samchain/econo-pairs-v1 huggingface dataset:
As a logical consequence, a question arises about how the monetary policy should be conducted in these circumstances, and in particular, whether it should respond to the increase in asset prices despite the fact that inflation of consumer goods and services remains low or very low. Another vital question arises about the appropriate level of central bank interest rates when long-term interest rates remain low, possibly as a result of globalisation. A hot debate accompanies the issue, both among the central 26 27 bankers and among academics. The Chairman of the Federal Reserve, Ben Bernanke, in his address 28 last month, presented possible diagnoses regarding the sources of low interest rates on the bond market despite as many as fourteen increases in the central bank references rates. There are at least two explanations of such situation. If the long-term interest rates remain unchanged and the short-term ones increase, this means that either the markets pessimistically assess the perspectives of economic growth or the risk premium related to forward rates decreases; here this may be the inflation risk premium or real interest rates volatility risk premium. Another explanation may be the very effect of global imbalances, i.e. the result of large purchases of sovereign bonds by Asian central banks and oil- exporting countries. Depending on which hypothesis is true, the implications for the monetary policy are different. If the long-term rates go down as a result of poor growth prospects, the current short-term interest rates should be lowered  23  See e.g.

•  Let me finish with a few words on the development of macro-prudential frameworks across the globe. For the most part good progress has been made in setting up effective macroprudential frameworks at a national level. However, many emerging macro prudential risks are cross border in nature – for example the GFSR has identified global factors as having played an important role in the quadrupling of corporate debt across major emerging economies, much of which is in foreign currencies. The risk inherent in this build up of leverage has motivated calls for a normalisation of advanced economy monetary policy sooner rather than later – a global leaning against the wind. •  But tightening advanced economy monetary policy solely to discourage further borrowing could make the job of getting inflation back to target more difficult. So, just as using a targeted macroprudential tool is preferable to using monetary policy to tackle domestic financial stability risks, so too would it be preferable to use efficient and effective international macroprudential tools to target global risks to financial stability. The framework for international macroprudential co-ordination is currently still in its infancy, and there is much room for improvement by way of surveillance, design and implementation of global macroprudential tools. This perhaps is the next frontier for macro-prudential policy and an important one for the FSB and IMF to take forward given the potentially significant negative spillovers that might result. BIS central bankers’ speeches  3
Chart 18: UK banks hold only a small fraction of CLOs  Chart 17: Corporate gearing still well below peak but has grown recently Per cent of earnings Other corporate debt Commercial real estate debt 400  EA Banks US Banks Japanese Banks  300  US Insurers Pension funds  200 100 0 1998  02  06  10  14  18  Sources: Association of British Insurers, Bank of England, Cass Commercial Real Estate Lending survey, Deloitte, LCD, an offering of S&P Global Market Intelligence, London Stock Exchange, ONS, Preqin, Deals Business Intelligence from Refinitiv and Bank calculations. Indicative Bank staff estimate. For further detail, please see Chart F.5 in the November 2018 Financial Stability Report. UK Banks  These types of investor would typically hold the riskier tranches  SMAs  Other investors (mainly Open‐ended international) funds Hedge funds Structured credit funds  UK Insure  EA Insurers  Other SMAs  CLO managers  Sources: BarclayHedge, Bloomberg Finance L.P., FCA Alternative Investment Fund Managers Directive (AIFMD), Firm public disclosures, LCD, an offering of S&P Global Market Intelligence, Morningstar, National Association of Insurance Commissioners, Securities Industry and Financial Markets Association, Solvency II submissions, and Bank calculations. Indicative estimated holdings of CLOs by global investors. 1 square = 1% of $ billion global CLO market. For further detail, see footnotes to Chart F. 8 in the November 2018 Financial Stability Report.

Calibrating PEPP This brings me to the second question – the calibration of the PEPP. By removing duration risk from the market, PEPP reduces the bond free-float ratio –the share of bonds that need to be held by private price-sensitive investors relative to total bond supply (see left chart on Slide 8). In the absence of our new measures, this ratio would have gradually increased on the back of the large coronavirus-induced increase in debt issuance, thereby putting upward pressure on bond yields. The PEPP envelope has been calibrated with a view to restoring and preserving financial conditions that are consistent with bringing inflation back to the pre-COVID-19 inflation path. The evidence speaks for itself. Upon the announcement of the PEPP, and again in response to our actions last week, the euro area GDP-weighted yield curve has shifted downward measurably, and today it is not far from the level we observed before the outbreak of the crisis (see right chart on Slide 8). In view of the historically weak inflation outlook and the already accommodative stance, the question arises whether our actions are sufficient and proportionate. In answering this question, the Governing Council assesses whether the benefits of achieving a faster return of inflation to levels closer to 2% outweigh the potentially adverse side effects. In other words, it assesses how long the “medium term” should be, given current circumstances.
Miguel Fernández Ordóñez: Seeking solutions to Spain’s economic, financial and fiscal issues Address by Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, to the Annual Assembly of the Instituto de Empresa Familiar (IEF) Madrid, 23 May 2011. *  *  *  Many thanks for inviting me to talk at your Assembly. And since one of the functions of your Institute is to seek solutions to the legal and institutional environment in which the company moves, I’ve decided to focus my address today on what I think about this matter. Resolving a country’s economic problems should be no different from what any individual or company does to improve its situation. First, acknowledge that we have problems; second, identify the changes needed; and third, apply them. I’ll try to apply these guidelines to what, in my view, are our main problems: the relatively low level of educational attainment of the labour force; the need to adjust the imbalances accumulated over the course of 14 years of expansion; massive unemployment; and, for a year now, the mistrust of the markets to which we have to resort for funding. Let’s begin by looking at two examples where problems were not properly identified. The first of these was thinking that the main source of our difficulties was the international financial crisis and not the imbalances accumulated further to a long expansion based on indebtedness and the deterioration of our competitiveness.

Since the introduction of the MPESA mobile banking service in Kenya, the number of adults with access to financial services has increased from 42% in 2011 to 75% today. Agent banking in Malaysia has provided consumers with an innovative and alternative channel to access financial services, resulting in the percentage of sub-districts served by financial services access point to increase from 46% in 2011 to 96% in 2014. This has enabled 99% of Malaysians, particularly those in rural areas, to conveniently access and benefit from financial services. The microfinance  1  “Global Financial Development Report 2014”, World Bank, 2014. 2  Discussion note “Redistribution, Inequality, and Growth”, IMF, 2014. BIS central bankers’ speeches  1  institution Grameen Bank in Bangladesh has extended credit through its 2,500 branches to almost 8 million people, with 60% of them lifted from poverty. The loan recovery rate is higher than 98 percent. The experience in Bangladesh, in particular, dispels the myth that the poor is not bankable. Of proportionate regulation and the global standards The proportionate application of Global Standards for financial regulation is a critical factor in enabling innovative financial inclusion solutions, ensuring its delivery in a safe and sound manner. My remarks today will touch on the following topics: Recent developments in global standards and financial inclusion; Focus areas to advance Proportionality in Practice; and The importance of the Global Symposium to galvanise action.
As ever, my votes on Bank Rate at the December MPC meeting and beyond will be determined by pursuit of the inflation target, and guided by the evolution of the economic and financial data. Conducting central bank asset purchases But the MPC is not only taking decisions about Bank Rate. In parallel with increases in Bank Rate, the MPC has also embarked on quantitative tightening. Gilts held as a result of QE conducted over the past decade or more have been sold as of the beginning of this month, following the decision in February 2022 to cease reinvesting the proceeds of maturing bonds. QT is another aspect of the normalisation of the monetary policy stance. The MPC has committed to unwinding its QE holdings in a gradual and predictable manner. Gilt sales are running ‘in the background’, rather than being responsive to month-to-month data news. As I have already discussed, responses to shocks at the margin involve what the MPC has identified as its ‘active’ instrument – Bank Rate. From the outset of its communication about QT, the MPC has emphasised that, were markets to become dysfunctional, asset sales could, if necessary, be paused.

As we saw with the onset of the global financial crisis, in the face of deflationary pressures, monetary policy makers can resort to asset purchases in the form of quantitative easing to ease the stance of monetary policy and financial conditions more broadly. Central bank asset purchases can be seen as working in two ways. Asset purchases as a substitute for changing Bank Rate First, they are a potential substitute for monetary easing via the conventional lowering of interest rates should the effective lower bound on Bank Rate bind. In this context, QE can influence the economic outlook through a number of channels. On the basis of quantity-theoretic considerations, an expansion of the central bank’s monetary liabilities may raise inflation expectations directly. QE can also offer guidance to the market about the Bank’s plans for interest rates. In short, QE may work through a signalling channel. The increase in central bank reserves associated with QE may lead to portfolio rebalancing, as banks attempt to restructure their balance sheets by buying financial assets or making loans. More generally, the absorption of duration from markets associated with Bank of England purchases of government debt financed by the creation of central bank reserves can trigger efforts by a broader set of market participants to rebalance portfolios, leading to a bidding up of asset prices. Higher asset prices ease the wider set of financial conditions faced by households and firms, supporting economic activity alleviating deflationary pressures. In sum, QE may also work through a portfolio balance channel.
In terms of how to move forward I’d like to make three brief points before I close: First, the fact that we’re all sitting here in this room is a very positive sign. That so many leaders from major firms are here today, engaged in these issues, is a symbol of how organizational culture is moving up the agenda. The second is that the Banking Standards Board survey is a terrific tool for getting a snapshot of what your organization’s culture looks like and how it’s changing over time. It goes far beyond typical engagement questionnaires and provides powerful insights into the values of employees and the characteristics of an organization.7 It’s impossible to make progress if you don’t have an accurate picture of your starting point. The third is that when it comes to culture, I encourage everyone to look beyond their own lens of expertise. The Fed couldn’t do its work without the deep knowledge of economists, lawyers, and statisticians. But the solutions to challenges related to a firm’s culture are unlikely to be found if we keep our focus narrowly trained on our own specialties. We have so much to learn from experts in psychology, ethics, and management. 3/4  BIS central bankers' speeches  That’s one reason I’ve been so looking forward to today’s panel discussion. It brings together experts from many of these fields, whose combined insights are the key to moving us all toward the business culture we want to see.

Employees may enter an organization with a strong sense of right and wrong. What they may not realize is that group norms can exert a powerful magnetic pull on their moral compass. The junior banker knew the way the number was being presented was unethical, and yet she complied with her boss. The response from the senior analyst, describing the situation as a “judgment call,” is a common phenomenon. Using a euphemism to describe the inflated statistic camouflages the wrongdoing and makes it sound more acceptable to others. We see it in our daily lives—terms like “troublemaker” and “not being a team player” are often used to shift the onus from the person whose behavior is being challenged to the challenger. Ann Tenbrunsel’s work has been very important for revealing how we use language to disguise or excuse behavior we know to be unacceptable.3 One of the other issues this example illustrates is how organizational norms affect our own sense of what’s right and wrong and whether to speak up. Many of you here today will be familiar with the Asch experiment, where students participated in a vision test. There was a control line and three other lines labelled A, B, and C. Participants had to state aloud which line was the same length as the control.
This should increase understanding among the population for implementing necessary measures and put pressure on governments to do so. Every other year, a special Globalisation report will be produced. This will contain a more in-depth version of the annual analyses of global financial and economic stability. One very important question for the Fund’s legitimacy and ability to act is how it is governed. Today the governance of the IMF to a large extent reflects the distribution of power in the world when the IMF was established. The question of influence and governance has gained a new explosive force through the economic developments in a number of large growth economies such as China, India, Brazil and Mexico, who now demand greater influence. If nothing is done to reform the IMF’s forms of governance, there is a risk that the organisation will lose legitimacy and relevance. It will most likely take time before a sustainable solution has been drawn up. Personally, I regard the regional principle as the most democratic and efficient in the long term. This would mean that the large regions – which are currently more or less well-organised - the United States, Latin America, Europe, Africa, Asia, etc. - reinforcing there regional platforms in order to shoulder global responsibility together. Thank you! 8  BIS Review 35/2006

More broadly speaking, the RMB is now the seventh most used payment currency according to the Society for Worldwide Interbank Financial Telecommunication (SWIFT), and the ninth most actively traded currency according to the Bank for International Settlements (BIS). 4. To me, the extent and pace of the development of offshore RMB business depends on three key factors. The first factor is the relaxation of controls and restrictions by the Mainland authorities. The second factor is the availability of the necessary financial market infrastructure, such as clearing and settlement systems. The third factor is the awareness and willingness of corporates and financial institutions, especially banks, to develop RMB business opportunities. 5. Since the RMB trade settlement pilot scheme was launched back in July 2009, the Mainland authorities have incrementally removed many controls and restrictions on the flow of RMB out of and into the Mainland. Presently all trade and current account  BIS central bankers’ speeches  1  transactions between Mainland China and other parts of the world, as well as inward and outward direct investment into and out of China, can be conducted in RMB. Moreover, some cross-border portfolio investment flows, such as investments into China’s bond and equity markets, can also be made in RMB via the RMB Qualified Foreign Institutional Investors (RQFII) scheme. 6. More importantly, in April this year the Mainland and Hong Kong authorities announced a milestone project, i.e. the Shanghai-Hong Kong Stock Connect scheme.
And, as the banks have grown larger and have increasingly expanded their operations over national boundaries over the last decade, each nation cannot solve such problems alone. The question of how to manage crisis banks is currently the subject of intensive discussion across the world, and new regulations of some form must also arise from this discussion. Today, I plan to address another lesson from the financial crisis, a lesson that has not yet led to any consequences in the form of regulatory changes, but which nevertheless must be dealt with in the long term. It applies to Sweden, but also to many other countries, particularly in Europe. It relates to the banks’ dependence on funding in foreign currencies, primarily US dollars. What kind of risks are the Swedish banks taking when they borrow in dollars – and who bears the cost? As usual, I would like to point out that the thoughts I present are my own and are not necessarily shared by my colleagues on the Riksbank’s Executive Board. The dollar crisis… As we all know, when Lehman Brothers collapsed in September 2008, the immediate effect was a liquidity crisis that affected the entire world to varying degrees. Banks and investment banks that had based their business on being able to rapidly obtain large volumes of shortterm borrowing, for example by issuing securities with short maturities, discovered that investors in these securities suddenly just vanished.

Oversimplifying, I would say that the French and English languages seem to be very much designed to “communicate”. My understanding of the German language is that it is very much designed to “think”, with its verbs at the end of the sentence. I am not surprised that it is such a good language for philosophy. FOCUS: Are you trying to say that Germans are not as good at small talk? Trichet: Not at all! I just want to say that the German language itself is particularly well suited to reflection. In speeches, for example, speakers let the audience think along with them. Only at the end of a sentence is the audience able to understand exactly what is actually meant. This is why it is pretty unacceptable for people in the audience to whisper during a speech. BIS Review 7/2010  5
We should continue to report a main scenario for economic developments and the repo rate in the coming three years, in which inflation approaches 2 per cent and resource utilisation approaches a normal level, but we should regard it as such – a potential scenario. We should also continue to analyse the consequences of other sequences of events. The base for monetary policy has improved gradually since the current monetary policy regime, with a floating exchange rate and inflation target, was introduced. A large number of models have been developed and the forecasts are now based on the Riksbank’s repo-rate path that can differ from the market’s forward rate curve. However, the base should be developed further. I have taken up some such areas in this speech:   The forecasts for the GDP gap and other measures of resource utilisation should be developed further and the description of the uncertainty in these forecasts should be shown in the same way as the uncertainty in the GDP growth and inflation forecasts.   The Riksbank should also take into account credit expansion and asset prices in its monetary policy. The forecasts for credit growth and asset prices should be developed and formally integrated into the materials on which the monetary policy decisions are based. In this case, too, it is important to show the uncertainty in these forecasts.   The Riksbank’s models should be developed to be able to handle the difference between the Riksbank’s repo-rate path and the market’s forward rate curve.

2 Unemployment peaked at nearly 12% in the eighties and over 10% in the early nineties – after smaller falls in output. 2  Labour force data were published after the date of this talk: unemployment has dropped to 7.9% in the three months to April. 2  BIS Review 91/2010  Throughout the recession we have heard many reports from firms about how they and their workforces have responded to recessionary pressures. Those reports are from our Agents or MPC members talking directly to business contacts across the regions and in all sectors – a truly invaluable source of information for the Committee. It has been clear that there has been an unusual response from companies and their employees. Many firms have sought to retain staff wherever possible, rather than shed them as in previous downturns – hours have been shortened and wages frozen or even cut where possible, rather than making people redundant. Large firms with smaller suppliers have tried to work with suppliers to keep their supply chains intact, which has helped smaller firms to survive. Many employees – at least in the private sector – have been willing to forgo income in order to retain their jobs. Tax officials have worked very hard with firms to give them the time for tax bills to be paid.