samchain/econo-pairs-v1 huggingface dataset:
And in private services earnings actually fell. But this reflects the impact of significantly lower bonus payments this year than last, and is likely to unwind as the bonus season comes to an end. If output growth were to pick up during the course of this year, then some of the recent fall in average hours worked - which appears to reflect a degree of labour hoarding - would be likely to unwind, leading to an increase in earnings growth. So the MPC will continue to monitor carefully developments in both wages and prices. The fourth and final price I want to discuss is the level of interest rates. The MPC sets interest rates in order to try to maintain an overall balance between demand and supply in the economy, thus keeping inflation close to the target. What will happen to interest rates depends, in part, on the response of the three other prices - the exchange rate, the oil price and wages - to developments in the economy. As resources shift from private consumption into both the public sector and net exports, there might be considerable movements in the exchange rate, the oil price, and even wages. The path of interest rates that will be necessary to keep inflation close to the target will depend on what happens to those prices. That is why it is extremely difficult to predict what that path will be. The MPC will take decisions on rates one month at a time.

Thirdly, there is no indication – from our perspective – that the risks entered into in the banking industry have risen: market and interest rate risk have only increased slightly on an aggregate level, and credit risk even seems to have fallen. Consequently, the banking sector is in good shape at the moment. As far as prospects for the near future are concerned, we believe that the macroeconomic environment and financial market conditions pose no major threat to the stability of the Swiss banking system. The outlook for 2005 indicates that economic growth in most regions will only slow down at a moderate pace. In addition, the available indicators suggest that there is currently little risk of contagion effects causing a crisis in the Swiss banking sector. Nevertheless, there are still potential sources of risk. They pertain to credit risks in particular. Firstly, an unexpectedly sharp economic downturn could have a serious impact on the quality of the loan portfolios and the stock market. Secondly, should we witness a swift economic recovery, however, a sharp rise in the still very low interest rates could also result in a deterioration of the loan portfolio. This  is because the growing interest burden would suddenly put considerable pressure on households and companies with mortgages to pay off. Banks would also be directly affected by the steep interest rate hike, as the interest rates on their assets tend to be fixed for a longer period than those on their liabilities.
If anything, it looks to be slightly lower than anticipated. However, so far this year wage costs per produced unit nevertheless appear to have increased by more than we had expected as a result of the weaker productivity. Employment continued to increase during the second quarter of this year, but unemployment remained largely unchanged compared with one year ago. The outcomes were close to the forecasts. The number of hours worked per week continued to increase during the first half of the year, which contributed to a decline in productivity. The Economic Tendency Survey in July was also weak. It fell and now indicates that the Swedish economy is much weaker than normal. It is mainly households that are contributing to the low level. This is the most pessimistic that households have been about the Swedish economy for 15 years. The confidence indicator for the Swedish business sector fell, but it is nevertheless at a level corresponding to the average since 1996. The Economic Tendency Survey also shows that sales prices in the wholesale and retail trade continued to rise to a large extent and that continued increases are predicted for the third quarter. Households’ and companies’ inflation expectations continued to rise. They even rose more than is indicated by statistical correlations between inflation and inflation expectations. However, inflation expectations as measured in the bond market, what is known as breakeven inflation, have declined. Inflation rose from 4.0 per cent in May to 4.3 per cent in June and 4.4 per cent in July.

In practice this often means that we allow the time for bringing inflation up or down to the target to vary depending on the prospects for economic activity. According to our monetary policy strategy, our policy is normally aimed at attaining the inflation target within two years. The calculation we made in July indicated that it would probably have required a slightly higher interest rate path than that described in the Report to bring inflation down to 2 per cent in two years. This would have brought down growth even lower next year. Given that inflation was deviating so far from target and taking into account the uncertainty in the financial markets, it would have been better, in my opinion, to aim at bringing down inflation to around 2 per cent in three years. I do not believe that the decision in July can be regarded as any severe tightening of monetary policy. The interest rate is still relatively low. The nominal interest rate prior to the decision at the beginning of July was at a long-term average of 4.25 per cent. But the real interest rate was still lower than an historical average. In July the real interest rate was around 1.5 per cent, but it will rise during the forecast period to just over 2.5 per cent at most. The interest rate path we described in July entailed a change from a relatively neutral to a slightly contractionary monetary policy.
I’ve spent this morning talking about measures to tackle the root cause of the stress last autumn, poorly managed leverage. But LDI funds aren’t the only non-bank to use leverage. [20] And leverage is also not the only vulnerability in the non-bank system. Forced selling that can follow from leverage can also arise from liquidity mismatches[21] or from a lack of preparedness for margin calls. [22] Identifying vulnerabilities is only half the battle. We also need to understand how market participants will behave when a stress hits. To this end, the Bank is very shortly launching its exploratory exercise to enhance understanding of the risks to and from non-banks, their behaviours, and how these behaviours can amplify shocks. As part of this exercise the Bank may reach out to some of you attending this conference. Shining a light on how market participants may behave collectively in a stress will help both the Bank and yourselves better prepare for such events. You’ll hear plenty from us once the exercise is launched. In particular, my colleague Lee Foulger will be giving a speech next week outlining how this exercise will helps us to better understand system-wide resilience. But what should we do about these vulnerabilities? We should seek to contain them and to mitigate their financial stability impact. This is what I’ve laid out today with respect to LDI funds’ leverage. Further frameworks may need to be built up.

It is for staff at the UK authorities to calibrate a range of holdings of liquid assets maturing within a week that would address financial stability risks from MMFs. However, it is easy to see how the illustrative scenario I talked you through earlier could be used to calibrate the appropriate resilience of MMFs. MMFs could have a range of holdings to reflect idiosyncratic and systemic risks. These holdings could be calibrated according to observed historical outflows, as seen in the dash for cash and LDI stress events. And as discussed in the discussion paper, the usability of these holdings will also be a key consideration for the UK authorities. Conclusion The FPC have recommended a framework for the steady-state resilience of LDI funds, built over three building blocks: baseline resilience, systemic resilience, and fund specific additional resilience. The first two building blocks amount to a 250 basis point minimum. And the framework also requires pension schemes to put in place operational processes enabling them to deliver collateral within five days and to support LDI funds in drawing down during stress. This framework provides us with a suitable framework for addressing non-bank vulnerabilities more generally. We can use this framework to contain non-bank vulnerabilities and so to mitigate their financial stability impacts. But this is a conference for pension funds, so I will leave on a message to the experts at this conference. Ensuring financial stability is not only a job for financial stability authorities and regulators such as TPR, but also for participants.
4 See Bogle, 45–46. 5 See What is Banking For? Remarks by Onora O’Neill, Reforming Culture and Behavior in the Financial Services  Industry: Expanding the Dialogue, October 20, 2016. 6 5/6  BIS central bankers' speeches  6 See generally Robert H. Frank, Success and Luck: Good Fortune and the Myth of Meritocracy (2016). 7 See generally Dan Awrey, William Blair, and David Kershaw, “Between Law and Markets: Is There a Role for  Culture and Ethics in Financial Regulation?” 38 Del. J. Corp. L. 217 (2013) (discussing the need for “otherregarding” norms in finance). 8 See Criminal Accountability and Culture, Remarks by Preet Bharara, Reforming Culture and Behavior in the  Financial Services Industry: Expanding the Dialogue, October 20, 2016. 9 See Adam Smith, The Theory of Moral Sentiments, Section III.1.5. 6/6  BIS central bankers' speeches

William C Dudley: Student loans and household finance Opening remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Convening on Student Loan Data Conference, New York City, 4 March 2015. *  *  *  Andrew Haughwout, Joseph Tracy and Wilbert van der Klaauw assisted in preparing these remarks. Good morning. I’m happy to welcome you to the New York Fed for this workshop that is intended to increase our understanding of student debt and how it affects individuals, their families and the economy. I am delighted to see such widespread and growing interest in this important topic. Making continued progress on understanding these issues will depend critically on efforts to identify and address existing data gaps that hamper its study. I am particularly happy to welcome Deputy Secretary Sarah Bloom Raskin, who has spoken frequently and eloquently in the past about the need for improvements in student loan servicing and debt collection, the macroeconomic consequences of increased student debt, and the need for better data and analysis. I look forward to her remarks today. Before I make some specific comments on student debt, let me take a step back and say a few words on household finance more generally. As always, what I say represents my own views and not necessarily those of the Federal Open Market Committee or the Federal Reserve System.1 There are several reasons the New York Fed has increased its focus on household finance.
Prospects for lower inflation, a weaker growth outlook and lower interest rates abroad were underlying factors. In the course of spring 2011, it has become clear that the upturn in the Norwegian economy has gained a firm footing. There is a rising shortage of labour and cost inflation is picking up. The subdued rise in import prices, combined with the krone appreciation, has resulted in a slower rise in prices for imported consumer goods. With the Norwegian economy’s current solid pace of growth, inflation is nonetheless expected to pick up further ahead. At our meeting on12 May, we decided to raise the key policy rate by 0.25 percentage points to 2.25% to take into account the consideration of stabilising inflation and activity further ahead. Chart: Krone exchange rate – I-44 The krone is strong, reflecting favourable prospects for the Norwegian economy and high oil prices. When oil market conditions normalise, some of the krone appreciation can be expected to be reversed. Norges Bank does not operate with a target for the krone exchange rate, and the krone shows fairly wide fluctuations. With high growth in demand for goods and services and rising price and cost inflation, there is also a risk of a further appreciation of the krone. A strong krone dampens inflation through a subdued rise in prices for imported goods and services. Persistent low inflation could curb the rise in the key policy rate.

Chart: Level of debt high for many households Direct losses associated with loans to households are seldom large in Norway. Even during the banking crisis 20 years ago, losses were limited. However, historically low losses are no guarantee of low losses in the future. A mutually reinforcing dynamic of rising debt and increasing property prices characterises the run-up to financial crises. Higher property prices lead to higher collateral values for loans. With easier access to credit, purchasing power increases. The household debt burden is now higher than prior to the banking crisis. The increase has been highest for middle and lower income groups (deciles). The number of households with a very high debt burden is also far higher. The number is sufficiently high to engender negative spillover effects in the economy in the event of an abrupt change in household behaviour. Such spillover effects may in their turn affect bank losses, which is the main reason that the work on financial stability places particular emphasis on developments in the household sector. While monetary policy and fiscal policy have been anchored within a long-term, operational framework over the past ten years, there has been no comparable, coherent regulatory system for financial markets. Requirements are currently imposed on individual banks, but without adequate regard to overall risk in the financial system. This became clear during the financial crisis. New regulations are underway. The new Basel III framework aims to establish a long-term framework for financial market regulation that lays the basis for a robust financial system.
In this facility, a number of financial entities, such as money market funds, that cannot hold reserves at the Federal Reserve can lend funds overnight to the Federal Reserve against the Fed’s Treasury collateral and receive the overnight RRP rate – currently 25 basis points. The overnight RRP provides these institutions with an alternative investment if the interest rate offered by banks is unattractive. Consequently, these financial  2  In this arrangement, the size of the Federal Reserve’s balance sheet was mainly driven by the amount of currency in circulation. As the amount of currency in circulation increased, this drained reserves from the banking system. The Federal Reserve offset this by increasing its holdings of Treasury securities. 3  The Federal Reserve gained the authority to pay interest on reserves earlier as part of the Financial Services Regulatory Relief Act of 2006; that legislation authorized the Federal Reserve Banks to begin payment of interest on reserves in 2011. As part of the TARP legislation, Congress moved up the date at which the Federal Reserve could exercise that authority to October 2008. BIS central bankers’ speeches  5  entities should be unwilling to lend funds to banks and others at lower rates than the overnight RRP rate. The overnight RRP rate should act, therefore, as a floor on money market rates. As I noted earlier, the tools are working as anticipated.

One might reasonably expect these modal forecasts to be above the mean when inflation is low and the economic outlook is uncertain. Second, the median federal funds rate forecasts for primary dealers and for buyside participants surveyed just prior to the December FOMC meeting differed only marginally from the December SEP median projections of FOMC participants. This reinforces my judgment that the difference between means and modes is the main factor for the gap between the federal funds futures market and the SEP paths. Third, the differences between the interest rates implied by futures markets and the SEP have been quite small at shorterterm time horizons, such as the end of 2016, and grow much larger as the time horizon lengthens. I think this is noteworthy because the confidence one has at longer horizons should be much lower than at shorter horizons. Because I do not know what the federal funds rate target range will be at the end of 2017 or 2018 with any confidence, I am not very concerned if others have a different modal forecast. Projections will adjust as incoming information changes the economic outlook. I would expect convergence over time of the SEP and market expectations as new information informs the outlook. 6  BIS central bankers’ speeches  Let me close with some observations about my current thinking concerning our reinvestment of maturing Treasury securities and paydowns in our agency MBS holdings.
Several large Nordic bank conglomerates define the Nordic area as their home market, and have established, or plan to establish, branches in most Nordic countries. The largest Swedish and Danish banks have been the most active so far. A few of them, in contrast to other international banks established in Norway, have started to show an interest in the market for households and small and medium-sized enterprises. The strengthening of the position of Nordic banks in their home market may partly be perceived as a defensive strategy to keep out large global banks. The launching of a single currency in Europe may have been an important driving force. The euro is likely, at least in the short term, to be of greater consequence to the banking sector in euro countries than in Norway and other countries outside the euro area. The loss of income in some areas, such as currency trading, is greater for banks in the euro area, and the costs associated with adapting systems, etc. are also higher. In addition, cross-border competition is likely to intensify more between countries with a single currency than between euro countries and non-euro countries, although this is not certain. These factors point to a reduction in earnings for euro area banks. However, increased competition may in the longer term enhance the efficiency and competitiveness of banks. The introduction of the euro will also have a considerable influence on the development of securities markets in euro countries.

This may make the market more receptive to private bonds, as investors may be willing to accept higher credit risk when seeking a return. This factor, combined with lower borrowing costs, may give medium-sized enterprises, which so far have had to rely on bank financing, increased access to the bond market. It should be emphasised that the expected increase in competition in securities markets in the euro area is not solely due to the single currency. Technological advances, deregulation and harmonisation of laws and regulations are important forces contributing to a freer flow of capital and services in the single market. There is little doubt, however, that the introduction of a single currency will make a major contribution to accelerating this process. In sum, trends influencing developments in the banking and financial industry such as deregulation, internationalisation, changes in customer behaviour and rapid technological advances – leading to intensified competition – have been there for some time and will continue. However, the establishment of monetary union will probably intensify existing trends, creating even greater challenges with regard to competition in the banking and financial industry. This brings me back to the basic proposition made in the introduction. In many respects, the euro will not give rise to fundamentally new challenges. It is highly likely, however, that the euro will accentuate challenges that are already present. And that, I think, goes for the UK as well as Norway. *  BIS Review 16/1999  *  *
Let me also thank Ms Linda Zuze (the International Consultant on the project) and Mr Shebo Nalishebo (the Local Consultant) and IPSOS Zambia for successfully conducting the Survey. 1/3  BIS central bankers' speeches  The Bank of Zambia and its collaborating institutions mentioned earlier are greatly indebted to the respondents who participated in the Survey for completing the questionnaires. We thank you most sincerely for your cooperation. In particular, we are aware that the survey got into the way of your work as you completed the questionnaires. We are pleased to note that the response rate was 90%. This points to the fact that you share in our resolve to bridge the financial inclusion gender gap and engender economic development. Ladies and Gentlemen, having launched the commencement of the project for the development and implementation of a framework for collection of supply-side sex-disaggregated data almost a year ago, I am pleased that today we can mark a significant milestone towards achieving the objective of the project as we disseminate the results of the baseline survey. The survey results not only give us the situation analysis regarding the availability of supply-side sexdisaggregated data, but also provides a synopsis of the magnitude of the financial inclusion gender gap, which we must all work hard to bridge.

Consequences of cross-border banking The increased globalisation of banking has brought both benefits and costs to the economy. For a long time, the benefits have appeared to outweigh the costs, but the recent global financial crisis has put this issue in a new light. I will talk about the economic costs of cross-border banking shortly. But let me first say something about its benefits. A general problem with the banking sector is that it is highly concentrated, which makes it especially prone to anti-competitive behaviour. An interesting question in itself is why the banking sector is so concentrated. One reason is surely that it is heavily regulated. Regulations create entry and exit barriers. From my viewpoint, however, it also seems as if the mechanisms of banking crises are such that you end up with an even more concentrated banking sector after a crisis than before. When some banks run into difficulties, a common solution is to let them be acquired by a more healthy-looking competitor. In Sweden, we went from seven large banks to only four as a consequence of the acquisitions that occurred in connection with the banking crisis in the early 1990s. Four banks now hold around 80 per cent of the total market. That is a highly concentrated market! 13  Williams (2002). 14  See e.g. “Mapping of large European groups with a significant cross-border banking activity for the year 2008” prepared by the Banking Supervision Committee (restricted edition).