samchain/econo-pairs-v1 huggingface dataset:
Household and business confidence continued to strengthen, reinforcing the economic momentum. In the event, the unemployment rate fell far faster than we had expected, falling below 7% in February 2014. But even as the recovery strengthened and survey indicators of output growth reached levels previously associated with sharp policy tightenings (Chart 1), market expectations about the future path of policy remained subdued (Chart 2). Participants understood the conditionality of guidance, as they and the MPC learned that there was still considerable spare capacity in the economy. Chart 2: Forward market interest rates rose only modestly as unemployment fell quickly towards 7% August 2013 guidance issued  Data published showing Percent unemployment fell to 6.9% 4.0  February 2014 guidance issued  3.5 3.0  Counterfactual path for Bank Rate based on historic correlation with survey indicators of output growth  2.5 2.0 1.5  UK 1 year instantenous forward OIS rates  1.0 0.5 0.0  Jan. 12  Jul. 12  Jan. 13  Jul. 13  Jan. 14  Jul. 14  Sources: Bloomberg Finance L.P., IHS Markit, ONS and Bank calculations. The MPC’s second use of guidance responded to another structural development: the sharp fall in the equilibrium real interest rate, or r*. 6  In February 2014, the Committee explained why it expected the equilibrium rate of interest to be much lower than in the past, and then outlined the possible consequences for policy. 7  The Committee signalled that the policy path was likely to be different from the past.

Guidance, Contingencies and Brexit Speech given by Mark Carney, Governor of the Bank of England  Society of Professional Economists 24 May 2018  I am grateful to James Benford and Clare Macallan for their assistance in preparing these remarks. 1  All speeches are available online at www.bankofengland.co.uk/speeches  Introduction This evening I would like to discuss potential paths for monetary policy during the next, critical phase of the Brexit process. Note the conditionality of the phrase “potential paths.” The actual path for policy will depend on the outlook for the economy which in turn will depend very much on how the Brexit negotiations evolve. Monetary policy is always contingent on the economic outlook. This is broader than it being data dependent. In order to achieve the inflation target, monetary policy needs to adjust not only to news about current 1  conditions but also to any changes in likely future circumstances. While it may be the MPC that sets interest rates, it is ultimately the economy that determines them. Monetary policy will be most effective if agents can anticipate how policymakers will react to changing conditions. But the predictability of monetary policy can break down when there are large structural changes in: -  Supply capacity;  -  Equilibrium interest rates; or  -  Trading relationships. In such circumstances, forward guidance can help anchor expectations and improve the effectiveness of monetary policy.
Unquestionably, digital natives make up a very large and, above all, growing number of the 1/5  BIS central bankers' speeches  population, and they are naturally an attractive customer segment for the sector. However, we must not forget that there are still sections of the population that continue to rely on traditional banking services. No “neobank” plans on competing to attract the least digitally savvy segment of the population. The report describes the potential strategies being tested to lure and retain these groups, such as shifting from human service to virtual interaction, where queries are answered using machine learning or artificial intelligence techniques (such as chatbots). These initiatives are interesting, but overcoming their limitations will require further efforts to support education, both in digital and financial literacy, since these new channels open the possibility of many more services being arranged with a single click. The techniques used also need to respect some of our society’s fundamental values, as reflected by the proposed regulation of the European Parliament and of the Council on the use of artificial intelligence algorithms. Moreover, given that these groups may be more vulnerable to fraud and the rising cyber threat, monitoring must be maximised. In this regard, the report points to deepfake technology, which could put consumers at risk of identity theft. Yet more conventional fraud techniques, such as phishing, can be equally dangerous for those who only envisage arranging a financial product by walking into a branch, shaking hands and signing a document.

Margarita Delgado: Digital transition in the banking business. Lessons after COVID-19 Webinar closing address by Ms Margarita Delgado, Deputy Governor of the Bank of Spain, at the presentation of the report “Digital transition and transformation of the banking business in Spain driven by COVID-19”/ KPMG/IEAF, 16 June 2021. * * * I should like to thank KPMG, the Instituto Español de Analistas Financieros and its Foundation for their kind invitation to participate in the presentation of the report “Digital transition and transformation of the banking business in Spain driven by COVID-19”. One need only look at the title to understand just how relevant this report is in the current context. And having read it, I think it is also fair to emphasise the accuracy of its analysis and conclusions. The report takes as its starting point an established fact: the health crisis has catalysed, or accelerated, certain trends whose growing influence over the banking business model was evident even before the outbreak of the pandemic. What trends are these? I refer, of course, to the increased use of digital banking channels, particularly mobile phones; the growth of digital payments to the detriment of cash; and the entry of non-traditional competitors into the banking business. COVID-19 has probably advanced these trends by a decade, or at least half a decade, in just one year. But, as we all know, digitalisation has been a dominant factor in the transformation of the banking business for some time.
The precise scope of our price stability mandate has been the subject of some debate in recent times.6 Some have argued that central banks, by engaging in a systematic expansion of their balance sheets, are in effect venturing into the realm of fiscal policy. Such views could be paving the way for another turnaround in the public perception and institutional status of central banks, which could result in less financial and, ultimately, less statutory independence. This threat may be even more pronounced in a world in which, virtually everywhere, public debt has surged to high levels, making political pressure on central banks to alleviate debt servicing costs through higher inflation more likely.7 Another swing of the pendulum? Central banks are ultimately judged on their success or failure in ensuring low and stable inflation. Central bank independence gives them the freedom to pursue their mandate. Independence does not mean that they can act in a completely unfettered way. In modern democratic societies, independent institutions are accountable. They need to explain the reasons for their actions and why these are appropriate for fulfilling the mandate that has been assigned to them as the result of a democratic process. For central banks, one of the challenges is to communicate their internal deliberations in a transparent manner to their external stakeholders. Safeguarding accountability The Treaty sets out an accountability framework for the ECB, which requires regular appearances by ECB officials before the European Parliament and the publishing of the Annual 3/6  BIS central bankers' speeches  Report.

In June 2014 monetary policy in the euro area embarked on a phase of renewed expansion, aimed both at enhancing monetary policy transmission, in a context of continued bank deleveraging, and increasing policy accommodation in view of persistently weak inflation. Having limited room for manoeuvre on the main refinancing rate, the ECB initiated a series of new unconventional measures. These consisted of our targeted longer-term refinancing operations 2/6  BIS central bankers' speeches  (TLTROs), our asset purchase programme for public and private sector securities (APP), and our policy of charging a zero interest rate on main refinancing operations and a negative rate on excess reserves. As the floor of our monetary policy corridor – which by then had become the key instrument steering monetary conditions in the money market – was reduced to negative levels, other short to medium-term market yields dipped below the zero line as well. Given the novelty, scope and size of the measures taken, and given their potential interaction with other public policies, communication of these measures proved to be much more difficult than before the crisis, when we only had to explain how changes in the main policy interest rates affect the economy and ultimately the price level. Likewise, holding the ECB accountable for its monetary policy has also become more difficult. Let me illustrate this difficulty by considering how observers have been using Taylor rules to compare our policy interest rates with rule-based benchmarks.
Banks severely limited the maturity, the scale and the number of counterparties to whom they would lend. This liquidity freeze further deteriorated after the bankruptcy of Lehman in September 2008. Central banks intervened massively in order to tame the liquidity crisis and prevent its spill over to the real economy. This intervention took various forms across countries, reflecting the specificity local financial markets. In the Euro area financial intermediation occurs mainly through the banking system. Most of our actions, therefore, aimed at providing banks with sufficient liquidity through repo operations to ensure that the flow of credit to the economy would not be severely disrupted. We have been fortunate to enter the crisis with a very appropriate set of tools. From the outset, our operational framework was based on a very broad list of eligible counterparties and collateral. So, we could adjust to the shocks in money and credit markets without creating new facilities, with the small exceptions of the covered bonds and, more recently, government bonds purchases. Doing so, we have been able to maintain a clear separation between monetary policy and liquidity provision. A major step was taken in October 2008 when we moved to a regime called in our jargon “full allotment fixed rate”, which basically means that banks were given unlimited access to liquidity at the prevailing policy rate. Over the course of the crisis, we made several downward adjustments to that policy rate. But we never committed to any specific path or trend.

Bond yields have, consequently, been low by historical standards, a phenomenon which has substantially facilitated private investment. This in turn, will not fail to have a highly positive effect on growth. A third benefit of the Euro is the removal of exchange rate risk and transaction costs for intra Euro area trade. This has promoted trade integration among Euro area countries without diverting trade with other countries. Indeed, it appears that business cycles tend to be more and more synchronized over time, an evolution which allows for greater efficiency and  BIS Review 115/2007  1  sustainability of the common monetary policy. This shows that monetary union is a self sustaining process: real convergence is to some extent a result, as much as a precondition of economic integration. Another benefit of the Euro is the boost it gives to financial integration in Europe. In many segments, European financial markets have reached the depth and liquidity which, up to now, were the preserve of dollar markets. This stimulates productive investment, helps in restructuring and, more generally, allows a better allocation of savings and sharing of risks. The current market turmoil is a clear test for this achievement and while the problems affecting the Euro markets have been comparable to those affecting the other major markets, the strength of the Euro shows, to some extent, that it has become a safe haven in our globalized financial world. The Euro is becoming extremely attractive, as a vehicle, a transaction, an investment and a reserve currency.
For other types of financial activities, no specific regime for accessing EU markets has been established. This is not unusual: most if not all countries place some restrictions on the types of financial services that can be provided across their borders. There may be good reasons for these restrictions, such as consumer protection or financial stability considerations. In the case of the EU, certain bank lending and deposit-taking activities are not covered by the so-called 2/5  BIS central bankers' speeches  third-country regimes and so will no longer be able to be provided from the United Kingdom, but will need to be provided from within the EU. This – together with the fact that equivalence cannot be taken for granted – is why many banks have chosen to relocate activities to the EU27, and have been engaged in very detailed discussions with the ECB and other authorities to obtain agreement on their plans. The ECB expects banks to build up their capabilities in EU27 countries and to implement the agreed relocation plans within the previously agreed timelines. The risks of financial fragmentation Regulatory drivers – and in particular the end of passporting rights for certain UK-based activities – are already having an effect on the geography of financial centres in the euro area. According to preliminary evidence, a small number of financial hubs appear to be emerging as a result of the relocation – or plans for relocation – of certain activities.

It is hoped that the discussions during the forum will assist in gathering a consensus on the viability of such an initiative where efforts and resources involved may be substantial. Indeed, it should be noted that there is certainly potential in the development of this shared platform, where combined resources and expertise would foster greater efficiency and provide fresh impetus for a more meaningful and far-reaching development of Islamic finance in the international stage. The prospects of such pioneering works with the possibility of international appeal, if successful, would certainly be exciting. Ladies and gentlemen, SSO, at first sight, seems very much the domain of large global players – where opportunities for significant cost arbitrage involved in, say, the relocation of call centres from the UK to Malaysia seem to be very compelling and obvious options. Understandably, the issue of SSO is tread very cautiously by the smaller and boutique players in the industry. Where bottom lines are concerned, an institution's Board may find little appeal in the proposition of outsourcing where the cost-savings involved may seem minimal. However, there are many rewards to be reaped by an institution's successful execution and maintenance of SSO arrangements and a reduction in operating costs may only form part of the picture. The outsourcing of back office operations, say, allows institutions to accord greater focus on their core competencies and core businesses such as the execution of growth strategies or capturing market share.
By potential output and potential growth we mean instead the output and growth that is possible without serious imbalances arising in the economy; the level of output at which supply and demand correspond and actual and expected inflation are in line with the central bank’s inflation target (assuming that there is one). The potential output level is not constant over time; it usually shows a growth trend, which is illustrated in Figure 1. This is mainly because technological developments mean that higher output can be achieved with the same amount of factors of production. Another reason could be long-term changes in the factors of production. The change in potential output from year to year is equal to the potential growth of the economy, which thus is the growth rate that is sustainable in the long term. Figure 1 shows the potential output level according to a simple statistical method where the trend, and thereby also the potential growth rate, is allowed to vary over time. The difference between actual and potential output is known as the output gap, and this reflects the cyclical variations in the economy. A negative output gap, that is to say, when actual output is lower than potential output, is usually connected with a recession. The demand pressure for goods, services and the factors of production is then small and there are ample unutilised resources in the economy. Price and wage increases are small and inflation is usually below the central bank’s target level.

The number of newly-granted early retirements rose sharply from 1997 onwards. In recent years, this increase has been particularly large with regard to people under the age of 50.2 The percentage of those participating in the labour force has fallen from around 88 per cent at its highest point in 1990 to about 82 per cent today. The fact that such a high percentage of people of working age are outside the labour force will limit growth in the future and will contribute to further exacerbating the problem of an ageing population. Figure 6 shows both the percentage of employed actually working and the mean working time for people in work.3 As you can see from the Figure, developments in these factors also vary according to the economic cycle. During the boom at the end of the 1980s, the number of hours per person rocketed while the percentage of people in work declined, partly due to a growth in sick leave. Many studies have indicated that there is a link between total absence due to sickness and the situation in the labour market. When the situation in the labour market improves, absence due to sickness increases, and vice versa. However, this relationship does not seem to apply to long-term sick leave, which is the type of sick leave that has increased most in recent years. How to resolve this is another subject much debated at present.
According to a recent report by the World Economic Forum (WEF) on the future of jobs, 75 million jobs may be displaced by 2022, while 133 million new roles may emerge.15 Are we preparing our graduates for such a shift in the labor market? This is an equally pertinent question for the banking industry. According to the WEF study, 56% of bank employees will need to be re-skilled. Talent and resources in a number of functions will need to shift towards analytics, with fewer resources likely to be involved in manual work. New staff will need to be data scientists with expertise in AI, machine learning, etc. And business staff will be required to have the ability to translate such data insights into business actions. The WEF has reported that the largest barrier to embracing technology in banks, identified by 74% of financial institutions surveyed, was a lack of skill sets in the local labor market. If this is the case today, what will happen in the future? This is why the banking industry needs to build strong partnerships with educational institutions, to ensure that they are preparing the graduates the industry will require for its transformation. ii. Regulators The other key stakeholder in the banking industry’s transformative journey is the regulator. Regulatory authorities need to strike a balance between protecting consumers, establishing standards for sound regulatory and supervisory practices, safeguarding financial and monetary stability, and at the same time facilitating growth and innovation in the industry.

To maintain competitive strength, wage growth in Norway had to be on a par with wage growth among our trading partners when productivity growth in Norway was on a par with our trading partners. With the current monetary policy regime, the inflation target is the nominal anchor. According to updated national accounts figures, an inflation target of 2½ per cent and trend productivity growth of around 2 per cent imply annual nominal wage growth of about 4½ per cent. Wage growth that is lower than 4.5 per cent contributes to increased employment. The Swedish Trade Union Confederation’s recommendations to its members are based on the inflation target: “It is therefore in the interests of all wage earners to control total wage increases to avoid exceeding the level that is consistent with the inflation target defined by Sveriges Riksdag (Swedish parliament).”  Challenges facing the Norwegian business sector History has taught us that individual companies and individual industries in wealthy countries may be threatened by the emergence of producers from low-cost countries. Nevertheless, the emerging Asian economies have not posed a threat to industrialised countries' economies as a whole. On the contrary, growth in Asian economies has led to lower prices for a wider range of products. These countries have also gradually developed into important markets. We know from experience that competition from Japanese and then Korean shipyards was an important reason behind the downsizing of our own shipbuilding industry.