samchain/econo-pairs-v1 huggingface dataset:
However, in a highly volatile environment, the war is affecting the cost of these goods on global markets, irrespective of their origin. In particular, the rise in energy prices has significant effects on the cost of the household consumption basket and on firms’ costs of production. Also, the war itself could ultimately hamper the supply of some of these goods, which would obviously tend to have a large impact on prices and economic activity. The European authorities have formally announced their intention to reduce structural energy dependence on Russia, but clearly this is not something that can be achieved in the short term. The surge in inflationary pressures apparent in the March data partly reflects the increase in commodity prices associated with the war, but also the delayed effects of the acceleration in intermediate costs in the preceding months on the prices of other goods and services, and the scarcity of certain products as a result of the road hauliers’ strike. The impact of the increase in energy costs is highly uneven across groups of agents. In the case of households, those with low incomes are most affected. In the case of productive sectors, the impact is naturally greater on the more energy-intensive ones. A second channel, that is also very significant, is the impact of the war on household and business confidence, given the extraordinary uncertainty surrounding the duration and course of the war.

Any agreements concerning wage increases should take their lead from the underlying inflation. These recommendations apply to both wage increases and, where applicable, to potential wage guarantee clauses. Arrangements such as these have already been used by the social partners in the past and have proven a useful tool for protecting jobs, making firms more competitive and spurring economic growth.10 Fifth, these guidelines on wage developments should be accompanied by explicit commitments to moderate profit margins. Only then will such wage restraint actually make firms more competitive, while, in turn, limiting the extent to which rising energy input costs are passed through to other goods and services in the economy. And some sort of mechanism would have to be set in place to ensure this restraint in profit margins can be verified. The simulations performed using the Quarterly Macroeconometric Model of the Banco de España (MTBE) underscore the benefits of a successful incomes policy. The MTBE  8  The weight of energy inputs in production and exposure to international competition vary considerably across sectors and firms. 9  To varying degrees, these types of clauses mean that, regardless of the type of underlying shock, any potential future price rises automatically pass through to wage increases, thereby triggering the second-round effects we hope to avoid.
The world of work is being reshaped in many advanced economies by the secular fall in the degree of unionisation and collective bargaining, by changes in employment contracts and working patterns and by rises in the degree of concentration and automation in the company sector. By reducing workers’ “pay power”, they too have depressed wage growth, actually and prospectively. I will start by discussing recent pay developments and the factors responsible for driving them, cyclical and structural. I will then discuss the implications of these cyclical and structural factors for domestic cost growth, inflationary pressures and hence for monetary policy in the period ahead. Jobs and Pay  I do not need to tell this audience that the past decade has been a strikingly weak one for pay growth. Ten years ago, the mean weekly wage in the UK was around £ per week. A decade on, it has risen to £  2  All speeches are available online at www.bankofengland.co.uk/speeches  2  per week, an average annual rise of less than 2% in money terms. This makes it the weakest decade for growth in money wages for British workers since the 1930s. That is not the end of the story, of course. Over the same period, consumer prices in the UK have risen by, on average, 2.2% per year. That means inflation-adjusted, or real, pay has fallen by around 3.7% cumulatively over the past decade.

That weekly pay packet in 2008 has, in purchasing power terms, fallen to be worth only around £ per week. This makes the recent period very unusual by historical standards (Chart 1). Since as far back as 1870, there have been only two episodes when the real pay of workers has fallen over a ten-year period. The other episodes were associated with seismic shocks in the labour market, often wrenching technological change or sharp cyclical downturns, which raised levels of unemployment and job insecurity. The past decade has bucked that historical trend, with a boom in job creation accompanying weak pay growth. The employment rate in the UK has risen to over 60%, and the unemployment rate has fallen to 4%, respectively their highest and lowest levels since the mid-1970s. The vast majority of these new jobs, around 75%, have been full-time. And this boom has persisted, with around 830,000 job vacancies currently being advertised – the highest since records began. This picture of weak pay and strong employment has been broadly-based, spanning all regions and sectors. Real pay has fallen across every region of the UK since 2008 (Figure 1) and in all three major sectors of the economy (Chart 2). Meanwhile, unemployment has fallen steeply across every region of the UK, by at least 2.5 percentage points. The high-level picture of the UK labour market, then, is a jobs-rich but pay-poor recovery. This pattern is broadly replicated in other countries.
Bank of England consolidated balance sheet(a) Chart 1: Liabilities  Chart 2: Assets £ billions 450  £ billions 450 Other assets  Other liabilities  400  Reserve balances Notes in Circulation  400  Loan to APF (QE)  350  Short-term repos  350  300  Long-term repos  300  250  250  200  200  150  150  100  100  50  50 0  0 2007 (a)  2008  2009  2010  2011  2012  2013  2007  2008  2009  2010  2011  2012  2013  Weekly data to 13 February 2013  In addition to controlling the size of our balance sheet and/or the price of money, which may affect the total supply of credit in the economy directly, we can alter the composition of the assets held on the Bank’s balance sheet, or conduct off-balance sheet operations, and so affect the composition of private sector asset holdings. Executed judiciously, we can thus influence the price and/or quantity of particular types of credit in the economy. Finally, by talking about what we might do in the future, the Bank can influence the price and quantity of money and credit for some time to come. The power of communications as an operational tool should not be underestimated and the MPC has always used a range of communication channels to help accomplish its objectives.

Such coordination failure may arise not because the depositors or the interbank market participants think the bank is likely to be insolvent, but because they anticipate others will withdraw.2 The rationale of liquidity requirements is that they reduce the impact of uncertainty on the bank risk profile, since they allow the bank to withstand larger withdrawals. LOLR and deposit insurance are other ways to achieve the same means: mitigating the risk of a run. The difference is that liquidity requirements are internalised, while LOLR and deposit insurance are externalised to the central bank and to the taxpayers, respectively. Another difference is that liquidity requirements and deposit insurance exert their effects ex ante while LOLR happens after the fact. An additional micro-prudential benefit derived from liquidity requirements relates to a special role of liquid assets. By maintaining liquidity buffers in advance, banks commit to removing solvency risk from a portion of their portfolio. This limits solvency risk and encourages good risk management, acting as a prudential regulatory tool alongside other requirements, such as capital buffers or bail-inable debt, that also exert discipline on bank risk-taking behaviour.3 A counterargument is however that holding a large balance of liquid assets gives bank management too much discretion and can thus create agency problems.4 Liquidity standards should also be designed to mitigate adverse effects owing to inherently systemic characteristics of a liquidity crisis. The reaction of one bank to liquidity strains might create major liquidity strains for other banks.
As long as the banking system was – or at least appeared to be – sound, as central bankers we did not need to worry too much about what happened elsewhere in the financial system or the condition of the corporate sector or the structure of household balance sheets. But this is no longer true, if it ever was. I have already mentioned the role of the corporate sector in the Asian financial crises of a decade ago. The fact that it was the corporate sector rather than the banking sector that had assumed foreign exchange risk ultimately didn’t matter from the point of financial system stability. The effects were the same – or possibly were greater as the corporate sector was less well able to handle the risks than the banking sector might have been. From a macro prudential policy perspective this means that we must pay attention to conditions in the corporate sector and the soundness of corporate balance sheets. And given that so many banks in Asia have followed those in the rest of the world in looking to develop their consumer credit business, the condition of household finances is also important to understand from a financial system stability perspective. In addition, the experience of the last decade has also taught us that non-bank financial intermediaries matter for the soundness of financial systems. For example, there is plenty of evidence that insurance companies have been major sellers of credit derivatives. This passes credit risk from the banking system to the insurance sector.

Such weaknesses arose from the rapid growth in credit, the high exposure to the real estate development sector and the increase in capacity, which grew so as to adapt to what were unsustainable rates of expansion. The global crisis broke at a time when the adjustment of the imbalances had just begun, and it contributed to exacerbating their significance. The measures adopted in the Spanish banking sector have been specifically aimed at countering the weaknesses incubated during the expansionary phase. Undoubtedly, the key challenge has been the restructuring of savings banks, undertaken with the support of the Fund for the Orderly Restructuring of the Banking Sector (FROB). The 45 pre-existing savings banks have since seen their number reduced by two-thirds, in a consolidation process that has affected 95% of the sector’s total assets. This has enabled excess capacity in both networks and central services to be cut; it corrects the excessive fragmentation of the sector, which hitherto comprised a large number of institutions whose small size curtailed future prospects; and it allows advantage to be taken of the resources and management capacity of those savings banks which, on the basis of their greater soundness, have led the various integration processes. Other far-reaching measures have been brought to bear in this restructuring process. For instance, there is the reform of the savings bank regulatory framework, which is allowing for their conversion into institutions more subject to market discipline and better prepared to meet the requirements of the new international regulatory framework.
Financial stability analysis, regularly conducted by a number of central banks including the European Central Bank (ECB) and other institutions (such as the IMF and the Financial Stability Board (FSB)) , aims at detecting sources of risk and vulnerability, assessing the overall resilience of the system, and its aggregate ability to  BIS Review 125/2010  1  withstand shocks. Macro-prudential policy adds the policy component to this oversight function. In broad terms, policy-makers tend to agree that the objective of macro-prudential policy is to limit systemic risk, so as to minimise the costs that financial instability can impose on the overall economy. It is important to underline that macro-prudential policy is preventative in its orientation. It should not be confounded with crisis management policy, which is about the resolution of financial crisis once systemic risks have materialised. It aims at containing systemic risk by strengthening the financial system against shocks and at addressing sources of risk and vulnerability as soon as these are perceived as potentially systemic. III. What is macro-prudential oversight? Let me know drill down on what we mean by macro-prudential oversight and the way in which it can be made operational. The crisis has revealed the fundamental importance of systemic risk. The purpose of macroprudential oversight is to identify sources of systemic risk and promote remedial action. As such, a good understanding of systemic risk and its forms is at the core of macro-prudential analysis supporting policy decisions.

There is, however, still progress to be made; our monetary and economic union needs to be completed. Our European economic institutions are like a trimaran. Our vessel already has a robust central hull in the form of the ECB and the Eurosystem, with its credible single monetary policy. This boat must be completed with two floaters. On one side, we need a public float with a standing common fiscal capacity to better cope with macroeconomic shocks. This need not mean increasing permanently our yearly budget; rather we should construct a fiscal facility that could be activated in moments of crisis or recession. In this respect, the EUR 750 billion Next Generation EU programme – agreed in 2020 and now actively implemented – has been a major step forward. On the other side, we need a private float to foster a better capital allocation, which is just as important. The  Page 5 sur 9 Banking Union and Capital Markets Union, though somewhat “boring” and technical, should be absolute political priorities to enhance the free circulation of capital across the EU and build what I suggest to rebrand a “Financing Union for Investment and Innovation”. In the U.S., private capital flows are a major financial shock absorber between states. We can achieve the same in Europe, and make better use of the world’s largest pool of savings, including by fostering venture capital which is still underdeveloped.
BIS central bankers’ speeches  5  6  BIS central bankers’ speeches  A. House prices deflated by the consumer price index. Index 2000=100. Sources: Association of Norwegian Real Estate Agents, ECON Pöyry, Finn.no, Association of Real Estate Agency Firms and Statistics Norway. B. Corporate credit, mainland Norway (C3)/mainland GDP. Index 2000=100. Source: Statistics Norway. C. Market funding and other debt excluding deposits in Norwegian-owned banks and covered bond mortgage companies. As a percentage of total assets. Source: Norges Bank. BIS central bankers’ speeches  7  8  BIS central bankers’ speeches  BIS central bankers’ speeches  9  10  BIS central bankers’ speeches

In addition, unprocessed food prices have continued to exert some upward pressure on overall price increases in recent months. Excluding the more volatile HICP components of energy and food, the rate of increase in consumer prices in March remained at 1.1% - i.e. unchanged from the rate observed in February and marginally lower than that recorded at the turn of the year. In conclusion, at this point in time the general outlook for price stability remains favourable. Although the lower effective exchange rate of the euro and the rise in oil prices may lead to some upward pressure on headline HICP inflation in the coming months, the current economic situation is likely to contribute to containing this upward pressure. At the same time, current monetary developments and other available indicators do not point to inflationary risks over the medium term. On the basis of this assessment the Governing Council decided to keep the ECB’s interest rates at their current levels. In addition to reviewing the main monetary, financial and other economic indicators, the Governing Council considered a report prepared by the ECB’s Banking Supervision Committee on “The effects of technology on the EU banking systems”. The report assesses the extent to which technological developments have taken place and are expected to occur in the EU banking systems, the main categories of banking risks affected by these developments and the strategic responses that EU banks are devising. The Governing Council agreed to publish the report, which will be made available in due course.
With regard to the communication of monetary policy, one possibility would be to supplement the interest rate forecast with a promise to condition the policy on a particular development in the economy, for instance that inflation should reach a certain level before the policy rate is raised. This kind of conditionality can be regarded as a way of reducing the risk that monetary policy will put the brakes on too early in an economic upturn. This, in turn, can be seen as a means of emphasising the importance of symmetry in the inflation target. One problem for the Riksbank and many other central banks over the past decade has been that inflation has tended to systematically undershoot the target. The importance of treating the inflation target symmetrically and not putting the brakes on too early in economic upturns also appear to have been guiding principles for the strategy changes announced by the US Federal Reserve at the end of 19  Clarida (2019) premised in May 2019 that the review the Federal Reserve had begun earlier the same year was “more likely to produce evolution, not a revolution, in the way we conduct monetary policy”. 10 [15]  August. I think these changes are interesting and thought-provoking, and the Riksbank will analyse them thoroughly. References Ball, Laurence M. (2014), “The Case for a Long-Run Inflation Target of Four Percent”, Working Paper WP/14/92, IMF. Blanchard, Olivier, Giovanni Dell’Ariccia and Paolo Mauro (2013), “Rethinking Macro Policy II: Getting Granular”, IMF Staff Discussion Note 13/03, International Monetary Fund.

I perceive them mainly as a policy statement of how the Fed intends to act in future, and a signal of its determination to achieve its objectives.18 As I see it, Fed has thus explicitly adapted its strategy to  16 The Fed’s communication so far has focused on target deviations downwards, which are compensated for by  overshooting the target. 17 For a more detailed description of “average inflation targeting”, see Nessén and Vestin (2005). 18 Powell (2020) puts it like this: “Overall, our new Statement on Longer-Run Goals and Monetary Policy Strategy conveys our continued strong commitment to achieving our goals, given the difficult challenges presented by the proximity of interest rates to the effective lower bound.”  9 [15]  tackle the challenges most central banks are currently facing. As the monetary policy situation in the United States has a lot in common with that in many other countries, these changes will be analysed in detail by central banks around the world. The changes can certainly be regarded as more of an “evolution” than a “revolution” of the Fed’s monetary policy.19 But they are nevertheless sufficiently large for other central banks having to examine them in detail and discuss whether they should do something similar. This also applies to the Riksbank, of course. My most important messages Let me conclude by repeating my most important messages. The pandemic has brought the international discussion on the central banks’ monetary policy framework and strategy to a head.
It provides a record of who owns a given asset at any moment in time and an immutable record of all transactions in that asset. Second, it is a protocol for establishing trust among diverse parties in a decentralised system: where everyone has access to the same record; the data are secured by advanced cryptography; and transactions are executed by smart contracts in accordance with pre-agreed terms. The blockchain is suited for applications where it is important to know the histories of ownership but there is no trusted central party or reliance on a central party is inefficient or costly. Take supply chain management for instance. Blockchains can potentially provide the means for registering, certifying, and tracking the movement of goods across the supply chain, at low cost and low risk. Or trade finance. There are already successful proofs-of-concept by banks that show how blockchains can make the trade finance process safer and more efficient. 2/6  BIS central bankers' speeches  One of the potentially strongest use cases of crypto tokens is to facilitate cross-border payments in traditional currencies. This is the challenge that Singapore’s Project Ubin has set itself to solve: to use blockchain technology to enable entities across jurisdictions to make payments to one another: without intermediaries; with greater speed and efficiency; and at lower risk and cost. Following two successful proofs-of-concept domestically, MAS has entered a collaboration with the Bank of Canada to test and develop a cross-border solution using crypto tokens issued by the two central banks.

If you buy today, you will always be able to sell at a better price tomorrow. Where the housing market is concerned, however, there is reason to question whether a bubble is possible at all. This is because most people do not purchase a home primarily as an investment but rather as a place to live. Consequently, a house buyer neither thinks nor behaves as an investor speculating on a quick and persistent rise in prices. There can hardly be many people who buy a home solely because they expect to gain financially through a rise in house prices! So assuming that speculation on future price increases doesn't exist, a bubble should quite simply not be able to occur. Some of you might now be thinking that this is just a convenient academic approach to the issue. After all, we have witnessed rapid price increases and even faster declines in the housing market, for example for tenant-owned apartments in metropolitan areas during the crisis at the beginning of the 1990s. In principle, I would be prepared to agree, if it proved impossible to explain the price rises with fundamental factors. In order to see if there are fundamental factors that could explain the recent price increases, it makes sense to look at the driving forces that could have been important for house prices, i.e. interest rates, primarily the post-tax real interest rate, household disposable income, the supply of housing and the demand that results from people moving to metropolitan areas in particular.