samchain/econo-pairs-v1 huggingface dataset:
But when the value of the underlying subprime loans  BIS central bankers’ speeches  1  collapsed in 2006/2007, it became clear, on the one hand, that the risk had not disappeared and, on the other, that by increasingly dispersing this risk, it was everywhere. This was the crux of the first episode of the crisis. Investors then realised that these products were opaque and toxic and they became distrustful. The collapse of a number of hedge funds in summer 2007 as a result of these products led to a freeze in interbank markets and banks stopped lending to each other. In September 2008, these dynamics and the attendant loss of confidence culminated in the folding of the major US investment bank Lehman Brothers. The seizing up of the interbank market and the magnitude of the shock for banks was even greater and had an immediate impact on the real economy. Lending to the economy declined, investments and international trade collapsed and all regions of the world went into recession at the end of 2008. This is a brief recap of the first leg of the crisis. You can see that at the outset it was a real estate and financial crisis whose epicentre was in the United States. Epicentre No.2: Since 2009, the euro area But how did this first crisis transform into the euro area crisis that has been raging for the past two years? In two words, the answer is public debt.

Tackling the urgent issues To tackle the urgent issues stemming from the crisis, it was first essential for the three countries that were experiencing major difficulties to be able to continue funding themselves:  BIS central bankers’ speeches  3  the EU and the IFM stepped in to assist them. They did this via bilateral loans in the beginning, and then in the framework of a structure that borrowed on the markets backed by a guarantee from the euro area Member States: the European Financial Stability Facility (EFSF). This support was subject to strict conditionality to ensure that the sustainability of public finances was restored and the country in question regained its competitiveness. These countries therefore undertook to meet deficit reduction targets in order, ultimately, to be able to tap the markets directly for their funding needs. This support was always designed to be temporary and encourage sound fiscal policies. Central banks also played a decisive role throughout the crisis. First, they cut their key interest rates sharply after the crisis of 2008 in order to guarantee price stability and boost lending and activity. Furthermore, they provided financial institutions with liquidity to limit credit crunches. Since 2008, the Eurosystem, for example, has conducted fixed-rate tenders with full allotment against an extended range of eligible collateral.
12 Adequate levels of capital requirements, beyond regulatory minima, should depend on structural and cyclical factors, notably the overall position of a country in the cycle. A general equilibrium framework is thus needed to account for the overall impact of higher capital ratios that can constrain banks’ capacity to provide credit to the economy while, at the same time, can bring down the cost of credit by reducing banks’ default probability. The optimal level of capital requirements is thus one that balances the costs linked to more expensive equity funding with the benefits of a lower rate of bank defaults. Results from this model-based approach can quantitatively assess the impact on overall GDP indicating that, as the capital ratio increases, household consumption and borrowers’ welfare first increase and then decrease, thus highlighting the importance of correctly taking into account the starting point – and the position in the cycle – when assessing the effects of a policy measure. We have also assessed banks’ response to capital shortfalls, using a GVAR model, also used to examine the cross-border effects of deleveraging. This empirical work confirms common wisdom that, in response to a negative shock to the leverage, banks tend to shed assets instead of raising capital while keeping the leverage constant. 13 The macro-feedback nexus is however not the only reason why an initial shock to an entity can be amplified at the system-wide level.

Auctions of funds against wider collateral of the kind introduced by the Fed and the Bank of England side-step the stigma problem by having a number of banks borrow at the same time. They have definitely helped to underpin the system. But, compared with a facility, those auctions are available only periodically – fortnightly in the UK at present – rather than every day. The DWF is available on a continuous basis, and is designed to avoid the stigma problem. In particular, in its usual mode of operation, it involves a collateral swap, so there is no give away of its being used in the size of either the banking system’s reserves balances or our open market operations. And we publish data on its use on an aggregate, averaged basis and with a lag. This puts onto a permanent footing some of the technology of the Bank’s Special Liquidity Scheme, which was used in 2008 to provide 3-year financing, via a collateral swap, for assets that had become illiquid as a result of the crisis. 20 How the facilities can work in extremely stressed conditions Monthly, wide-collateral repos for a 3-month maturity and typically of fairly modest size, together with a continuously available Window for 30-day collateral swaps, are now permanent features of the Bank of England’s regime. Various parameters can be adapted in the face of extremely stressed conditions of the kind we have been facing. Thus, the widecollateral repos have been held fortnightly rather than monthly, and for very large sizes.
In such a situation, it is a case of using all the means at your disposal to ensure that you stay on the road and do not fall into the ditch. What the road looks like 50 meters further ahead is highly uncertain and, in effect, less important. Once you are back relatively safely on the road your speed will be very low and you will be able to look ahead and try to return to more normal driving. In the upturn: patterns had been broken, parallels with previous crises Thanks to resolute action on the part of central banks and other authorities the crisis entered a less acute phase. However, the financial markets were still not functioning effectively and support measures were still needed. But, a total collapse had been avoided and it was possible to see signs of a normalisation on some financial markets. Nevertheless, the situation was highly uncertain. It was also difficult to assess the real economy. Did the major falls in GDP in Sweden and abroad mean that potential GDP had declined? In many countries the households had experienced substantial falls in house prices. To what extent would the need of the households to strengthen their balance sheets mean that consumption would decline and that the ability of monetary policy to stimulate the economy would be weakened?5 It was clear that the economic patterns that prevailed before the financial crisis had largely been broken.

True, there are other external factors that generate what is occasionally unwarranted mistrust of the Kingdom of Spain. Undoubtedly, factors such as market irrationality, herding or procyclicality are significant, but they will not foreseeably change. There are also other factors, such as the mistakes made by European Union Member States when attempting to resolve their problems, that are no doubt also responsible for this higher cost, and the proof is that the sense of incapacity being conveyed to the markets does not only affect our country, as shown by the abnormally high level of most euro area countries’ CDSs. But it must also be accepted that the possibility of improving economic governance in Europe is in the hands of many other countries and not only Spain. This is why we should focus on easing the concerns of the markets, which do largely depend on us. These concerns are those that I have mentioned: there are doubts as to whether we will be capable of seeing through the fiscal adjustment, concluding the restructuring of savings banks and changing the institutional framework in a way conducive to job creation in Spain. As to the fiscal adjustment and to financial restructuring, I believe the means and the schedule set by Parliament are correct, and now it’s a question of complying.
Caleb M Fundanga: Barclays Bank home loan product Vote of thanks by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the official launch of the Barclays Bank home loan product, Lusaka, 25 January 2006. *  *  *  •  The Minister of Finance and National Planning, Hon. Ng’andu Peter Magande M.P. •  The Board Chairman of Barclays Bank Zambia PLC, Mr Hakainde Hichilema and Board Members present here today  •  The Acting Managing Director Barclays Bank Zambia PLC Mr Daniel Nel,  •  Barclays Bank Zambia PLC staff,  •  Distinguished Invited Guests, Ladies and Gentlemen  I feel greatly honoured to be invited to give a vote of thanks to the Honourable minister’s speech at the launch of the Barclays Bank Home loan product. On behalf of Bank of Zambia and indeed on my own behalf, I would like to congratulate Barclays Bank Plc Zambia for leading the way in establishing long-term finance for the real estate sector. Distinguished invited guests, its just a few months ago that I was invited to talk to an audience on the theme, “Investment opportunities in the Zambia real estate business: The role of Bank of Zambia” at a workshop on Investment Opportunities in Zambia – Integrating African Property Markets. I remember telling the audience then that although the share of the real estate sector in GDP has been increasing over the years, it could perform even better if certain issues were addressed.

It refers to a ball which pitches in such a position – the corridor – that the batter does not know whether to be playing off the back foot or the front foot. This, I will argue, is similar to the dilemma facing monetary policymakers on the Bank’s Monetary Policy Committee (MPC) today. Should monetary policy hold back until key sources of uncertainty about the economy have been resolved? Or instead push forward to prevent leaving it too late? Playing off the back foot Let’s start with where we have been. Since 2007, the UK and global economy has faced a barrage of financial bouncers of frightening pace and ferocity. The economy was on the back foot for much of this period. Output growth in the UK fell short of the Bank’s, and other mainstream forecasters’, expectations between 2008 and 2012. By the end of 2012, output in the economy was still 3% below its 2007 level. This was indeed a Great Recession. With the economy falling well short of expectations, monetary policy was required to shore up its defences, to prevent recession morphing into depression. That meant interest rates falling to unprecedentedly low levels, in the UK and globally – indeed, the lowest levels in the Bank of England’s 320-year history. This monetary medicine was then augmented with £ billion of asset purchases by the Bank from 2009 onwards, known colloquially as Quantitative Easing or QE. It is impossible to know for sure how the economy would have performed without this extraordinary monetary medicine.
To realise in full the benefits of the euro, we need to have the same components that made the euro a reality in 1999. On the one hand, we need national reforms to promote sustainable economic convergence. Under any monetary system, higher growth potential can only be achieved through continuous reform efforts. As the convergence process is primarily driven by structural factors, this is a key responsibility of Member States. On the other hand, Europe can make a difference by supporting and facilitating such reform efforts. Our togetherness represents a unique competitive advantage, and we should capitalise on this. First, we can build on the synergies between EMU and the Single Market. The Single Market is indeed one of the most powerful tools we have to unlock the mechanisms that will raise productivity. In particular, a genuine capital markets union (CMU) would not only ease and diversify access to funds for households and firms, thus fostering investment and innovation. It would also enable risk diversification and thus compensate for temporary drops in activity locally – the so called private risk-sharing –, thereby reinforcing the overall resilience of EMU. Second, it is essential to complete the projects that we initiated during the crisis, namely the banking union. Together with CMU, a complete banking union would deliver meaningful private risk sharing that is currently lacking in the euro area in comparison to the US. But private risk sharing, to be effective, needs to be supported by other policies.

Many more would follow and you effectively ensured that the ECB would be accountable and therefore could legitimately be independent in carrying out its monetary policy. But I am also grateful for the support that this Committee always expressed for the actions of the ECB, a sincere support because it built on the voice of European citizens and an important support that helped the ECB through the many difficult times of the past years. As co-legislators your role was also essential in delivering reforms that further strengthened our Union. This Committee, and the European Parliament more generally, has been in my experience an attentive interpreter of the demands of European citizens. It is only by doing so that the trust in the legitimacy of the EU’s institutions and policies is built, making it possible to achieve a more effective and inclusive Union. As I have argued elsewhere, citizens demand, and Parliament may help in achieving, a “more perfect Union”. A Union that will continue providing its citizens with physical and economic security, while also promoting the values of an open, democratic and peaceful society. Thank you for your attention. I am now at your disposal for questions. 1 See Speech by Mario Draghi, President of the European Central Bank, at the plenary debate of the European  Parliament on the ECB’s Annual Report 2017, Strasbourg, 15 January 2019.
In this context, we felt it was vitally important to defuse these unfounded fears that were not only fragmenting the euro area’s financial markets, but also, in the longer term, threatening to undermine the effectiveness of our monetary policy. That is why we created the OMT which will consist of an ex ante unlimited intervention on the secondary market to acquire sovereign bonds for which we consider the risk premium applied by the markets is unjustifiably high. The OMT will therefore represent a massive and effective backstop to the unjustifiable increase in sovereign yields and will allow us to counter the fragmentation of the euro area’s markets and restore the proper transmission of our monetary policy. The use of this instrument will be subject to very strict conditions: States must have previously negotiated a programme with the ESM and must respect their commitments regarding fiscal consolidation, financial reforms and competitiveness. This should enable a return of confidence and stability, not just in the short and medium term thanks to our action, but also on a longer term basis. *** Today, the euro area is advancing with determination in the right direction. The Eurosystem’s monetary policy is a source of immediate confidence and stability. Its governments are making fiscal, structural, financial and institutional reforms that will ensure the future stability and growth of the euro area. Our determination is total and our efforts must be continued relentlessly. I thank you for your attention. 4  BIS central bankers’ speeches

If more people take part in the labour force, wages and thereby inflation should be held back. Developments in the wage bargaining rounds so far do not indicate that the potential labour supply is holding back wage demands quite as much as we had earlier estimated. Abolition of property tax on housing One of the Government’s proposals that has received considerable attention is the proposal to abolish property tax on housing. A working group has been commissioned by the Government to investigate a model that would finance this tax cut in the housing sector. In this model, the tax is replaced by a municipal charge and higher tax on profits made when selling property. In theory, a fully-financed proposal should not involve any effects on general housing price levels. However, in practice there is reason to believe that house prices will increase at a slightly faster rate due to the tax changes. In those parts of the country with high property taxes, and where the difference between the municipal tax and the current property tax is substantial, there could be fairly large price increases. But this would probably be mainly a one-off effect that did not have any more long-term effect on the rate of price increase. Therefore, a fully-financed abolition of the property tax would not necessarily have any major direct impact on CPI inflation.
Hervé Hannoun: The Banque de France’s view on gold and comments on the euro  Speech by Mr Hervé Hannoun, First Deputy Governor of the Banque de France, at a dinner organised by Goldman Sachs on the occasion of the Financial Times Gold Conference held on 26 June 2000. * * *  Introduction: silver and gold Ladies and gentlemen, it is a great pleasure and privilege for me to be speaking here in the Hôtel des Invalides in front of such a distinguished audience. The organisers gave you the opportunity to visit Napoléon’s tomb. So let me, as an introduction, highlight some historical facts, which may not be so far away from the topics I intend to discuss later. Two hundred years ago, the First Consul Napoléon Bonaparte created the Banque de France with himself as one of the shareholders. At the same time, Napoléon built a monetary regime based on a bimetal system (a combined gold and silver standard) that prevailed throughout the 19th century. At that time, many currencies in the world were based on a gold standard, while a few had a silver standard. France had defined the Germinal franc - which remained absolutely stable for almost 120 years - with respect to its weight in both silver and gold. One Germinal franc was equivalent to 5 grams of silver and to 322 milligrams of gold; the famous 20 franc coin, called the Napoléon, was issued at that time (with a weight of 6.45 grams).

The creation of a macroprudential framework with its own objectives, authorities and tools provides an important complement to monetary policy. In the long term, the complementarity naturally arises because the respective objectives are intertwined and one cannot be achieved without the other. At the same time, they complement each other equally well in the short term. When asset prices, leverage, financial exuberance and strength of the economy and inflationary pressures move in the same direction, monetary policy and macroprudential policy typically pull in the same direction too. On the other hand, when financial imbalances increase amid an environment characterised by relatively muted inflation, the twin goals of price stability and financial stability can be best achieved by resorting to two separate instruments, in line with the Tinbergen principle.4 While more restrictive monetary policy may be able to lean against the build-up of financial imbalances, targeted macroprudential measures are typically a more efficient way of addressing their causes. This is especially relevant in the euro area, given its multi-country composition. Macroprudential measures can be targeted to specific member countries to address the build-up of local imbalances, which cannot be addressed in an efficient manner by the single monetary policy. The presence of macroprudential policy should, however, not lead monetary policy to neglect financial stability issues.
As a result, the case for maintaining forward guidance to smooth the transition is, at least in my view, much diminished. On this basis, the ‘further tightening’ forward guidance that had been in place in MPC statements since November – despite its evolution over the intervening period – had come to outlive its usefulness. Speaking from the collective perspective of the MPC, using forward guidance of that form requires near-unanimity across members of the Committee if it is to be meaningful. But, as the patterns of individual votes on Bank Rate in recent months reveals, unanimity about the short-term interest rate outlook no longer exists. We should not be defensive about that. One of the strengths of the MPC set-up is individual accountability and the diversity of view that it encourages. At a time when inflation is elevated, monetary policy faces substantial challenges, and uncertainty is heightened by geopolitical and epidemiological concerns, it would be not only surprising but also worrying if all MPC members moved in lockstep. For all the commentary about ‘group think’ on the Committee, I see little evidence of that in our discussions or published votes. But trying to shoehorn that necessary and constructive diversity of opinion into a common statement[15] is understandably – and probably inevitably – confusing. It certainly is hard to encompass the prevailing diversity of opinion into a short and clear statement of forward guidance. And if, in that context, attempts at guidance create confusion rather than clarity, then surely the time has come to retire them.

Third, the statement gives an indication of how the MPC intends to respond to future data developments. In line with the argumentation that I have already offered, it emphasises that the MPC will be focused on ‘indications of more persistent inflationary pressures’ – in my view, this places emphasis on identifying potential second-round effects in price and wage setting behaviour. This helps to clarify how the MPC defines it policy ‘reaction function’ at present, prioritising the more persistent component of inflation developments over the headline spot measure. Fourth, by signalling preparedness to ‘if necessary act forcefully in response’ to indications of  Page 11  greater persistence in inflation, the statement reflects both my willingness to adopt a faster pace of tightening than implemented thus far in this tightening cycle, while simultaneously emphasising the conditionality of any such change in pace on the flow of new data and analysis. Much remains to be resolved before we vote on our August policy decision. How I vote on that occasion will be determined by the data that we see and my interpretation of it. And finally, harking back to the opening section of my remarks, the statement places a direct and clear statement of the MPC’s commitment to return inflation to target at its heart. This is something all MPC members agree on – and the main message addressees of the statement should extract. As I said earlier, it is also the message I would like you to take from my comments today.