samchain/econo-pairs-v1 huggingface dataset:
Aggregates, as I have said, can hide a multitude of sins. Household debt came down post crisis in most advanced economies – falling from 83% of GDP in 2009 to around 73% today – and has grown very slowly, if at all, since, moving within a percentage point for the last five years.12  11 The Euro area is perhaps something of an exception, given that Euro members issue debt in a common currency rather than a national currency. This removes the exchange rate and inflation mechanisms for correcting debt values that can operate when sovereigns issue in their own currency and makes the adjustment mechanism of default more likely, as was seen in the Euro crisis. 8  All speeches are available online at www.bankofengland.co.uk/speeches  8  Financial sector debt in advanced economies has also grown very slowly after the very painful deleveraging of the financial sector during and after the crisis. This reflects greater risk aversion in the banking sector reinforced by the much higher level of capital banks are now required to hold against losses, a very positive development for financial stability. Corporate debt in advanced economies, however, is a more mixed story. It has not grown much overall over the past 5 years. But within that, over the past 3 years its growth rate has accelerated in some countries – particularly the US and France. And perhaps more importantly, while the totals may not be changing much, the riskiness has been increasing.

Google and Facebook may be at the top of their industry now, but remember there were Yahoo, MySpace and Friendster. I am very sure somewhere in some garage, killer apps are being developed to rival current industry leaders. The fourth observation is that shifts in consumer needs and expectations will play a key part in the finance revolution. 91% of Malaysians today have a smartphone and 83% will look on the internet to research new products and services. Finance and business models will need to be redeveloped around changes in consumers’ lifestyles and expectations. For example mobile banking in its traditional sense does not work anymore in this country as smartphone penetration is quite high and the public is generally receptive to new ideas and innovations. The transformation of finance and technology will also usher in an era of increasingly educated, empowered and activist consumers, who will scout for the best prices and services. Globally, around a third of consumers would consider banking with a technology giant (e.g. Google, Amazon or Facebook), potentially due to perceived personalisation and better customer experience. The fifth observation is that technology could be the catalyst to propel finance as a great social equaliser of the future. Advancement in technology will enhance financial inclusion by addressing information asymmetry and reducing the cost of extending finance to previously underserved groups. This could grant access to around 2 billion people globally who remain unbanked today, enabling them to save, invest and uplift their livelihood.
Monetary and macro-prudential policies: The case for a separation of powers Speech given by Ben Broadbent  Reserve Bank of Australia, Sydney via videolink from Bank of England 12 April 2018  I have benefitted from helpful comments from my colleagues at the Bank of England. I would particularly like to thank Mette E. Nielsen, Richard Harrison, Lien Laureys, Roland Meeks, Ambrogio Cesa-Bianchi and Matthew Corder for their valuable research assistance. The views expressed are my own and do not necessarily reflect those of the Bank of England or other members of the Monetary Policy Committee. 1  All speeches are available online at www.bankofengland.co.uk/speeches  Periodically, public services in Britain are criticised for what is described as a “target culture”. The charge is that, because they’re asked by politicians to concentrate on the more prominent and observable objectives of the job, public services can pay too little attention to its less visible requirements, even when those are equally important. If you ask doctors to prioritise a reduction in waiting lists they might then spend too little time with individual patients. If they’re judged only by exam results there’s a risk that schools “teach to the test” and neglect the broader aspects of education. What these jobs have in common is that they involve multiple objectives, some of which are more easily measured than others. Many jobs are like this and economists have suggested that this can explain why, in the real world, performance-based pay contracts are much less prevalent than one would expect.

I also think there’s an additional justification for separation in many of these cases, and for monetary and macro-prudential policies in particular. It’s essentially a matter of accountability11. I think there’s little doubt that, over any limited period of time, monetary stability is more easily measured than financial stability. The MPC’s primary target is inflation, as measured by the rate of change of the Consumer Prices Index. We get to see the CPI every month, it’s never revised, and it’s therefore reasonably clear over time whether the target has been reached. Judging the MPC’s performance is in reality a little more complex than this. Policy takes time to work, so it’s inevitable that intervening shocks will prevent inflation from being exactly at the 2% target all the time, even if that were the sole objective of policy. In addition, the MPC’s remit involves a secondary objective, subject to the primary inflation target, to stabilise the real economy. If they occur, the MPC is asked to identify tradeoffs between the two. However, when that has happened – for example, following the sharp fall in sterling that accompanied the result of the UK’s EU referendum – I don’t think it’s been insuperably difficult to explain the policy approach. People can then monitor how the economy is performing, relative to our earlier projections. We on the MPC, for our part, can use surveys and market prices to gauge very regularly, in “real time”, what’s happening to inflation expectations.
For the past 40 years, the most popular of those informational assumptions has been rational expectations (Muth (1961)). That, too, has dominated modern macro and finance for a generation. In its strongest form, rational expectations assumes that information collection is close to costless and that agents have cognitive faculties sufficient to weight probabilistically all future outturns. Those strong assumptions about states of knowledge and cognition have not always been at the centre of the economics profession. Many of the dominant figures in 20th century economics – from Keynes to Hayek, from Simon to Friedman – placed imperfections in information and knowledge centre-stage. Uncertainty was for them the normal state of decision-making affairs. Hayek’s Nobel address, “The Pretence of Knowledge”, laid bare the perils of over-active policy if we assumed omniscience (Hayek (1974)). For Friedman, lack of knowledge justified a k% monetary policy rule (Friedman (1960)). For physicist Richard Feynman: “It is not what we know, but what we do not know which we must always address, to avoid major failures, catastrophes and panics.” Through Arrow-Debreu and Merton-Markowitz, economists may have failed to heed Feynman’s catastrophe warning. Despite occupying a small corner of the profession, decision-making under uncertainty has begun to attract recent interest (Hansen and Sargent (2010)). That is in part recognition of the limitations of the rational-expectations-cum-general-equilibrium framework for capturing key elements of the current crisis (Kirman (2010)). More positively, it may also be because it yields powerful, and in some cases surprising, insights. Take decision-making in a complex environment.

We also project that during the first half of 2017 inflation will hit 3 percent and will remain in the neighborhood from then onwards (figure 5). It should be noted that private inflation expectations are consistent with this scenario, assuming that it will stand somewhat above 3 percent in one year and at 3 percent in two years. One important thing that distinguishes Chile from other economies, is that this process 2  BIS central bankers’ speeches  where inflation has remained high for quite some time has not driven inflation expectations away from the policy target, which attests to the credibility of the Chilean monetary policy (figure 6). In line with earlier Reports, inflation remaining high for almost two years responds largely to the direct and indirect effects of the exchange rate depreciation, in a context where past inflation indexation and tight capacity gaps have kept non-tradable inflation at a high level. In the baseline scenario, core inflation will converge to near its historic average by mid-2017. This process will be largely determined by the fact that, beyond the usual volatility, no further depreciations are expected of the magnitude seen in recent years. It is worth saying that, with significant fluctuations, the peso/dollar parity has dropped since December and, at the statistical cutoff date of the Report, it was near its levels of August 2015.
In line with this development, oil prices hovered above the previous assumption of oil prices at USD 55 per barrel in the Inflation Report of April. Our assumption for oil prices have been revised in line with the average of futures prices registered in the first half of July. Within this framework, oil prices were assumed to be USD 60 on average in 2009 and around USD 70 in 2010 and thereafter. On the other hand, projections for food inflation of 7.5 percent for end-2009 and 6 percent for the following years have been maintained. The impact of exchange rate movements on input costs since the last quarter of 2008 was offset by declining import prices. Therefore, import prices denominated in domestic currency did not display significant changes. While generating medium-term forecasts, it was assumed that imported input costs would increase gradually, in line with the anticipated slow recovery in global economic activity. 16  BIS Review 103/2009  Furthermore, revised forecasts envisage that world interest rates will remain low for an extended period of time. Regarding fiscal policy, it is assumed that fiscal discipline will be established within a medium-term program. Moreover, it is assumed that adjustments in taxes/administered prices in the second half of 2009 will add around 1.5 percentage points to 2009 inflation.

8), which will be published in May. Discussion of the timetable for a potential Swedish EMU membership The timetable for a potential full Swedish membership of EMU will be determined by the political process. The Government Bill "Sweden and the Economic and Monetary Union" from 1997 states that if the government later finds that Sweden should participate in the monetary union, the matter should be put before the Swedish people. Pronouncements by, for instance, Prime Minister Göran Persson indicate that a referendum will be held next year. Other political leaders have expressed similar opinions. If the result is a "yes", then Sweden would put forward an application to the European Commission and the ECB for an examination of whether we fulfil the legal and economic convergence criteria. The economic criteria assessed are the inflation rate, long-term interest rates, exchange rate stability and the public sector's budget and central government debt. Following this scrutiny, the European Parliament and the European Council shall present their views on the reports made by the Commission and the ECB and after this the ECOFIN Council will decide on the Commission's proposal to allow Sweden to participate in the union. If Sweden is accepted, there will be negotiations on when entry will occur and at what exchange rate the krona will be fixed against the euro, which is decided by the ECOFIN Council. After this a national changeover plan will need to be drawn up.
Cecilia Skingsley: A new playing field for monetary policy – what can a small, open economy expect? Speech by Ms Cecilia Skingsley, Deputy Governor of the Sveriges Riksbank, at Kammarkollegiet capital market day, Stockholm, 19 May 2016. *  *  *  I would like to thank Mikael Apel for his help in writing this speech, Goran Katinic for help with the diagrams and Claes Berg, Hans Dellmo, Gabriela Guibourg, Ulf Söderström and Anders Vredin for useful comments. Any remaining errors are strictly my own responsibility. As difficult as it is to believe today, it was only ten years ago that monetary policy was considered to be a relatively straightforward and uncomplicated business. It was assumed that essentially all that the central bank needed to do was to set the policy rate so that inflation ended up close to the target at the same time as production and employment developed in a satisfactory manner. There was a widespread perception that the central banks had finally gotten a grasp of how monetary policy should best be conducted, and this, it was assumed in turn, was an important explanation for the “Great Moderation” – the fairly long period of unusual macroeconomic stability that preceded the financial crisis. How different the situation is today. Conducting monetary policy is now rightly seen as anything but easy by both central bank representatives and economic analysts in general.

The regulatory model for stablecoins could include different applications of these features – as long as it offers equivalent protections to those for commercial bank money. As part of this, a key requirement will be to ensure that, unless the stablecoin is operating as a bank, the backing assets for stablecoins cover the outstanding coin issuance at all times. An alternative to a private stablecoin, but not a mutually exclusive one would be central bank digital money in the form of a central bank digital coin (CBDC). Central bank money has a unique role in anchoring value and promoting confidence in monetary systems. A CBDC could therefore play an important role in sustaining, and potentially expanding retail access to central bank money. I have discussed the public interest in the safety and security of money. But there is another very important public interest in this area which goes to the heart of the monetary and financial system. I mentioned earlier that commercial bank money combines in one place – bank accounts – the store of value and means of payment functions of money and in doing so enables lending to the real economy. What if new forms of digital money – Stablecoins or CBDC – result in a large scale displacement of commercial bank money which means that a higher fraction of money in the economy must be backed by high-quality liquid assets rather than by loans to the real economy, with this being necessary to preserve the stability of a now more fragmented financial system.
Looking at the size of the largest firm’s assets in relation to GDP across a spectrum of industries, finance is by far the largest (Chart 22). The extent of balance sheet growth was, if anything, understated by banks’ reported assets. Accounting and regulatory policies permitted banks to place certain exposures off-balance sheet, including special purpose vehicles and contingent credit commitments. Even disclosures of on-balance sheet positions on derivatives disguised some information about banks’ contingent exposures. This rapid expansion of the balance sheet of the banking system was not accompanied by a commensurate increase in its equity base. Over the same 130 year period, the capital ratios of banks in the US and UK fell from around 15–25% at the start of the 20th century to around 5% at its end (Chart 23). In other words, on this metric measures of balance sheet leverage rose from around 4-times equity capital in the early part of the previous century to around 20 times capital at the end. If anything, the pressure to raise leverage increased further moving into this century. Measures of gearing rose sharply between 2000 and 2008 among the major global banks, other than US commercial banks which were subject to a leverage ratio constraint (Chart 24). Once adjustments are made to on- and off-balance sheet assets and capital to give a more comprehensive cross-country picture, levels of gearing are even more striking.

Among the major global banks in the world, levels of leverage were on average more than 50 times equity at the peak of the boom (Chart 25). For a given return on assets (RoA), higher leverage mechanically boosts a banks’ ROE. The decision by many banks to increase leverage appears to have been driven, at least in part, by a desire to maintain ROE relative to competitors, even as RoA fell. For example, as Chart 26 illustrates, virtually all of the increase in the ROE of the major UK banks during this century appears to have been the result of higher leverage. Banks’ return on assets – a more precise measure of their productivity – was flat or even falling over this period. Between 1997 and 2008, as UK banks increased leverage, they managed to maintain broadly constant capital ratios by, on average, seeking out assets with lower risk weights (Chart 27). A similar pattern was evident among a number of the Continental European major global banks (Chart 28).
Of course, the realized stream of income could differ substantially from these projections, depending on how interest rates and the balance sheet evolve. In any event, it is worth repeating that the realized income is much less important than the economic outcomes that are achieved from the programs. Conclusion I hope these comments have provided you with some insights into how the SOMA portfolio has been managed to date and some perspectives on its evolution going forward. In general, the Federal Reserve will continue to have a meaningful presence in the Treasury market and in the agency debt and agency MBS markets for a number of years. However, with effective communications about potential balance sheet actions and careful implementation of any such actions by the Desk, the markets should be able to adjust to the evolution of the SOMA portfolio without considerable problems. Thank you. 12  All SOMA income is remitted to Treasury after paying for the operating expenses and capital needs of the Federal Reserve. 13  Of course, the Federal Reserve is being compensated for assuming this risk in the same manner as other market participants, because the assets were obtained at market prices that embed premiums for the various risks involved. Our presence in the market likely reduced these risk premiums, but they appear to have remained positive on average for the assets purchased. 14  See “Domestic Open Market Operations During 2010”, a report by the Markets Group of the Federal Reserve Bank of New York, March 2011.

Being a senior manager in finance now brings the responsibility and accountability that befits what the best in the industry have long recognised: finance is a true profession. The Bank of England’s role in markets has been comprehensively overhauled. We’re replacing constructive ambiguity with open for business when we provide liquidity to markets. We’re working with others as One Bank to develop markets that support financial stability and the real economy. We’ve revamped our governance and we’re holding ourselves to the highest standards of accountability, including the Senior Managers Regime on top of parliamentary and public scrutiny. So a huge amount has already been completed to make markets fairer, more resilient, accountable and effective. These reforms are essential for the UK to remain the leading international financial centre. BIS central bankers’ speeches  3  They are essential not least because the size of the UK-based market-based financial system could increase from six to nearly 15 times UK GDP by 2050. But the journey isn’t finished. Today is a chance to take stock and reflect: not just on our achievements but on what we might have missed, overdone, or simply got wrong. Given the complexity and scale of financial reform, it would be remarkable if every measure were perfectly constructed. Or if they all fit seamlessly into a totally coherent, self-reinforcing whole. Authorities must have the courage to listen, the honesty to admit our mistakes and the confidence to set them right.
This is that the new single-currency, euro, markets develop trading practices and standards of conduct, and the necessary infrastructure, that will genuinely facilitate integration. In terms of infrastructure, for example, real-time, same-day wholesale payments are essential to tie together money market activity conducted in different centres in the same instrument in the single currency; and similarly, linkages may also need to be considered between different settlement systems. Common trading practices, and market conventions, will also need to be developed. The lead here lies in many cases with market participants themselves, and with the systems they have developed to serve their trading needs. But it is a process we are very familiar with in London, where we have sought when necessary to encourage just such common initiatives in order to enhance the effectiveness of international trading activity in London. And with an eye on EMU, we have encouraged trading activity in the ECU, particularly in the money markets: hence, for example, the regular programme of monthly auctions for UK government ECU treasury bills, and the quarterly auctions of UK government three-year ECU notes, which have been running for some years. Because of the international flavour of our markets, and because we are conscious that these markets will want to trade the full range of euro instruments in London, we will continue to support initiatives aimed at achieving the necessary market structure where we feel we can make a contribution. Reforms in the London markets  BIS Review 110/1997  -7-  35.

They will want to be able to offer their customers deposits and foreign exchange facilities in the euro, lending and borrowing in the euro, hedging and collateral in the euro and financing and settlement facilities. The London markets will need to be able to operate in euro from the outset across the full range of their wholesale activities, and practical preparations are now well advanced to achieve that by January 1999. 14. The Bank of England’s part in this extensive process of market-wide preparation, besides equipping ourselves internally for operations in the euro, is a co-ordinating one, in three main ways:  •  first, our job is to ensure that the necessary infrastructure is developed in the UK to allow anyone who wishes to do so to use the euro in wholesale payments and across the financial markets from the first day of EMU. •  second, we aim to promote discussion between the EMI, national central banks and market participants across Europe about practical issues on which the market is seeking a degree of coordination. •  and third, we provide information: for example, through a quarterly publication on Practical Issues Arising from the Introduction of the Euro, which is distributed to around 32,000 recipients, including 4,000 directly overseas. The next edition will appear shortly, neatly timed for people’s Christmas reading, and I confidently expect it to be on the best sellers’ list for the festive season.