samchain/econo-pairs-v1 huggingface dataset:
Note: A positive gender pay gap in this chart indicates that women earn less than men. Finally, if we look at unconditional gender pay gaps by sector (Chart 10), these gaps are broadly-based across sectors. The largest gaps are in the finance sector, both in London and the rest of the UK. These average close to 40%. This is materially larger than the next-worst sector, ICT, which averages around 30%. The evolution of the gender pay gap in finance suggests it has fallen only modestly, from over 45% in the mid-1990s to around 38% in 2018. 13  All speeches are available online at www.bankofengland.co.uk/speeches  13  Chart 10: Median gender pay gap by sector, sample average  Gender pay gap, per cent  45 40  London  Other  35 30 25 20 15 10 5 0  Agriculture  Industry  Construction  Trade and transport  ICT  Male male  Finance  Real Estate  Professional Public sector  Other  Female female  Source: ONS Labour Force Survey and Bank of England calculations. Note: A positive gender pay gap in this chart indicates that women earn less than men. The unconditional ethnicity pay gap exhibits a rather different pattern than the gender pay gap. This gap has also been materially lower, averaging around 4% over the sample. As the gender gap fell sharply in the decade to 2005, the ethnicity pay gap was broadly stable at around 2% (yellow dots in Chart 11).

If we were to repeat our calculations from 2016, the changes in interest rates alone would have reduced the estimated expected real return from around 3 percent to about 2 percent annually.3 Such estimates are fundamentally uncertain. The actual return may be substantially lower or higher than this estimate, as the history of the GPFG has shown. Even so, this uncertainty is something that we should bear in mind when drafting future central government budgets. 3 Other assumptions underlying the calculation of the GPFG’s expected real return, including an estimated equity risk premium of 3 percentage points, are held constant. 14  CONCLUSION  NORGES BANK  Eleven months ago, Norway had to lock down. At that time, we had no vaccine or medicines that could prevent the illness from spreading. We had to resort to wellknown remedies: Hand disinfectant, soap, hot water and not least – social distancing. Here at Norges Bank, it has not been any different. ECONOMIC PERSPECTIVES 18 FEBRUARY 2021  But times have changed. During the Spanish flu pandemic, Norges Bank decided to dispense a daily dose of cognac to employees who were ill or not feeling very well.
Even if we supplied the correct aggregate quantity of reserve balances, individual depository institutions with a deficiency of reserves had to find and trade with depository institutions with reserve surpluses. A purchase of fed funds therefore represented the marginal source of funding for a bank, and the fed funds rate paid by the bank was the marginal cost of bank funding. The Desk’s daily fine-tuning operations represented a marginal adjustment to the aggregate supply of reserves, mostly in response to the exogenous impact of changes in other balance sheet items, such as Federal Reserve notes and the level of the U.S. Treasury’s account balance at the Fed, which altered the level of aggregate reserves in the banking system. In the five years prior to the crisis, this system functioned with an average of $ billion in reserve balances and about $ billion in excess reserves. Although aspects of this approach evolved over time, this general method for implementing monetary policy was employed by the Desk for decades, and the Desk’s ability to reliably achieve the FOMC’s policy directive was judged quite favorably by market participants. In fact, with increased transparency around the FOMC’s fed funds target (which the Committee began to officially announce in the mid-1990s) and with high confidence in the Desk’s ability to hit that target, markets often adjusted to announced changes in the FOMC’s target policy rate without the need for the Desk to conduct operations to effect the change.

Instead, overnight, fixed-rate, full-allotment reverse repo operations with expanded counterparties, coupled with IOER available to banks, might enhance the Fed’s achievement of its policy objectives in this environment. Similar to IOER for banks, an overnight, fixed-rate, full-allotment reverse repo facility with same-day settlement would provide an essentially risk-free investment directly at a fixed rate, in this case to a broad range of non-bank counterparties. By reaching financial institutions that are ineligible to earn IOER, including, for example, money market funds, the facility widens the universe of counterparties that should generally be unwilling to lend at rates below those rates available through the central bank.14 The facility should also enhance competition in the markets by strengthening the bargaining position of non-bank lenders, which would now be able to place essentially unlimited funds overnight in the Fed’s facility.15 In this way, the facility is expected to complement IOER, strengthening the floor on the level of overnight rates and tightening the relationship among various money market rates. Such a facility might also be expected to help reduce the volatility of short-term interest rates. By conducting a daily operation with a known, fixed rate in unlimited amounts, the Fed can reduce uncertainty and absorb day-to-day variations in the supply of and demand for funds and collateral. An eligible lender that cannot earn the IOER rate and that has an unexpectedly large amount of funds to invest would be able to place the funds in the reverse repo facility rather than sell them in the market at an unusually low rate.
Equity prices are more volatile than seems justified by the variability of corporate earnings, as least over the sample period he considered; bond yields look to be more variable than reasonable forecasts of future short-term interest rates. Economists have therefore presumed that asset markets are prone to “time-varying risk premia”. In the case of bond markets, these would take the form of variations in the so-called “term premium” – by definition the gap between yields and expected future short rates. And although the term premium has generally been positive – on average, longer-term bonds have yielded more than rolling over a sequence of short-term bills – it could also be negative at times. For example, if investors worry about growing (if small) risks of some very bad economic outcome, that would tend to depress the yield on safe assets to levels below the expected future short rate. People are prepared to pay over the odds to insure against such tail risks 4. Unfortunately, it’s hard to distinguish these risk-induced movements in bond yields from those in the true expected path of future interest rates. But there are some pieces of evidence that, to me, are at least suggestive of such effects. 2  Strictly speaking, I should limit this equivalence to unpredictable changes in asset prices. But that covers most of them. 3  The reference is Shiller (1979); see also Mankiw and Summers (1984) and Campbell (1995).

The economy has also faced significant cost shocks in the past couple of years, this time in a negative direction. Commodity prices have fallen sharply, sterling’s exchange rate has risen. The combined impact has been enough to push CPI inflation down to zero. We don’t face the same trade-offs as during the 2009-12 period, as output now looks much closer to potential. Equally, there is a good argument for “looking through” some of the effects of these cost shocks. Faced with the same situation, Committee A would probably choose to loosen policy now in order to get inflation back to target as rapidly as possible. But, with the output gap projected to narrow further anyway, and because the effects of lower commodity and import prices are likely to fade over time, it would probably then face the prospect of having to re-tighten policy thereafter, as inflation threatened to move above the target. There was a very slight flavour of this in the MPC’s latest projections. The Committee has said it wants to get inflation back to target in “around two years and [keep] it there in the absence of further shocks”. Given all the other underlying assumptions in the forecast, the yield curve we faced at the time broadly does the first part of that job. But the central forecast rises a touch above target at two years and then drifts a little higher. For what it’s worth, and if only at the margin, that yield curve was thought likely to over-achieve.
Decomposing the forces that have weighed on wage growth3, we find two principal drivers: first, the still-high unemployment rate and its effect on wage bargaining dynamics; and second, a below-average contribution from past inflation in wage formation, caused by the last few years of exceptionally low headline inflation. As monetary policy has successfully supported demand and stabilised inflation expectations, both of these drivers should wane going forward. Their dragging 4/6  BIS central bankers' speeches  effect on wage growth, however, will take time to fade out. Labour market slack will lessen as unemployment continues to fall, but it is unclear how quickly this will feed through into wage dynamics – especially if the experience of other advanced economies is instructive. A strengthening labour market may attract “marginally attached” workers back into the labour force, or encourage those “underemployed” to seek more hours, causing the effective supply of labour to rise in tandem with demand. Domestic wage pressures may therefore only materialise later in the economic expansion. The influence of the second driver – low past inflation – should also dissipate given the recent recovery of headline inflation. But this may take some time since a number of factors might slow down the reaction of wages to higher inflation. First, wage negotiations in many countries and sectors have largely been concluded for this year, meaning any impact of higher inflation via negotiated wages is likely to be delayed.

Historically, the most drastic processes of deleveraging, including the post-war episodes and the recent post-crisis episode in the US, have relied on both mechanisms. But the contribution of nominal growth has always been decisive for success. In the euro area, until recently, real growth and inflation were too low to foster macroeconomic deleveraging, so balance sheet repair had to take place through the more painful channel, conflicting with the objective of macroeconomic stabilisation. Rising nominal growth is now helping to reconcile those two goals. Nevertheless, further efforts are still needed to work through the legacies of the crisis, especially in parts of the euro area banking sector where nonperforming loans remain high. The third important feature of the recovery is its broadness across sectors and countries – which is to say, it has not only strengthened but become more homogenous across the euro area. This reflects above all the effectiveness of our measures in narrowing financing conditions across different economies. If one looks at the percentage of all sectors in all euro area countries that have positive growth, the figure stood above 80% at the end of last year – above its historical average of 73% and the level observed during the 2009–11 recovery. Similarly, the dispersion in growth rates across both sectors and countries has also narrowed significantly and both are now at their lowest level since 1997. The same story is visible for employment. In early 2014 the vast majority of euro area headcount growth was coming from Germany.
While local rates have not responded only to changes in external rates – reflecting also the actions of local monetary policy –, a rise in international interest rates could result in increased costs of corporate financing. At the same time, it could generate portfolio adjustments by the agents involved, helping in the interest rate hike and causing greater volatility in the markets. As of the second quarter, Chile’s corporate financial sector showed no material change from end-of-2013, although debt is high and profits are low by historical standards (figure 10). All in all, the debt-to-GDP ratio maintains a slightly positive trend. In the context of slower economic growth, we cannot rule out less favorable indicators coming in for more recent periods – not available at the closing of this IEF Report. Meanwhile, the exchange rate depreciation has not eroded significantly the profits of currency-mismatched firms. In the residential real-estate market, prices continue on the rise, while in the office- space sector vacancies have increased (figure 11). Market indicators point to strong growth in housing prices in the Metropolitan Region, as demand continues to be strong – despite the ongoing phase of the business cycle – and depleted inventories. A change in these factors could result in slower growth in prices, so one must not extrapolate past trends into investment and funding decisions for projects in the sector.

By regions, it is worth noting the widening divergence between the United States – with a more consolidated recovery – and other developed economies, such as the Eurozone and Japan, which have made further downward revisions. In the emerging world, prospects are also weaker, with Latin America making the bigger downward corrections. In the baseline scenario, our trading partners are expected to grow 3.5 and 3.9 percent in 2015 and 2016, respectively (table 2). In the baseline scenario, external financial conditions and prospects will be less expansionary than they were this year, but will remain favorable from a historical perspective. In the United States, the Federal Reserve Board ended its asset purchase program and is expected to raise the federal funds rate in 2015, probably pushing US long-term rates up. The Eurozone and Japan have pursued a more expansionary monetary policy, because of weaker economies and deflationary risks, and further efforts in this direction are expected in the coming quarters. Thus, long-term interest rates in the main developed economies continued to recede or remained low. The better relative performance of the United States compared with the rest of the world has led to an overall strengthening of the dollar, affecting the other currencies, including the Chilean peso. In Chile, its trajectory has also been influenced by the adjustment of the local macroeconomic scenario, changes in monetary policy and the decline in copper prices (figure 8). The drop in commodity prices has triggered important changes in the world inflation outlook.
As you know, we have already spent close to three-quarters of a year studying both sets of issues in depth. Because both banks and securities firms have a great interest in the potential solutions to these particular issues, the Basel Committee has worked jointly with the International Organization of Securities Commissions (IOSCO) to consult with industry representatives and other supervisors on  2  BIS Review 17/2005  these matters. I must say that this co-operation with IOSCO in areas of mutual interest has been a very fruitful and beneficial experience, and the work has been conducted in a very positive and collaborative spirit. Also in this regard, I must extend my thanks to ISDA and its members for being faithful and active participants in these discussions. ISDA and its members have volunteered again considerable data, time, and energy to the work at hand. As you may already know, there are five specific areas of focus, namely First, the treatment of counterparty credit risk for over-the-counter derivatives, repo-style and securities financing transactions; Second, the treatment of double-default effects for hedged transactions, in relation with trading book, but also banking book, exposures; Third, the short-term maturity adjustment, under the internal ratings-based approach, for some trading book-related items; Fourth, a limited number of improvements to the current trading book regime, especially with respect to the treatment of specific risk; and Fifth, the design of a specific capital treatment for unsettled and failed transactions.

We also published a working paper called: “Studies on the Validation of Internal Rating Systems” Let me mention these principles briefly. Firstly, we set out our understanding that validation is fundamentally about assessing the predictive ability of risk estimates and the use of ratings in credit processes. Secondly, we stress that the primary responsibility for validation lies with the bank itself, while the supervisor’s responsibility is to review the bank’s processes and outcomes – a point which I think we all agree is very important. 4  BIS Review 17/2005  The remaining principles relate more to the process itself. We note that validation is a likely to be an ongoing, iterative process which will require an ongoing, iterative dialogue between banks and supervisors. Then our fourth principle reflects that there is no single validation method, or universal tool for validation, even though techniques may converge over time. We also highlight, in our fifth principle, that validation should encompass both quantitative and qualitative elements – validation is not a purely technical or mathematical exercise, but should also include an assessment of controls and other qualitative factors. Finally, we stress our view that validation processes and outcomes should be subject to review within the bank, by parties which are independent of those who are responsible for the design and implementation of the processes. I think these principles set out clearly what supervisory expectations are, and should provide a useful steer to the industry.
The public authorities at home were committed to supporting the domestic economic development by pursuing stimulus fiscal and monetary policies. In the banking sector, the global financial crisis appeared mainly with the contracted paces of lending to the economy. Throughout this period, the Bank of Albania has aimed at preventing the deepening of the impact of this crisis by conducting an ease monetary policy and supplying the interbank market with necessary liquidity. During 2009 and 2010, the Bank of Albania lowered the key interest rate by 1.25 percentage points, to 5%. Also, during the major part of 2009, the banks benefited unlimited liquidity, at an interest rate equal to the key policy rate. In the meantime, before the impact of the crisis, through special regulatory acts initiated  BIS central bankers’ speeches  1  since 2006, the Bank of Albania has aimed at limiting some risks arising from banking activity, such as rapid and foreign-currency lending, by setting higher capital requirements for more exposed banks. Throughout this period, we have communicated regularly with the public at large, businesses and banking industry, to explain our actions and discuss the challenges posed to economic actors. We believe that as a result of these actions taken by public authorities and the cooperation with the financial industry, the banking sector has successfully withstood the impact of the global financial crises, remaining sustainable and maintaining positive indicators of financial intermediation.

Or might there be reasons for Sweden and other countries to specially design our own solutions, over and above those imposed by international regulations? Lending and house prices in Sweden relatively unaffected by the crisis One area where Sweden stands out in comparison with many other countries, is the development of house prices and household indebtedness. As I noted earlier, house prices  1  See, for instance, the report “An assessment of the long-term economic impact of stronger capital and liquidity requirements” by the Basel Committee and the Financial Stability Board (http://www.bis.org/publ/bcbs173.htm). BIS central bankers’ speeches  1  in many countries have fallen heavily after being pushed up in a credit-driven boom over a number of years. In Sweden, too, house prices and lending to households have risen substantially. But here we have not experienced any corresponding fall in housing prices in connection with the crisis; we can just distinguish a minor dent in the curve (Figure 1). Lending to households has also continued to increase rapidly. It has been profitable for the banks to fund the increase in Swedish mortgage borrowing in the international capital markets. Funding in foreign currency has shown an increase trend (Figure 2). This has meant that Swedish households have been able to obtain mortgages at a lower cost and probably to a greater extent than would otherwise have been the case. But this method of funding is not entirely without risk.
–  And lastly, the Stability and Growth Pact disproves the assertion that the euro area has no automatic stabilisers in the event of asymmetric shocks to a Member State. Indeed, by urging governments to aim at a fiscal position "close to balance or in surplus" in the medium term, the Pact enables them to allow budget deficits to increase during periods of specific national difficulties without exceeding the 3% reference value. In short, it enables countries  BIS Review 96/2001  3  to create a fiscal buffer during periods of normal economic conditions. This buffer can be drawn on to counter economic divergences or asymmetric shocks during economic downturns. But of course, the extent to which Governments can let automatic stabilisers play strictly depends on the initial level of the fiscal balance; obviously countries which still have fiscal deficits have less room than countries with budgets close to balance or in surplus. II. The Euro itself is a catalyst for further progress  While many acknowledge that the introduction of the euro on 1 January 1999 was broadly successful, one may ask, at this juncture, what the conditions are for the full and ongoing success of the euro in the medium and long term. What is very encouraging in this respect is the fact that, in a number of areas, the euro in itself appears to be a catalyst for meeting these conditions. 1.

How are credit derivatives used in Sweden? As you may know, Sweden currently has one of the world’s most developed derivative markets. This is seen in relation to the size of the economy and the turnover on the stock market. But when it comes to credit derivatives, the situation is different. Here the trade is much more limited. This is primarily due to our corporate bond market being so small. And without corporate bonds, it has been difficult to trade in credit derivatives. The major Swedish banks base their core activities on long-term customer relations. Credits to small and medium-sized companies are predominant. The banks’ exposures to companies traded actively in the credit derivatives market are relatively small. Moreover, the banks have had plenty of capital and the need to sell credit risk to outsiders has been limited. The number of deals in credit derivatives has increased in recent years, but the total exposures remain small, on the whole. The major part of the trade has been on behalf of customers. This means that the banks mediate deals for customers, for instance, insurance companies, which for various reasons want to buy or sell credit risk. If we look ahead, there is reason to believe that credit derivatives will gain increased significance. This is partly related to the new capital adequacy rules, Basel II. The Basel rules, the old and the new, regulate how much capital a bank needs to cover the risks in its credit portfolio.