samchain/econo-pairs-v1 huggingface dataset:
We have the same monetary policy as all the rest; our income is taxed at the same federal tax rate; and we are equally impacted by Washington’s tax, spending and regulatory policies. But we have better fiscal policy at the state level. We have no state income tax; we are a right-to-work state; we have state and local governments that, under both Democratic and Republican leadership, have for decades assiduously courted job creators – so much so that we have even outperformed the job creation of most every other major industrialized economy worldwide, as shown by the previous slide. Whither monetary policy? Now, back to the hue and cry of financial markets, and the question of further monetary accommodation. Interest rates are at record lows. Trillions of dollars are sitting on the sidelines, not being used for job creation. We know that in areas of the country where fiscal and regulatory policy incents businesses to expand – Texas is the most prominent of those places – easy money is more likely to be put to work than in places where government policy retards job creation. During the next few weeks as I contemplate the future course of monetary policy, I will be asking myself what good would it do to buy more mortgage-backed securities or more Treasuries when we have so much money sitting on the sidelines and yet have no sense of direction for the future of the federal government’s tax and spending policy.

The Banks also house and manage staff that supervise and regulate banks in the districts (under policy guidance from the Board of Governors), and perform other services, the most widely observed and commented upon of which is the operating of the  BIS central bankers’ speeches  1  open-market operations conducted by the Federal Reserve Bank of New York on behalf of all 12 Banks at the instruction of the FOMC. All 12 Bank presidents serve on the FOMC together with the seven members of the Board of Governors. This is where monetary policy for the United States is determined by collective decision. The operating procedure of the FOMC is for each of the governors to have a vote on policy; the bankers rotate their votes, with the New York Fed having a constant vote. However, all 19 members – the seven governors and the 12 bankers – participate fully in every FOMC meeting and actively contribute to policy discussions. The FOMC has traditionally decided the federal funds rate, the overnight rate for interbank lending that anchors the yield curve. In recent years, in reaction to the Financial Panic of 2008 and 2009 and its aftermath, the FOMC has instructed the New York desk to buy mortgage-backed securities and Treasury notes and bonds – eschewing Treasury bills. Presently, the Fed holds more than $ billion in mortgage-backed securities (MBS) and over $ trillion in Treasuries. This expansion of our portfolio and extension of maturities held therein is known as “quantitative easing”, or QE.
What we cannot hope to do is to provide an equally stable environment for every sector of the economy or for every business enterprise, nor therefore can we hope to maintain a stable environment for those regions of the country with heavy concentrations of particular sectors or businesses. We cannot hope, for example, nor should we seek, to obstruct structural change. Consumer demands change over time, and so, too, do technologies and management and production techniques. Competition, to seek out such changes and to exploit them to meet social needs more efficiently – however unwelcome it may be to establish producers – is a vital driver of supply-side improvement, increasing the potentially sustainable growth rate at the macroeconomic level from which we all stand to benefit. Nor can we realistically hope to avoid all shorter-term fluctuations associated with the business cycle, for example, or as a result simply of random shocks - though we can aim to moderate their impact rather than exaggerate it as we have done at times in the past. Nor, finally, can we hope to insulate ourselves from shocks originating overseas. That does not mean that we do not understand the painful impact of the recent state of the world economy or of the strong exchange rate. Nor does it mean that we simply ignore the plight of the adversely affected sectors.

At the time of that Report the latest figure for earnings growth was 5.4%. Given historical levels of productivity growth of around 2%, this level of earnings growth was, on the face of it, incompatible in the long run with the inflation target of 22. That led to an extended discussion during the summer, both within the MPC and among commentators in the press and the City, about the extent to which those levels of earnings growth had been distorted by the impact of bonuses during the Spring of this year and so might be expected to fall in due course without the need for an easing of pressures in the labour market. Since August, the estimates of this key economic statistic have been revised - not once, but twice. The good news - somewhat ironic given the amount of attention it attracted earlier this year - is that as a result of these revisions the “great bonus debate” of the summer has become a non-issue. Bonuses, we are now told, if anything subtracted from, not added to, the growth of earnings in March and April of this year. The bad news, however, is that if before the revisions it was difficult to know how to interpret the impact of bonuses on earnings growth, it is, I think it is fair to say, now extremely difficult to know how to interpret any aspect of the earnings data. Statistics, official or otherwise, are neither right nor wrong.
William C Dudley: Lessons of the crisis – the implications for regulatory reform Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Partnership for New York City discussion, New York, 20 January 2010. *  *  *  It is a pleasure to have the opportunity to speak here today. I will focus on the important lessons of the recent crisis and how those lessons should inform the regulatory reform effort. As always, what I have to say reflects my own views and not necessarily those of the Federal Open Market Committee or the Federal Reserve System. In my opinion, this crisis demonstrated that a systemic risk oversight framework is needed to foster financial stability. The financial system is simply too complex for siloed regulators to see the entire field of play, to prevent the movement of financial activity to areas where there are regulatory gaps, and, when there are difficulties, to communicate and coordinate all responses in a timely and effective manner. Effective systemic oversight requires two elements. First, the financial system needs to be evaluated in its entirety because, as we have seen, developments in one area can often have devastating consequences elsewhere. In particular, three broad areas of the financial system need to be continuously evaluated: large systemically important financial institutions, payments and settlement systems and the capital markets. The linkages between each must be understood and monitored on a real-time basis.

Nevertheless, increased productive capacity of oil suppliers and technological progress, which will enable us to decrease our reliance on oil over time, should dampen the impact in the medium run. I have so far outlined the main challenges on the external front. But the key question remains: how will the Bank of Thailand meet these challenges and attain the goal of ensuring low and stable inflation as well as a resilient, well-functioning financial sector that is able to intermediate efficiently between savers and investors? This leads to my second point. Before we grapple with global imbalances and high oil prices, we must first realize that the key factors underlying these challenges are largely beyond our control. They arise from the complex economic interactions on the global scale. However, the central bank can attempt to contain the adverse impacts of these external shocks on the domestic economy by preserving domestic monetary and financial stability. This is, of course, easier said than done. Rapid changes, whether from within or without, typically bring forth tension and necessitate tough decisions in trading off short-term pain for long-term gain. The recent surge in oil prices is a case in point. High oil prices have had two adverse effects: pressure on prices and a drag on economic growth. Tightening interest rates is the Bank of Thailand’s primary method of fighting inflation. However, high interest rates would burden firms and households already trying to cope with high oil prices. Domestic demand would be adversely affected.
Edward Scicluna: Pursuing price and financial stability Address by Prof Edward Scicluna, Governor of the Central Bank of Malta, at the annual dinner of the Institute of Financial Services, Saint Julian's, 2 December 2022. *** President and Members of the Committee of the Institute of Financial Services (IFS) Malta, distinguished guests, good evening. Last year's annual dinner took place at a time economies were gradually re-opening and forecasts for economic growth were being upgraded. Policy rates in the main advanced economies were still negative or mildly positive. Fiscal stimulus was gradually being withdrawn. The spike in inflation was also expected to go back to moderate levels in the course of 2022. And then came war. Apart from the human loss it has caused, the war in Ukraine has amplified shortages of certain commodities and unleashed an unprecedented energy shock which has disproportionately affected Europe. Lately, supply bottlenecks have started to dissipate, as reflected in globalsurveys ofsupplier delivery times and mainstream freight rates. Yet, inflation has remained elevated. In the euro area, inflation increased from just above 5% in January this year, to 10.6% in October, moving into two-digit territory for the first time in decades. Meanwhile, HICP excluding food and energy, has broadly doubled, standing at 5.0% in October, in part reflecting indirect effects from higher energy costs but also the lagged effects of rising non-energy costs.

Inflation has also remained on an upward trajectory in Malta, despite the generous subsidies which kept wholesale and retail fuel and electricity prices at 2019 levels, hitting 7.4% in September and remaining at that level in October. Still, they are nowhere near the level of prices experienced in most other euro area countries. The assessment of Malta's HICP excluding energy is even less encouraging. While since the start of the year, food inflation has been only moderately below that in the euro area, non-energy industrial goods (NEIG) and services inflation have exceeded the corresponding euro area averages. In particular, services inflation in Malta averaged 5.8% since January, far above the rate of 3.4% recorded for the euro area. In part this reflects the higher cost of imported inputs used to generate services, but it also reflects domestic inflation processesthat have been triggered by the strength of demand for services – the latter in the context of a tight labour market, households' strong balance sheet and considerable fiscal support. While domestic economic activity can be expected to gradually slow down during the current and coming quarters, the European Commission's forecasts that Malta isstill expected to have the second highest rate of growth in the euro area. In our view, even this forecast is quite cautious given the resilience of the economy, as shown, for example by the unemployment rate, which is still below the lowest rate  1/5  BIS - Central bankers' speeches  recorded pre-pandemic.
Meetings held last summer with the banks’ leaders revealed, among other things, that some of them were making vigorous attempts to attract foreign investors, those with retail deposit collection in foreign branches were aiming to transfer the deposits held in those branches to subsidiaries within a few months, and some were even considering moving their headquarters out of Iceland which the Central Bank did not object to. As pressures in the global liquidity markets intensified, much like banks in other parts of the world, the Icelandic banks turned to the Central Bank for funding, as many banks abroad have done. The Central Bank of Iceland expanded its liquidity facilities, as did its foreign counterparts. Iceland’s banks obtained funding both from their own Central Bank and, through their foreign subsidiaries, from the European Central Bank (ECB), from which they sought liquidity in euros. As other banks, they became heavily dependent on ready access to liquidity facilities. However, the Central Bank of Iceland could not provide liquidity in currencies other than the Icelandic króna, and until recently most other central banks only provided loans in their own currency. All over the globe, central banks and other authorities fought to rescue banks and other financial companies, resorting to increasingly unconventional measures in the process. In spite of these attempts, financial companies of all sizes have gone bankrupt, while others have been rescued – at least temporarily – through massive government assistance or guarantees.

There were examples of demands that the banks reduce their deposits, in spite of the provisions in EU directives on financial companies’ equal right to conduct business anywhere within the European Economic Area. In this case national interests outweighed pan- European commitments. As a result, it appeared as though the banks’ plans to meet their funding needs through retail deposits would be, at best, difficult to carry out. The Board of Governors of the Central Bank explained the foreign authorities’ attitudes towards this deposit accumulation to the leaders of the Icelandic banks and informed them that they would be faced with strong and swiftly mounting opposition. The Central Bank of Iceland was unequivocally of the opinion that the banks’ foreign deposits should be held in subsidiaries rather than branches and that Landsbanki’s deposit business in London should be transferred to a subsidiary of the bank. The preparation for this transfer began early in 2008, and the Central Bank was informed soon thereafter of what was needed to make the change and how long it would take. Judging from discussions with senior executives at Landsbanki, the Central Bank assumed that the process had begun that spring. In July, it was revealed that this was not the case. Although the Central Bank’s position on the matter was clear, it did not have the power to force changes or make demands. Moreover, other Icelandic authorities also had limited legal power in this respect under the legislation then in force which was and is based on EU Directives.
I would then like to turn my attention to the subject of gold as part of our currency reserves. But first, let me begin with the key events in monetary policy. Key events in monetary policy in 2012 and 2013 More than 20 months have passed since the SNB introduced the minimum exchange rate against the euro under exceptional circumstances. In summer 2011, the Swiss franc had appreciated to such an extent that we had to take action. It is the SNB’s statutory mandate to ensure price stability, while taking economic developments into account. With money market interest rates already close to zero and conventional monetary policy options exhausted, we would have no longer been able to fulfil this mandate without the introduction of a minimum exchange rate. In taking this step, the SNB averted the threat of adverse developments to price stability and the Swiss economy. The minimum exchange rate provided the foreign exchange market with clear guidance and gave companies a sounder basis for their investment planning. Notwithstanding the minimum exchange rate, conditions for the Swiss economy remained difficult in the past year. Global economic growth weakened, after having already lost momentum the previous year. This slowdown was mostly due to the deterioration in economic activity in emerging economies and to the recession in the euro area. Although the European financial and debt crisis is weighing particularly heavily on the euro area economy, it is also curbing growth in other regions.

Instead, they are based on misunderstandings about the importance of gold in monetary policy and would compromise the SNB’s capacity to act in pursuing its monetary policy, which would run counter to the objectives envisaged. In other words, these measures would, in certain situations, considerably hinder the SNB in fulfilling its monetary policy mandate and be detrimental to Switzerland. We therefore consider it our duty to point out the serious disadvantages of the initiative already at an early stage. Having said that, however, the SNB is interested in a dialogue on any questions connected with the initiative. With this in mind, allow me to make a few remarks. The SNB has the statutory mandate to ensure price stability, while taking due account of economic developments. The monetary policy operations that must be carried out in fulfilment of this mandate have a direct impact on the SNB’s balance sheet. In order for the SNB to fulfil its mandate at all times, its capacity to act in monetary policy matters must not be compromised by rigid rules on the composition of its balance sheet, which would be the case with the required 20% minimum share of gold and the ban on the sale of gold. It was precisely the latest crisis that demonstrated how important it is for the SNB to have the flexibility to expand its balance sheet, if needed. In future, the SNB will also need this flexibility to reduce the balance sheet again, if necessary. The demands of the initiative would considerably curtail this flexibility.
At the same time, it is important that central banks and other authorities develop their ability to cooperate across national borders, particularly within the EU. Not least, we must learn to accept that someone will have to put their foot down when a cross-border risk develops, even though this may create a certain amount of fuss. The new European authorities – in the case of the banks primarily the European Banking Authority – are intended to act as arbitrators between national authorities on certain specific and limited issues. Although the right of the EU authorities to override the national authorities is limited, there are signs of a new tendency to transfer power to these international bodies. A risk council – the European Systemic Risk Board (ESRB) – is also to be set up in the EU with a special responsibility for the supervision of macro-financial stability. Even though the powers of the ESRB will be limited, this still represents an important step on the road towards a better consensus regarding the cross-border risks that exist and how they should be dealt with. An issue which in my opinion should be high on the agenda of the ESRB is lending in foreign currencies. Concluding remarks At the beginning of this speech I expressed the hope that we are heading towards a more stable and efficient financial system. The crisis has shown that we must reform regulation and supervision so that we can better prevent financial crises.

Governance to prevent systemic risks – the road ahead I would now like to say a few words about the road ahead for the authorities’ efforts to prevent systemic risks. Today, the Riksbank has an overall responsibility for the financial system. Finansinspektionen is responsible for the stability of individual institutions, but also has a responsibility for the system as a whole. Together, our task is to try to steer the financial system away from instability and towards stability. The main responsibility for this of course lies with the banks themselves. The institutional frameworks give Finansinspektionen the effective tools that directly affect behaviour – the possibility to change the capital requirements, impose sanctions, prohibit or stipulate measures and, ultimately, to withdraw permits and licenses. The role of the Riksbank, on the other hand, is to exert influence by conducting a dialogue with the participants and issuing warnings about the risks that arise. The “Financial Stability Report”, which we publish twice a year, is a central tool in this work. The idea is that our warnings should influence the banks in the following way: if the Riksbank points out that a risk has arisen at a bank, the bank itself should take action to retain the confidence of the market in its operations. If the bank itself does not take action, the bank’s counterparties and customers should at least react and take account of the risk in their pricing.
We have seen that in periods, the krone is heavily influenced by changes in the difference between interest rates at home and abroad, and we must take this into account when setting interest rates. Themes in foreign exchange markets may shift, however. The impact of interest rate changes on the exchange rate may be less pronounced. When inflation gradually moves up from a very low level, there will be a basis for gradually moving towards a more normal short-term interest rate level in Norway. This may counter the emergence of excessive pressures on domestic resources in the medium term. Interest rate developments in other countries may also have considerable impact on the krone and hence on Norwegian interest rates. When inflation is low - and as low as it is now - it is appropriate to place considerable emphasis on pushing up inflation. Therefore, we are particularly vigilant with regard to consumer price developments. Financial stability Developments in real economic variables are mirrored in credit markets. In recent years, household income has shown solid growth, and household confidence has been high. However, corporate earnings have been low, and until recently enterprises have primarily focused on enhancing efficiency. Credit developments are giving ambiguous signals to our interest-rate setting. Growth in household borrowing is high, but enterprises are reducing debt. The change in the breakdown of credit may have been amplified by banks’ increased eagerness to extend credit to households after a period of losses  BIS Review 11/2004  15  on loans to the business sector.

Normally, this will lead to an appreciation of the krone, with a further reduction in earnings and employment. Manufacturing will, therefore, feel the effects of excessively high wage growth to an even greater extent than earlier. At present, the labour market is relatively tight, which is reflected in high wage growth. In other countries, the situation is different, with sluggish economic development and declining inflation. As a result, interest rates are higher in Norway than in other countries. According to the guideline for fiscal policy, the use of petroleum revenues will increase every year for a number of years ahead. This will sustain the demand for labour. The service industries will need more resources. The contest for labour resources will intensify. To contain inflation, monetary policy must probably be fairly tight in the years ahead. Since 1997, labour costs have increased by between 5 and 7 per cent per year. Nevertheless, the increase in consumer prices has been about 2½ per cent the last couple of years. The krone exchange rate has appreciated since the summer of 2000 as a result of a wider interest rate differential between Norway and other countries. Combined with low growth abroad and increased trade with low-cost countries such as China, this has led to a slower rise in import prices. A higher rise in prices for domestically produced goods and services reflects an increase in labour costs in Norway. As the world economy recovers, import price inflation will probably edge up.