samchain/econo-pairs-v1 huggingface dataset:
22  All speeches are available online at www.bankofengland.co.uk/news/speeches  22  Chart 15: FPC housing tools more efficient than monetary policy for addressing the same risks  Risks increasing as the GDP-at-risk tail grows larger  1yr ahead median GDP growth 4.0 forecast (%)  2004  If FPC housing tools had been in place  2004 2007  2014  3.5  3.0 2000  2015  2006  2.5 2005  If monetary policy acted to achieve same reduction in GDP-at-risk  1998  2001  2003  2017 2.0 2016 2010 2002  2013 1.5 2018  2008 2019  2011 1999  1.0  0.5  3yr ahead 5th percentile GDP growth estimate (%, cumulative)  2012  0.0 -6.0  -5.0  -4.0  -3.0  -2.0  -1.0  0.0  1.0  2.0  The FPC’s structural and cyclical bank capital requirements The UK’s bank capital framework optimises the FPC’s objective function by balancing the impact of higher capital on GDP-at-risk with the impact of higher capital requirements on the central GDP forecast. 𝑇  min ℒ𝑡 ≡ 𝐸𝑡 {∑ 𝛽 𝑖 [𝑓(𝐺@𝑅𝒕+𝒊 ) − 𝜙𝑦𝑡+𝑖 ]} 𝜌𝑡  𝑖=0  The capital framework includes structural requirements that are not designed to vary systematically over time, and a cyclical requirement that varies with the financial cycle to match the level of resilience with the level of GDP-at-risk.

Early work has estimated that, for example, an initial shock of 60bps to corporate bond spreads could be amplified by a further 30% and increase GDPat-risk (proxied by the 5th percentile of the forecast distribution of GDP) by 0.2pp. Estimating the costs and benefits will also require simulating into the future to take account of the larger size of funds. The impact of the FPC’s principles on the central forecast for GDP is harder to quantify as it depends on (unpredictable) investor behaviour. Under current fund structures, funds with longer notice periods or discounted redemption pricing are not as attractive to investors as the apparently “costless” funds with daily liquidity. Those structures that may look unattractive today are the very structures needed to finance investment in productive finance, such as infrastructure, the transition to a net zero economy and the financing of SMEs. Such investments simply are poorly suited to structures offering short-notice redemption. It follows that investors could respond to reform of fund structures by increasing investments in productive finance. The prospect of productive finance increasing after applying the FPC’s principles would be the macroprudential equivalent of ‘Divine Coincidence’ that promotes financial stability while increasing the rate of trend growth. Global co-ordination of potential reforms will be vital. That is why the Bank and FCA are engaging with the FSB, IOSCO and other competent authorities on the financial stability risks of asset management activity. Breaking the Tragedy of the Horizon to address the Climate Crisis The climate crisis is a Tragedy of the Horizon.
No longer will the Central Bank of Samoa stand on the sidelines and play only a promotional role, and hoping for the desired economic and financial results to eventuate. The adoption of Financial Inclusion, as part of our mandate will ensure that the Central Bank takes on a more holistic approach to promoting and maintaining financial and economic stability in the country. Moreover, it would lend support to Government’s efforts to facilitate the achievement by Samoa of the Millennium Development Goals, on a timely basis. Here at the Central Bank of Samoa, Financial Inclusion is tasked to the Financial Research and Markets Development Area, headed by Deputy Governor Losefo Bourne. The Financial Markets Department assumes the role of Financial Inclusion Secretariat, supported by a  BIS Review 9/2010  1  financial inclusion team comprising of selected staff from the Research and Statistics, Banking and Corporate Services and Financial Institutions Departments. Financial Inclusion is not a completely new concept, as some elements of it (particularly Micro Credit Schemes) have already been implemented in some countries of the Pacific, including here Samoa. And, these micro-credit schemes have been promoted mostly through private Non-Government Organisations. In the Pacific Region, Financial Inclusion is being spearheaded by the Pacific Financial Inclusion Program of the United Nations Capital Development Fund (UNCDF), with their Head Office located in Fiji.

But, in the longer term, as more people become more financial literate, business activities will increase and thus help generate more revenue for these bank branches. Financial literacy and financial inclusion also has great potential to address several issues specific to the economy of Samoa, like reducing the current relatively high costs of Remittances into the country. Today’s Exchange of Information on Mobile Money and Mobile Banking kick starts the Central Bank’s involvement in Financial Inclusion. To this end, I would like to acknowledge, with appreciation, the kind assistance of the Pacific Financial Inclusion Program of the UNCDF and AUSAID in assisting the Bank in its new role by co-hosting and co-sponsoring today’s Workshop and Information Exchange. Ladies and Gentlemen, I encourage you to share generously your knowledge and experiences in your specific fields of expertise so that we are able to put together an effective and secure mobile money and banking network for Samoa. Because you may not have sufficient time to fully cover the important topics that you are going to discuss, I hope that at the end of the formal part of the Workshop, we can all relax and continue the dialogue over some refreshments. With these brief remarks, I would now like to welcome to the podium our Information Exchange Co-ordinators, Mr. Tillman Bruett and Mr. Michael McCaffrey, of the UNCDF Pacific Financial Inclusion Program. Thank you for your attention. Soifua. 2  BIS Review 9/2010
During the crisis we and other central banks have been forced to undertake a much wider range of actions than we would normally contemplate, lending against a broader range of collateral and for longer tenors than usual, and intervening in markets where we do not usually operate. While many of the new facilities were invented on the hoof as the crisis unfolded and should become redundant once normality returns, they will nevertheless remain in the emergency toolkit in case of future need. 2  This uses Basel I risk weights, though it seems unlikely that measures of risk-weighted assets calculated under the Basel II or III rules would have performed that much better. 4  BIS central bankers’ speeches  But once the immediate crisis has past, how can central banks foster the recovery? There is now ample evidence (IMF, 2009; Reinhart and Rogoff, 2009) suggesting recoveries after recessions associated with financial crises are typically much more drawn out than those after “normal” recessions. For instance, a study by the IMF of 122 post-war recessions across 21 countries finds that, on average, output surpasses its pre-crisis peak around a year after the start of a “normal” recession. But that average period rises to 2½ years following financial crises. And the mean level of output across the 15 recessions associated with financial crises is still some 6% below a continuation of the pre-crisis trend some seven years after the onset of the crisis (though there is considerable heterogeneity in individual country experience, as Chart 3 shows).

So, as yet, we do not seem to be in a liquidity trap in which yields can be pushed down no further. What to my mind is a more open question, though, is the degree of traction these lower yields have on demand at the present juncture. Looser monetary policy works in large part by encouraging households and businesses to bring forward future spending to the present. It is plausible, however, that such intertemporal substitution will be weaker when uncertainty is elevated and when banks and some households are concentrating on repairing their balance sheets. For instance, a modest fall in the cost of capital may do little to boost investment spending when the environment is so dominated by uncertainty about the outlook for demand. To illustrate this, Chart 9 shows the results from CBI business surveys of the factors holding back investment spending at the current juncture. Uncertainty about the outlook for demand is far and away the dominant factor. That does not mean that quantitative easing is impotent, as demand will still be affected by the wealth effect from the higher asset prices, as well as by any related exchange rate depreciation. But I think there are reasons to believe the effect of lower yields may be weaker than usual at the current juncture (in old speak, the IS curve may be quite steep, even though the LM curve may not be absolutely flat).
One is that what is normally referred to as “structural unemployment”, the unemployment level in a situation with normal activity in the economy, has fallen. 2 An overestimation of structural unemployment implies that there is more spare capacity in the economy than originally thought and it is thereby possible to stimulate demand more before wage growth kicks in. The fact that structural unemployment cannot be observed and also varies over time obviously makes it difficult to verify the hypothesis. Purely theoretically, the observation that wage increases are unexpectedly low is well in line with an overestimation of structural unemployment. Personally, I am a little sceptical  2 For example, Bell and Blanchflower (2018) think this is the case in the United Kingdom. 7 [16]  about this hypothesis as far as Sweden is concerned. I will come back to this later on. Another possible explanation for the low wage increases has to do with how inflation has developed after the financial crisis. For about six years, between 2011 and 2017, CPIF inflation was below and often well below target. It would not be particularly surprising if this has had a certain impact on what economic agents generally believe about inflation. It is true that inflation expectations, as they are measured in surveys, indicate that economic agents are now once again expecting inflation to remain on target in the long term. It also appears that employee organisations are increasingly seeing the inflation target as the basis for wage negotiations.

But there is still reason to ask oneself how permanent the subdued wage increases are. The second challenge has to do with unemployment. The key question is: Has unemployment bottomed out? Or can it fall further with an expansionary monetary policy? My assessment is that it will not be possible to bring unemployment down much further with monetary policy alone. In my view, the increasing demand for labour that we are currently witnessing is more likely to lead to increased labour supply than to lower unemployment. This is also what Labour Force Survey flow statistics show. Further reduction in unemployment requires measures from other policy areas. The third and final challenge is the fact that skills matching on the labour market has deteriorated. This implies that output and employment are not as high as they could have been without the matching problems. Monetary policy can scarcely improve matching on the Swedish labour market. Here, too, measures in other policy areas are required. It is a question of increasing productivity among unemployed persons and reducing the cost of employing them. Labour market policy has a crucial role to play here. 15 [16]  References Bell, D.N.F. and D.G. Blanchflower (2018), “The Lack of Wage Growth and the Falling NAIRU”, NBER Working Paper 24502. Blanchard, O. (2016), “The Phillips Curve: Back to the ’60s?”, American Economic Review: Papers & Proceedings 106(5), 31–34. Cunliffe, J. (2017), “The Phillips curve: lower, flatter or in hiding?”, speech at the Oxford Economics Society, 14 November, Bank of England. Dow, J.C.R.
This familiar fact, demonstrated in numerous studies, can be exemplified with the Riksbank’s alternative estimations of the output gap as presented continuously in the Inflation Report. A Taylor rule relies on a single measurement of resource utilisation. This contrasts with the Riksbank’s conception of the output gap or resource utilisation. We try to combine a number of different measurements and indicators into a weighted overall assessment. Alternative estimations of the output gap are presented in connection with the Inflation Report’s discussion of resource utilisation. Studies of different industries’ assessments of resource utilisation are considered in detail. Other indicators that can add to the picture of resource utilisation and its relationship with inflation are obtained by analysing current wage trends (both negotiated wage increases and wage drift) and data on the labour market situation. We usually also emphasise the need for a flexible approach to and a continuous reassessment of different indicators of resource utilisation. In recent years our views about the level of resource utilisation, the interval within which potential growth lies and the relationship between growth and inflation have been revised continuously. The point I want to make is thus that the analysis stands to gain from decision-makers using a perception of resource utilisation that is broader than a mechanical application of the Taylor rule provides.

Examples of such intermediate variables could be current price tendencies, the money supply or resource utilisation. I intend to discuss such possibilities and then conclude by harking back to the Riksbank’s current monetary policy strategy. Alternatives to basing monetary policy on forecasts Actual price movements One alternative to the present rule of thumb could be to set the interest rate in the light of the prevailing rate of inflation. The Riksbank would then adjust the instrumental rate every time Statistics Sweden publishes a CPI outcome that is above or below the 2 per cent target. The primary argument against such an arrangement is perhaps that, compared with the present rule of thumb, it would lead to larger fluctuations in real economic activity. This is because the repo rate and inflation are not directly linked. The Riksbank’s possibility of influencing price movements is more indirect and works, in simple terms, via market interest rates, credit flows and asset prices before impinging on demand in the real economy and such variables as employment, profits, investment, consumption and net exports. Demand’s impact on prices depends in turn on potential output and resource utilisation. We still do not know exactly how this complex transmission mechanism functions, how quickly it works or how it varies both over time and in its effects on the economy. Concerning the time lag, the view adopted by most central banks is that most of the effect materialises after an interval of one to two years.
In 1999, Romania’s GDP stood at merely EUR 33 billion, while GDP per capita was lower than EUR 1,500. This leap, which led to significant changes including higher consumer standards, will have to be accompanied by similar progress in understanding economic issues, so that the path forward should be as smooth as possible. If we look at the long-term development of the Romanian society, the decade elapsed since the launch of Ziarul Financiar is a significant landmark, which can be compared with the significant upturn after World War I and the achievement of the Grand Union of 1918. At such turning points, the quantitative developments, which are nonetheless important, need to be accompanied by qualitative changes that are related to social philosophy as a whole, as well as to progress in national standards and values. From this perspective, the opinionmakers and the press in general play a major role. Economic newspapers in particular find themselves in a very special position. As a matter of fact, the National Bank of Romania has steadily promoted economic education and has done its best to raise journalists’ level of professionalism when approaching economic issues. Let us remember that Ziarul Financiar was launched ten years ago in the very Marble Hall of the NBR. Numerous occasions have arisen over the years when NBR representatives participated in events organised by Ziarul Financiar and vice versa. There has been a steadfast dialogue benefiting, in my opinion, both Ziarul Financiar journalists and central bank experts.

We have sought to push in the direction of market forces, rather than against them. Asset management One good illustration of how we have sought to promote and develop our financial centre is our efforts to develop Singapore into an asset management hub. We assessed very early on was that there was good potential for growing the asset management industry in Singapore. A rising affluent class across Asia would have assets needing to be managed. Most of the savings in Asian countries are still in the form of bank deposits. There is considerable scope for diverting some of these funds for professional management. There was also an opportunity for managing the Asian mandates of global portfolio investors, an area where no clear leader had emerged. We believe that global funds and institutions would find Singapore a good location from which to manage their Asian portfolios. Although for now the region is not a hot destination for inbound investments, this will change as the region picks up again. We therefore carried out a comprehensive strategy to strengthen our fund management industry. We streamlined licensing requirements for fund mangers, and provided more room for indigenous fund managers to grow. We introduced tax incentives, especially for fund managers managing substantial amounts of discretionary funds out of Singapore. We leveraged on our domestic savings, both government and private, to attract fund managers here.
Alongside Bercy this time, and French banks, I fully support the Commission and ECB’sii target of applying the output floor on a consolidated basis: we must not create new obstacles to Banking Union, and the reluctance of “host” countries has no other basis than a form of harmful protectionism. Regarding insurance, the Commission also published in September its proposed amendments to the Solvency II rules, which look set to lead soon to a final compromise text at Council level, under the French Presidency of the European Union. They have our full support, to facilitate long-term, sustainable investment (support for equity investment, integration of climate objectives), without increasing overall capital requirements for insurers. Further advances have also been made in anti-money laundering and combating the financing of terrorism (AML/CFT) with the creation of a dedicated directorate within the ACPR, which will notably monitor the risks linked to crypto-assets. The ACPR is in part to thank for France’s excellent results in its evaluation by the Financial Action Task Force (FATF), with the French AML/CFT system recently receiving the highest possible score for quality. In customer protection, the industry-wide agreement reached in February 2022 under the aegis of the Ministry of the Economy will ensure greater transparency in management fees for life insurance and retirement savings contracts, with insurers required to publish a fee schedule for each contract as of 1 July 2022. But we need to ensure savers are even better informed.

A regulatory framework that remains to be finalised With regard to banking regulation, the Commission presented its proposal at the end of October 2021 for the transposition into EU law of the international agreement of December 2017, which is a decisive step towards the finalisation of Basel III. The ACPR supports this proposal which takes full account of Europe’s specificities and allows sufficient time – until 2032 – to adapt to the new features of supervision. But I want to be very clear on this: the exemptions regarding housing loans or unrated businesses must absolutely remain temporary. Any temptation to make them more permanent would call into question our commitment, the international credibility of France and Europe. In response to certain surprising but recurrent claims from the banking industry, let  Page 5 of 8 me just re-state the obvious: in the past ten years, the regulatory framework has done nothing to hinder the sound, and even very broad, financing of the French economy; on the contrary, it has strengthened the resilience of the financial system, as became abundantly clear during the Covid crisis. We must not deviate or drag our feet: France and Europe have everything to gain from a stable and balanced Basel III; we shall strive to maintain this level international regulatory playing field, including in investment banking which is important for European sovereignty.
On the sales side, even though low mortgage interest rates and falling home prices have together boosted housing affordability to its highest level in 40 years, the current pace of sales is quite sluggish. Impediments to home sales include tight lending standards, a weak job market and continued uncertainty about home prices. Importantly, the large drop in home prices between 2006 and 2008 also reduced homeowner equity broadly, making it more difficult to “trade-up” and move into better homes. With lower home prices, many families now owe more on their mortgages than their homes are worth. This means that they cannot refinance or sell their homes easily if they experience a crisis such as a job loss or a serious illness. Foreclosure completions are at an all-time high, although the initiation of new foreclosures may be finally slowing. Recently, attention has focused on cases where some of the documentation used in the foreclosure process may have been flawed. The Fed actively encourages efforts to find viable alternatives to foreclosure. Not many people know this, but a team of New York Fed officials work with mortgage counselors and community activists to support distressed homeowners, and our lawyers support legal aid programs for people facing foreclosure. At the same time, it is  BIS Review 141/2010  3  important that foreclosures that comply with the law can ultimately take place. This is a necessary part of returning the housing market to more normal conditions.

In this connection, the heterogeneity in households’ financial situation is proving very significant from the financial stability standpoint. Taking the Banco de España’s Survey of Household Finances (EFF), we find that the industries most affected by the pandemic used youths and women proportionally more than other sectors, also employing a higher percentage of low-wage workers. These lower wages would be partly offset by the fact that the employees concerned lived with other household members with higher income. As regards their finances, 28% of workers in the social industries lived in 2017 in households whose financial assets amounted to less than one month’s income, and around 8% had bank debts whose payments exceeded 40% of the household’s gross income. Accordingly, the labour income and financial situation of the households of workers in the social industries were in 2017 more fragile than those of employees in other, regular industries. Overall, then, the non-financial private sector’s financial position has worsened. The consequences of this for credit institutions’ results will become fully patent in the coming quarters. Clearly, too, the improvements in the quality of the Spanish banking sector’s balance sheet and in its solvency levels in the past decade have placed it in a better position to absorb this crisis and to continue providing the financing the economy needs. And the sector’s risks to financial stability have been mitigated by the various economic policy measures adopted. In any event, banks’ income statements have already been adversely affected.