and to monitor the Riksbank’s activities within the scope of the fixed budget and operational plan. However, this will not solve the problem of the Governor not being head of the Riksbank in the same way as a Director General is head of an authority. The Riksdag Committee on Finance has stated its intention to review the Sveriges Riksbank Act once other issues it has been assigned by the government to investigate have been cleared up. My suggestion is that the role of the Governor of the Riksbank also be reviewed and strengthened at the same time. There are many ways in which this could be done, and different countries have taken different approaches. One possibility that I think might work well would be to have a Governor who is head of the authority and two Deputy Governors who, under the Governor, each take responsibility for their part of operations.

Reservations regarding such decisions could have the opposite effect to that desired. Instead of strengthening financial stability, we could weaken it. Despite this, our concrete measures functioned well during the financial crisis. At the Riksbank, we have, in practice, successively moved away from the principle of all six members of the Executive Board needing to be involved in and decide on all issues. Just  10  I know of only two other authorities with several heads: the Swedish National Audit Office has three heads, of whom one is an administrative head, and the Parliamentary Ombudsmen have four heads, of whom one is an administrative head. Like the Riksbank, both of these authorities are under the Riksdag, which does not have any extensive experience of appointing and leading authorities. BIS central bankers’ speeches  11  over ten years ago, the five Deputy Governors were responsible for preparing matters within one or more departments. This was changed even before I came to the Riksbank, six years ago, when they were given preparatory responsibility for certain specific areas. Eventually a management group was formed. This consists of the Heads of Department, with the Head of the General Secretariat as chairman. It took over responsibility for certain strategic issues and responsibility for coordinating many of the daily operational issues which, previously, had largely fallen to the Executive Board to handle. Decision-making responsibility for daily operational issues has been delegated to the Heads of Department.
Collateralised finance and the transmission of monetary policy  The shift of gravity in the financial sector away from traditional commercial banking and towards shadow banking affects the channels of transmission for monetary policy in different ways. In some respects the transmission mechanism is weakened through the loss of control over some financial aggregates – such as credit formation – and the declining coherence between credit and money. In a world of shadow banks the money multiplier might become a will-o’the-wisp which central banks find difficult to use as a steady instrument of policy. The reserve basis – which in the inverted-pyramid representation of the financial system sustains the creation of total leverage in the economy – becomes an even thinner support for finance. As the famous “conundrum” episode has demonstrated, a central bank’s intention to impose limits on credit can be resisted and offset by an endogenous expansion in leverage. While the base of the pyramid remains narrow, growing leverage can still expand the whole edifice of finance. Regulation is an answer to the weakening of central bank controls over the size of finance. It will be especially important to extend regulatory oversight to those market segments that, before the crisis, had escaped the attention of regulators. The prime focus of attention here will be – once again – the shadow banking system. Here, of course, there is an issue of relative scale.

The ECB has had to use different instruments at different stages of the crisis. Now the economic and financial situation in Europe is significantly better. Financial fragmentation has receded, Member States have made significant efforts towards economic convergence and the governance of the euro area has been strengthened. We are gradually moving out of the  BIS central bankers’ speeches  1  crisis phase into a different environment, with the focus shifting from solving the crisis to ensuring stable economic growth and inflation close to 2%. It requires a different approach and different instruments. The developments beyond our eastern border are the big topic of debate in Poland at the moment. Could the conflict between Russia and the Ukraine affect Europe and its economy in any way? The impact on trade or the financial system has thus far been limited. But this situation does give rise to uncertainty, so it can be regarded as a potential negative factor that could hinder economic growth in Europe, and that is part of our risk assessment. What about the strong euro? Aren’t you worried it could cause problems for European exporters and hinder the recovery? The ECB doesn’t target the exchange rate. Our primary mandate is price stability, and within this mandate, the exchange rate of the euro is among the factors determining the level of inflation. And indeed, the strong euro is contributing to the current low inflation.