samchain/econo-pairs-v1 huggingface dataset:
In terms of financial sector development, they range from sophisticated international financial centres with deep financial markets and robust financial infrastructures to those which have just begun building their financial systems. 42. Reflecting such diversity, there are also dramatic differences in policies, in terms of the objectives pursued and the approaches to achieving those objectives. Focusing specifically on monetary policy, although there seems to be a clear consensus on the desirability of maintaining currency stability, there is great diversity on the degree of clarity with which this is defined. For some, currency stability is what the government thinks is politically expedient at the time. For others, currency stability is defined in the clearest of terms. Associated with this, there is also great diversity in the degree of independence of the monetary authorities and the degree of discretion available to them arising from the different monetary or exchange rate regimes practised. Nothing can be more polar than, for example, the currency board version of a fixed exchange regime in Hong Kong and BIS Review 91/1997  -9-  the totally free float of New Zealand. Given differences in the economic and financial structure on the one hand, and differences in policy objectives and approaches on the other, the monetary transmission mechanism of Asian economies and their monetary reactions to internal and external shocks are also quite different. 43. How then should Asian economies pursue Asian monetary co-operation?

But the world inflation climate has become much more inflationary now, both through the direct effect of rising energy and commodity prices and through a turnaround in global demand. While the global demand environment remains buoyant, we should not regard energy and commodity price movements as one-off shocks, as the inflationary pressure from the world economy may well persist for quite a while. And persistent above-target inflation carries other risks for price stability in the UK – to the credibility of our policy framework and to expectations of future inflation. Indeed, Chart 11 shows that UK services sector inflation has been running at around 4% for much of the past decade, and has not shifted downwards to offset rising goods prices. This raises the possibility that in the services sector, high inflation expectations have already become engrained. 7  Kemp (2011) argues that if all monetary authorities treat energy and commodity price shocks as exogenous, there is a strong risk of an inflationary bias to global monetary policy.
Both borrowers and lenders need to be careful not to over-stretch themselves. In line with the recent FPC statement, we will be keeping a very close eye on developments, and the Bank has a range of tools that can be used in mitigation of those risks. Stage 4: the flow of credit Annual growth in the stock of lending to households and businesses has remained close to zero since mid-2012, similar to rates seen in the run-up to the launch of the FLS. But it is important to bear in mind that prior to the announcement of the FLS, the Bank judged that UK bank lending was more likely to decline than increase over the following eighteen months. The profile of lending seen to date has been broadly in line with our original expectations: the trend in household net lending has been somewhat stronger than expected before the launch of the FLS and net lending to businesses has been perhaps a little weaker. We were also conscious that the stock of credit depends on both supply and demand. We were sure that the FLS would shift supply but the demand effects were always less certain. The price elasticity for firms in particular is likely to be low. It is possible at the margin that some firms will be better able to repay or refinance loans if their borrowing costs are a bit lower, but this effect is probably small relative to the importance of expected demand for a firm’s products.

If I, as a policy maker, am uncertain about how policy will evolve, how can the market be so much more certain? I am continually struck by the degree of certainty some market participants seem to have about prospective monetary policy decisions, particularly those of the FOMC. In general, communication from monetary policy setters aims to convey details of our reaction functions – how policy might change in reaction to future data or other news – it is not aimed to convey the outcome of a decision that has yet to be made! The best we can usually do is to set out how we are thinking about the outlook so that market participants and others might be able  1  Real Estate Investment Trusts  2  Exchange Traded Funds  3  Record of the Financial Policy Committee meeting, 18 September 2013 (http://www.bankofengland.co.uk/publications/ Documents/records/fpc/pdf/2013/record1310.pdf)  4  BIS central bankers’ speeches  dynamically to gauge our response as the data and events reveal themselves. Forward guidance, on which more shortly, can add to that understanding but the actual outcome for policy will always be dependent on how the economy, and hence the outlook, evolves. Can we learn anything about the impact of large scale asset purchases – or quantitative easing – from this recent episode?
When one considers the cumulative effects of the changes currently experienced - in the field of regulations, in the labor market and in public finances - which were triggered by the single market and now by the single currency, one can be reasonably confident that the euro zone is progressively catching up with the US economy in terms of long-term potential growth. 2. The integration process of the euro-wide financial markets  Turning now to the situation of financial markets, I would like to offer a couple of comments, related to the integration of markets and the process of consolidation in the banking sector. 2.1 First, allow me to recall the important step taken on 24 March 2000 by the Lisbon European Council towards an integrated financial services and capital market in the European Union. In Lisbon, the Heads of State and Government recognized the central role of efficient financial markets for long-term European competitiveness and for the development of the new economy. The central bankers and market practitioners who are participating in this meeting share, of course, a common interest in achieving the smooth and full integration of financial markets within the euro area: both you BIS Review 52/2000  2  and us, because of the very nature of our respective jobs and responsibilities, attach the utmost importance to the smooth circulation of cash and securities across the euro zone.

Jean-Claude Trichet: Structural and financial reforms in Europe in a global economic environment  Speech by Mr Jean-Claude Trichet, Governor of the Banque de France, at the International Securities Market Association meeting, held in Paris, on 16 June 2000. *  *  *  Ladies and Gentlemen, It is a great pleasure for me to take the opportunity of this ISMA meeting in Paris to present some views on how European economies have entered a new era with the introduction of the euro. First, I would like to elaborate on the pace of structural reforms, which have already produced tangible and positive effects on the growth rate in the euro zone. Second, I will focus on the integration process which is under way in financial markets across the euro area. 1. The euro area may expect a long phase of steady economic growth sustained by the strong pace of structural reforms: further liberalization, increasing labor flexibility and government budgetary discipline  Liberalization based on privatization, deregulation and transparency has been a success The time is long past when a significant portion of the European economy was controlled through various government bodies or regulations. The liberalization movement, which accelerated substantially with the development of the European Union and principally the completion of the single market, includes three aspects: –  A significant privatization movement, which has spread throughout all of Europe. Since 1990, Europe’s governments have sold more than $ billion worth of state companies.
Indeed, the tensions were amplified by the weaknesses of European institutional arrangements and by the prevailing doubts over the willingness and ability of national governments to tackle the structural and budget deficit problems of their economies. Evidently, the Greek crisis has highlighted the incapacity of the Stability and Growth Pact and, more generally, of the European economic governance framework to prevent the excessive build-up of imbalances and to pursue timely corrective action. As you know, the European authorities have reacted to this need by initiating a deep-seated review of European governance mechanisms, some of the results of which are already coming to light. It can thus be said that as a result of this crisis, economic policies and, in particular, the fiscal policy of the EU Member States, will be subject henceforth to closer and more detailed  BIS Review 129/2010  1  control by the European institutions so as to anticipate and forestall inconsistencies and imbalances. Any build-up of the latter will ultimately entail major costs not only for the countries concerned, but also for the European single currency project. Further, attributing events exclusively to market excesses would mean ignoring the importance of the effects of the decline in activity and employment, of the deterioration in public finances and of financial systems on the possibilities of recovery, and the major economic policy challenges posed thereby, most particularly in the fiscal realm and in the field of structural financial reform.

From this perspective, it is easy to understand how the Spanish economy was subjected to singular pressure. The deterioration in its public finances was evident not only because the budget deficit had climbed to an excessive level, but also because of the rapid increase in the public debt ratio, despite the fact that general government debt remained substantially lower than that in other European economies facing similar pressures. But there were also other factors amplifying the vulnerability of the Spanish economy in such exceptional circumstances. Firstly, the dysfunctionalities of our labour market, which heightened the impact of the shock on employment, giving rise to a surge in the unemployment rate that called into question the possibility of reversing the course of public spending in the absence of reforms that would enable a significant and lasting reduction in unemployment. As I stated before this Committee a year ago, the viability of any credible budgetary consolidation strategy would require the adoption of labour market reforms providing for far-reaching change in employment behavioural patterns. At the same time, the Spanish economy’s high reliance on external funding made it particularly sensitive to any loss of confidence blocking access to such financial resources, in particular access for credit institutions, which channel the bulk of these resources to households and firms. All these factors contributed to the contagiousness of the sovereign debt crisis and to the serious external funding difficulties experienced from May to July.
This, after all, was the new economy and massive profits were apparently waiting round the corner. Yes, that was almost the case, wasn’t it? An argument that was frequently put forward when share prices broke new records was that the “new economy” would lead to higher profit growth. Today we know that that has not been the case so far. The share price rise left many companies notably over-valued. Then what always happens happened. A bubble is bound to burst, sooner or later. From the high, the Swedish stock market in general has fallen by around 50 per cent, IT shares by almost 90 per cent and telecom shares about 75 per cent. In a historical perspective these are dramatic figures. Such a large average fall has not occurred since the major corrections in the early 1920s and 1930s. But it is not only on the Stockholm exchange that share prices have fallen so markedly. Much the same has happened in other countries, not least on New York’s technology-oriented Nasdaq exchange. Now let us take a slightly closer look at corporate profits in connection with earlier shifts in technology. A strong expected increase in corporate profits is bound to be mirrored in expectations for the total economy. A country’s GDP represents the aggregate incomes that are earned in the course of a year. The national accounts show the shares of total income that go to owners of capital and to wageearners, respectively.

Urban Bäckström: The Swedish economy Speech by Mr Urban Bäckström, Governor of the Sveriges Riksbank and Chairman of the Board of Directors and President of the Bank for International Settlements, to the Swedish Shareholders’ Association, Örebro, 30 October 2001 *  *  *  First a word of thanks for the invitation to come to Örebro and discuss matters to do with the Swedish economy with you. It is now a fortnight since the Riksbank presented this year’s third Inflation Report. Some more statistics have been published in the meanwhile but the information they contain does not point to anything particularly new. So today one can hardly arrive at an assessment of economic developments in Sweden one to two years ahead that differs all that much from the picture outlined in the Report. Those of you who want to know more about our assessment should consult the Riksbank’s website, www.riksbank.se. The whole Report can be downloaded, as can all the figures on which the tables and charts are based. Diagram 1:  The ”new economy” concept in Swedish media. (Number of hits) 250  217  200 150  87  100 50  26  8  0 1998  1999  2000  2001 Jan.Oct. Sources: Mediearkivet and Presstext. There are, however, a couple of questions concerning the Swedish economy and the outlook in the somewhat longer term that I should like to dwell on here today.
But if people do not distinguish between the two things – and this is why I don’t like the word “currency” for these schemes – it would undermine confidence in the official currency. 3/5  BIS central bankers' speeches  And some of those who promote these new schemes want a currency which is not controlled by a government. So it’s a slightly sympathetic anarchic or libertarian approach, but unfortunately there is no libertarian law enforcement and there is no libertarian world government. You said in London last month that virtual currencies were not real money and that they wouldn’t be for the foreseeable future. So what would have to change for them to be considered money, what would need to be implemented? Without a trusted authority backing the stability of a so-called currency, an institution whose primary objective is to do just that, you don’t have a currency. A currency has three functions: a unit of account, a store of value and a medium of exchange. These tokens don’t fulfil any of the three functions, as I said in London. There is another sector growing without proper authority, and that’s shadow banking. A recent study has shown that it’s growing, and that the Luxembourg market – which is for the first time included in the study – could represent 7.2% of all shadow banking. How would you judge whether activities like securitisation represent a threat to financial stability? Let me first say that you cannot call everything that is not a bank a shadow bank.

8 For example, the central banks in Chile, the Czech Republic, Israel and Mexico have been able to fulfil their tasks despite having worked with negative equity for long periods of time (Archer and Moser-Boehm, 2013). 4 [12]  Both the Riksbank’s own interest rate forecasts and the statistical methods suggest that the term premiums are now very low, and maybe even negative. Chart 3 shows the Riksbank’s and the Swedish National Debt Office's estimations of the term premium on ten-year government bonds based on similar statistical methods. These statistical methods, as I have said, produce fairly uncertain results, but they clearly indicate that premiums have fallen sharply in the last decade. 9 Both the Debt Office's and the Riksbank’s estimates indicate that the term premium is negative. If the premium really is negative, the Riksbank is expected to lose money on purchasing bonds and funding them at the repo rate. The Riksbank’s estimate points to the term premium currently being around -0.7 per cent on bonds with long maturities. 10 This would mean that the loss is expected to be around 0.7 per cent of the purchase price for each year of maturity. Since the average maturity on the bonds is about five years, this would mean that the losses are expected to be 3.5 per cent of the purchase price. Chart 3.
This downward shift in inflation expectations has a secondround effect on real interest rates, the economy, and inflation. When policy is constrained by the effective lower bound, the downward shift in inflation expectations raises the real interest rate, further diminishing the degree of monetary stimulus, making the downturn worse and reducing inflation even more. Even in times when policy is not constrained, the expectation of belowtarget inflation in the future affects current decisions, putting additional downward pressure on inflation. In other words, monetary policy is always swimming upstream, fighting a current of toolow inflation expectations that interferes with achieving the target inflation rate. A number of alternative monetary policy frameworks have been proposed that aim to tackle the problems associated with the lower bound on interest rates. Although they differ in many ways, it is useful to divide these proposals into three broad categories. The first option is to maintain the basic framework of inflation targeting and to rely on a combination of aggressive conventional and unconventional policy actions when facing economic downturns to limit the deleterious effects of the lower bound. This carries with it the risk that inflation expectations become anchored at too low a level. The second option is “average-inflation targeting,” whereby the central bank purposefully aims to achieve an above-target inflation rate in “good” times when the lower bound is not a constraint.

Similarly, in our case, the Bank of Thailand recently launched the Financial Sector Master Plan 2, in which we outline the key principles and guidelines for further strengthening of the financial sector over the next five years. Chief among the agenda are our commitments to bring down financial transaction costs through further deregulation and promotion of more competition in the banking industry. The second element of financial soundness is the integrity aspect. That is, financial institutions must be sufficiently immune to “runs”, which I define loosely as correlated and large-scale withdrawals of deposits, triggered by sudden loss of confidence in the solvency of banks concerned. On this, a key lesson for emerging markets from the global financial crisis is that the push for financial market development must be accompanied by constant efforts to review and bolster as necessary the supervisory framework and standards, so that financial soundness can be ensured without compromising the financial system’s integrity. The third and last element of financial soundness is the stability aspect. The financial sector, while playing an important role in supporting the real economy, can at the same time be the source of risk and instability to the real sector. As we know, the spillover effects from financial to real sector can take many forms. For example, the tendency for financial institutions to extend more credit during economic upswings, and scale back lending precisely during downturns, can contribute to the amplitude of the business cycles.
Unfortunately, there continues to be limited diversity in both US and UK economics  5  All speeches are available online at www.bankofengland.co.uk/speeches  5  xx  departments, which to some degree, constrains whom we can hire . Both the education sector and the Bank need to do more to broaden access. xxi  One new initiative that enables the Bank to hire graduates from a broader set of disciplines and train them as economists and technical specialists is our new Central Bank Qualification. Similarly, our African-Caribbean scholarship aims to attract those hitherto underrepresented in central banking. Launched in 2015, the scholarship has given three students per year £ toward living and study costs, offered summer internships and provided career mentors. To recruit experienced hires, we have committed to ensure that wherever possible, we will create diverse shortlists for jobs and interview people with diverse panels in order to mitigate affinity effects and unconscious biases. This is starting to pay off. Of the 700 experienced professionals we hired last year, almost half were women and a quarter came from a BAME background, up from two-fifths and one fifth respectively since our strategic plan was launched. In recent years, we have recruited new PhD students not just from economics, but from physics, computer science, linguistics, psychology, anthropology and economic history. We recognise that career paths can be varied, so for people who want to return to work or to retrain, we are offering more opportunities to learn.

First, quantitative easing, through the purchase of public and private debt, seeks to extend the effects of low short-term interest rates to the rest of the yield curve, including to longterm rates, over which monetary policy normally has no direct influence. To do this, the central bank purchases assets with long-term maturities, generating an increase in their price, or, tantamount to this, a reduction in their yields. These lower yields on the assets acquired by the central bank are in turn partly passed through to the yields on assets with a similar duration, such as the interest rates on bank loans, which tend to be the most relevant ones for the saving and investment decisions of households and firms, thus stimulating demand and price rises. Second, forward guidance seeks to transmit to private agents the central bank’s commitment to maintaining an expansionary monetary policy throughout the early stages of the recovery, in order to avoid the deanchoring of inflation expectations. These programmes, whose application has involved major challenges for central banks given the lack of any similar experience in the past, seem to be working acceptably well, assisting the economic recovery and avoiding the emergence of crisis-induced deflationary pressures. According to analysis carried out by the Banco de España, ECB action can explain around half of the nominal GDP growth in the euro area over the period 2015-2017. That said, it is important to stress that central banks cannot take sole responsibility for the recovery.