samchain/econo-pairs-v1 huggingface dataset:
After all, adjustments to the balance sheet are in many respects a substitute for changes in the federal funds rate. Both instruments attempt to influence broader financial conditions in order to achieve a desired economic outcome. However, the way in which the FOMC implemented asset purchases differed in important ways from the manner in which it has historically adjusted the federal funds rate. With this contrast in mind, I raise a set of policy questions that could be considered in designing a purchase program. First, should the balance sheet be adjusted in relatively continuous but smaller steps, or in infrequent but large increments? The earlier round of asset purchases involved the latter approach, which caused the market response to be concentrated in several days on which significant announcements were made. That might have been appropriate in circumstances when substantial and front-loaded policy surprises had benefits, but different approaches may be warranted in other circumstances. Indeed, it contrasts with the manner in which the FOMC has historically adjusted the federal funds rate, which has typically involved incremental changes to the policy instrument. Second, how responsive should the balance sheet be to economic conditions? Historically, the FOMC has determined the federal funds target rate based on the Committee’s assessment of the outlook for economic growth and inflation.

As rates declined in response to a weakening of the economy, the Federal Reserve’s MBS holdings would decline more rapidly, effectively adding to the supply of duration held by the market. 4 This increase in the duration held by the market would tend to damp the decline in yields. With the change in strategy at its August meeting, the FOMC no longer lets its aggregate duration holdings flow back into the market. This approach allows long-term interest rates to adjust fully to a weakening of the economy, which should act to better stabilize the economy. Implementing the reinvestment policy So far, I have focused on the FOMC’s August policy decision; however, you may also be interested in the details of how the Desk has actually implemented the reinvestment policy. The instructions from the FOMC to the Desk, from both the August FOMC statement and the directive that was adopted at that meeting, were to keep the total face value of domestic securities held in the SOMA portfolio near their level at that time. The published size of the securities portfolio just ahead of the August meeting was $ trillion, so the Desk adopted this level as the target for the portfolio. This is a notable development by itself, as the directive from the FOMC now involved two targeted variables – the target range for the federal funds rate, and the target size for its asset holdings. To implement this directive, the Desk has been purchasing Treasury securities on a monthly schedule.
This means that he is also included in the Steering Committee that prepares the General Board’s meetings and monitors the ESRB’s current work, and in the Advisory Scientific Committee, which is the other advisory body. BIS central bankers’ speeches  7  continued financial stability work is formed by stress tests of the banks. During the financial crisis, both the US and European authorities implemented and reported such stress tests. Their aims were to increase transparency concerning the banks’ risks, to increase confidence in the sector, and to push the banks into increasing their capital bases. The next European stress test will be reported this June. The Swedish regulations for the financial sector need to be strengthened The Swedish regulations for the financial sector also need to be strengthened. Consequently, the Executive Board and General Council of the Riksbank have, in a communication to the Riksdag, urged the Riksdag to assign the government to carry out a thorough review of the regulations.7 The starting point for this is that we need a cohesive and effective regulatory framework that allows us to better prevent and manage crises in the future. Firstly, the mandates and roles of the authorities involved are unclear. As the regulations are currently written, responsibility for financial stability is shared by the government, Finansinspektionen, the Riksbank and the Swedish National Debt Office. But it is not specified sufficiently clearly who is to do what or how the exchange of information and knowledge is to take place.

Still, the services component of inflation continues to be the largest contributor to its increase, so medium-term risks remain present, due to the closing of output gaps and the tight labor market (figure 2). Market inflation expectations have moderated for the short term and remain around 3 percent over the projection horizon. The baseline scenario foresees GDP growing this year between 4 and 5 percent, which is the same range forecast in March. Although the economy outgrew forecasts in the first quarter, the worsened external conditions will result in output slowing down more deeply than  BIS central bankers’ speeches  3  forecast in March. Still, GDP growth will not drift substantially away from the trend, which the Board estimates at 5 percent. This projection also considers that y-o-y growth in consumption will moderate further, in line with decelerating labor income and less expansionary lending conditions than some months ago. Interest rates on consumer loans have risen lately, coinciding with a decline in the y-o-y growth of these credits. In addition, the Survey on Lending Conditions of the first quarter revealed greater constraints in the supply of consumer loans by some financial institutions. Demand for consumer loans continued to rise, according to this survey. For investment, the more persistent construction and infrastructure component – largely associated to the execution of mining and energy projects – suggests that it will remain strong in the coming quarters.
However, during periods when the repo rate is adjusted substantially and in the same direction, there is reason to consider these direct monetary policy effects, as otherwise the Riksbank might be tempted to “chase its own tail” – a policy rate increase leads to higher CPI, which in turn leads to further policy rate increases and higher CPI, and so on. The period with an inflation target has been special in the sense that the repo rate has fallen more than it has risen. One important reason for this is that it has been possible to cut the rate as confidence in the inflation target has increased and inflation has slowed down. For example, in 1995 the repo rate was almost 9 per cent, while three years later it was around 3 per cent. Since then it has only exceeded 4 per cent for brief periods. If one calculates the average inflation rate since 1995 – when the inflation target began to apply5 – with a measure, the CPIF, that excludes the direct effects of monetary policy, it amounts to 1.85 per cent. As CPI inflation during the same period was around 1.5 per cent, one can say that 3–4 tenths of the deviation in the CPI from the inflation target is explained by the Riksbank having cut the repo rate more than it had raised it during this period. Even though the target is specified in terms of the CPI, this information is fairly important when determining how successful monetary policy has been.

373–409 and Cochrane, John, H. (2011), “Inflation and Debt”, National Affairs 9, Fall 2011, pp. 56–78. 11  Letting the central bank itself determine the employment target is no solution, either. As discussed in the section on criticism of a lack of clarity, assessing what could be an appropriate target level/equilibrium level entails considerable problems. 12  A press release in connection with the Federal Reserve introducing an inflation target on 25 January 2012 stated that: “The maximum level of employment is largely determined by nonmonetary factors that affect the structure and dynamics of the labor market. These factors may change over time and may not be directly  6  BIS central bankers’ speeches  One can illustrate the fact that the long-run level of employment is determined by factors other than monetary policy in different ways. Following the crisis in the 1990s, unemployment and the employment rate have varied around an apparently unchanged long-run level, despite the policy rate having been both relatively high and very low during this period. Although there is a relationship between monetary policy and the labour market in the short run, monetary policy does not seem to have influenced the labour market on average. Despite periods of very strong growth and economic activity, unemployment has never been lower than just under 6 per cent, with an average rate of around 7 per cent since 2000. An overwhelming proportion of unemployment is thus structural rather than cyclical. This picture is also supported by unemployment varying substantially between groups.
This is a world in which it is harder for policy to boost productivity and growth. the second half of the 20th century, the median level of GDP per capita was 15% below the level predicted from the trend of the ten years prior to the crisis, which is roughly where the UK is currently. See Reinhart, C. M., and V. R. Reinhart (2015) “Financial crises, development, and growth: a long-term perspective”, The World Bank Economic Review. 3  2  Refers to forecasts made for the first year after the April IMF WEO in question; for example the April 2010 WEO forecast for 2011 relative to the final outturn data. BIS central bankers’ speeches  In these secular stagnation views of the world, the water around us was getting colder before the crisis and has become colder since. But we have not noticed it. And it is this, rather than the slowness of the healing process and the aftershocks of the crisis, that explains the serial disappointments in economic growth. I have set this out as two very different stories about what is happening – “slow healing” and “secular stagnation”. Of course, given enough unfortunate events and enough repeated disappointment on the pace of recovery, they could look and feel the same for a long time. There is much that is common to them. In both stories for a period of time, productivity is lower, interest rates stay low for long and pay and income growth is weak.

In the crisis, estimates of this rate were deeply into negative territory, which is why the MPC cut Bank Rate to 0.5% and launched quantitative easing (QE). The MPC’s asset purchases can be thought of as equivalent to reducing the level of Bank Rate, since both policies provide stimulus to activity and boost inflation. If you adjust real Bank Rate to factor in the effects of QE, the resulting, “adjusted”, rate is probably below zero at present.7 Our latest forecast is consistent with the natural rate and adjusted Bank Rate recovering slowly. But it is very much part of our thinking that the  5  See Nickell, S, and Saleheen, J. (2015) “The impact of immigration on occupational wages: evidence from Britain”, Bank of England Staff Working Paper No.574. 6  The GDP projections in the February 2016 forecast include a downside skew, reflecting the possibility that global activity and, in particular, growth in emerging economies may disappoint. 7  The adjusted measure of Bank Rate is calculated by comparing the estimated effects of QE with those for a cut in Bank Rate, and using that to convert the MPC’s asset purchases into an equivalent change in Bank Rate. Expected inflation is also subtracted from the adjusted rate to convert it from a nominal to a real rate and so make it comparable to the estimates of the natural rate of interest discussed in the text.
We, in Saudi Arabia, have the same tendency. The Kingdom has attached great importance to this sector and encouraged all authorities concerned to support such enterprises. Several government initiatives have been taken to support and finance small and medium size enterprises, as clearly evidenced by the contributions made by government development funds. However, in spite of substantial government support, the private sector, in particular finance companies should seize such opportunities to achieve the goals of the financial sector and the Saudi economy in general. BIS central bankers’ speeches  1  Dear Brothers and Sisters, Some may wonder what are small and medium size enterprises, and how can we distinguish between them; and is there an international definition for them. Indeed, there is a substantial difference at the international level in their definition. If we rely on capital as a standard, for example, we will find that a facility with a capital of 10 million euros, is considered a smallsize enterprise in the European Union, while it is considered a medium-size enterprise and perhaps large-size enterprise in some developing countries. The terms “small” and “medium” are comparative words and have relative concepts that vary from one sector to another and from one country to another. However, the general practice in each country or region is to rely on a set of criteria intended to define medium and small size enterprises. Among the most important criteria are: the amount of labor, capital, annual sales, and the overall financial position at the end of a period.

(2016), “The ECB's asset purchase programme: an early assessment”, Working Paper Series, No 1956, ECB, September; Eser et al. (2019), “Tracing the impact of the ECB’s asset purchase programme on the yield curve”, International Journal of Central Banking (forthcoming); and Blattner, T.S. and Joyce, M. (2020), “The Euro Area Bond Free Float and the Implications for QE”, Journal of Money, Credit and Banking, Vol. 52(6), January, pp. 1361-1395. For a discussion of the different transmission channels of the pandemic emergency purchase programme, see Schnabel, I. (2021), “Asset purchases: from crisis to recovery”, speech at the Annual Conference of Latvijas Banka on "Sustainable Economy in Times of Change", Frankfurt am Main, 20 September. 2. Partial reinvestments will be conducted broadly in line with the practice followed during the full reinvestment phase. In particular, the remaining reinvestment amounts will be allocated proportionally to  the share of redemptions across each constituent programme of the APP and, under the public sector purchase programme, to the share of redemptions of each jurisdiction and across national and supranational issuers. See ECB (2023), ECB decides on detailed modalities for reducing asset purchase programme holdings, press release, 2 February. 3. See also Schnabel, I. (2023), “Monetary policy tightening and the green transition”, speech at the International Symposium on Central Bank Independence, Sveriges Riksbank, Stockholm, 10 January. 4. For more information on the differences between a corridor and a floor system, see Åberg, P. et al.
In the crisis in Southeast Asia, which is the most spectacular example of such a financial crisis in recent memory, the real value of foreign currency loans often rose when domestic currencies depreciated sharply. This kind of dramatic event only occurs when asset prices rise higher than the levels justified by underlying economic factors. This kind of situation in an asset market is what is known as a bubble. It might be worthwhile at this point to stop and reflect for a moment on the fundamental relationship between monetary policy and asset markets, on the one hand, and product and commodity markets on the other. The purpose of explicit inflation targeting policy that has been introduced in Sweden and many other countries in the last decade is to address recurrent overheating in product and labour markets. It might be said - even if it is strictly speaking not quite correct - that the aim is to avoid the “bubbles” that tend to appear in these markets from time to time. Generally speaking, inflation targets have hitherto proved their worth in this respect, and inflation targets appear today to constitute a credible basis - a nominal anchor - for price and wage formation. However, no corresponding anchor exists in asset markets. This means that there is nothing to prevent the prices of various assets rising to levels higher than those justified by economic fundamentals owing to psychological factors, or “irrational exuberance” if you like.

In other words, I think that it is a wiser basic strategy to concentrate on making sure that the economy does not overheat - which leads to recessions - than to count on large hypothetical improvements in future productivity which, if they do not materialise, will involve loss of credibility and a drastic slowing down of the economy similar to those we have so often witnessed in the last couple of decades. I have also discussed various aspects of fluctuations in asset prices. One encouraging conclusion that I think we can draw in this connection is that the present monetary policy framework in Sweden, with built-in inflation targets, provides a reasonable basis for tackling any problems that may arise. BIS Review 128/1999  6
But in typical Singapore fashion, we kept our cool to battle the crises and, at the same time, strategise to meet the larger challenges posed by globalisation. We formed the Economic Review Committee (ERC). The ERC came up with a comprehensive strategy to restructure, upgrade and transform our economy. The government accepted most of the ERC’s recommendations. We have since cut corporate and personal income taxes, reduced business costs, made wages more flexible, restructured the manufacturing sector, invested more in R & D (Research and Development) and revamped our education system. Our economy is now stronger and more broad-based than ever before. In 2006, our GDP was $ billion, 55% bigger than in 1998. Annual growth rate over the past 3 years averaged 8%, double the figure for the period between 1997 and 2002. This year, jobs are chasing after people. Two weeks ago, I attended the Gala Dinner for Merrill Lynch’s inaugural “Pan Asia Rising Stars Conference”. Several foreign bankers and business executives I met – some had not visited Singapore for many years and a few were here for the first time – told me that they were surprised and excited by the “buzz” in Singapore. It is not just the business buzz of the financial industry, the Integrated Resorts, the sizzling property market, and so on. It is also the glitz of our nightlife and our arts, culture and restaurant scene. How have we managed this quick and dramatic rebound?

We have just witnessed the signing of MOUs between the SICC and the Riyadh and Abu Dhabi Chambers’ of Commerce and Industry. I also encourage SICC to collaborate with IE Singapore and the Singapore Business Federation to organise more networking platforms to forge partnerships between foreign and local companies. For instance, given our knowledge and connections, Singapore can serve as a bridge for Middle Eastern investors interested in going into China. Finally, let me once again congratulate the SICC on your 170th Anniversary and wish the SICC and its members continued success. Thank you. BIS Review 55/2007  3
So far, this is very much the picture we are seeing. At end of March, the BIS ratio for capital adequacy for Thai banking system is 14.9 percent, of which the level for tier-one capital is 11.8 percent. On the issue of credit extension, to ensure adequate flows of credit to the economy, our approach has been to rely on market mechanism by encouraging greater competition amongst banks with regard to interest rates adjustment through a process of close consultation and dialogue. The recent round of bank’s lending rate adjustment following the last MPC meeting is a case in point. In addition, to help banks better manage the increased credit risk, a credit guarantee scheme backed by government funding has been set up to promote SME lending by banks. Also, to help resolve problems related to bank lending, the Bank of Thailand has set up a customer-call center to look into problems related to loans application and approval between customers and banks. Going forward, the slowing economy will continue to put pressure on the asset quality of banks. Therefore, managing credit risk will continue to be an overriding focus of Thai banks this year. To do this effectively, banks need to have in place both a strong capital base and a good risk management system, both of which have been strengthened significantly in the past years in line with Basel II and international best practices. Therefore, this should enable our banks to manage risk adequately going forward while supporting the economy.

International banking and finance – a new model for a new era While this debate will surely continue to unfold over the coming years, perhaps the more pertinent question is how we can evolve the model of international banking such that it becomes more desirable and beneficial for the needs of the future. It is worth considering a new model – one that is inherently more sustainable and inclusive. If I may postulate, the starting point is perhaps an honest appraisal that international banking ought to be much more than just a commercial decision. Beyond considerations of revenue, margins and returns, international banking should fundamentally be more attuned to and invested in the developmental journey of the host country. Existing and traditional considerations on profitability, while important, should not become a border that limits the potential of transforming international banking for the benefit of the future. Here, the mindset is not one of a “winner takes all”, but rather one where the benefits of development are equitably “shared by all”. This, again, resonates with the ‘ASEAN Way’ of greater shared prosperity and is perhaps a useful reference. There are at least three ways in which international banking can further this new model. Firstly, by actively identifying the economic needs of the host country and working to serve these needs. These include, for example, national infrastructure development needs, financing gaps for certain segments of society as well as adoption of productivity-enhancing technology by firms.