samchain/econo-pairs-v1 huggingface dataset:
On inflation, there’s only around a one-in-four chance that inflation will lie close to the central projection – that is, between 2 and 2.5%, but a more than one-in-three chance that it will be above 2.5%, and an almost 1 in 5 chance that it will be below 1.5%. As this illustrates, one implication of widening the fan charts has been to increase the perceived risk of some rather unattractive outcomes – either that growth slows too sharply, or that inflation does not return to target following an upward spike. In particular both the upper tail of the inflation forecast – where inflation expectations might well come seriously adrift – and the bottom tail of the output forecast – where there could be a risk of setting off a deflationary spiral – are to be avoided, if at all possible. In this situation, it is not unreasonable to suppose that the Committee will be more sensitive than usual to changes in the balance of risks. Since neither of the key risks to the outlook is readily modelled or measured, monitoring them is not going to be easy. But we do have a framework for thinking about them, and a variety of timely surveys and indicators which can act as early warning signs. On the impact of the credit shock, we will be monitoring our new quarterly credit conditions survey of lenders, and special surveys from our own Agents, as well as the full range of indicators of the price and quantity of credit.

The group we are most concerned with are the vulnerable customers. We are focussing on cases of mis-selling to vulnerable customers and on cases where the products were clearly inappropriate for them given their circumstances. We have required the FIs to give priority to these cases. They should not take an overly legalistic approach to mis-selling in dealing with these cases. For cases where there are sufficient indications that the product was mis-sold or that it was clearly inappropriate given the investor’s profile and circumstances, the FI should take responsibility. Several FIs have assured MAS that they will take full responsibility in such cases. We welcome this commitment and expect all FIs that have sold these products to take the same approach. They must do the right thing and ensure a quick and fair resolution for these customers. We have communicated this to their CEOs. Thank you, I will now take your questions. 2  BIS Review 126/2008
But with hindsight, seen across the world as a whole, there was a case for somewhat tighter monetary policy to prevent the demand for resources outstripping supply (although I would note that our interest rates have been consistently higher in recent years than those elsewhere in the advanced economies). The rise in oil and food prices has appeared as an external pressure on each country on its own but it is not external to us all collectively. A particular problem here – that has yet to be resolved – is the expansion of the dollar bloc. The emerging economies were importing loose monetary policy, which scarcely seemed appropriate to their domestic conditions. However it is hard to believe that a somewhat tighter monetary policy would have been guaranteed to head off the credit boom and subsequent crunch altogether. Put another way, monetary policy is a blunt instrument. To prevent excesses in financial markets, we might have had to generate an unnecessary slowdown in the real economy. I share the view therefore that we have to look for new regulatory measures to complement interest rates. There are a number of specific lessons on regulation which have already been identified. The FSA, for example, is already strengthening its prudential supervision. And internationally, we need to fill gaps in the current framework – for example on mortgage origination in the US, increasing the capital requirements for some credit products and loan commitments, and ensuring that investors and rating agencies assess new products more diligently.

Luis de Guindos: Key vulnerabilities for euro area financial stability Remarks by Mr Luis de Guindos, Vice-President of the European Central Bank, at the meeting of the Financial Stability Contact Group, Frankfurt am Main, 2 October 2019. * * * Let me start by thanking you all for participating in this meeting of the Financial Stability Contact Group. These meetings are a key feature of the ECB’s market intelligence gathering activities. The financial stability environment has certainly remained challenging since this group last met in March. The global economic outlook has worsened since then, and political and policy uncertainty has increased in a number of areas. Taking this into account, we continue to see four key vulnerabilities for euro area financial stability: (i) first, a risk of mispricing of some financial assets; (ii) second, high public and private sector indebtedness in several countries; (iii) third, in view of banks’ subdued profitability outlook, we see a risk of hampered bank intermediation capacity; and (iv) fourth, vulnerabilities stemming from increased risk taking in the non-bank financial sector. We see the likelihood of these vulnerabilities unravelling in a disorderly manner over the next 18–24 months as remaining largely unchanged. This is because the now widely expected “lowerfor-longer” interest rate environment mitigates many of the possible triggers for corrections over the short to medium term.
Jaime Caruana: Perspective on issues relevant to the new international capital framework After-dinner remarks by Mr Jaime Caruana, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, at the “Accounting, Transparency and Bank Stability Workshop”, Basel, 17 May 2004. *  I. *  *  Introduction  Good evening. I hope that you are enjoying this opportunity to dine and unwind after your deliberations on emerging issues in accounting, transparency, and financial stability. You represent a wide range of views and institutions and, based on the animated conversations taking place during dinner, it seems that you bring great enthusiasm and interest to this workshop. In my view, that mixture enlivens the exchange of ideas and helps us to sharpen our understanding of the questions we face and the options we have to address them. It has been said that “learning is achieved only in company.” In this connection, we are all indebted to the workshop’s coordinators and sponsoring organisations for bringing together such select and highly qualified company in which to learn. Here I’d like to thank in particular Urs Birchler from the Swiss National Bank, along with Reint Gropp from the European Central Bank. On the academic side, I’d like to thank Mark Flannery (University of Florida), Rafael Repullo (CEMFI and CEPR), Ernst-Ludwig von Thadden (Université de Lausanne, CEPR and JFI), and Anjan Thakor (Washington University).

Over the last few months we have completed significant changes in a number of important areas: we decided to calibrate regulatory capital to unexpected losses only; we have made significant improvements to the provisions relating to securitisation, credit risk mitigation and operational risk; we have clarified Pillar 2 and the calibration process; we have specified the treatment of revolving retail exposures, and we continue to make progress in preparations for the implementation of the Accord. Having reached consensus on the framework, the Basel II process is entering a new stage. Member authorities will now focus on transforming the text of the framework, which will be published at the end of June, into national rules. This will require national supervisors to conduct rule-making and adoption processes relevant to their jurisdictions, something that is well under way in many countries. In addition, the Committee agreed on the timetable for the implementation of the Accord in member countries. This is the second important development of last week’s meeting in my view. The Committee confirmed that the new framework will be implemented by year-end 2006 for those banks adopting the standardised and foundation approaches to risk. With regard to the most sophisticated approaches to risk measurement and management, the Committee considered the needs of national supervisors and of the industry and decided to provide an additional year.
They’re driven by demographic changes and slow productivity growth, which are unlikely to reverse any time soon. Low r-star implies that many central banks will be grappling with the challenges of life near the 1/4  BIS central bankers' speeches  ZLB, which is why it’s so critical to consider how the ZLB alters strategies related to monetary policy. Monetary Policy Near the ZLB And that’s exactly the question we looked at around 20 years ago. In a paper and subsequent FOMC briefing in January 2002, my colleague Dave Reifschneider and I evaluated the effects of the ZLB on the macro economy and examined alternative monetary policy strategies to mitigate the effects of the ZLB.3 This work highlighted a number of conclusions based on model simulations.4 In particular, monetary policy can mitigate the effects of the ZLB in several ways: The first: don’t keep your powder dry—that is, move more quickly to add monetary stimulus than you otherwise might. When the ZLB is nowhere in view, one can afford to move slowly and take a “wait and see” approach to gain additional clarity about potentially adverse economic developments. But not when interest rates are in the vicinity of the ZLB. In that case, you want to do the opposite, and vaccinate against further ills. When you only have so much stimulus at your disposal, it pays to act quickly to lower rates at the first sign of economic distress. This brings me to my second conclusion, which is to keep interest rates lower for longer.

It was a time when there was an absence of speculators. It was only in 1997-98 when the ringgit and other regional currencies came under speculative attack. The volume of foreign exchange transactions had become massive, far exceeding volume of trade and the normal financial flows. This resulted in exchange rate volatility during the Asian crisis that occurred wave after wave. Regional currencies continued to plummet during this period. After more than a year of this turmoil and uncertainty in the foreign exchange market, Malaysia implemented selective capital controls and de-internationalised the ringgit. This was instrumental in restoring stability in the market. It acted very much like a circuit breaker. Offshore trading of the ringgit, the major source for financing the speculative attacks, was effectively eliminated. Within a year, all the controls that were imposed were removed. More than 10 years later, the ringgit, however, still remains non-internationalised. An important precondition for the internationalisation is the development of a robust foreign exchange market in our financial system. Financial stability The events surrounding the current financial crisis has brought into sharp focus the role of central banks in financial stability. As these events continue to unfold with great uncertainty on the financial markets and broader economy, allow me to reflect on Bank Negara Malaysia's own role in financial stability. In addition to its functions as the lender of last resort, Bank Negara Malaysia has also had the responsibility for the regulation of banking institutions.
Importantly, there are no signs of worsened counterparty concerns among banks, and spreads in the FX swaps market in dollar and other advanced-economy currency pairs have tightened in recent months, demonstrating that foreign firms that wish to obtain dollars by providing foreign currency effectively as collateral can do so on reasonable terms. That said, I do recognize that capital flows to emerging market economies have diminished in recent months. But, this shift appears to be largely driven by divergence in nearterm growth momentum, which has supported the dollar and triggered some pullbacks in portfolio flows and reduced borrower demand, and not by general dislocations in the availability of short-term dollar funding. We will continue to monitor developments in U.S. and global dollar funding markets closely, as we always do. In this regard, our ongoing dialogue with fellow central bankers, including through meetings such as this one, provides us with very valuable insight and perspective. As part of the New York Fed’s ongoing engagement in and commitment to the region, we are pleased to be partnering with Bank Indonesia on a joint Central Banking Forum, which will take place prior to the 2018 Annual Meetings of the International Monetary Fund and World Bank Group in Bali in October. This forum will highlight economic and monetary policy developments in the United States and emerging markets as well as geopolitical and technological trends and their implications for central bankers. We hope that you and members of your delegation will be able to join us for this event.

Since the crisis, the FOMC’s accommodative monetary policy stance has helped support an economic recovery and expansion both in the United States and around the world. But, it has not done this alone: it has had the support of a wide variety of policy actions—most notably, but not limited to, financial regulatory reform aimed at bolstering economic resiliency and reducing the economy’s propensity toward boom-and-bust cycles. Going forward, maintaining the U.S. economy on a sustainable trajectory, including through transparent monetary policy implementation and effective and efficient regulation, is our best means of contributing to prosperity both at home and in the broader global community. Thank you for your attention. I look forward to the panel discussion. ###  13
References  4/5  BIS central bankers' speeches  Brainard, W. (1967): “Uncertainty about the effectiveness of policy”, American Economic Review 57, 411–425 Constâncio, V. (2016): “The challenge of low real interest rates for monetary policy”, speech delivered on 15 June 2016 Hamilton, J. D., J. Hatzius, E. S. Harris and K. D. West (2015): “The equilibrium real funds rate: Past, present, and future”, Hutchins center on fiscal & monetary policy at Brookings, Working Paper 16 Hansen, F. and K. Torstensen (2016): “Does high debt growth in upturns lead to a more pronounced fall in consumption in downturns?”, Economic commentaries 8/16, Norges Bank Laubach, T. and J. C. Williams (2015): “Measuring the natural rate of interest redux”, Hutchins center on fiscal & monetary policy at Brookings, Working Paper 15 Lund, K., K., K. Tafjord and M. Øwre-Johnsen (2016): “What drives the risk premium in Nibor?”, Economic commentaries 10/2016, Norges Bank Rachel, L. and T. D. Smith (2015): “Secular drivers of the global real interest rate”, Staff Working Paper 571, Bank of England Zhu, F. (2016): “Understanding the changing equilibrium real interest rates in AsiaPacific”, BIS Working Papers 567 1 The spread between the money market rate and the expected key policy rate (the interest rate premium) can vary  somewhat over time (see Lund et al (2016) for a discussion of the premium in the Norwegian three-month money market rate). 5/5  BIS central bankers' speeches

Second, the new model, which relies to a great extent on national supervisors, will not entail a decrease in the workload or, therefore, in the staffing needs of the participating countries’ authorities, or in the importance of their work. This will also be the case for the Banco de España. And third, the Banco de España has already made the necessary changes in the organisation of the Directorate General Banking Supervision, to adapt its structure to the 4  BIS central bankers’ speeches  needs and arrangements that the SSM requires. Moreover, it has also begun to implement the changes needed in its working methods and systems in order to contribute, as effectively as possible, to the operation of the euro area’s new supervisory structure. But we are still at the early, founding stages of the SSM. And foreseeably for some time, even for some years, adjustments and changes will have to be made to the different components of our supervisory arrangements, both in terms of organisation and of working procedures and staffing levels. Thank you. BIS central bankers’ speeches  5
Some 12 percent of the Bronx workforce – a painfully high share – is jobless and less than a fifth of its adult population hold a college degree. The seeming disconnect between the pace of job creation here and high unemployment reflects commuting patterns. Many Bronx residents work in Manhattan and other places where job trends have been less favorable. In addition, not all jobs in the Bronx are filled by borough residents. High unemployment and low average levels of education help explain why the per capita income here is less than two-thirds of the national average. A quarter of the population here lives below the poverty line, more than double the national rate. Reducing poverty and raising the graduation rate are clearly major challenges for policymakers here,2 even though the Bronx, like the city, seems headed in a promising direction. How are families here doing in reducing their debt to more sustainable levels? Let me tell you what our special consumer credit panel reveals about the Bronx.3 Families here, as renters, carry relatively little debt. However, it worries me that in contrast to falling debt levels elsewhere, Bronx residents have not reduced their indebtedness during the last two years. Also troubling is the 17 percent of household debt in the Bronx that is seriously delinquent: roughly double the rate in the state and nation. Plus, the number of delinquencies is still climbing here, even though they are falling in the state and nation.

Just like interest rate cuts in normal times, our monetary policy provides support through lower interest rates that encourage private-sector business investment and household spending. This policy tool should not be confused with fiscal stimulus or government spending. I believe that the actions we have taken recently will be helpful in supporting growth and jobs. However, I do not think that monetary policy is all-powerful. To get the strongest possible recovery we need reinforcing action in areas such as housing and fiscal policy.   Stabilizing the housing sector is particularly important because housing equity is an important part of household wealth. This calls for a comprehensive approach to housing policy, starting with an urgent effort to remove the obstacles that make it difficult for all borrowers to refinance at today’s low mortgage rates, but extending beyond this to tackle other problems weighing on housing. Taken together, such efforts could help shift people’s expectations about future house prices. If prospective homeowners no longer fear that prices could decline further, they will be more willing to enter the market to take advantage of reduced prices and low financing costs, and existing homeowners will feel more confident about spending. A vicious cycle could be replaced by a virtuous circle, in which stabilization in house prices supports spending, growth and jobs. Today, the Federal Housing Finance Agency (FHFA) set out plans to address one element of the problem – obstacles to refinancing for borrowers with high loan-to-value ratios.
However, in my opinion, the changes that have occurred would appear to indicate slightly stronger economic growth and perhaps also the risk of a slightly more rapid rate of price increase, mainly connected with international inflation and a weak krona. Given the information we have now, the financial markets’ expectations of a repo rate increase some time next year appear reasonable. As I see it, this conclusion is supported by the strong growth in the real economy and the increased risks that follow on from a continued rise in house prices,” continued Mr Heikensten. ”Let me conclude with a few more general reflections. It is quite natural given the current situation with extremely low interest rates and stimulation from monetary policy that the time for a repo rate increase is approaching. There have been increases in the repo rate on a number of previous occasions since inflation targeting was introduced, without any dramatic consequences. This is essentially a natural consequence of the strong economic growth and something that could contribute to safeguarding continued stable development in the Swedish economy during coming years,” concluded Mr Heikensten. 2/2

This is  BIS central bankers’ speeches  3  because the longer such measures persist, the greater the risks that can come with it. And in the euro area context there are two main risks that can in principle arise: first, greater financial instability (and let me stress here I am talking only about the situation in the euro area and not in other jurisdictions); and second, the delay of much needed structural reforms. To provide a framework for how to think about these risks I find it useful to invoke the wellknown “Tinbergen rule”, which states that a macroeconomic authority must have at least as many instruments as it has objectives. In terms of the first risk – financial stability – one has to distinguish between conflicting and complementary objectives. In normal times, it might be appropriate for monetary policy to take financial stability into account in its assessment of the appropriate level of interest rates. The reason is that, especially if one extends the concept of the medium-term, raising rates to choke off excessive credit developments will actually contribute to our price stability objective. It helps to prevent deflationary episodes emanating from large financial crises. And the symmetrical argument is also true: lowering rates in a downturn to support the financial sector will safeguard the transmission of monetary policy and hence support the achievement of our mandate. In this sense, I am supportive of the “leaning against the wind” argument in both directions, provided instruments and objectives are consistent.
Chart 7: Productivity levels relative to the US Per cent 100% 90% 80% 70% 60% 50% AEs  40%  EMEs  30% 20%  World  10% 0% 1950  1958  1966  1974  1982  1990  1998  2006  2014  Sources: Penn World Tables 9.0 and Bank calculations. Notes: Median TFP level at current PPPs; USA = 1  31  All speeches are available online at www.bankofengland.co.uk/speeches  31  Chart 8: UK and Germany firm-level productivity (Productivity Leadership Group (2017))  Sources: McKinsey & Company Inc. analysis of Orbis (2013) data, as shown in Productivity Leadership Group (2017). Available at: https://www.bethebusiness.com/wp-content/uploads/2018/04/how-good-is-your-business-really.pdf  Chart 9: Enterprises’ broadband connectivity by firm size in 2016 for OECD countries Per cent 100  90  80  70  60  50  All enterprises  10-49 employees  50-249 employees  250+ employees  Sources: OECD  32  All speeches are available online at www.bankofengland.co.uk/speeches  32

The “Gemeinschaftswerk” may not be the sole means of ensuring that progress is made but, in any case, a well-defined proactive strategy is called for if we are to rise to the challenges ahead. 8  BIS central bankers’ speeches