samchain/econo-pairs-v1 huggingface dataset:
Because the equilibrium rate is so central to monetary policy I will come back to discuss it further in a few moments. Persistently low inflation can be difficult. Deflation proper – by which I mean a persistent and generalised decline in prices – is potentially dangerous. During the Great Depression, sharp falls in prices reinforced collapsing output and skyrocketing unemployment. To consider how susceptible we might be to it, it is helpful to review why such deflationary spirals are potentially dangerous. A commonly cited reason is that falling prices prompt households and firms to delay spending and investment. The subsequent reduction in demand causes further reductions in prices through higher unemployment. That further reduces incomes and spending, drawing the economy into the vortex. The relevance of that dynamic depends on households’ willingness and ability to delay consumption. There are limits to the ability of households to delay consumption of some items, however, like food. And the psychology of instant gratification – the tendency for all of us to discount the future heavily relative to the present – mutes the willingness of households to wait for lower prices. It’s fair to say that thus far there’s no evidence as yet of delayed gratification taking hold in the UK.5, 6 There would be, however, a more clear and present danger arising from the balance sheets of households and firms should deflation persist. This is a concern across the advanced  4  See Tobin (1972), “Inflation and unemployment”, American Economic Review, 62.

Lower oil prices will also boost UK domestic demand directly as households spend their windfall. Our forecast conservatively assumes that they save 40 pence in every pound of that amount. On balance, there is likely upside risk to growth and inflation from this assumption. Oil isn’t the only reason why inflation is low globally. Measures of inflation that strip out volatile factors – so-called “core” inflation – have been trending down as well (Chart 6). Core inflation rates in the euro area, the US and the UK have declined by between ¾ and 1 percentage points since 2012. Core inflation in the UK, currently around 1.4%, is likely to decline further in the coming months, reflecting sterling’s past strength and muted domestic cost growth. The weakness in core inflation across the globe reflects the shortfall of global demand below global supply (Chart 7).10 In some major economies there are additional disinflationary forces. For example, in the euro area, a series of necessary internal devaluations are weighing on wages and prices. In China, a rebalancing of investment and consumption risks generating further disinflation. The producer price inflation rate has been negative for 35 months in a row, reflecting longstanding overcapacity in industries such as concrete and steel, while the more recent weakness in the property market could further increase excess capacity in related sectors. All this suggests a persistent period of low inflation globally is a possibility, and as I mentioned a few moments ago, could itself create a self-fulfilling fear of a bad outcome.
We expect to start granting licences to virtual banks around the end of this year or early next year. I believe establishment of virtual banks will provide further traction to the growth of the Smart Banking ecosystem in Hong Kong. 7.Fourthly, the Smart Banking ecosystem is not complete without support from the general public and customers. I am glad to see that a large number of bank customers have signed up with the Faster Payment System (FPS) since the launch of customer registration on 17 September for registration. Growing significance of Regtech in the Smart Banking Era 8.As we watch the positive development of the Smart Banking ecosystem, it is also important that we maintain momentum. This year, the conference’s theme, “Banking for a Smart Society”, reminds us not to be complacent. We should continue to work collectively to further develop the ecosystem. 9.While we naturally pay more attention to new or innovative digital financial services that become available to bank customers as a result of the Smart Banking initiatives, let’s not forget that Fintech is not only about the interface between banks and customers. The importance of a key Fintech segment, Regtech – regulatory technology – in supporting and facilitating the interface between banks and the regulators, should not be understated nor overlooked. I would like to therefore provide a supervisor’s perspective on Regtech in the Smart Banking era. 10.When we look at Regtech, some may immediately start to envisage the substitution of us, banking supervisors, with technologies such as artificial intelligence (AI) or “robo-regulators”.

20.Let me be clear that this is not technology at any cost. We must fully understand the pros and cons of what these changes will mean to banks’ AML systems and controls. At the same time we cannot outsource this responsibility to technology firms. Some of you will know from our work with a Regtech firm specialising in testing screening systems that we expect banks to understand why a machine makes the recommendations it does. 21.Going forward, if we are going to address the challenges, we need to be ambitious. The HKMA plans to move in the coming months from a one-to-one type engagement in our Chatroom, to a many-to-many type engagement where banks, stored value facility (SVF) operators, technology specialists and the regulator come together to tackle AML pain points. This will initially target one or two challenges, but will aim to build momentum and turn the successes into mainstream AML solutions that contribute to effectiveness and efficiency. 22.But that perhaps is still not enough. New technology comes at the right time not only for the regulatees, but also for regulators. With the advice from technology experts, we will embark upon a study to enhance the timely retrieval and transmission of AML/CFT related information and data from banks and SVF operators in a digitalised and efficient way, as opposed to the old-fashioned way of regulatory returns and surveys.
The regulatory model for stablecoins could include different applications of these features – as long as it offers equivalent protections to those for commercial bank money. As part of this, a key requirement will be to ensure that, unless the stablecoin is operating as a bank, the backing assets for stablecoins cover the outstanding coin issuance at all times. An alternative to a private stablecoin, but not a mutually exclusive one would be central bank digital money in the form of a central bank digital coin (CBDC). Central bank money has a unique role in anchoring value and promoting confidence in monetary systems. A CBDC could therefore play an important role in sustaining, and potentially expanding retail access to central bank money. I have discussed the public interest in the safety and security of money. But there is another very important public interest in this area which goes to the heart of the monetary and financial system. I mentioned earlier that commercial bank money combines in one place – bank accounts – the store of value and means of payment functions of money and in doing so enables lending to the real economy. What if new forms of digital money – Stablecoins or CBDC – result in a large scale displacement of commercial bank money which means that a higher fraction of money in the economy must be backed by high-quality liquid assets rather than by loans to the real economy, with this being necessary to preserve the stability of a now more fragmented financial system.

It is no exaggeration to say that this is the beating heart of central banking, it’s where it all comes together. The Bank of England’s mission is to promote the good of the people of this country by maintaining monetary and financial stability, and a key way in which we fulfil this is to ensure people have confidence in the money they use, whether to store wealth or to make payments, and that it is an effective unit of account. At the heart of this is confidence in the value of money, meaning confidence in its monetary value not being eroded by inflation, in other words monetary stability, and confidence in the system and institutions in which it is held and transmitted in transactions, in other words financial stability. A useful practical definition of this meaning of stability comes from a saying by Alan Greenspan, namely that monetary stability is when people’s decisions on spending and investment are not influenced by their concerns and expectations about the value of the money they are using. It is possible to extend that saying to cover aspects of financial stability too, for instance in terms of being concerned about the safety and soundness of individual banks. There are two forms of money in use in the UK – and there is nothing unusual about the UK in this respect. Central bank money is a liability of the Bank of England.
Examples include using the Kuala 2  BIS central bankers’ speeches  Lumpur Regional Centre for Arbitration that offers services as dispute resolution for Islamic financial contracts; Hong Kong issuers tapping the Ringgit sukuk liquidity for cost-effective pricing given the depth of the sukuk market in Malaysia; as well as enhancing knowledge and expertise in Islamic finance through our higher learning education centres such as the International Centre for Education in Islamic Finance (or INCEIF). Forward-looking scenario – A common trading platform for sukuk Future growth prospect for the sukuk market is tremendous. Growth is expected to come from the GCC and Asian regions as infrastructure projects are estimated to be USD2 trillion and USD8.3 trillion respectively till 2020. Hong Kong, with its sizeable bond market to GDP of 72% can play a role in funding these projects. Moving forward, more efforts are needed towards developing financial inter-linkages between our two markets. One area is for our financial communities to explore a common sukuk trading platform for cross-border transactions. A common platform that incorporates international standards and best practices in all aspects of the sukuk trading is key to instil confidence in secondary markets. It can also increase cross-border activities. It has the potential to spur further diversification of product offerings, reduces cost of intermediation and boosts trading activities.

This common platform would give both the Hong Kong and Malaysia financial markets the added critical mass for sukuk and boost liquidity in the secondary market, thus contributing towards the development of a global Islamic money market for a more efficient cross border liquidity management. The benefits that can be realised from the cooperation between our two markets are enormous. On that note, I wish to thank HKMA for hosting this joint conference and I bid the participants a productive endeavour. BIS central bankers’ speeches  3
Timothy F Geithner: Restoring market liquidity in a financial crisis Welcoming remarks by Mr Timothy F Geithner, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Second New York Fed-Princeton University Liquidity Conference, New York, 13 December 2007. *  *  *  Welcome to the New York Fed and to this conference on liquidity. You are addressing some of the most important issues affecting financial markets today. Your timing is good, perhaps too good. We are all going to need some time and perspective before we will know enough to draw conclusions and recommendations from the events of the past six months. The conditions that led to this crisis took a long time to develop and they will take some time to resolve. I think it is appropriate, though, that as central banks act to address the challenges in markets today, we also begin to define the agenda for future research and policy. On December 12, the Federal Reserve and several other major central banks, announced a series of actions in response to the elevated pressures in funding markets. Together, these actions provide a more flexible and potentially more effective set of instruments, alongside our conventional monetary policy instruments, to help mitigate the risks that liquidity pressures in markets going forward could pose to the broader economy. With this framework of tools, we have the capacity to calibrate our response as market conditions change.

is a parameter that expresses how much weight is given to stable output versus low and stable inflation. If is greater than 0, this is often referred to as flexible inflation targeting. 8  BIS Review 10/2007  Thirty to forty years ago, economic policy was widely regarded as an optimal control problem where the authorities could minimise society’s loss function directly and mechanically. Economic policy could in a sense be viewed as an engineering art. However, in 1977 Finn Kydland and Edward Prescott warned against this approach to economic policy conduct.4 In their work, for which they were later awarded the Nobel Prize, they showed that if the authorities in each period attempt to optimise on a discretionary basis, a suboptimal equilibrium may arise. The reason lies in economic agents’ expectations formation. Kydland and Prescott argued in favour of a rule-based policy, where policymakers commit to a certain pattern of behaviour. They also pointed out that it would generally be tempting to "reoptimise" at a later time and thereby ignore earlier promises. This temptation is often referred to as the "time inconsistency problem". For a rule-based policy to be successful, it must be credible so that economic agents can fairly safely assume that decision-makers will actually follow their announced response pattern. Norway’s experience of various fixed exchange rate regimes during the post-war period provides a good illustration of the difference between discretionary policy and commitment policy. In the period 1946-1971, the krone was pegged to the US dollar.
The same expectation was expressed in the European Commission’s Winter Forecast released on Friday last week. These somewhat better prospects are primarily due to policy changes in the field of fiscal and structural policies at the national level as well as in the European Union. For sure, the ECB’s monetary policy has contributed to the process by maintaining an accommodative monetary policy stance and by fostering improved financial market confidence. As host of both the ESRB and soon also the SSM, the ECB is committed to playing a positive role in the further development of the euro area as a well-structured and stability-oriented part of the global economy. We call on the euro area’s governments to keep up the efforts to undertake still necessary reforms, while acknowledging what has already been achieved. Adjustment of such a magnitude as was needed to address the crisis is a long haul, and I am confident that we are on the right track to get there. Thank you very much for your attention. BIS central bankers’ speeches  7

The main changes in the State and Social Security Budget for 2016 are, on the revenue side, the application of the second phase of the tax reform designed in 2014 and, on the expenditure side, still in the context of observing the spending ceiling, certain expansionary measures such as the approval of a wage increase of 1% for public employees, payment of the second part of the salary payment eliminated in 2012, and the general increase in the average staff replacement rate to 50%. The 2016 Budget Plan presents an estimate of the impact of these measures on regional and local governments, which are the levels of government that manage the most labour-intensive public services. Noteworthy in the area of Social Security is the revaluation of pensions by 0.25%, in accordance with the application of the new revaluation index. In light of the macroeconomic developments envisaged and the above-mentioned measures, the 2016 Budget Plan anticipates growth of around 4.5% in overall general government revenue, which is slightly higher than projected nominal GDP. This would take the public revenue/GDP ratio to 38% in 2016, compared with 37.8% estimated for 2015. On the expenditure side, the State spending ceiling, the improvement in the economic situation and the application of the above-mentioned measures to overall general government would – according to the estimations of the 2016 Budget Plan – give rise to a decrease of 1.4 pp in the public expenditure/GDP ratio.
Supervisory Cooperation  To support responsible openness to international wholesale banking, be it as branches or subsidiaries, and to meet our objectives on safety and soundness and financial stability, we need confidence that: a. the Home State Supervisory regime delivers outcomes which are sufficiently equivalent to the UK regime; b. there is effective supervisory cooperation; and c.  3 4  there is assurance over the home state resolution framework. https://www.bankofengland.co.uk/speech/2020/sam-woods-city-banquet https://www.bankofengland.co.uk/financial-stability-report/2020/december-2020 4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4  The first and last points concern in large part the legislative framework, rules and powers of intervention that home states and authorities have. The better the outcomes they deliver, so the more reliance we can place on risks arising from overseas operations being manageable. The second point is about how those powers are applied, the practices, and openness of overseas authorities that wield them. It is on this point that I want to focus as a supervisor. Cooperation with Home State Supervisors  For both branches and subsidiaries, the PRA places reliance on cooperating closely with the Home State Supervisor, for branches this is particularly the case for prudential requirements, because a branch is not a separate legal entity. But for both there needs to be effective regulatory and supervisory cooperation if openness is to be ‘responsible’. We have a long history of working very effectively with a range of supervisory authorities, including the US, EU, Switzerland, Japan, and many others.

  For a small number of you, we will need better information and visibility going forward to bring you in line with others. We will start that discussion with you now.   For those going in to TPR, it will be a gradual evolution. These firms have had extensive interaction with the PRA’s supervisors over the past three years – we have seen substantial preparations by  9  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  9  these firms as part of their authorisation submissions and we have worked together with firms on a large number of thematic reviews.   And, for those considering coming to the UK to operate, it provides clarity on our approach so you can consider how best to meet our expectations. For our regulatory colleagues around the world, we look forward to continuing to build our open and supportive relationships. 10  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  10
Charles Bean: Rebalancing Speech by Mr Charles Bean, Deputy Governor for Monetary Policy of the Bank of England, at the Official Monetary and Financial Institutions Forum Golden Series Lecture, London, 29 May 2013. *  *  *  Good morning! It is almost six years since the onset of the Global Financial Crisis and almost four years on from the trough of the recession that followed the collapse of Lehman’s. Yet despite highly stimulatory monetary policies, we are still a long way short of seeing a full recovery in the advanced economies. Here, output remains some 2½% below its pre-crisis peak, while in the euro area the shortfall is even larger at 3¼%. And even in the United States, where the recovery is further advanced, output is just 3¼% above its pre-crisis peak, well below where one might have expected on the basis of past cyclical recoveries. That sluggishness in the recovery reflects the fact that, unlike a normal cycle, substantial real adjustments are also required in our economies. These include not only the repair of overextended balance sheets, especially in the banking sector, but also the need to shift the composition of demand and production towards more sustainable patterns. And these shifts require changes not only in the indebted countries, but also corresponding shifts in the pattern of demand and production in other countries. To what extent are these changes under way? Let me begin with our own rebalancing challenge, here in the United Kingdom.

In addition, some emerging economy governments engaged in the accumulation of foreign reserves, in order both to sustain export-led development and to insure against sudden capital outflows of the sort seen in 1997–8. So capital flowed uphill, rather than downhill as in the euro area. Moreover, there was a strong desire to hold these savings in safe assets, such as US Treasuries. The counterpart to this “savings glut” was downward pressure on the interest rates on those safe assets in the advanced economies. Faced with these lower returns on safe assets, investors then sought to generate higher returns in other ways, including packaging securities in ways that appeared to combine yield with safety. And a long period of benign economic outcomes – the Great Moderation – lulled investors into a false sense of security. The consequent buoyancy in asset prices and easy availability of credit then helped sustain demand. But all this came to an end when investors realised the true nature of their exposures, leading to a scramble for safety, a drying-up of credit and a sharp reduction in spending by households and businesses. This analysis focuses on the net capital flows between countries, but in passing it is worth noting that gross capital flows can be just as, if not more, important. 3 The pre-crisis leveraged search for yield resulted in an unprecedented expansion of debt within and across countries' financial systems (Chart 10).