samchain/econo-pairs-v1 huggingface dataset:
And, as I have noted, when private banks settle the claims they have on each other, that happens in ‘public’ money, by exchanging their claims on the Bank of England. There have, of course, been examples, as in the US ‘free banking’ era of the mid 1800s, of private money operating outside the supporting technologies of public institutions and regulation. But that is not the case in the UK today. So rather than talk of ‘private money’, it is I think more accurate to talk of money issued by and transacted through publicly authorised firms. 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  You will have noted that I keep coming back to the Bank of England. There are many ways to describe the role of the Bank as a public institution serving the people of the United Kingdom. But in this context, perhaps the best is that our role is the stewardship in the UK of the social technology of money or, in Mill’s words, of the ‘machine’. Our statutory objectives, to ensure monetary and financial stability, are in effect to prevent the technology getting out of order. The first sets our responsibility for keeping confidence in the ‘unit of account’ of sterling. The second sets our responsibility for the financial system, on which the creation of, and the transactions in, our money depend. And of course, we are responsible also for the safety and soundness of most of the physical money, the banknotes that are used in the UK.

The first is that these claims are denominated in Sterling, the ‘unit of account’ in the UK, the common measuring stick of economic value that we all accept, that is governed by the Bank of England under the authority of Parliament. The Bank’s Monetary Policy Committee is charged with ensuring the stability of the currency’s value in terms of what it can buy. The second is that the private banks that hold our transactional accounts (i.e. take deposits) and create money by issuing claims on themselves, have to operate within a comprehensive legal and regulatory framework – supervised by the Bank of England and the FCA. This framework itself has been greatly strengthened since the financial crisis. It is designed to ensure that the banks that are authorised to take deposits and issue claims on themselves in return, are robust and can absorb losses. They have access to the lending facilities of the Bank of England to meet any shortages of liquidity. Up to £ of deposits are protected by a statutory deposit guarantee scheme paid for by the banking industry. Banks are also now subject to ‘resolution’ requirements to ensure that in the unlikely event of failure they can be stabilised and subsequently broken up, sold or wound down to the degree necessary while protecting depositors’ ability to make and receive payments – and without requiring taxpayer money. The payment systems through which claims on private banks are exchanged, are likewise supervised by the Bank of England.
There are examples showing that a period of higher-than-normal house prices can have an impact over a very long period. At the end of the 1800s, house prices in Kristiania (now Oslo) rose sharply. Some areas of Oslo are still marked by the massive volume of residential construction prompted by the rise in prices. The housing market collapsed at that time. The demand for new dwellings was saturated. It was not until the mid-1980s that real house prices returned to the level in 1899. Household debt is now more than one and a half times as high as disposable income. The accumulation of debt partly reflects structural adaptation over time to a deregulated credit market and partly to low interest rates. The higher debt burden has made households more vulnerable. A period will come when households prefer to stabilise debt and reduce consumption. The fall in interest rates has sustained activity in Norway after a period of weak economic developments abroad and high domestic wage and cost inflation. But an aggressive use of the interest rate as an instrument may itself be a source of new fluctuations in the economy because it influences the time profile for saving and investment. It is therefore important that growth is self-driven when the interest rate has to return to a more normal level after a period. The effect of Norway’s interest rate also depends on external interest rates. Many countries have raised their key rates during this cyclical upturn, also in several steps.

The issues reflect areas where the true costs of managing a large, complex, internationally active firm have not yet been fully internalized by the firms. Said differently, the cost of international financial activity has probably been too low, and as it rises, some readjustment of those activities will be necessary. The forces of change continue strong, as strong as they were in the peak years of innovation more than 25 years ago. Now, as then, financial institutions will need to adapt and transform themselves. This time, however, we have the sobering experiences of the financial crisis to guide us. We all have an interest in moving forward, given the pace of change in the world and in technology. Thank you for your attention. BIS central bankers’ speeches  5
A regulatory framework for appointment of agents was also issued. The Direction largely focuses on the approval and selection process of agents, responsibilities of banks, permitted activities, risk management and oversight, customer protection and dispute resolution. Further, adoption of Sri Lanka Financial Reporting Standards 9 on financial reporting of financial instruments is another progressive policy measure adopted in line with international best practices. The Central Bank also issued guidelines to banks on the adoption of SLFRS 9 in consultation with the Institute of Chartered Accountants of Sri Lanka for consistent and prudent application of standards. The Central Bank has already initiated drafting a new Banking Act with a view to further strengthening the regulatory framework pertaining to licensed banks. The overall mandate for supervision and regulation, strengthening corporate governance, digital banking, consolidated supervision, resolution, monetary penalties/fines, ring-fencing, mergers, acquisitions and consolidation, subsidiarisation of foreign banks and differentiated regulatory frameworks for a tiered banking structure are the key policy aspects to be factored into the proposed Act. In addition, the Banking Sustainability Rating Index (BSRI) will be implemented from 2019 for risk based supervision and planning the supervisory calendar. As banks are frequent targets for cyber-attacks and other information security threats, a road map and a consultation paper were issued to improve technology risk resilience in the banking sector in line with international 24  standards and best practices. A Banking Direction in this regard will be issued in 2019.

Sub-par economic growth continued in 2018 following subdued growth in 2017. Favourable weather conditions supported a rebound in the agriculture sector while the expansion in services activities has been broad-based. 4  However, industrial activities slowed in 2018 mainly due to the slowdown in the construction sector. Consumer price inflation remained low in 2018 in spite of temporary ups and downs due to volatile food prices and administrative price adjustments. In response to the tight monetary policy stance pursued by the Central Bank in the past two years, monetary and credit growth decelerated in 2018 from the higher levels observed in 2016 and 2017. An adequate expansion in domestic credit flows driven by demand from the private sector was witnessed during the year. Being guided by these developments as well as considering impending risks and challenges, we followed a cautious approach in relation to the monetary policy conduct in 2018. Taking into account the favourable developments in inflation and the inflation outlook, as well as the subdued performance in the real economy, the Central Bank signalled the end of monetary policy tightening that commenced at end 2015, by reducing the upper bound of the policy interest rates corridor in April 2018. Nevertheless, considering the impact of global developments that affected external sector stability of the economy, the Central Bank maintained a neutral monetary policy stance in the ensuing period.
The Riksbank has chosen not to specify any exact figure for potential growth, but instead has decided to state a range of between 2 and 2.5 per cent. We have not considered it possible to be more precise than this, given the difficulties in measuring growth, etc. If we look ahead, it is reasonable to believe that growth will in future be somewhere within this interval, although where depends on how far ahead one looks. Over the coming years, growth will probably be closer to 2.5 per cent than to 2 per cent. In the longer perspective, when the demographic effects on the labour supply are greater, it is reasonable to believe in a figure closer to 2 per cent than 2.5 per cent. How much closer depends to a great extent on how much the labour supply can be stimulated during the period. Thank you! Figure 1.GDP and an example of potential GDP 1950-2003, SEK million 2300000  2300000  GDP  2100000  2100000  Potential GDP (example)  1900000  1900000  700000  500000  500000 2000  700000 1995  900000  1990  900000  1985  1100000  1980  1100000  1975  1300000  1970  1300000  1965  1500000  1960  1500000  1955  1700000  1950  1700000  Sources: Statistics Sweden and the Riksbank  8  BIS Review 64/2004  Figure 2.

3  Mean working time is calculated here as the number of hours worked according to the National Accounts divided by the number of people in work according to Statistics Sweden’s labour force survey. BIS Review 64/2004  5  leave together cannot be broken. Labour force participation and the degree of employment seem to have attained a lower level following the 1990s crisis. Unemployment also varies considerably between occupational categories and different parts of the country. This indicates that there are structural problems and that the functioning of the labour market and the social insurance system must be improved. The conclusion that can be drawn is that the weak growth in employment is not mainly due to low demand in the economy - although economic activity has not been favourable recently. There is thus no point in seeking the answer to these problems in stabilisation policy. It is structural policy measures that are needed to improve the functioning of the labour market. There are a number of projects there that could contribute to raising the labour supply, at least in the medium term. As I understand it, these include both general measures to increase the labour supply among all groups in the economy and specific measures to increase the supply among certain groups where there may be a greater potential for increases. What can be done to increase the labour supply? Economic incentives can affect individuals’ participation in the work force, but economic theory alone cannot always determine which effects they will have.
Crucially, independence allowed monetary policy to respond boldly and effectively to the biggest financial crisis in a century. And it leaves the Bank well placed to address a range of possible developments around Brexit. 1  As former Governor Eddie George once remarked, in the half century that followed its nationalisation in 1946 “the Bank operated under legislation which, remarkably, did not attempt to define our objectives or functions.” They were, instead, “assumed to carry over from [the Bank’s] earlier long history.” George, E (2000), ‘Central bank independence’, speech at the SEANZA Governors’ Symposium, 26 August 2000. 3  All speeches are available online at www.bankofengland.co.uk/speeches  3  Over the past twenty years, we have also learned a few important lessons. Allow me to highlight three. First, the financial crisis exposed how a healthy focus on price stability became a dangerous distraction. Central banks had won the war against inflation during the Great Moderation only to lose the peace as vulnerabilities built inexorably. Now monetary policy isn’t best placed to address risks to financial stability but the challenge is that the necessary financial policy decisions are also subject to time inconsistency problems. Financial lobbies are strong, and the temptations of a dash for growth are powerful. Conversely, there are no obvious or immediate rewards to the tough decisions necessary to avoid future crises. In the world of financial stability, success is an orphan.

That is why when the Bank was fundamentally reformed after the crisis, the procedures and structures of the MPC were largely replicated in the Bank’s two new policy committees, the FPC and the PRC. Crucially, all the Bank’s committees have access to the Bank’s information and analysis, all are well-informed about each other’s reaction functions and all can coordinate their policies when appropriate. The Bank’s Committees are independent but not isolated. The second lesson of the past two decades has been the importance of the flexibility in flexible inflation targeting. While the inflation target applies at all times, the remit has always acknowledged that inflation may deviate temporarily from the target on account of shocks. Since 2013, it has explicitly recognised that in exceptional circumstances, bringing inflation back to target too rapidly could cause undesirable volatility in output and employment. In exceptional circumstances like today when the economy is facing profound structural change, the MPC can extend the horizon over which it returns inflation to target from above in order to balance the effects on jobs and activity. After all, even though monetary policy cannot prevent the weaker real income growth likely to accompany the transition to new trading arrangements with the EU, it can influence how this hit to incomes is distributed between job losses and price rises. This brings me to my final point: while carefully circumscribed independence is highly effective in delivering price and financial stability, it cannot deliver lasting prosperity and it cannot solve broader societal challenges.
In other words, within-system interactions are sufficient to generate booms and busts in the housing market. Cycles in house prices and in mortgage lending are, in that sense, an “emergent” property of the model. Chart 9 shows a simulation run of the model, looking at the dynamic behaviour of listed prices, house prices when sold and the number of years a property is on the market. The model exhibits large cyclical swings, which arise endogenously as a result of feedback loops in the model. Some of these feedback loops are dampening (“negative feedback”), others amplifying (“positive feedback”). For example, when mortgage rates fall, this boosts the affordability and the demand of housing, putting upward pressure on house prices. This generates expectations of higher future house price inflation and a further increase in housing demand - an amplifying loop. Ultimately, however, affordability constraints bite and dampen house prices expectations and demand – a dampening loop. We can use the simulated data from Chart 9 to construct distributions of house price inflation over time (Chart 10). This simulated distribution exhibits fat-tails, if not as heavy as the historical distribution. Nonetheless, the model goes some way towards matching the moments of the real-world housing market.

Sound macroeconomic policies, institutional improvements spurred by EU-accession, increased trade and financial integration with the EU contributed to a rapid catching-up. Indeed, the year 2006 was the year with the highest GDP growth for the region since the beginning of transition. Today, the New Member States face the challenge of maintaining stability and sustainability of the catching-up path. Stability requires macroeconomic policies avoiding the accumulation of imbalances. Sustainability implies that past rates of high economic growth could be maintained in the future. To some extent, economic performance in the past decade could partly be related to a cyclical recovery after an initial slump. The recent dynamics were also generated by the massive reorganisation and privatisation of the economy after the fall of  4  BIS Review 115/2007  communism. This process triggered large FDI inflows providing both financial means and technological transfer. Today privatisation is almost complete and one has to look for new engines pushing forward the catching-up process. Currently, I see three main risks that have to be addressed as priorities by policy-makers: (i) (ii) (iii)  increased financial vulnerabilities, in relation with fast credit growth and mounting external imbalances ; rising inflation pressures which hurt external competitiveness; and the challenge of ensuring high future potential growth. . This third challenge belongs to the long-run as future economic developments will need to feed productivity growth beyond the dynamics of catching-up, through technological and production process innovation.
As I have noted, to the extent that these are sensible regulatory improvements in line with global norms intended to enable delegation and global business models to operate effectively and practically while managing risk, one would have little concern. To the extent, however, that they are motivated by Brexit and a desire to pull activity and risk back within jurisdictional boundaries,  22  contrary to current global practice, I do have a concern that they could act as the  harbinger of fragmentation to come. That would raise the cost and reduce the efficiency of market-based intermediation of savings in the EU and, if it led to wider effects, further afield. It would also slow, and perhaps frustrate, the development of market-based finance globally as a way of diversifying economic risks and benefits across jurisdictions and of dampening economic and financial shocks. And from a macroprudential perspective, for the reasons I have set out earlier this morning, that could be the biggest long-term loss. 22  The stated aims of the European Commission’s proposal are to ensure effectively supervision of outsourcing, delegation and risk transfer arrangements in third countries.

By now we all know that the reliance on second-best solutions in statistics might entail wrong policy decisions, inability to detect and respond to vulnerabilities, and large costs for the society. Let me wish you a successful seminar with productive and interactive discussions. Thank you. BIS central bankers’ speeches  3
It follows, therefore, that in an environment of rising interest rates abroad, domestic rates must also rise in order to maintain a premium over euro rates, and thus protect the Maltese lira by making domestic financial assets more attractive, thus discouraging capital outflows. That is why under fixed exchange rate regimes, the state of the economy cannot be a primary consideration. Having said that, it must be pointed out that the two objectives are not mutually exclusive. Indeed, since a prudent monetary policy stance contributes to macroeconomic stability, it indirectly creates favourable conditions for sustainable economic growth. It should also be noted that the recent increases in domestic interest rates – after a long period at historically low levels, it must be said – are unlikely to have slowed down the economy unduly. The sensitivity of the economy to interest rates is, in fact, thought to be relatively small. Higher rates will have some impact on growth and employment only if they are sustained over a long period of time. Our estimates show that a half-percentage point rise in interest rates, for example, will reduce the GDP by only 0.06% in the first year, reaching 0.1% by the third year. At the micro level, of course, higher interest rates raise borrowing costs for businesses and households. On the other hand, depositors benefit from higher interest income. Once again, however, monetary policy decisions cannot be based exclusively on such considerations. Exchange rate stability must take precedence over the cost of money in a small, open economy.

It is hardly equitable to provide free health care and medicines to all irrespective of income levels. Means testing  BIS Review 59/2007  1  would, moreover, help to ensure that essential health and welfare services could be provided free of charge in the years to come to those who truly deserve them. The provision of stipends to all students in higher education is even more difficult to justify. For apart from equity considerations, stipends draw funds away from other uses, such as the provision of better library and laboratory facilities and the recruitment of more full-time teaching staff instead of part-timers. I acknowledge that it is not easy to implement means testing fairly because those who under-declare their income, and thus evade taxes, would qualify for benefits undeservedly. The answer, however, is not to rule out means testing in principle, but to wage a more effective campaign against tax evasion. I also recognize that a wider application of such testing might make only a relatively small contribution to the correction of the fiscal imbalance. But it would be highly symbolic in that it would send a powerful message about the need for change to a citizenry which firmly believes that public goods and services can be had for “free”. The truth is that there is no free lunch – somebody must pay for it! Let me give you two topical examples. First, take the Park and Ride scheme. The popular impression is that it is free. This, however, is not correct.