samchain/econo-pairs-v1 huggingface dataset:
The shifts in demand during the pandemic – which are geographical as well as sectoral – may have introduced a degree of dislocation between the two. Another is that the sheer speed of the recovery has thrown some sand in the wheels of the labour market. It’s usual for actual hiring to lag changes in vacancies and, so rapid has been that increase in vacancies, there was bound to be a bit of friction in the process of filling them (see Chart 15). These aren’t mutually exclusive, but the latter would be slightly more benign because it would need only time for things to improve. Once those wheels start to turn, and jobs get allocated, one would expect some of this pressure to abate. 13  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  13  Whether that’s the case remains to be seen, however. And, in the meantime, the result is continuing upward pressure on pay. Chart 14 included a survey index of wage growth for new  Chart 19. Wage growth stronger than usual, given the rate of unemployment Annual nominal wage growth, per cent 5 2021  4  employees. Chart 19 plots official numbers for average wage (AWE) growth across the economy as a whole, in the years since the financial crisis,  3 2013-19 2  against the rate of unemployment. Unfortunately, labour market data have been subject to significant distortions during the pandemic.

Though it’s also been rising, price  2  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  2  inflation for (largely non-tradable) consumer services is currently close to its average during the inflation targeting period. Another indication is that we’ve seen similar surges in inflation in many other developed economies as well (Chart 3). This is a global phenomenon. And what’s striking is that this has happened even though global (UK-weighted) economic activity has only just returned – and in several individual countries has yet to return – to pre-pandemic levels (Chart 4). In the UK, in the third quarter of the year, output in the private sector – the part of the economy that actually sets prices – was still 2% lower than it had been at the end of 2019. More often than not higher inflation is associated with stronger, not weaker, economic activity. At least if you consider the last eighteen months or so as a whole, taking account not just of the resurgence this year but the huge contractions in 2020, that’s not what’s happened on this occasion. Chart 3. Inflation has risen significantly in many countries... UK  Euro area  US  Chart 4.
The post-trade system is a collection of systems, infrastructures, and workflows that differ across firms, with low levels of interoperability. Many firms operate on legacy post-trade systems and technologies that require a lot of maintenance and upkeep, but are critical for the firm in its daily operations. The current system contains inefficiencies and complexities, with many firms running on systems which were developed in-house by firms during the 80s and the 90s. Many firms have run on the same systems over this time, patching and upgrading, whilst the environment we are operating in has developed, becoming bigger and more complex. There are obvious cost benefits in simplifying. But if you look at the kinds of innovation the sector has seen since it built the systems on which it runs, it is clear that there are also opportunities to take advantage of the benefits of new technologies and functions. As you would imagine, the Bank is not immune from the needs of change and development, and we have been investing in our own plumbing.

Looking at on-going developments, we are better able to interpret the current situation and assess the fiscal and monetary stances. A good example of this improved understanding is the development of the SYNFINT, the Synthetic Financial Integration Indicator, presented in our Report and that is based on measures of crosscountry price dispersion in the money, bond, equity and banking markets in euro area countries. Looking ahead, we are also better equipped to warn about looming systemic risks or adjustment failings, as well as to identify strengths. 9 Macro-prudential policy will have an important role to play One of the more important goals of the on-going research is the grounding and calibration of macroprudential instruments. The need for a macro-prudential perspective is one of the main lessons stemming from the crisis. In fact, the whole regulatory reform after the crisis was internationally discussed in Basle or in the FSB and the G20, from the macro-prudential perspective. Indeed improving the design of Financial Regulation to ensure a resilient system is the first instrument of macro-prudential policy. I see macro-prudential policy as particularly important for the single currency, as macroprudential tools can in principle allow policymakers to address financial imbalances in a more country-specific and granular way. 9  See Fecht, Gruener and Hartmann, “Financial integration, specialization and systemic risk”, Journal of International Economics, Vol. 88, 2012. BIS central bankers’ speeches  5  I acknowledge that we do not yet have a large body of evidence on the effectiveness of these policies, especially in advanced economies.
In Germany, structural reforms are being implemented, particularly in the labour market, which could promote growth. It is possible that low long-term interest rates will boost investment. Nevertheless, there is uncertainty as to future economic developments, which is not fully reflected in prices, interest rates and premiums. There is also a risk that large imbalances in world trade and low employment in Europe will trigger protectionism, which could reduce growth capacity even further. Low interest rates in Norway Norges Bank’s key rate, the sight deposit rate, is at a historically low level. Real interest rates are also low. Between December 2002 and March 2004, the key rate was reduced by a total of 5.25 percentage points. The interest rate decline can be ascribed to a number of factors. In late autumn 2002, inflation started to fall. The inflation projections were also revised down. Gradually new information about the outlook for other countries and the Norwegian economy indicated that inflation might be very low. Short-term interest rates fell by close to 4 percentage points. It would seem that it is not only changes in the real interest rate that have an influence, but also the level of real interest rates. Between December 2002 and March 2004, the interest rate has moved from a high to a low level. The real interest rate is now lower than a neutral interest rate. A real interest rate that is lower than the neutral rate will stimulate activity even after the effects of the interest rate fall itself have been exhausted.

There are examples showing that a period of higher-than-normal house prices can have an impact over a very long period. At the end of the 1800s, house prices in Kristiania (now Oslo) rose sharply. Some areas of Oslo are still marked by the massive volume of residential construction prompted by the rise in prices. The housing market collapsed at that time. The demand for new dwellings was saturated. It was not until the mid-1980s that real house prices returned to the level in 1899. Household debt is now more than one and a half times as high as disposable income. The accumulation of debt partly reflects structural adaptation over time to a deregulated credit market and partly to low interest rates. The higher debt burden has made households more vulnerable. A period will come when households prefer to stabilise debt and reduce consumption. The fall in interest rates has sustained activity in Norway after a period of weak economic developments abroad and high domestic wage and cost inflation. But an aggressive use of the interest rate as an instrument may itself be a source of new fluctuations in the economy because it influences the time profile for saving and investment. It is therefore important that growth is self-driven when the interest rate has to return to a more normal level after a period. The effect of Norway’s interest rate also depends on external interest rates. Many countries have raised their key rates during this cyclical upturn, also in several steps.
You would agree with me that it is quite difficult for a central bank, like ours, to implement monetary policy effectively in an environment characterised by inadequate banking facilities. It is for this reason therefore that I commend the Management of Stanbic Bank Zambia for bringing banking facilities closer to the people. In this regard, I wish to assure you that on our part we shall continue to support you in your endeavours to open more of such branches, because we firmly believe that you are making our work and that of the Government much easier. However, may I take this opportunity to advise the Management of Stanbic Zambia that if you want this branch or many of such branches you intend to open in future to be beneficial to the communities in which they operate, kindly be flexible on the requirements for opening accounts as well as lowering  BIS Review 13/2005  1  the minimum account balances to be maintained by your clients. I say so because communities like Matero and the surrounding areas comprise mainly of people who are in the informal sector. Therefore, it would be unreasonable for you to ask an unemployed prospective customer to bring a letter from their employer before an account could be opened with your branch! In other words, I strongly urge you to tailor your banking services to the needs of the community you operate in.

Finally, let me also take this opportunity to urge the other commercial banks operating in Zambia to emulate Stanbic Bank Zambia by establishing community banking branches. As your regulator and supervisor, we take a lot of pride in seeing commercial banks coming up with innovative and progressive financial services, such as community banking. I believe that it is through the provision of such tailor-made banking services that banks would meaningfully fulfil their role as financial intermediaries in our economy. With these few remarks, Ladies and Gentlemen, it is now my honour and privilege to declare the Stanbic Bank Matero Branch officially open. I thank you. 2  BIS Review 13/2005
The room was absolutely jam-packed with staff from the PRA and the wider Bank – standing room only, in fact if one more person had entered it would have been a clear health and safety breach. My colleague Vicky Saporta was in the Chair, and this was a tough job: arguments raged, data was questioned, competing views were offered and challenged. Why so much excitement at the PRA? After all, boring is good in our line of work. Were we perhaps having our own private Brexit debate, with Vicky in the role of speaker? Were we changing our pension scheme, which is in my experience the only topic that gets people hotter under the collar than Brexit? Or were we picking next year’s Charity of the Year? None of the above. This was a meeting on what we call “horizon-scanning”, which we have made a strategic priority for the PRA as we come out of the post-crisis reform period. What is this activity? Why have we made it a priority? And why does it generate so much interest from our staff? This part of our work has its origins in two simple observations about financial history. The first is that crashes and financial crises are an enduring phenomenon 1. The second is that as memories of the most recent crisis fade, market participants often gravitate back to bad practices, sometimes in a new-fangled form, leading to the next crash.

interest rates adjusted for inflation) have been exceptionally low for a long time, and in all likelihood will continue to be so for some considerable time. Monetary policy cannot influence global real interest rates but must relate to the developments we see. The lower global interest rates are, the lower the policy rate must be to have the same expansionary effect on the economy. Another circumstance that has changed the monetary policy landscape – and which I will address later – is that households are more affected by interest rate adjustments than previously. What happens to the bond holdings? As you may know, in addition to lowering the interest rate to negative levels, we have also purchased significant volumes of Swedish government bonds to a nominal value of approximately SEK 350 billion – to make monetary policy even more expansionary. There is much talk about interest rates rising in the future, but many may not be so aware of how adjustments to the repo rate going forward relate to our bond  2  See “Monetary policy in a new environment”, speech by Stefan Ingves on 5 March 2018. 5 [13]  holdings. The figure shown in Figure 5 has been taken from the article we published in December 2017. 3 The shaded parts of the figure show roughly what has happened since then. Figure 5. The Riksbank’s overall normalisation plan for monetary policy  New purchases of bonds were discontinued in December 2017, which also signified the end of phase 1 in Figure 5.
From my viewpoint as a central banker, I hope that banks indeed seize on this opportunity, because I think it would ultimately lead to a more robust banking sector as a whole. For example, European securitisation markets would improve risk-sharing among banks: one can imagine a world where small, local banks originate loans while larger, global banks securitise and market them. And a true CMU would also mean convergence of some parts of insolvency law and deepening of markets for distressed debt, which would help banks work through NPLs more quickly in future and hence increase the resilience of the banking sector to shocks. Moreover, if bank finance declines in importance over the longer-term, that might also encourage some much needed consolidation in the banking sector, which would in my view be beneficial for the real economy. We see at the moment that overcapacity hinders the recovery of bank profitability, as weaker banks distort competition and make it difficult for other banks to re-price loans.4 Whether all this materialises, however, hinges crucially on how far-reaching the CMU project really is. The Commission’s Action Plan for CMU has put forward many areas for further work, but each will take years to implement. What type of CMU will ultimately emerge therefore remains to be seen. I am sure Commissioner Hill will give us more guidance on this tomorrow. 3  Ryan, R., O’Toole, C. and McCann, F. (2014), “Does bank market power affect SME financing constraints?”, Journal of Banking and Finance.

Yves Mersch: Three challenges for the banking sector Speech by Mr Yves Mersch, Member of the Executive Board of the European Central Bank, at the European Financial Forum dinner, 2015 Cumberland Lodge Financial Services Summit, Cumberland Lodge, Windsor, 12 November 2015. *  *  *  Thank you very much for inviting me to speak to you this evening. I have been asked to give a “central bankers’ view” on the various issues being discussed at this conference, so let me lay out upfront the perspective I will be coming from. While I am indifferent to how structural changes affect individual financial institutions, I have a strong interest in how they affect the financial sector – and in particular, in a bank-based economy like the euro area, how they affect the ability of banks to finance the real economy. We need to make sure that in an environment of structural change we still have strong and sound banks. At present, euro area banks continue to struggle with low profitability driven by both cyclical and structural factors. On the cyclical side, the low nominal growth and low interest rate environment makes traditional banking activities such as retail lending using maturity transformation less lucrative. On the structural side, banks’ return on equity remains below their cost of equity, which points to a need for further balance sheet adjustment. Nonperforming loans (NPLs) in particular remain an important obstacle for banks to provide new credit to the real economy.
In the US and the UK, we have seen evidence of tight labour markets and a strengthening of corporate pricing power, which threaten inflationary pressure. Driving those pressures is an excess of aggregate demand over aggregate supply. The required monetary policy response is a tightening to steer aggregate demand conditions more closely into alignment with available supply. Even if the overall implications for monetary policy are similar on the two sides of the Atlantic, the underlying drivers differ. Bottlenecks in markets for durable goods Here in the US, the strength of fiscal support for households during the pandemic in combination with the impact of lockdowns on access to consumer-facing services boosted demand for consumer durables. Many of these durables are the products of complex global supply chains, which were disrupted by the impact of the pandemic as factories shutdown and shipping was dislocated. The resulting bottlenecks stemming from a combination of both demand and supply developments led to the emergence of inflationary pressures in the tradable durable goods sector. In the UK, direct fiscal support to household spending was more modest. Nonetheless, as a small open economy and a price taker in internationally traded markets for durable goods, the UK was exposed to the inflationary consequences of these global developments. Additionally, Brexit weighed on UK trade with continental Europe, also serving to disturb supply chains and weaken competitive pressure on UK producers.

And therefore, among the broad set of UK economic indicators market participants could follow, there is no single ‘smoking gun’ that could be identified as the key indicator or driver of inflation persistence and thus monetary policy decisions. What I have attempted to do this evening is give some insight into how I think about the underlying structural forces driving the persistence of inflation. In particular – and reflecting the central conjunctural issues – I have focused on whether, and, if so, how, the initial inflationary impulse stemming from higher European wholesale natural gas prices will propagate through the UK price process. What this exercise suggests to me is that the distinctive context that prevails in the UK – of higher natural gas prices with a tight labour market, adverse labour supply developments and goods market bottlenecks – creates the potential for inflation to prove more persistent. It is therefore in this nexus that I focus in coming to my own assessment of the risks surrounding inflation persistence, which – consistent with the MPC’s collective communication – will strongly influence my monetary policy position in the coming months. The views expressed in this speech are not necessarily those of the Bank of England or the Monetary Policy Committee. I would particularly like to thank Saba Alam, Doug Rendle, Philip Schnattinger and Brad Speigner for helpful discussions in the preparation of this speech.
While earlier studies focused on the effect of contemporaneous rate surprises, more recent papers account for the fact that monetary policy decisions have typically been accompanied by explicit (or at least perceived) central bank communication on the future course of policy rates. Accordingly, the literature has started to distinguish between “rate surprises” and “path surprises” (or surprise changes to the forward guidance on future rates). [7] As was true for the earlier literature focusing on standard rate cuts, identification is a challenge: researchers need to separate rate surprises from path surprises and tell both apart from other structural shocks occurring at the same time. Recent research involving ECB economists has used high-frequency movements in financial market variables to disentangle various types of monetary policy surprises affecting the yield curve during ECB press conferences: the impact of each type of surprise can be parsimoniously described by its “footprint” on the term structure (Chart 3). [8] A standard rate cut primarily affects the short end of the curve, while the impact peters out monotonically across the curve (Chart 3, left panel). By contrast, an innovation in the forward guidance on interest rates has a hump-shaped effect on the curve and exerts its maximum effect at a maturity of around two years (Chart 3, right panel). Chart 3 Estimated effect of standard policy rate surprise (left-hand side) and rate path surprise (righthand side) on the euro area OIS curve (basis points)  Sources: Based on Altavilla et al. (forthcoming).

Jean-Pierre Roth: Switzerland – a platform for global business Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the Forum de l'Economie vaudoise, Lausanne, 14 September 2007. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  Within the past ten years, Switzerland has become a genuine platform for global economic operations. From here, the international markets are being worked systematically, and an ever-growing part of our economic performance is now attributable to investment activity abroad. This is a welcome development since it allows us to keep high value-added jobs in Switzerland. However, it also involves some risk because the international mobility of production has increased. Consequently, the general conditions which help to keep Switzerland attractive as a business location must be maintained. This platform for global economic operations has given us a role outside the European Union and the euro area. Thus we have chosen to face the challenge of globalisation instead of the challenge of European integration. Our path may be demanding, but it is also promising! BIS Review 101/2007  1