samchain/econo-pairs-v1 huggingface dataset:
All we can do on the Monetary Policy Committee is stand ready to react to those risks if and when they crystallise, either resuming asset purchases if further stimulation is required, or tightening policy through Bank Rate increases and ultimately asset sales. 4  BIS Review 31/2010  Let me now step back from the UK’s immediate economic prospects, to ask what recent experience has taught us about the broader monetary policy framework. After such a cataclysmic economic event, people have unsurprisingly questioned whether inflation targeting is the right regime or whether it needs to be modified or even abandoned. A variety of changes have been mooted. First, some commentators have suggested that the focus on inflation is misplaced at the current juncture, when surely the aim ought to be to get output up and unemployment down; at the very least the Committee’s objective ought to include a measure of activity, as, for instance, in the US Federal Reserve’s “dual” mandate. In my view, this criticism is misplaced as the Chancellor’s remit to the MPC already incorporates a subsidiary objective to support the Government’s aims with respect to growth and employment, providing that it does not jeopardise meeting the inflation target. When the economy experiences a contraction in demand, as in the wake of the collapse of Lehman Brothers, other things equal, inflation tends to fall. The objectives of maintaining full employment and stabilising inflation are therefore aligned, and there is no inconsistency in these circumstances between boosting growth and meeting the inflation target.

When the normalization process starts and we raise the target range for the federal funds rate, what should we anticipate? I anticipate a smooth lift-off in terms of the ability of the FOMC to push the federal funds rate up into a higher range. Less clear is what the financial market reaction will be. Will it be more like the turbulent taper tantrum of 2013 in response to Chairman Bernanke’s remarks that we might at some point begin to taper our asset purchases, or the benign response when the FOMC actually tapered in 2014? Let me consider these two issues in turn. I am very confident that the Federal Reserve has the tools in place to ensure that the FOMC can successfully raise the federal funds rate into a new, higher target range when the time comes to do so. This reflects several factors. Most importantly, we have demonstrated that the interest rate paid on banks’ reserve balances (IOER) – which is our primary tool to raise the federal funds rate target – and daily overnight reverse repo (ON RRP) operations – which is a supplementary tool to help put a floor under money market rates – have been effective in keeping the federal funds rate well within the FOMC’s desired target range.
The number of countries engaged in this global event and consequently the number of the involved of children and young people has been trended upwards. This year, GMW will take place in around 175 countries and will involve around 40 million children and young people. The global health and economic emergency caused by COVID-19, and its social effects have affected almost all aspects of life to all age groups of the society. We know that different age groups are experiencing these effects in different ways. Hence, related to students and younger people, in addition to health aspect, the pandemic has posed to them challenges in the field of education and employment. For these reasons, it is more important and relevant than ever, to provide them with the required knowledge on the personal finance management and the correct use of banking products. In this context, the theme of this year competitions and activities to take place is “Take care of yourself, take care of your money”. This theme highlights the crucial importance of knowledge in an evolving digitalised and innovative market, which enable people to avoid physical contact while using the financial and banking products, hence providing for a better protection of public health.

A direct consequence of this growth was that the short-term liabilities associated with the shadow banking system – repos and commercial paper – exceeded the level of demand deposits as seen in Chart 3. Despite this rapid transformation of the financial system, the liquidity protections put in place for demand deposits (deposit insurance and access to the Fed’s discount window) were not available to these new funding sources. This lack of liquidity protection was a source of systemic risk that was building in the financial system – akin to underbrush that builds up in a forest over time increasing the risk of a major fire. The Panic of 2007, however, required a trigger – a spark to ignite the fire. As I will describe in more detail in a moment, subprime mortgages provided the spark. Once the fire was started, the Fed was confronted with fighting the fire using a set of tools designed for a 20th century banking crisis – not a 21st century shadow banking crisis. As a result, the Fed had to improvise and design new tools as it battled the financial blaze. Another choice would have been to let the fire burn on the theory that this is the best way to clear away the underbrush that has built up over time. The great risk with this strategy is that the fire burns out of control creating considerable collateral damage in the process.
This I find entirely natural in that the exchange rate is an important factor in our assessment of future inflation. The overall picture To sum up, the new statistics since June largely support the opinion about inflation prospects that we presented in the latest report. The figures for real economic activity and inflation suggest, if anything, that the path of inflation will be lower than in our main scenario in the June report. If so, however, it is presumably a question of marginal revisions. The exchange rate, however, instead of moving as we predicted, has weakened. The assessment of this tendency and how it should be weighed up with other factors in an overall assessment of inflation prospects is a matter to which the Riksbank will be returning in the next inflation report on September 28th. Concluding remarks Having presented the Riksbank’s picture of current economic developments, I should like to return to the somewhat longer time perspective from the beginning of this talk and take up the issue that is the theme for today’s speakers. Is there room for expansion in the Swedish economy? In doing so I shall concentrate on two fields that are closely connected with monetary policy: the functioning of the labour market and fiscal policy. The economic policy that has been implemented in recent years, with its emphasis on price stability and sound government finances, has had favourable results in a number of respects. High growth has been combined with persistently low inflation.

If they occur, it is important that we explain their causes and state how inflation is to be brought back into line with the target. To influence consumer prices, the Riksbank uses its instrumental rate—the repo rate. Simplifying somewhat, one can say that, by altering the marginal interest rate for banks, the Riksbank influences other domestic interest rates and thereby the level of economic activity in Sweden and consequently the development of prices. It should be noted, however, that in the short and medium term, pricing is also affected by other factors, such as the construction of fiscal policy and the development of wages. That is why the Riksbank is concerned that, when making decisions, politicians and labour market organisations should also promote low inflation. It is the reason, moreover, for my returning to these matters at the end of this talk. But in the long run the course of inflation is crucially dependent on monetary policy. Interest rate adjustments have their main effect on prices after an interval of one to two years. Monetary policy decisions therefore have to be based, not on the latest figures for inflation but on the Riksbank’s current assessment of future price movements. Our quarterly inflation reports accordingly present ongoing inflation forecasts based on analyses of a large array of economic indicators, supported by economic models and knowledge of relationships between different parts of the economy. The inflation assessment is used by the Riksbank in drawing conclusions about the direction of monetary policy.
This document should enable a complete analysis of budgetary projections to be performed and is, in fact, that used by the European Commission as a basis for its assessment of Spanish fiscal policy. 7/9  The importance of budgetary consolidation Before concluding my address, I should like to offer some reflections on the importance of completing the budgetary consolidation process. Spain’s public debt-to-GDP ratio remains very high. Despite its recent stabilisation, it is close to 100% and more than 60 percentage points above its pre-crisis level. Moreover, the budget deficit (both the total deficit and the structural deficit) is also very high and exceeds that of most of our European partners. The outstanding adjustment is still significant, despite the current context of a high pace of growth and low interest rates, that is relatively conducive to reducing the structural budget deficit and the public debt-to-GDP ratio. Reducing fiscal imbalances is important in order to moderate the future financial costs associated with public debt, and also to reduce the vulnerability of the economy to a possible tightening of financial conditions, without forgetting the need to restore scope for a fiscal policy response in the event of possible adverse growth scenarios. For all these reasons, it is crucial to adopt a time perspective that goes beyond the annual budgetary exercise, with a detailed and credible deficit correction plan geared towards gradually reducing public debt.

Should such barriers actually be introduced, there would be a negative impact on world trade that could affect an economy, like Spain's, whose recovery has been largely export-led. In the same vein, uncertainty about the implications of the United Kingdom leaving the EU remains high, in a setting in which the Spanish economy has significant exposure to this country in terms of services exports and financial ties. This uncertainty is also affected by the context of low returns in Europe's financial system and of the fragility of certain institutions. On the domestic front, several factors of vulnerability persist. One of them arises from the level of public indebtedness (which I will refer to later) and that of certain segments of the household and corporate sectors, which entails high reliance on foreign saving and represents a source of weakness in the face of possible increases in the cost of borrowing. Also, despite efficiency improvements, our economy remains highly sensitive to potential increases in commodities prices, particularly, oil prices. From a medium-term perspective, the high structural component of the unemployment rate, an ageing population and low productivity are the main factors limiting the sustained growth of our economy. I shall now review the main features of the budget. Budgetary policy in 2017 The macroeconomic forecasts accompanying the draft State and Social Security Budgets for 2017 involve the prolongation of the current expansionary phase. Specifically, they estimate real GDP growth of 2.5%, accompanied by a recovery in prices, so that nominal GDP growth is slightly above 4%.
Charles L Evans: Monetary policy normalization – if not now, when? Speech by Mr Charles L Evans, President of the Federal Reserve Bank of Chicago, at the BMO Harris and Lakeland College Economic Briefing, Plymouth, Wisconsin, 8 October 2014. *  *  *  Introduction I would like to thank Lakeland College for inviting me to speak this morning. It’s always refreshing to reach directly into the communities in our District to gain valuable personal insights into what is going on in the economy and pick up information that sometimes get missed in dry reports and statistics. Opportunities such as this also give me a chance to talk to you about the state of the economy, the progress we have seen in repairing the damage from the Great Recession, and how Federal Reserve policy fits into the picture. Of course, to gauge progress, we must measure economic performance. It’s natural for us at the Federal Reserve to do so against the objectives that Congress has set out for us – what are known as the Fed’s dual mandate. Namely, the Federal Reserve is charged with fostering financial conditions consistent with full employment and price stability. Needless to say, the past seven years have been very challenging and we have struggled to achieve both our employment and inflation objectives. To accomplish our goals, the Federal Open Market Committee (FOMC) cut its traditional policy tool, the target federal funds rate, essentially to zero – what economists refer to as its zero lower bound, or ZLB.

Nigel Jenkinson: Promoting financial system resilience in modern global capital markets – some issues Speech by Mr Nigel Jenkinson, Executive Director, Financial Stability, Bank of England, at the conference, Law and Economics of Systemic Risk in Finance, University of St. Gallen, St. Gallen, 29 June 2007. This speech has been prepared with my colleague Mark Manning. I am very grateful to Mark and to Joanna Perkins for her input on legal risks, and to Ben Norman, Victoria Cleland and Andrew Bailey for their comments. *  *  *  The changing nature of risks Spurred by rapid innovation, we are currently witnessing a period of major structural change in financial intermediation and the global financial system. Financial market activity is growing at a tremendous pace. For example, over the past five years, the credit derivatives market has grown spectacularly from around $ trillion notional amount outstanding in 2001 to around $ trillion in 2006 (Chart 1) and the issuance of leveraged loans has increased almost three-fold (Chart 2). The balance sheets of the major global financial institutions (the so-called large complex financial institutions or LCFIs) have more than doubled since 2000, fuelled by an increase in trading assets (Chart 3). Turnover in the UK and US foreign-exchange markets has risen by around 50% in only the last couple of years. And capital market integration is rising rapidly as barriers to cross border flows have come down.
In theory, the choice of optimal regulatory rule depends importantly on the environment. The simpler the environment, the more robust are likely to be sophisticated regulatory rules. To assess that, consider a sample of simpler banks – FDIC-insured banks in the US. This covers 8,500 institutions, the majority small regional banks. How well did solvency metrics, simple and complex, perform in predicting pre-crisis failure among this very different bank cohort? Charts 6 and 7 plot the pre-crisis Tier 1 capital and leverage ratios of these banks, with the failed institutions again identified, while Table 5 shows the results of a formal logit regression. Failure is defined here as those banks entering receivership. Since 2007, this totals 442 institutions, almost all of which had assets below $ billion. Both solvency metrics enter with the right sign: lower capital and leverage ratios signal a higher probability of bank failure in a univariate regression. In general, however, the ranking of the solvency metrics is reversed. Risk-based capital ratios are significant at the 1% level, while the leverage ratio is not significant at the 10% level. There are two potential explanations for this finding. One is that, during the sample period, US banks were already subject to a leverage ratio. This may have encouraged them to seek higher-risk assets which would tend to be better reflected in risk-based capital ratios. An alternative explanation, consistent with the complexity literature, is that risk-based rules are more robust in an easier to calibrate risk environment. Which explanation is more likely?

In 1986, this covered 547 columns in Excel, by 1999, 1,208 columns. By 2011, it had reached 2,271 columns. Fortunately, over this period the column capacity of Excel had expanded sufficiently to capture the increase. 12  Bank of England Archive number 7A222/2. BIS central bankers’ speeches  9  Taken together, the emerging picture is of a steadily-rising regulatory tower. New floors have been added in response to each crisis episode. Extra filing cabinets have been ordered and installed to house the explosion in regulatory returns. And many new skulks of supervisory foxes (together with the occasional hedgehog) have been installed on the upper floors. The costs of constructing and maintaining this regulatory skyscraper are not trivial. A recent study by McKinsey estimates the compliance costs of Basel III. For a midsize European bank, these are put at up to 200 full-time jobs. 13 Given that Europe has around 350 banks with total assets over € billion, this translates into over 70,000 new full time jobs to comply with Basel III requirements. The picture in the US is similar. Dodd-Frank rulemaking in the 12 months after its enactment covered thirty new rules or less than 10% of the total. A survey of the Federal Register showed that complying with these new rules would require an estimated 2,260,631 labour hours every year, equivalent to over 1,000 full-time jobs. 14 Scaling this up, the compliance costs of Dodd-Frank will run to tens of thousands of full-time positions.
However, the number of new work permits has not increased year-on-year over the past quarter. More labour has been imported to meet the labour requirement on aluminium and power sector projects, but it has increased in other sectors as well. Private sector wage settlements agreed in the first half of 2004 were broadly uniform and their cost effect more or less consistent with the inflation target. The settlements are in force for four years but may be renegotiated at the end of 2005 and 2006 if inflation moves out of line with the target and the increased wage costs that they imply are not adopted across the labour market in general. This is one example of the importance of keeping inflation as close to target as possible later this year. When Iceland moved onto an inflation target, this involved abandoning the fixed exchange-rate regime and allowing to the króna to float in the market. Experience has shown that, in a climate of unrestricted cross-border capital movements, it is impossible for a central bank to control the exchange rate. Central Bank interest rate decisions admittedly affect the nominal exchange rate, but many other factors operate as well. Thus it is totally unrealistic to insist that the Central Bank should keep the exchange rate at a certain level and find the right combination of interest rates and exchange rate, whatever that may be. To do so, the Bank would either need to abandon its inflation target or impose foreign exchange restrictions, which of course is unrealistic.

In light of this forecast, at the same time as Monetary Bulletin was published the Central Bank decided to raise its policy interest rate by 0.25 percentage points, which is a somewhat lower hike than market agents had predicted and also less than the Bank’s other recent policy rate rises. The policy rate is therefore currently 9%. Among other things, the decision to take a relatively modest step now is based on the fact that the tightening implied by the recent policy rate hikes and the significant appreciation of the króna have yet to be transmitted in full. Nonetheless, further tightening may be necessary over the next few months. Comparisons with previous forecasts and various indicators suggest that since December the Central Bank’s policy rate hikes have by and large delivered a tighter stance. The Central Bank’s monetary policy is very much debated in society at large at the moment, which is natural given the great interests at stake. Obviously I have closely followed discussions of monetary policy for a fairly long time and must admit that the debate in recent times has been more mature and bears witness to a deeper understanding of economic principles than before. It is normal for opinions to be divided over the Central Bank’s measures during tight stances such as the present. The Central Bank welcomes public debate and is ready to take part in it. I would like to use this opportunity to address a few points that have been raised in this debate recently.
You really didn’t think that meeting people from BNP Paribas on the very same day that the Governing Council took a major monetary policy decision would arouse suspicions about your independence? Do you really think there’s a risk there? Our independence towards banks is well known. The person in question was passing through Frankfurt that day and I can assure you that we didn’t discuss monetary policy. To be clear: in such meetings we never divulge sensitive information or indications about the future direction of monetary policy. That is against our rules. Publishing your meeting calendars may not be enough. Why not implement a “quiet period” like the Bank of England, during which no meetings are allowed? If we need to tighten our rules because the public has a negative perception of how we conduct ourselves, then we will tighten them. Central banks are public institutions and people’s perception of what we do is important. But we’re not going to stop talking to the market. Communicating with market players is a key part of monetary policy, and is all the more important given that the ECB is implementing new, unconventional monetary policy instruments. The financial markets seem to think that the ECB will boost its very accommodative monetary policy of purchasing assets, or “quantitative easing”, from December… Are they right? The decision has not been taken. The debate is ongoing.

Sometimes we hear it said that the ECB should have a less accommodative monetary policy because it has created false incentives for governments. This reasoning is not in line with the spirit and the letter of the European Treaties. The ECB is not – and must not be – an instrument of fiscal policy. But we say to the countries in question that they should make the most of the current situation and of the gains stemming from the drop in interest rates to reduce their indebtedness rather than to spend more. Finally, do you think that the ECB will exit this state of emergency before you come to the end of your term? As far as the financial state of emergency is concerned, yes I do. The challenge now is to achieve long-term growth. So, the answer is no? Let’s just say that, increasingly, the challenges that Europe is facing are unrelated to monetary policy. BIS central bankers’ speeches  3  Let’s move on to the topic of Greece. Social discontent is on the rise, the negotiations between the Tsipras government and the “quartet” are already stalling over some points of the new financial rescue plan. Isn’t there a risk that the coming months will be turbulent? No one said it would be easy. The third programme, which was approved by the Greek Parliament, is extremely ambitious. It covers areas that previous governments had not dared to tackle, which call into question existing benefits, for example the battle against vested interests in some sectors.