samchain/econo-pairs-v1 huggingface dataset:
This is reflected, for example, in the fact that the credit spreads, that is the difference between the interest rates on corporate bonds and the interest rates on government bonds, have returned to the levels that applied before Lehman Brothers filed for bankruptcy protection. The difference between interbank rates and the expected policy rate has also decreased (see Figure 15). The credit markets are also steadily improving. Companies that just a few months  BIS Review 105/2009  7  ago found it difficult to issue bonds now have access to the market again. Companies with a good credit rating can now borrow at a lower cost, at longer maturities and with lower collateral requirements than before the summer. It thus appears that the situation on the financial markets is beginning to ease and that confidence is slowly returning. This is in turn a precondition for the continuation of the recovery of the real economy. Global monetary and fiscal policy is still highly expansionary and there is plenty of spare capacity in most countries. It is not unreasonable to assume that a rapid recovery of the financial markets can also facilitate a more rapid recovery in the real economy. There are thus several reasons why it is reasonable to be cautiously optimistic. We must also remember, however, that we are still emerging from a severe recession and it may therefore take time before global demand recovers completely.

The European and French economies are therefore likely to suffer a significant slowdown next year, and the possibility of a limited recession cannot be excluded. But growth is expected to resume in 2024. I turn now to our assessment regarding the recent developments of inflation in the euro area. The rise in consumer prices has amplified in recent months in the euro area, reaching 9.1% in August according to the harmonised index of consumer prices. In France, inflation levelled at 6.6%, the lowest level in the euro area, thanks in particular to the tariff shield, but still stands at three times the inflation target of the Eurosystem. The flash estimates for September didn't bring a fundamental change to this landscape as inflation reached 10% in the euro area, and the mild levelling off in France was confirmed with a figure of 6.2%. In our view, the current surge in inflation has its roots not in excess liquidity, but in supply bottlenecks stemming from the faster-than-expected rebound in activity in the aftermath of the pandemic, and the sharp rise in energy and food prices, which was greatly exacerbated by the war in Ukraine. The inflation we are currently seeing is largely imported, and much of it - about twothirds for the euro area - is driven by energy and food prices. The recent surge in international gas prices has led the ECB to predict a peak in inflation by the end of 2022.
  The majority of bids, both by number and size, have been against narrow collateral.   Clearing spreads against both narrow and wider collateral have been similar across operations of the same maturity (Chart 8). 6 month auctions for wider collateral have commanded a significant premium compared to the 3 month auctions. BIS central bankers’ speeches  11    The January and February auctions were uncovered – that is, the amount bid (against either collateral set) was less than the amount on offer. There are two points to note about uncovered auctions. First, even if there is insufficient demand, the auction mechanism functions. Second, irrespective of the cover ratio, the allocation depends on where the bids are relative to the RSS. So while an uncovered auction will mean that the Bank allocates less than it had offered, a similar outcome could still occur if the auction was covered (but the bids were below the RSS). Concluding remarks During the past five years, the Bank has totally re-shaped its operations. Many of the changes arose as a direct consequence of the financial crisis, and the new demands for liquidity insurance that it engendered. As a result, the Bank has now installed permanent  12  BIS central bankers’ speeches  facilities to provide liquidity insurance, without compromising its ability to meet its monetary policy implementation objective. The academic profession can make a significant contribution to the field of central bank operations.

In this paper I have highlighted one example in particular where our thinking has benefitted considerably from such insights. And there is room for much more involvement going forward: although the Bank has rebuilt all of its sterling operations in the past five years, it is unlikely to have reached the end of the development process. As experience grows with both reserves averaging and the new auctions, we will undoubtedly learn more and adjust the operations accordingly. I hope that the presentation of this paper will provoke interest and questions, that it will nurture further academic study of central bank operations and that it will encourage wider participation in developing the future agenda. BIS central bankers’ speeches  13
Those who have been unemployed for a long period of time may lose their job skills and become less employable in the future. This can push up the non-inflationary rate of unemployment (NAIRU). Not only is this bad for those who are unemployed due to the loss of their job skills, it is bad for the nation as a whole because the rise in the NAIRU lowers the effective productive capacity of the economy and, with it, the capacity of the country to service its debts. 8  BIS central bankers’ speeches  In the current economic cycle, I think it is apparent that the path back to the Fed’s dual mandate objectives has been much slower than the one that the FOMC found acceptable in the past. Growth has consistently been disappointing relative to both our own and consensus forecasts. Recent performance and forecasts relative to the dual mandate objectives suggest that standard rules calibrated in earlier times understate the degree of accommodation required to achieve the desired return path to the dual mandate objectives. We should focus on how fast we are moving toward our employment and inflation objectives, and be wary of the risks that we see around that path. If progress toward the mandate objectives is slower than desired, then this is telling us that monetary policy needs to be kept at a more accommodative setting for a longer time period than a standard rule would suggest. As downside risks continue to be present, the case for accommodation is even stronger.

Such views should take into consideration the interests of European and Polish consumers, the interests of Polish banks and the interests of the institutions comprising the infrastructure of the Polish payment system. Moreover, they should be coherent with the assumptions of the Lisbon Strategy, i.e. with the obligation to prepare the European Union economy for global challenges of the 21st century. A separate issue is to specify the pace of works in Poland as regards the implementation of SEPA standards and mechanisms that have already been worked out. According to the timetable approved by the EPC, Poland will have to comply with SEPA standards for euro transactions already in 2008. However, the lack of established date for Poland’s accession to the euro area means that Poland should have more time to implement solutions specific for SEPA, which would mean that necessary investments and changes could be spread over time. On the other hand, it seems that early involvement of Polish banks and infrastructural institutions in the approved solutions, e.g. through the implementation of mechanisms to lower costs in the sector, through increased efficiency and attractiveness of offered payment services and through strengthened security of financial transactions, could be extremely significant for increasing their own competitive edge on the overall European scale. Thus, it seems that the above dilemma over the appropriate pace of works should be thoroughly analysed by the banking community and infrastructural institutions.
Growth since 1993 has averaged almost 3 per cent a year. The deep recession and good investment activity since then have meant that in this period there has been a supply of unutilised resources. As a result, inflation has remained low even though growth may have been somewhat above the level that can be regarded as sustainable. Moreover, Sweden has begun to repay external debt and government finances have recovered after the crisis in the wake of the 1980s bubble. In recent years household earned income has been able to grow strongly in real terms, partly thanks to the low inflation. Altered monetary policy process The laws that regulate the Riksbank were amended with effect from the beginning of this year. Monetary policy’s objective is now explicitly stated to be to maintain price stability. The Riksbank has a new Executive Board, consisting of six full-time members, that independently decides monetary policy issues. The new Executive Board entails some changes in the work on monetary policy. The centre of attention is the Board’s specific monetary policy meetings, which it is envisaged will be held eight to 10 times a year. Decisions about the repo rate, for example, will normally be taken at those meetings. A brief account of the Board’s decisions is to be presented in a communiqué the day after the meeting; a more detailed picture of the discussions will be available in the minutes of the meetings, which will be published with a time lag of six to eight weeks.

As a result, smaller firms have had to close and construction labour has moved abroad or gone to other domestic sectors. There are now many indications that construction activity is picking up again, though the rate of the recovery is difficult to assess. But housing demand has grown and there is a large need for new housing as well as for renovation. The Riksbank does not produce independent estimates; the available figures suggest, however, that in the coming decade between 20,000 and 45,000 new dwelling units need to be built each year and between 30,000 and 40,000 units a year need to be renovated. Activity may then grow rapidly in certain regions. Now that construction is recovering, the increased concentration among construction companies and producers of construction materials, as well as the shortages in certain categories of skilled labour, are liable to push costs and wages up. Certain problems with bottlenecks are already discernible; in the business tendency surveys from the National Institute of Economic Research, labour shortages are reported by 7 per cent of construction firms as against 2 per cent in March 1998. These shortages are accompanied by a high overall level of unemployment among construction workers; part of the explanation is that unemployment is high in certain regions and those who are unemployed there are reluctant to move a long way to regions where labour demand is stronger. Bottleneck problems in the construction industry are being studied on behalf of the Government by industry representatives.
Richard W Fisher: A report on the Texas economy and a hawk(s)eye view on recent Fed pronouncements – what does it all mean? Remarks by Mr Richard W Fisher, President and Chief Executive Officer of the Federal Reserve Bank of Dallas, before the Headliners Club, Austin, Texas, 2 February 2012. *  *  *  Thank you, Patti [Ohlendorf]. I am flattered that such a great group of Austinites has turned out tonight. I am especially pleased that Alejandro and Rosa Laura Junco are here. Alejandro is CEO of the print media company Grupo Reforma. He has earned a sterling reputation for journalistic independence in a part of the world where independence is a rare and sometimes dangerous thing. Columbia University, the University of Missouri and Michigan State University have honored him for his journalistic accomplishments, and the University of Texas at Austin has named him a Distinguished Alumnus. Alejandro’s company and its flagship paper in Mexico City take their name from La Reforma, a period of liberalizing reforms that transformed Mexico into a nation state in the mid-19th century, beginning with the overthrow of the man Texans know best and like least – Santa Anna – and ending with the ascension to power of a good general gone bad, Porfirio Diaz. As a child growing up in Mexico City, I was taught about La Reforma in school.

At the same time, we stated that we cannot specify an exact goal for employment because “the maximum level of employment is largely determined by nonmonetary factors that affect the structure and dynamics of the labor market” and that “change over time and may not be directly measurable.”7] In the aviary of monetary policy makers, I am considered a “hawk.” I respect the fact that the Congress of the United States has given the Federal Reserve a dual mandate of conducting monetary policy so as to have full employment and simultaneously maintain stable prices. I believe monetary policy is the principal determinant of long-term price stability. But I have long maintained that monetary policy is but one gear in the complicated gearbox that drives job creation. Education and other structural aspects of our economy condition the nation’s job-creating capacity; fiscal and regulatory policy, in turn, condition both the structure and dynamics of employment. I was delighted that the full committee recognized this and made it part of its official credo. In a world driven by rapid technological change and globalization, job-creating capital will flow not only to countries that conduct sound monetary policy but to places with the most welcoming, competitive tax and regulatory systems. This was underscored in a recent Harvard Business School (HBS) survey authored by Jan Rivkin and Michael Porter, two widely admired scholars on national competitiveness and economic development.
And all the narrow collateral previously eligible will remain permissible under the new regime as either narrow or wider collateral. 6  Of course any drawdown is predicated on the counterparty being expected to remain solvent. 7  This is in line with new FSB principles aimed at reducing the extent to which ratings are “hard-wired” into financial contracts. BIS central bankers’ speeches  5  Chart 3 Metrics of sovereign credit risk, market liquidity and size(a) US France Germany Netherlands Canada UK Italy Spain Belgium Austria Australia Sweden Denmark Finland Norway  5 yr CDS premia  300 250 200 150 100 50 0 -1  0 -50  1  2  3  4  5  6  7  10yr bond bid-offer spread (bps)  (a) The size of the bubbles is representative of the total amount of sovereign debt outstanding (in sterling terms). Ireland and Portugal are not shown, as their respective bubbles lie significantly to the north-east of the other countries identified in the Chart. Bubbles for Cyprus, Japan, Luxemburg, New Zealand, Slovenia and Switzerland are also not shown for clarity (although they are accepted as wider collateral). Data as at 11 April. Valuation The Bank’s valuation of collateral plays a key role in protecting the Bank against loss in the event of a counterparty default. Where available, the Bank uses market prices to value a security.

In particular, there are policy decisions required in the following dimensions: (i)  eligibility (what collateral should be accepted, and what should not);  (ii)  valuations and haircuts (how much is the collateral worth? );  (iii)  what fees should apply, if any, and  (iv)  limits (how much diversification should we seek across the collateral delivered?). These are important questions for the banking system as a whole, and have presented new and complex risk management challenges for central banks over the past few years. It is on these issues that we focus in this paper.3 To start with, we briefly outline some of the main features of the Bank’s lending operations. The sterling monetary framework The Bank’s main activity in the sterling market prior to the financial crisis was via its shortterm repo open market operations (STR OMOs). Those regular weekly operations provided the banking system with the right level of reserves such that short-term market interest rates would remain close to Bank Rate set by the MPC.4 In addition, in order to reduce the size of weekly STR OMOs to a manageable size, the Bank undertook longer-term repo OMOs (LTR OMOs) of 3, 6, 9 and 12 months maturity. The remaining operation of note was the Standing Facilities in which a commercial bank could borrow from, or lend to the Bank overnight, albeit at a less attractive rate than Bank Rate.
Each year, they engage in between 6,000-8,000 projects, large and small, with companies. The Fraunhofer have been found to play a vital role as both innovation hubs and diffusion spokes, boosting productivity in the German economy. 76  Since they first become operational in 2011, the UK now has around 10 Catapult centres, modelled on the German Fraunhofer. These are smaller in number and scale than their German counterparts and have far less project experience. Their focus, to date, has primarily been on acting as innovation hubs rather than diffusion spokes. This means the UK does not currently have the diffusion infrastructure for its companies enjoyed by Germany. This is not unimportant in explaining its longer lower tail of firms. The UK’s university network, repurposed, could potentially provide that diffusion infrastructure. Conclusion The story of growth is a story with two “i”s – ideas and institutions. The Fourth Industrial Revolution will expand the range of ideas, perhaps more than any of its predecessors. It may also expand the range of  75 76  https://www.fraunhofer.de/en/about-fraunhofer/profile-structure/facts-and-figures.html Comin, Trumbull and Yang (2011). 21  All speeches are available online at www.bankofengland.co.uk/speeches  21  workers who suffer its side-effects, perhaps more so than any of its predecessors. In the past, new institutions have emerged to cushion this painful transition, limiting the recessionary hit to societies. Historically, doing so appears to have held the key to sustainable growth.

There are added stresses on account of the dual burden of work and family responsibilities that, according to some studies, appears to have been largely shouldered by women.7 There are of course those wishing to return to the workplace as soon as possible due to remote working-induced anxiety associated with isolation. These are all side effects of working from home that we will have to tackle with appropriate policies. Now more than ever it is important to reaffirm diversity’s importance and value. It provides clear benefits such as efficiency, tolerance and a wealth of views in decision-making. We must continue to move forward resolutely and confidently, avoiding any blurring of the private and professional space, dividing tasks rationally and fairly, and harnessing technologies to our benefit to work towards real work-life balance. We cannot allow the pandemic to roll back the progress made in gender equality. Thank you. 7 Work, women and COVID-19, Ipsos Mori, United Kingdom, 23 October 2020. 10
On the contrary, there are several examples to show that Swedish banks’ service range fares relatively well in an international comparison. On the whole, it appears that Swedish banks are organisationally efficient and good at adopting new technologies in their distribution of services, but are less advanced when it comes to developing new products and services. Flexibility and long-term competitiveness In the long run, a company’s competitiveness is determined by its ability to adapt to changed conditions. How well-positioned are the Swedish banks to meet the banking and financial markets of tomorrow? I do not intend here and now to try to predict what the banking market will look like in ten years – that would be doomed to failure. But I would still like to take the chance to reflect on some of the trends that we nonetheless can perceive and what these might entail for Swedish banks. Here, I would like to highlight two such trends that are somewhat related. The first is disintermediation, which entails that banks’ role in the loan market is changing from own lending to only providing loans for which another investor assumes the risk. The other trend is commoditization, which means that certain kinds of financial contract – e.g. loans, funds or insurance – are becoming increasingly standardised and difficult to distinguish from one another. With that, the price should become the crucial factor in the consumer’s choice of product. These kinds of trends should be taken with a pinch of salt, of course.

By contract design, the overall financial system became impossible to decompose into separable sub-structures. Such a structure is in fact worse even than Tempus’s complex production line. Structured credit was equivalent to taking one part randomly from each of 1000 watches and reassembling the pieces. No watchmaker in their right mind would expect the resulting timepiece to keep time for too long. Such was the CDO story. However sensible structuring of credit may have seemed for individual firms, it is difficult to conceive of a network which could have been less structurally robust. Darwinian evolution is currently in the process of naturally deselecting CDOs. But there is a strong public policy case for the authorities intervening more aggressively when next financial innovation spawns species with undesirable physiological features. Finally, the business strategies of financial firms have over the past decade created a network structure which is much less easily decomposable. Under the old financial order, mutuals were a sub-structure, as were commercial banks, investment banks and investment funds. In some cases that was by choice. In other cases it was the result of regulatory  38  President’s Working Group (2008). 39  For example, as proposed in King (2008). BIS Review 53/2009  17  design: for the larger part of the past century, the Glass-Steagall Act in the US prohibited inter-breeding between commercial and investment banking. Deregulation swept away banking segregation and, with it, decomposability of the financial network. The upshot was a predictable lack of network robustness.