samchain/econo-pairs-v1 huggingface dataset:
In coming weeks, Congress will be considering how to fund the government for the next fiscal year and will also be debating what to do about the debt limit. This creates uncertainty about the fiscal outlook and may exert a restraining influence on household and business spending. One other risk to highlight is the global economic outlook. Even though the euro area appears to have begun to grow again after a protracted recession, growth in that area is still expected to be fairly weak at best. In addition, growth in many of the largest emerging economies has slowed, and some of the countries with large trade and current account  1  2  Based on the CoreLogic home price index including distressed sales. BIS central bankers’ speeches  imbalances have seen their financial markets and currencies come under pressure. If growth abroad were to slow, this could impede the growth of U.S. exports and this could result in less strength in manufacturing production and employment in the U.S. Thus, returning to an analogy I have used in previous speeches, I see the economy in a tugof-war between these headwinds and underlying fundamental improvement, with a great deal of uncertainty over when the improvement in the underlying fundamentals will prevail. In the end, my best guess is that growth for all of 2013, measured on a Q4/Q4 basis, will be near the post-recession average. But I believe a good case can be made that the pace of growth will pick up some in 2014.

The statement notes that the Committee “decided to keep the target range for the federal funds rate at 0 to ¼ percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6–1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longerterm inflation expectations continue to be well anchored.”3  2  Federal Open Market Committee statement, September 18, 2013. 3  Federal Open Market Committee statement, September 18, 2013. BIS central bankers’ speeches  3  One noteworthy question that emerged following the meeting was why the Committee did not begin to reduce the pace of asset purchases. Although I can’t speak for the Committee, I can provide some reasons for my own decision. To begin to taper, I have two tests that must be passed: (1) evidence that the labor market has shown improvement, and (2) information about the economy’s forward momentum that makes me confident that labor market improvement will continue in the future. So far, I think we have made progress with respect to these metrics, but have not yet achieved success. With respect to the first metric, we have seen labor market improvement since the program began last September. Over this time period, the unemployment rate has declined to 7.3 percent from 8.1 percent.
(a) The 2018 H2 counterfactual for stock LTI ratios takes the 2018 H2 distribution shown in Chart 3 and removes the estimated impact of FPC policy on the flow of new lending to date. The impact of FPC policy is estimated with a combination of model outputs and analysis of trends in high LTI lending over time. Assessing what could have happened if we had not introduced these policies, or if the macro environment was different, is more difficult. But we can use the models to look at some counterfactuals, the ‘what ifs’ – modelling the stock under different macroeconomic scenarios and assumptions about lender and borrower behaviour and FPC policy.22 House prices and mortgage activity have been relatively subdued over the past 5 years – with house price and income growth slightly lower than the central forecast prior to the introduction of housing tools in 2014 and markedly fewer housing transactions than we were expecting. So the policy impact – both costs and benefits – have been relatively small to date. What would mortgage indebtedness look like if the policy hadn’t been there: if house prices, and activity, had followed the paths they actually followed but the FPC policies had not been in place? We can estimate the distribution of LTI in the stock of borrowers today if the 22  See Levina et al (2019) for more detail on methodology. 10  All speeches are available online at www.bankofengland.co.uk/news/speeches  10  policies had not been in place.

It is therefore time for us to reflect on these situations and try to be a step ahead. That is what saves financial markets – being a step ahead! I remember in February 2007, our Central Bank introduced an additional 1% provision for all performing loans of banks, because we realized that there was bubble that was forming. But, the public and media reaction to that policy action was somewhat rough. The next day’s newspaper headlines said that Cabraal has delivered a kidney punch to the banks; some claimed that we were killing the industry; others lamented that we are making it difficult for the banks unnecessarily. Today, one year and 2 months later, people realize that our anticipation has saved the day. We don't want everyone to get up and shout and acknowledge it. But perhaps those of you who are directors of finance companies, as persons who are responsible for about 5% of the financial system of this country, would now realize that, there are certain steps that need to be taken early in order to safeguard the entire industry. Sometimes, some people tell us, “our shareholders have been the ones who have made us. Our depositors have been continuously supported us. Therefore, we are responsible to our shareholders and depositors, and nobody else”. Perhaps, there is some truth in that statement. But, think about this a little more deeply. What would happen if one finance company fails?
In fact, the Commission’s experts are forecasting that this year and over the next two, Malta will have the highest current account surplus as a percentage of GDP of all euro area countries, “beating” countries such as Germany and the Netherlands. Whereas, going forward, growth is expected to moderate somewhat, Malta will continue to out-perform significantly the euro area. The Commission’s Autumn 2017 Forecasts put us at the head of the league table both in terms of real GDP growth and employment increases. Though there are downside risks stemming from more inward-looking policies abroad and an uncertain external environment, including the impact of Brexit on the continent’s economy, domestic demand in Malta should continue to grow at a fast rate, particularly as wage growth will boost disposable income while investment is expected to remain sustained. In last year’s speech I described what we believe are the conditions leading to this performance. Part of our success is attributable to cyclical factors, such as the effects of the ECB’s monetary policy actions to stimulate the euro area economy. Accommodative  monetary policy is boosting aggregate demand, locally and in our trading partners, and lowering the external value of the euro, which helps our exporters. We also noted how strong government investment, partly financed by EU funds, is helping the Maltese economy. However in last year’s speech we emphasised that most of our current economic growth is attributable to structural changes, which have contributed to more than double our potential growth rate since the global financial crisis.

Beyond that, there might well be some general improvement in market functioning, reflecting the reduction in regulatory uncertainty and the more resilient financial system that the regulatory agenda is designed to deliver. At the moment, market intelligence suggests that market participants are focussed on the elevated uncertainty and have not yet anticipated the benefits of, for example, a safer banking system. Conclusion Financial markets have come a long way since the epicentre of the crisis in 2008, with many markets that were significantly impaired in the crisis now functioning well. That progress is encouraging in terms of financial stability and support for the real economy, but further healing is still required. Looking ahead, there are some clear obstacles to that process. The sovereign debt crisis, currently focussed on the euro area, is one. And the general recovery in the macroeconomic outlook is another. There will also be a lot of uncertainty embedded in markets until final details are available on the majority of the regulatory agenda. That agenda must be allowed to take sufficient time to get the right answers, but as these become available we should expect to see further improvements in market functioning. Meanwhile, the authorities will need to pay particular attention to the next rounds of financial innovation, especially given the prolonged low interest rate environment. 12  BIS central bankers’ speeches
BIS central bankers’ speeches  1  Chart 1  Chart 2  Chart 1 shows, on the one hand, how the economic recovery looks so far and how it compares with the Central Bank’s forecast through 2014 and, on the other, developments in unemployment over the same period. According to these data, GDP was similar to Q4/2006 levels in Q3/2011 but will rise back to the peak of the boom years towards the end of the forecast horizon. At the same time, unemployment will decline steadily to 4½% near the end of the forecast horizon, and according to the forecast, the slack in the economy will have vanished by 2014. It is highly uncertain, however, just how much slack exists at this juncture. But inflation is the big change from the outlook around this time last year. Instead of falling slightly below target and remaining there for some time, inflation has taken quite a jump in 2011. It did fall below target, but it stayed there only three months before taking off again, peaking at 5.7% in September. That figure actually corresponds to over 6% inflation, however, if one takes into account the change in treatment of broadcasting fees earlier in the year. According to the Bank’s forecast, inflation will remain at this level until early next year and then begin to taper off. It will be reasonably close to the inflation target around the end of 2012.

Until now, the channels for cross-border flows are only open to current account items such as trade, and to direct investments under the capital account. Portfolio investments under the capital account into and out of China are mainly confined to designated channels and are subject to quotas, for example, the Qualified Foreign Institutional Investor (QFII) scheme with quotas totalling $ billion, and the Qualified Domestic Institutional Investor (QDII) scheme with quotas of $ billion. It can be reasonably expected that a further opening of the capital account would entail liberalisation of these channels and the addition of new avenues. These would result in an increase in cross-border capital flows. BIS central bankers’ speeches  1  7. Although it may not be easy to provide a precise estimate of the magnitude of the flows, given that China’s economy is the second largest in the world, and taking into account the size of both its domestic savings and its capital markets, one can probably say that the size of capital flows resulting from China’s capital account liberalisation would likely be felt in the global financial system. 8. From the perspective of Chinese savers, given their high level of savings and the fact that their investment options are mostly limited to domestic markets at present, there would be a desire on their part for investment diversification into international markets. The resulting investment flows, as they are liberalised, could be substantial for individual markets where these funds flow into. 9.
For the future, on the most appropriate way to reduce the intensity of our accommodation when it becomes warranted, two principles should in my view guide us: these are prudence and effectiveness. We need to be prudent, because the recovery is still fragile. This amounts to asking whether the adjustment of inflation towards our target of below, but close to, 2% would continue without our monetary stimulus. At present, the ECB’s Governing Council does not think this is the case. Underlying inflation, without oil and food prices, remains below 1% and should, according to our forecasts, gradually pick up to 1.8% in 2019 according to the pace of wage increases. We also need to be effective, in the sense that, among our combination of various instruments, we should withdraw last the measures that are mostneeded to secure a sustained adjustment in the path of inflation consistent with our target. We will continue to assess the situation with great pragmatism. There is no predefined split between the doves and the hawks on the Governing Council, as is sometimes claimed. I am confident that our future strategy, as the present one, will be the result of a collective discussion and a cohesive decision. b. Institutional framework In parallel, the institutional framework of the euro area has been improved in response to the crisis. Member states have secured key steps to reinforce the resilience of the euro area for the future.

Keynote address by François Villeroy de Galhau, Gouverneur de la Banque de France, Official Monetary and Financial Institutions Forum webinar, 25 September 2020 « ROLE OF CENTRAL BANKS IN THE HEART OF THE ECOSYSTEM i »  Contact presse : Mark Deen (mark.deen@banque-france.fr), Déborah Guedj (deborah.guedj@banque-france.fr)  Page 2 sur 10  Good morning and welcome to this webinar, jointly organized by the Official Monetary and Financial Institutions Forum and the Banque de France. What better way to demonstrate the digital transformation than holding an event in cyberspace. It has been common in recent years to hear about disruptive technologies but over the past 6 months, information technology has instead been a crucial source of continuity in a highly disrupted world. Digitalization is one among many factors transforming central banking and this will be my broader theme this morning. The ECB Strategic Review rightly launched by Christine Lagarde, with an explicit list of challengesii, is the opportunity to reflect on how the Eurosystem should respond to them. The shocks that have hit the economy in the past decade have been unprecedented, but in hindsight, many long-term structural shifts were occurring that have caused the unstable and complex situation we face today. Global natural interest rates had already been falling since the early 1980s driven by the demographic transition and risk-aversion in key emerging markets. Digitalisation and globalisation, combined, have been pressing for “lowflation”. Financial vulnerabilities were also steadily, but invisibly, rising since the socalled Great Moderation.
Although Spanish banks have very little direct financial exposure to Russia and Ukraine, the indirect effects of the war may be significant. Particularly through its impact on households and firms, especially those experiencing a slower or tardier recovery from the pandemic and whose solvency may now have worsened. I will now outline how the Spanish banking industry stood previous to the Russian invasion, before moving on to analyse the economic and financial risks that the new tense geopolitical environment poses. 1  Recent banking industry resilience  Turning to the situation of the Spanish banking industry previous to the start of the war in Ukraine, most noteworthy, first, was the gradual normalisation of bank lending, following the strong growth observed in 2020, underpinned by public policies. Specifically, bank lending to the resident private sector fell slightly in 2021. By sector, the deceleration in lending to non-financial corporations (NFCs) and sole proprietors, essentially explained by demand factors, offset the more expansionary behaviour of lending to households, in particular loans for house purchase.1  1  Specifically, the stock of mortgage loans grew by 1.2% year-on-year in 2021 Q4, while the stock of loans to construction and real estate development continued to decline, albeit at an increasingly slower pace.

It is difficult to put a starting date on the financial revolution which I am attempting to describe - I mean the era of sophisticated asset and liability management techniques, of ever more exotic derivative and hedging products, and so on. But I guess it got going during the 1970s. Why not before? It seems that for most of the preceding postwar years banking and finance enjoyed a rather cosy and protected existence around the world. Capital controls and domestic regulation tended to constrain the scope for competition or diversification; many domestic banking sectors were cartelised to a significant degree, or in some cases state controlled; cross-border migration was, for one reason or another, rather rare. All in all, the incentive and scope to innovate were weak by today’s standards. The environment changed quite quickly when national administrations began to deregulate their financial sectors at the micro level and to free up movements of capital at the macro level. Just as importantly, the electronic data processing revolution began to open up avenues for financial engineering that could never have been dreamt of before. In the dealing rooms of London - then as now the world’s leading international financial centre - professional mathematicians moved in alongside, or even displaced, the “barrow boys”. Perhaps I should explain that the barrow boy stereotype was a Cockney young man from the east end of London with probably no very accomplished formal education but with strong mental arithmetic and trading skills, acquired from working on market stalls.
Thus, many unemployed workers may be returning to work without needing to retrain or look far afield from the job they lost. However, an equal number may need to search outside the industry they know best and this may require retraining in some cases. Thus, the need for job search assistance and training opportunities is likely to be high in New Jersey and the nation in the near term.2 Now let’s look at the situation of New Jersey households. Here, too, there is room for improvement. While the median household income among New Jersey families is the second highest in the nation – at about $ in 2009 – about 9 percent of residents are in families with incomes below the poverty line. This rate compares favorably with the national rate of 13.6 percent, but varies by city across the state: here in Newark that share is 24 percent. Reducing poverty is a major challenge for policymakers. Local organizations like Newark Now are working hard to create greater economic independence for low- to moderate-income residents. More broadly, how are the state’s families doing in restoring their finances? During the recession, all across the nation, the number of debt delinquencies soared and many families had to reduce their debt to more sustainable levels.

The private sector has seen moderate gains, with growth in some of the key sectors I mentioned earlier, particularly professional and business services, education and health, and leisure and hospitality. Businesses in these sectors, on balance, expanded jobs at a faster rate than in the nation. But the state continues to shed jobs in manufacturing and residential construction. Notably, overall employment in the state has been weighed down by declines in public sector employment. Like many states, New Jersey faced large projected state budget deficits during the downturn, and, as in many states, the adjustment to those gaps included job cuts through a reduction in state government jobs and cuts in state funding for local government programs. Because the jobs recovery has been weak, there has been little progress in reducing unemployment. The unemployment rate among New Jersey residents currently stands at 9.5 percent, the same rate as a year ago, and slightly above the national rate. Underneath the slow overall job growth, however, there is a considerable amount of churning in the labor market. Taking a closer look at the patterns of job gains and losses during the recession and recovery reveals some interesting facts about the labor market in New Jersey. Of particular interest is that job creation in the state and the nation since the recession ended has been closely balanced between hiring into industries that lost jobs lost during the recession and jobs in expanding industries.
In the academic literature, some have suggested that the central bank can increase economic stability or reduce the negative effects of slow price adjustment by stabilising an index with fewer prices and weights other than those in the consumer price index.3 Prices that adjust slowly should have a relatively higher weight than prices that change quickly. Prices for goods and services where labour costs are a major component often adjust slowly.4 Labour costs are very important in these indices not only because they change slowly but also because they react to cyclical movements and are seldom exposed to extraordinary disturbances. 3  See Aoki, Kosuke (2001), “Optimal Monetary Policy Responses to Relative Price Changes,” Journal of Monetary Economics, Vol. 48, pp. 55-80, Arrazola Maria and José de Hevia (2002), “An Alternative Measure of Core Inflation,” Economics letters, Vol. 75, pp. 69-73, Mankiw, Gregory and Ricardo Reis (2003),“What Measure of Inflation Should a Central Bank Target?” Journal of the European Economic Association, Vol. 1, pp. 1058-1086, and Woodford, Michael (2003), Interest & Prices – Foundations of a Theory of Monetary Policy, Princeton University Press. 4  Angeloni, Ignazio, Luc Aucremanne, Michael Ehrmann, Jordi Gali, Andy Levin and Frank Smets (2004), “Inflation Persistence in the Euro Area: Preliminary Summary of Findings”, presented at the ECB’s conference on inflation persistence in the euro area, Frankfurt am Main , 10-11 December 2004. BIS Review 43/2005  3  Another topic currently of interest to academic research is whether a price level target may be better than an inflation target.

One aspect of independence is that the government is not allowed to borrow directly from the central bank. In this way, it is possible to avoid a situation where the government uses the printing press to finance deficits. Printing press financing will lead to inflation over time. In Norway, the government’s possibility of borrowing directly from Norges Bank was eliminated by means of changes in the Norges Bank Act in 2003. (The change became effective 1.1.2005.) Now, the Norwegian government has large surpluses and saves considerable amounts through the Government Petroleum Fund. The change may therefore appear to be of little practical importance, but it is not completely uninteresting. The Petroleum Fund is invested abroad. The government must borrow funds to finance domestic lending and financial investment. One observation is that the prohibition would be more important if the assets in the Petroleum Fund were earmarked for a particular purpose and could not be used for general financing of government expenditures. But there are no plans for this. Today, more than 20 countries have adopted inflation targeting. Some of them have had an inflation target for more than 10 years, but many adopted inflation targeting after 1998. Which countries actually have inflation targeting and when they introduced this regime is open to discussion. The following chart is based on information from T. Pétursson of the Central Bank of Iceland.2 In New Zealand, the new monetary policy regime emerged as a solution to a practical problem.