samchain/econo-pairs-v1 huggingface dataset:
In recent years, house prices and household borrowing have increased rapidly, partly as a result of low interest rates. We have stated that we feel some concern that this development may go too far, with a risk of severe adjustments in the future. One risk is that a sharp brake in house prices could lead to households perceiving their debt burden to be too high, and that they would therefore quickly increase their saving. This could lead to a severe decline in demand in the economy and in inflation. In the considerations behind our decision on the interest rate at the beginning of the year, we considered these risks to be one reason for not postponing an increase by a few months - which I otherwise believe would have been fully possible given the forecasts we otherwise make and the precision of these forecasts. I would not like to claim that this is necessarily always the optimum means of managing this type of risk in monetary policy considerations. The relationship between credit volume and asset prices on the one hand and monetary policy and the real economy on the other hand has not yet been sufficiently mapped to be able to draw any clear policy conclusions. In addition, our experience of deregulated financial markets is still limited to a small number of economic cycles. At the same time, we cannot ignore the risks to future inflation and economic activity with which we believe that developments in the housing market are connected.

Developments in recent years, with strong production growth and falling or only slightly rising employment are examples of how contradictory the signals can be. One weakness in this context is that production data is revised regularly. This makes it particularly difficult to estimate the amount of spare capacity there is in the economy at present. The picture of how high capacity utilisation was at a particular point in time can look different when new data are received and earlier outcomes are revised. One example worth mentioning is that the first data regarding GDP growth in Sweden during the first quarter of 2005 was 1.4 per cent, while the most recent calculations indicate that the figure was actually 2.1 per cent. The fact that there is considerable uncertainty regarding such a central variable as capacity utilisation is, of course, a problem. Everything would be much simpler if it were possible to quantify capacity utilisation in the same way as inflation can be measured. However, as it is not possible, I believe it is wise not to pretend to have this knowledge. For similar reasons, precise money supply measures have also been abandoned. Our forecasts of growth and inflation must nevertheless essentially be based on a view of the position of the economy with regard to a situation with normal capacity utilisation. In practice, a large amount of information from different sources must be weighed together to make an overall assessment.
But the Phillips curve for stickers looks to be somewhat flatter, and the rise in pay somewhat weaker, than might be expected given labour market tightness. Why might companies have felt less need to pay-up to retain staff than in the past? Equivalently, why might the pay power of existing workers have fallen? One possible explanation is recent change in employment contracts. Although the cyclical degree of job insecurity has fallen as people have become less fearful of losing their job, there may have been a compensating rise in structural job insecurity as people have become more uncertain about their hours and income in a job. There are various dimensions of employment contracts and different metrics of their impact on job security. One commonly-used measure is the share of the working population self-employed, doing agency work or on temporary or zero-hours contracts. The share of workers in each category has risen significantly recently. For some, these shifts in employment contract are welcome as they bring increased job flexibility. For others, they may be less welcome. The dark side of job flexibility is increased income uncertainty and job insecurity. It is estimated that more than one in ten of those on part-time contracts would prefer full-time work and close to half of those on zero-hours contracts would prefer to be on fixed-hours contracts. At the same time as the quantity of work has risen, for a growing number of workers its quality may have fallen. This pool of poorer-quality work appears to be fairly deep.

Speech  Embargo 16 November 2017, 6.30 pm  Developments on the Swiss franc capital market and the SNB’s monetary policy Money Market Event  Andréa M. Maechler Member of the Governing Board ∗ Swiss National Bank Geneva, 16 November 2017 © Swiss National Bank, Zurich, 2017 (speech to be held in French)  ∗ The speaker would like to thank Dirk Faltin and Martin Weder for their support in drafting this speech. She also thanks her colleagues at the SNB for their valuable comments and suggestions. Seite 1/7  Ladies and gentlemen Welcome to the annual Money Market Event of the Swiss National Bank (SNB) in Geneva. We are delighted that so many of you accepted our invitation to attend. The SNB attaches great importance to meeting representatives of Switzerland’s business and financial communities. Traditionally, we have held two speeches – and we are continuing this tradition today. In my remarks, I shall explore developments on the Swiss franc capital market. Then my colleague, Dewet Moser, will speak about the foreign exchange market and future changes in reference interest rates. As you know, the SNB’s monetary policy remains expansionary. It continues to be based on two key elements: the negative interest rate (–0.75%) on sight deposits at the SNB and our willingness to intervene in the foreign exchange market as necessary. Both are helping to ease upward pressure on the Swiss franc and thereby prevent an undesired tightening of monetary conditions in Switzerland.
As indicated before, we accept only those ABSs for which the transfer of  BIS Review 68/2008  5  underlying assets has been achieved via a true sale and where the issuing entity is bankruptcy remote from the originator of the transaction. These requirements should in principle ensure the de-linkage of the issuer from the originator. Nevertheless, these requirements do not rule out that counterparties may use ABSs as collateral with us which they have originated themselves and retained on their balance sheet. The possibility for banks to use as collateral ABSs that they have originated themselves may have prevented a complete shut down of primary markets. However, in the medium term this cannot be an alternative to the restoration of a deep and orderly functioning market which offers true secured funding possibilities. I strongly believe that the industry needs to make serious efforts to revive the interest of third party investors. One very telling development in this context is that, as a consequence of the retained issuance, the quality of the documentation underlying issuances, such as pre-sale reports by rating agencies and prospectuses, seems to have deteriorated. Hence, contrary to expectations that issuers would enhance transparency to restore investor confidence, we witness signs or indications of the opposite development towards ever more opaque markets. I will come back to this issue of transparency later again. 5. Taking stock  Let me take stock at this stage. Overall the operational framework of the Eurosystem has served us well during the ongoing financial market turmoil.

But given that inflation is still below the objective, as are marketbased long-term inflation expectations, upside shocks would be more welcome than equivalent downside shocks at present. Let me at this point add some words on negative rates following my remarks Lisbon last February, and state the obvious: we are in March 2019, and no longer in March 2016 when we cut the DFR to –0.40%. This gap in time has two consequences: First, there were, at that time, significant deflationary risks, and we decided accordingly a strong calibration of our monetary answers. As these deflationary risks have now receded, there is obviously no reason to go more negative on interest rates. Second, we have three years more evidence on the combined effects of our various unconventional monetary tools, including negative rates, on financial intermediation and their impact on the transmission of our monetary policy – the combined effects of which might 2/3  BIS central bankers' speeches  have evolved over time. So Mario Draghi rightly stressed that we need to further monitor the bank lending channel and to reflect on possible measures that we can take to preserve the favourable implications of negative rates for the economy, while mitigating their possible side effects. Knightian uncertainty is different situation, for which assigning probabilities is not feasible, and is a concept that anyone trying to forecast the recent outcomes in the House of Commons would instantly recognise.
This encourages banks to grant loans to SMEs and refinance them by borrowing from the ECB. In parallel, our supervisory arm ensured that there were no prudential barriers to banks acting quickly, which freed up € billion in bank capital for new lending. And fiscal authorities complemented our efforts, making available wide-ranging loan guarantees and other liquidity support measures – equalling close to 20% of euro area GDP. This was crucial to mitigate the higher credit risk banks face when lending to SMEs during a recession. As a result, from March to May last year, bank lending to euro area firms rose by the largest amount on record. And it was SMEs that benefited the most from both cheap and abundant credit. 4/8  Lending rates on very small loans – which are a proxy for lending to SMEs – declined substantially, with firms able to borrow at the lowest rates ever recorded – below 2%. [10] And, since March, € billion in new small loans have been granted to SMEs in the euro area, including € billion to SMEs in Germany. Our policies were key to achieving that outcome. Banks taking part in our TLTROs saw a considerable increase in their credit growth, with loans rising by over € billion in the year up to September. And this dovetailed with government loan guarantees to funnel credit to SMEs, which received more than 70% of all the guaranteed loans granted.

Thus, i)  The maximum amount to be purchased in daily foreign exchange buying auctions has been set as USD 45 million for 2007, with USD 15 million for auction amount and USD 30 million for optional selling amount,  ii)  Then, the auction amount has been raised to USD 40 million as of 25 July 2007 with an assumption that the capital inflow to Turkey will follow a strong trend due to the end of the election process and positive expectations for macroeconomic policies,  iii)  However, the auction amount has been lowered to USD 15 million as of 15 August 2007 due to the fact that the unfavorable developments in housing and credit markets in developing countries increased the volatilities in the Turkish markets as well as in other developing markets in the said period. iv)  The measures taken by central banks in order to alleviate the problems in housing and credit markets have relatively reduced the volatilities in these markets and increased the global risk appetite. Therefore, the maximum amount to be purchased in auctions has been set as USD 90 million with USD 30 million for auction amount and USD 60 million for optional selling amount from 9 October 2007 onwards. As of 14 December 2007, the total amount of foreign exchange purchased via auctions in 2007 is USD 9.5 billion and there has not been any direct intervention in the foreign exchange market.
I would be shirking my responsibilities if I did not explain to you the risks of failing to do so. Vague promises would not have been enough. Market reaction to rising sovereign debt can turn quickly from benign to malign, as we saw in the euro area earlier this year. It is not sensible to risk a damaging rise in long-term interest rates that would make investment and the cost of mortgages more expensive. The current plan is to reduce the deficit steadily over five years – a more gradual fiscal tightening than in some other countries. As a result of a failure to put such a plan in place sooner, some euro-area countries have found – to their cost – a much more rapid adjustment being forced upon them. Of course, no one can forecast the gusts – or indeed storms – the economy may face looking ahead. But if the recovery is slower than expected then the automatic fiscal stabilisers – the lower tax receipts and higher spending that result from weaker growth – will act to stimulate demand. And monetary policy can react too, especially when there is a credible plan to reduce the deficit. In the wake of the worst financial crisis ever, the amount of money in our economy – broad money – is now barely growing at all. It was the failure in the 1930s to halt a marked contraction in the money supply that led to the Great Depression.

If we are to prevent another crisis, action is required on both of the fundamental causes. First, we need to resolve the problems caused by massive capital flows from poor to rich countries. Yet the imbalances are growing again. This problem can be tackled only by international cooperation – most obviously through the G20 – and I hope that the trade union movement will continue to engage with that process. Second, our financial system needs radical reform. Slowly but surely, we must move towards a banking system that does not put both the economy and your members’ livelihoods at risk. In the long run, banks will have to hold much more capital and be much less highly leveraged. Part of the answer is improving the way we regulate banks, and devising policy tools to control the risks taken by the financial system as a whole. The aim should not be to prevent all bank failures. Just as with every other company in the economy, banks that get it wrong must be allowed to fail, without risk to ordinary depositors or taxpayers. In 2008, banks were bailed out not to protect them but to protect the rest of the economy from the banks. That may not seem fair – and it isn’t – when other companies, such as Jaguar, had to stand on their own feet or go to the wall. So banks too must face market discipline. But we need to do more than reform our banking system.
This is of course true to some extent. However, at the same time I find it difficult to see that we should act in a different way when we are now, as far as I know for the first time since introducing the inflation target, experiencing a period when house prices and household indebtedness have developed in a way that raises concerns that monetary policy has been too expansionary. The important thing is that the Riksbank in these situations reports the motives for the decisions made as clearly as possible. However, the considerations are very difficult to make and it is not always possible to provide simple, precise explanations. One might say, somewhat provocatively perhaps, that it appears as though many have interpreted our objective of maintaining price stability, or more generally, safeguarding confidence in the inflation  2  BIS Review 87/2006  target as meaning that the Riksbank should conduct a policy where the inflation forecast always shows inflation as being on target two years ahead. However, this is an overly narrow interpretation and I am convinced that if we were to follow this principle in all situations the final result, seen over a long period of time, would be worse than with a policy that also gives consideration to other prevailing circumstances. In this context it can also be observed that, despite the debate that monetary policy has become less clear and that there is a risk that confidence in the inflation target will weaken, none of this is reflected in inflation expectations.

All in all, this indicates that growth will be higher than we had assumed in June, even taking into account the fact that expectations of repo rate increases have been adjusted upwards over the summer. The upward revision in growth prospects has not led to any major revision in our inflation assessment. Although the high GDP growth in itself indicates that inflation may rise more rapidly in future, the strong productivity growth is at the same time expected to contribute to cost pressures being lower this year than was assumed in June. Cost developments in the somewhat longer term are very difficult to assess. If productivity continues to develop strongly, companies may postpone recruiting new staff, which would mean a delay in the labour market upturn and continued low cost pressures. However, there are a number of indications that the labour market is now strengthening and a more rapid increase in employment will probably contribute to rising cost pressures in future. During the summer inflation has been slightly higher than expected, which was mainly due to rising energy prices. The inflationary impulse this entails is to some extent counteracted by the low unit labour costs, but inflation this year will probably be slightly higher than we had assumed in our June forecast. Our assessment is that the effects of the energy prices will subside at the beginning of 2007.
Given the evidence of substantial excess capacity and a quite low core inflation rate, it is absolutely appropriate that monetary policy – and indeed fiscal policy – have been deployed in a way that encourages a more robust recovery. Going forward, it is my view that monetary policy must continue to focus on addressing both elements of the Fed’s mandate – price stability, and growth supporting a return to full employment in the medium term. Today I am going to focus on two questions that seem to be at the forefront of most discussions of the recovery. The first question is, what role will housing play in the recovery? As the most interestsensitive component of gross domestic product (GDP), housing has traditionally been an important sector of the economy for generating recovery. I will be highlighting the fact that, despite some improvement in factors fundamental to a housing recovery, I expect housing will not provide as much support to this recovery as it has in previous ones. My sense is that residential investment, consumer durables, and services related to housing will be less robust than is usual in many recoveries, thus playing a role in what I think will be only a gradual improvement in the economy and employment. To put it plainly, these housing-related headwinds are part of why I do not expect growth greater than 4 percent this year. And while 4 percent is not terrible, at that rate it will still take a very long time to get back to full employment.

The benchmark figure used for the weighting is based on the top panel of Figure 1B in Mayer and Pence (2008): “Subprime Mortgages: What, Where and to Whom?” Finance and Economics Discussion Series Paper No. 2008-29, Board of Governors of the Federal Reserve System – available on the Board of Governors website at http://www.federalreserve.gov/PUBS/FEDS/2008/200829/200829pap.pdf. BIS central bankers’ speeches  3  suggests that inflation is not likely to be a problem, then we can more comfortably align policy to continue supporting the recovery. Some observers and analysts have voiced great concern that the nascent economic recovery, combined with the actions of the Federal Reserve that have expanded its balance sheet, will lead to significant inflation. However, Figure 11 provides a variety of different measures of core inflation; core CPI, core PCE, trimmed core CPI and trimmed core PCE. It is striking how much all four series have declined. In fact many of these series are at their historical lows. Figure 12 shows the different measures of core inflation in the top panel, and the Federal Reserve’s balance sheet in the bottom panel. In the fall of 2008, the Federal Reserve’s balance sheet expanded significantly – but that period also corresponds to the emergence of disinflation (a reduction in the inflation rate) in the U.S. While monetary policy works with lags, why has the unprecedented increase in the Federal Reserve’s balance sheet corresponded with continued significant disinflation?
Jessica Chew Cheng Lian: Financial inclusion strategies in ASEAN economies Speech by Ms Jessica Chew Cheng Lian, Assistant Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the ASEAN Financial Inclusion Forum, Kuala Lumpur, 25 April 2017. * * * It is a great honour for Bank Negara Malaysia to host the first ASEAN Financial Inclusion Forum. We warmly welcome you to Kuala Lumpur. Let me also especially thank the distinguished speakers from Indonesia, Philippines, Singapore and Thailand; and experts from AFI, UNCDF and the World Bank for graciously taking the time to share your invaluable experience in pursuing financial inclusion strategies with participants of this Forum. ASEAN today is one of the fastest-growing and most dynamic regions in the world. We are home to 630 million people and a burgeoning middle class, with individual economies that are diverse in terms of demography, income level, resource endowment, financial sector development; and economic size, structure and systems. A vibrant SME sector contributes 50 to 80 percent of ASEAN’s workforce and accounts for 96 percent of enterprises in the region, linked by more extensive cross-border production networks and the intensification of intra-regional trade and investment activities. Growth for the region is still expected to outperform average global growth in 2017 and 2018, and this is expected to be sustained going forward.

ASEAN’s growth story has been supported by greater traction in recent years in regional financial integration which will expand sources of financing and investments for economic activities, deepen the region’s financial markets, and enhance the competitiveness of ASEAN businesses through efficiency gains (for example through lower costs of payments and settlements). Growth and development across the region however does not guarantee equal opportunities for all to lift their social and economic circumstances. Nor can it therefore be assumed that income and wealth divides will narrow. History bears this out, as despite advances in financial globalisation over several decades, income inequality has actually worsened in many parts of the world – including both developing and developed countries. For ASEAN, a key priority has therefore been to ensure that greater economic and financial integration progresses in lockstep with greater financial inclusion. For many policymakers in this room, the challenges are pressing with 265 million or 44% of adults in ASEAN who are still unbanked. This represents nearly half of the adult population in the region who do not have access to safe and reliable basic banking services, with broader implications for health, economic and social outcomes. ASEAN Finance Ministers and Central Bank Governors (AFMGM) have unanimously agreed that financial inclusion should be a policy priority for ASEAN. The Working Committee on Financial Inclusion, or WC-FINC established in April 2016 to carry this mandate forward, has in turn, laid out clear goals to support and accelerate regional initiatives to elevate the level of financial inclusion in ASEAN.