samchain/econo-pairs-v1 huggingface dataset:
And, although we bring as much economic and statistical science to bear as we can, we know that our forecasts, and indeed our policy judgements, are subject to a range of error. They cannot be accurate to every last digit. We can't expect to hit the target all the time, but by consistently aiming to do so (and we do consistently aim to do so looking 2 years or so ahead - whatever you may have read in some recent media commentaries) we can hope to get reasonably close to the target on average over time. Given the uncertainties, which are well illustrated by the sudden - and no doubt to some extent erratic - jump in the RPIX inflation rate in the year to January of 2.6% announced this morning, the overall results over the past decade since the recession of the early 1990's have been encouraging. Whether that's a result of good luck or good judgement I leave to others to decide - I'm more interested in the outcome. Since the Summer of 1992, inflation, on the target measure has averaged just 2.6% - and has been more stable than at any time in our history. And it has been consistently remarkably close to target over the past 5 years. But the even better news is that stable, low, inflation has been accompanied by steadily increasing overall output and employment, and by a progressive fall, until very recently at least, in the rate of unemployment.

But for the time being, and whatever the precise numbers, the overall prospect for the British economy over the next couple of years is for output growth picking up to around trend and inflation to around target. And it was against that background that we left interest rates unchanged at our MPC meeting last week. I gather that the EEF was "deeply disappointed" at that decision, having been hoping for a cut. And I really do understand why, seeing things from the perspective of the manufacturing sector in particular, you might take a somewhat more pessimistic view of the prospects than did the MPC. We are - as I have explained - well aware of the degree of uncertainty inherent in any forecast, and do not pretend we have a crystal ball. But I can assure you that if, as we move forward, it seems likely that the overall economy will be weaker than we currently expect, and inflation lower, then we are prepared to reduce interest rates further, just as we stand ready to raise them if the overall economy, and inflation, appear likely to be stronger than we currently anticipate. Mr President, the past year or so has been a difficult time for the world economy which has made life increasingly difficult for the internationally-exposed sectors of our own economy - including large parts of manufacturing. And things could remain difficult for a time. But it won't last for ever.
Moreover, the Governor shall be heard by the Minister for the Economy about the appointment of six members of the Governing Council. Propose to the Governing Council the Council members that shall form part of the Executive Commission. Propose to the Executive Commission the appointment and dismissal of the Directors General, for ratification by the Governing Council. The Governor shall have the powers delegated by the Governing Council or the Executive Commission. 2 Powers of the Deputy Governor     Manage, at the highest level, the common internal services of the Banco de España. Stand in for the Governor when the post is vacant or in the event of the latter’s absence or illness. The Deputy Governor shall have the powers delegated by the Governor, the Governing Council or the Executive Commission. 3 Powers of the Governing Council   Approve the general guidelines of action of the Banco de España so that it may fulfil the functions entrusted to it.   Debate monetary policy matters and supervise the Banco de España’s contribution to implementation of the monetary policy of the European System of Central Banks by the Executive Commission, all in accordance with the ECB’s guidelines and instructions and observing the independence and professional secrecy obligation of the Governor as a member of the ECB’s governing bodies.

The ECB recently published the methodology and results of our economy-wide climate stress test, showing that there are clear benefits for both banks and companies if they act early and ensure an orderly transition. The exercise will also be used to inform the 2022 supervisory climate stress test that will be conducted to test banks’ preparedness to assess climate risks. ECB Banking Supervision has also asked banks to conduct self-assessments in the light of the ECB guide on climate-related and environmental risks and to draw up action plans. The preliminary results were published in August and show that banks have made some progress in adapting their practices, but they are still moving too slowly. Next year, ECB Banking Supervision will conduct a full supervisory review of banks’ risk management and disclosure practices. As regards the digital economy, the ECB will continue to contribute to the G20 initiative to enhance cross-border payments to make them faster, cheaper and more inclusive, and to address the opportunities and challenges of the digitalisation of finance. At the ECB, we have launched the investigation phase of a digital euro project that will address key issues regarding the potential design and distribution of a digital euro, which would be a complement to cash, not a replacement for it. International cooperation on digital currencies will remain essential in the period ahead. 4/4  BIS central bankers' speeches
Internationally, we have catalysed a series of actions at the Financial Stability Board (FSB) that will be presented to the G20 Leaders’ Summit in July. Allow me to review the main elements before concentrating on how codes of conduct and the Senior Managers Regime (SMR) can lift standards and improve culture. Let me be clear at the outset that the Bank of England holds itself to the highest standards. In that spirit, I will extend my remarks to review some lessons the Bank can learn from the events surrounding Charlotte Hogg’s resignation, and the steps we are taking in response. The UK Action Plan to improve conduct  Our action plan for the financial system begins with stronger deterrents. In the UK, important steps have 5  been taken to strengthen laws and regulations, though some gaps remain, most notably in the FX market. But authorities cannot and should not try to legislate for every circumstance, watch every transaction, or anticipate every market innovation. So while fines and sanctions have roles in deterring misconduct, they will not, on their own, bring about the cultural change we need. We must move from an excessive reliance on punitive, ex post fines of firms to greater emphasis on more compelling ex ante incentives for individuals, and ultimately a more solid grounding in improved firm culture. This includes reducing opportunities for bad behaviour, for example, by overhauling the regulation of key benchmarks in FICC markets. More fundamentally, it requires compensation rules that align better risk and reward.

In order to cope with this new situation, we have slightly modified our existing framework of inflation targeting by explicitly highlighting the increasing role of financial stability in our objective function. Accordingly, first we have announced the details of our exit strategy from crisis measures in April 2010. As a first step, we have normalized the liquidity support facilities and brought back the TRY reserve requirement ratios to pre-crisis levels of 6 percent. Second, we started to highlight the macro financial risks and contingent policy responses. For example, we have stated through our policy documents that, if divergence in growth rates between domestic and external demand continues in the forthcoming period, and if this pattern of growth coexists with rapid credit expansion and deterioration in the current account balance, it would be necessary to utilize other policy instruments such as reserve requirement ratios and liquidity management facilities more effectively. The primary objective of the CBT is to achieve and maintain price stability. However, the recent crisis has taught us that this single objective may not be enough for attaining macroeconomic and financial stability. In this respect, we reminded the public that financial stability is one of the fundamental duties of the CBT as stipulated in our Law, and we approach financial stability from a macroeconomic perspective. From an emerging market point of view, the concept of “macroprudential” measures may not be the same as it is perceived in advanced economies.
•  Through the work of our business line specialists, we are developing a better understanding of the businesses you all are engaged in, including improving the dialogue with the front office and getting to know those business leaders. This has given us a much improved window into your strategies – into how you are thinking about the changes you will make and need to make in the face of increased regulation, increased regulatory pressure, competition and future economic growth. Areas where work remains Of course, there are many more areas where progress is being made, but those are the ones that I would highlight for you today. And, while I tend to be a “glass half-full” kind of person, I am also a realist and recognize the tough road ahead to continue implementing the kinds of changes needed across the system to achieve the end state of a more resilient, better managed and less complex financial system. In this regard, I’d highlight four areas where additional work is needed across firms and supervisors/regulators: 1. Resolution planning  2. Coordinating supervision across global organizations  3. Bank Secrecy Act/Anti-Money Laundering (AML/BSA) compliance  4. Culture of firms and the system  1. Resolution planning  I noted earlier that resolution planning was an area where progress had been made – and it has.

In this context, the Central Bank’s informing the public about the economic situation and risks, using various communication channels, must be viewed as a significant part of its independence. In the last four years, our Central Bank has experienced a historical transformation in terms of its communication policy. It all started with carrying out a new organizational arrangement within the Bank, founding a separate department. This department has the responsibility of preparing documents and booklets, and organizing meetings and conferences to explain monetary policy as well as improving the information set provided through the web page of the Bank. What we have achieved next was to elucidate the newly established conceptual framework of monetary policy. To this aim, we have tried to explain to the public concepts such as ‘inflation targeting’, ‘price stability’, ‘floating exchange rate regime’, ‘good governance’, and ‘sustainable growth’, standard elements of textbooks and generally known only in academic circles. To make economic agents familiar with these concepts, the communication policy of the Central Bank has effectively been used on every occasion through lectures and speeches across the country. Now, we know that these concepts are much better understood by the public. I truly believe that this good communication has played a very important role in the performance of the Central Bank in bringing down inflation. Dear Guests, Two important developments and their possible effects on the economy made us decide the year 2005 as a transition period and adopt full-fledged inflation targeting regime in 2006.
If the higher starting level of GDP were maintained, the cumulative loss of GDP would more than halve to around 8%.12 “The Third Quarter” Looking to the second half of the year, what might we expect? In the May MPR, the MPC’s scenario foresaw a sharp pick-up in activity, with quarterly growth rates of 12-13% in each of Q3 and Q4. These increases were driven, in large measure, by the assumption of a phased relaxation of lockdown measures, and accompanying policy support, between July and September. To my mind, two paths are possible in the second half of the year. One involves a negative feedback loop from higher unemployment to lower spending, the other a positive feedback loop from higher spending to lower unemployment. The first poses a downside risk to the outlook, the second an upside risk. As things stand, it is unclear which of these scenarios, or feedback loops, will prove the more potent. The negative loop has its roots in the labour market. So far, levels of employment appear to have fallen less rapidly than output. Against that, the number of furloughed workers has exceeded expectations, perhaps by in excess of a million people. This is good news for household incomes in the short run, as the income loss from furlough is far lower than from unemployment. Indeed, this might help explain some of the greater than expected strength in demand in Q2.

There is now a growing body of evidence on the very damaging impact of financial crises on the productive capacity of economies. Third, we should not imagine that there is some recent halcyon world of banks supporting the real economy to which we can quickly return if the regulatory straitjacket is loosened. The system was badly distorted in the long run up to the crisis. The post crisis world requires a major adjustment in bank business models. This is not some unintended consequence of overzealous regulation. It is a necessary, if painful adjustment to a new reality. Some numbers from the UK illustrate this point starkly. In the long upswing of the credit cycle, the stock of domestic lending by UK banks in the UK grew enormously from 95% in 1997 to 170% of GDP in 2008. The stock of non-property lending to companies as a proportion of GDP, however, grew only modestly from 19% in 1997 to 23% in 2008. Meanwhile, mortgage lending increased from 45% to 70% of GDP; lending to real estate tripled from 5% to 15% of GDP; and lending to the UK non-bank financial sector – including institutions like hedge funds, securities dealers and insurance companies – shot up from 25% of GDP to 60%. And these numbers do not count the explosion in UK-owned banks’ overseas exposures which more than quadrupled between the end of the 1990s and 2008.
At a minimum, the exchange of views and a better understanding of country positions may help to avoid even worse outcomes. For example, in 2009, there was real concern that countries might respond by resorting to protectionist measures. That has, by and large, been avoided. And some aspects of the international policy process have worked well. A good example is, in my view, provided by the redrawing of the scope of financial regulation. Here the G20 has set the overall political direction and tone, delegating the task of developing a detailed template for new international rules and regulations to the technocrats on the Financial Stability Board and the Basel Committee on Banking Supervision. This division of labour has enabled a substantial amount of new regulation relating to matters such as bank capital and liquidity requirements, financial sector compensation, and the principles for handling failing financial institutions to be developed in a relatively short period of time. So, despite the modest progress in restoring our economies to Strong, Sustainable and Balanced Growth in the global economy, policy makers can claim some successes. And on that more upbeat note, let me conclude. Thank you! BIS central bankers’ speeches  5  References Bean, C R (2002) “The MPC and the UK economy: should we fear the D-words?”, Speech given to The Emmanuel Society. Borio, C and Disyatat, P (2011) “Global imbalances and the financial crisis: Link or no link?”, Bank for International Settlements Working Paper No 346.

The ECB has had to use different instruments at different stages of the crisis. Now the economic and financial situation in Europe is significantly better. Financial fragmentation has receded, Member States have made significant efforts towards economic convergence and the governance of the euro area has been strengthened. We are gradually moving out of the  BIS central bankers’ speeches  1  crisis phase into a different environment, with the focus shifting from solving the crisis to ensuring stable economic growth and inflation close to 2%. It requires a different approach and different instruments. The developments beyond our eastern border are the big topic of debate in Poland at the moment. Could the conflict between Russia and the Ukraine affect Europe and its economy in any way? The impact on trade or the financial system has thus far been limited. But this situation does give rise to uncertainty, so it can be regarded as a potential negative factor that could hinder economic growth in Europe, and that is part of our risk assessment. What about the strong euro? Aren’t you worried it could cause problems for European exporters and hinder the recovery? The ECB doesn’t target the exchange rate. Our primary mandate is price stability, and within this mandate, the exchange rate of the euro is among the factors determining the level of inflation. And indeed, the strong euro is contributing to the current low inflation.
The precipitating factors vary but the event as such is simply a matter of time. The collapse in Sweden began in 1991. Share prices were already declining and property prices soon followed suit. The real economy is liable to be affected by falling asset prices, just as it is when asset prices rise. Households perceive a loss of wealth that prompts them to restrain their consumption. Another effect comes from the interaction of the credit market and the balance sheets of households and firms: when asset prices and their value as collateral fall, creditors become less willing to provide loans. In addition, falling asset prices may make banks generally less inclined to provide credit, so that even profitable projects suffer. This can ultimately paralyse the supply of credit and lead to the total collapse of the financial system. While Sweden can be said to have avoided a financial crisis in that sense, both the wealth and the balance-sheet effects probably contributed to the course of the worst economic recession here since the 1930s. Demand in general fell, financial saving rose and credit was rapidly repaid. The steep reduction of the loan stock in the first half of the 1990s is evident from Diagram 1. BIS Review 127/1999  2  However, a severe bank crisis was only one of the factors that hit the Swedish economy. At times in the early-1990s there was also heavy pressure on the krona. In November 1992 the Riksbank was finally obliged to change to a floating exchange rate.

In addition to the extensive financial worries of this type, there have been relatively abrupt shifts in interest rates, exchange rates and share prices. In some instances the financial turbulence has stemmed from inconsistent economic policies, as well as from notable shortcomings in the supervision of banks and other institutions. It has not infrequently coincided with and even been the direct cause of far-reaching macroeconomic adjustments in the economies concerned. In Sweden, for instance, GDP fell for three consecutive years, from 1991 to 1993, by a total of 6% and unemployment shot up. Other countries have experienced similar and even greater setbacks. Large loans have been provided by the International Monetary Fund to assist various countries. In the light of all this, it is hardly remarkable that in recent years matters to do with the global financial system and how it works have been discussed more intensively throughout the world. So my subject today is indeed topical. But let me say at once that I will be considering just a couple of the aspects the title of my talk encompasses. Time is obviously a consideration here but a more important reason is that we do not yet know enough about many of the complex matters in this field. I shall begin with the crisis in Sweden in the early-1990s because it illustrates some underlying problems that crises in other countries have had in common.
The calculations indicated that industrial production and investment would increase, public finances would improve, the current account deficit would disappear, employment would increase and unemployment would be kept down. After Kjell-Olof Feldt had made contact with the Nordic finance ministers and central bank governors, as well as the German central bank governor, the size of the devaluation was altered to 16 per cent and the planned pegging of the krona to the German D-mark was postponed indefinitely. I had reason to return to these calculations later on during the 1980s and I could observe that they were pretty accurate on most points, except with regard to price and wage developments. I had assumed that inflation and wage increases would adjust downwards to the international level. For devaluation to be successful, price and wage developments must be kept down after the devaluation. However, this was not the case. Sweden had an inflation rate much higher than that in Germany every year of the 1980s. Economic policy was not sufficiently strict during the 1980s to keep down price and wage increases after the devaluations in 1981 and 1982. Although public sector finances improved substantially, this was primarily due to automatic improvements resulting from a number of years of good growth.

The conclusions I have drawn from developments during the 1970s and 1980s are that the economic policy conducted together with the functioning of the economy during this period could not lay a foundation for macroeconomic stability and good economic growth. Price and wage formation that got out of hand in the 1970s, a series of devaluations that created considerable pressure in the economy during the 1980s, deregulation of the credit market that triggered a large credit boom, which could not be counteracted by monetary policy as this was detailed to defend the krona’s fixed exchange rate, and a fiscal policy that could not withstand inflationary pressures. All in all, this led to repeated crises and finally to economic collapse. This leads me in to the next three episodes. The reform of wage formation Before I get into the changeover in exchange rate and monetary policy at the beginning of the 1990s, I want to mention two episodes that have contributed to making the changeover in exchange rate and monetary policy successful with regard to bringing down inflation to a level comparable with other countries. These are the reform in wage formation and the budget consolidation in the 1990s. At the end of the 1980s it had become increasingly evident that Swedish wage formation did not function in a manner compatible with macroeconomic balance.