samchain/econo-pairs-v1 huggingface dataset:
In formulating a question on wage expectations we needed to pose a hypothetical situation to gain information of direct relevance to inflation. It is easiest to illustrate this by giving you the format and exact wording of the question: We first asked individuals who reported to be working for pay how many jobs they had. We then informed them that in some subsequent questions we would ask about their MAIN job, which we defined to be the job at which they usually work the most hours. We then ask: “Suppose that, 12 months from now, you actually are working in the exact same [MAIN] job at the same place you currently work, and working the exact same number of hours. Twelve months from now, do you expect your earnings on this job, before taxes and deductions, to have gone up, or gone down, or stayed where they are now?” For those who said gone up or gone down we then asked: “By about what percent do you expect that your hourly earnings on this job, before taxes and other deductions, will have gone [UP/DOWN], 12 months from now, if you actually are working in the exact same job at the same place you currently work, and working the exact same number of hours?” As in the rest of our work we also elicited uncertainty around this wage expectation. Chart 8 shows a time series of the median response and inter-quartile range to the point prediction question along with the average uncertainty as defined above.

Jessica Chew Cheng Lian: Digital developments in Malaysia's financial sector and the broader economy Opening address by Ms Jessica Chew Cheng Lian, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Asian Banker Digital Finance Convention 2018, Kuala Lumpur, 22 March 2018. * * * It is my great pleasure to be here today at the 2018 Asian Banker Digital Finance Convention. Many of us here would remember what a “Kodak moment” is. I believe the term for that these days is “Insta-worthy”. Kodak’s story is a familiar one, now infamous as a classic case of digital disruption. At the turn of the century, film was still very much the technology of choice. But within years, the digital camera quickly took over the mass market, eventually putting Kodak out of business. And the story does not end there, as we all know. Very soon, most people were taking pictures with their phones instead. This may be an old cautionary tale, but its message continues to be relevant. The digital revolution is real. It is inevitable. And it is pervasive in ways that change the way we live today, and in ways we cannot yet imagine. At its most fundamental level, perhaps the most significant change brought about by the digital revolution has been the change in paradigm. By this, I mean the basic assumptions that shape our thinking – whether in a business, social or political context.
While we are seeing competition between lenders pushing down on rates, particularly in the mortgage market, we have not yet seen evidence of a general deterioration in underwriting standards. Countercyclical macroprudential policy As we move forward in the credit cycle, I think we will need to consider whether and how risks are building in the financial system and how they should be addressed. This is of course already a regular and important element of the FPC’s discussions. But my guess is that it will become even more so in the next phase of the cycle. With that in mind I want to turn now from the conjunctural assessment of credit in the UK to what may look like a more theoretical question but one that is going to be increasingly important to us – what is the objective and the framework for time-varying macroprudential policy? Here I think one can distinguish a number of different strategies. The first is not to attempt time-varying macroprudential policy at all. The second is to set policy to aim to maintain a constant degree of resilience relative to risk. And the third is to use policy actively to lean against the credit cycle. I want to look at these three approaches for the core and riskiest part of the financial system – leveraged banking – and in particular the use of countercyclical capital buffers for banks. I have some sympathy for the “don’t do it at all” approach.

But leverage has started to creep back up in the past year or so as we have seen the return of more leveraged investors. That is not to say that there is no macroprudential interest in the UK CRE market at the moment. A rapid fall in CRE values could affect the UK economy through other channels. About 60% of lending to SMEs and smaller corporates is secured on property collateral so a fall in values could well constrain investment. And there are important initiatives in train to develop a database of CRE debt and to explore the use of “through the cycle” valuations1. In my view, the overall picture of the credit cycle in the UK suggests that it is entering into a more normal phase. Credit terms remain easy for both households and corporates and credit is readily available. At an aggregate level, credit in the economy is growing below pre-crisis levels though to me that might well be a misleading metric. Aggregate indebtedness is considerably below pre-crisis levels though it remains high. At a more granular level, credit is  1  4  See Brazier, A (2015) “Nurturing resilience to the financial cycle”. BIS central bankers’ speeches  growing fastest in the areas of unsecured lending to consumers and lending to buy to let housing investors. The stock of credit in each of these areas is reasonably material at around 10% of GDP. But it is a relatively small component of the overall stock of credit.
Therefore, financial institutions left to themselves will accept more risk than is optimal from a systemic point of view, thus forming the basic case for government regulation of banking activity and the establishment of capital requirements (Martin Feldstein, quoted in Dale, 1996). On this basis, we can justify the case for external regulations on private sector behaviour on four broad grounds which all relate to market failure:-  first, the moral hazard argument. If a market participant believes that the state will underwrite his losses, then behaviour will change. A good example is how deposit insurance encourages depositors and bankers to engage in risky behaviour that forces the state to pay in the end, thus undermining market discipline and entailing regulation. second, the widows and orphans argument. These regulations provide protection to poorly (asymmetrically) informed clients, based on the view that small depositors and investors cannot assess properly the riskiness of financial institutions they deal with. third, the public policy argument. In free market economies, public policy arguments call for competition and free trade. An example would be anti-trust laws in some countries to prevent monopolisation of certain markets. fourth, the systemic risk issue, which allows the state to prevent the failure of one participant to destabilize the whole system. This justifies the regulation, for example, of the payment system and the banking sector. BIS Review 55/1997  -3-  Regulation therefore has two important dimensions that must always be borne in mind.

As trading position can be transformed swiftly through the use of derivatives and hence may not be reliable, regulatory focus has shifted to assess internal risk models, rather than the instruments held at a point in time. In addition to external regulation, the Group of Thirty in its 1993 study of derivatives made recommendations at strengthening risk-management techniques and procedures. Another industry initiative was JP Morgan’s decision to release its own proprietary risk-management model for general use. In addition, changing consumer behaviour resulting from aging population, for example, calls for new and sophisticated products like pension funds and long-term debt instruments. Also, consumers’ expectations are likely to be higher as they now have access to more choices from more diversified markets. Finally, de-regulation has occurred because old regulations have not prevented the massive losses incurred by worldwide bank failures. In many countries, the losses caused by bank failures have been as high as 15% of GDP, with bank losses in Japan and France at an estimated 8% of GDP. In the light of these heavy costs, governments around the world have begun to look seriously at the cost of regulation. The latest initiative include the Japanese Big Bang, which would be complete by 2000. Should the Central Bank also act as the Supervisor? There are several arguments in support of the assumption of the supervisory role by the central bank. The first is efficiency consideration.
While monetary policy was strict in the sense that both nominal and real interest rates were kept at a high  2  BIS Review 21/2006  level to protect the krona, at the same time credit regulations were abolished in 1985, which led to a huge credit boom that increased demand and pushed up property prices. The excessive price and wage increases led to Sweden's cost level once again deteriorating substantially in relation to other countries. At the end of the 1980s, relative costs per produced unit had increased to the level prevailing prior to the devaluations at the beginning of the 1980s and we once again had problems with the twin deficits in the current account and public finances. The problems were aggravated by an international economic downswing at the beginning of the 1990s and by the fact that household saving increased considerably after the tax reform implemented at the beginning of the 1990s. The property bubble that had arisen in the wake of the deregulation of the credit market burst, which resulted in the whole of the Swedish banking system being on the verge of bankruptcy in 1992. Large currency flows in autumn 1992 made fiscal policy spending cuts necessary and led to a powerful defence of the Swedish krona by the Riksbank with interest rates creeping up in stages. In the end, it was necessary to give up. The krona was allowed to float, leaving the peg against the ecu in November 1992, and it depreciated by 20-25 per cent.

Secondly, inflation expectations rose steadily – albeit from a low level – particularly in the UK and the US (cf. chart 2b). This trend was reinforced by the outcome of the US election, which fuelled expectations of a more expansionary fiscal policy and a stronger increase in US government debt. The rise in yields also reflects higher risk premia caused by generally heightened uncertainty surrounding the future course of US fiscal and monetary policy. Page 1/7  Berne, 15 December 2016 Andréa M. Maechler  News conference  Thus, the increase in yields was particularly pronounced in the US. Ten-year US government bonds recently stood at around 2.5%, 1 percentage point up from mid-year. By contrast, yield increases in Japan and Europe were on a smaller scale. Yields on ten-year Swiss Confederation bonds recently stood at –0.1%, half a percentage point up from mid-year. Approximately 60% of outstanding Confederation bonds are currently still generating negative yields, compared with around 95% at the end of June. The global rise in yields has led to a reduction in the share of negative-yielding government bonds worldwide from over 30% at the end of June to around 20% most recently. Although this trend can be seen as a step towards normalisation on the bond markets, it is important to recognise that higher US yields and the associated appreciation of the US dollar could become a burden for some emerging economies.
Conclusion This conference’s organizers have put together an excellent program that addresses many of the points I have touched upon – from international financial stability, to capital market integration, to financial crisis resolution, to IMF governance. In these and other areas, work is underway on a medium-term strategy that will guide the IMF’s priorities and decision-making over the next few years. Your discussions will therefore provide valuable insights for that medium-term strategy, which we hope to finalize by the time of the 2005 Annual Meetings in September. Subsequently, I anticipate that the debate on longer-term issues, relating for instance to global governance and the future structure of the international monetary system, will continue, both within and outside the Fund. I look forward to your contributions to that debate as well. Thank you once again for your presence and participation in this symposium. As we consider how the IMF can best serve its membership and the world, it is indeed a great privilege to be able to tap into your wealth of experience and knowledge on some of the issues that lie at the heart of our institution’s mandate. BIS Review 43/2005  5

This is why financial stability is about the way in which banks and financial markets function and how safe and efficient various technical payment systems are – on a daily basis, but also in crisis situations. Money is an excellent means of payment – as long as we believe that it has some value. Should we lose that belief then it only remains for us to begin to exchange goods with each other and there are many accounts as to how clumsy and costly this is, even in modern times. This is why the Riksdag has given the Riksbank the task to maintain price stability However, I do not intend to talk about the inflation target and its background today. Today I will talk about cash and other means of making payments. And this is where, just like in so many other areas, technical developments have to a great extent changed reality. Do you remember the pay packet? When holding wage negotiations, there are still discussions about “how much money will there be in the pay packet”. However, the pay packet is now a metaphor. Those of us who have seen them in reality are becoming fewer. I shall never forget when I worked at a sawmill in Ångermanland and “the chief clerk” from the office came down with the pay packets on Fridays. When one received the pay packet in one’s hand it felt as though one had truly accomplished something during the week.
The priority of the labour market reform in no way detracts from the importance of pushing ahead with reforms in the product markets, particularly in the services sector, aimed at ensuring more flexible and efficient overall functioning of the economy that will permit continued productivity growth. This is a field in which numerous initiatives have been adopted and in which the policy followed in recent years has earned a good reputation. The main challenge lies in timely and rigorous implementation of the measures announced and in maintaining the pace of reform. As part of the measures needed to successfully exit the crisis and overcome the problems of credibility spread by contagion, the orderly restructuring of the financial system is vital in order to complete the adjustment of the accumulated imbalances and pave the way for the recovery of economic growth, competitiveness and job creation. I will therefore devote the last part of my address to the challenges posed by the restructuring of our financial system, a process which has to be set against that of restructuring the regulatory and supervisory frameworks of the international financial markets. In my presentation of the 2008 Annual Report, I explained in some detail why such an in-depth revision of the regulatory framework was necessary, so here I will limit myself to the key changes proposed in the work currently under way. Two main areas of change can be distinguished: the supranational organisational framework and a new regulatory system.

The focus on a macro-perspective of systemic risk is definitely important and the use of macroprudential measures is not new in Asia, especially in the context of limiting credit and asset price excesses that can have broader financial stability implications. Recently, however, macroprudential measures have been used, in combination with monetary policy, to manage the macro-implications of large capital inflows. To this end, while the short-term benefits of macroprudential policies for financial stability purposes are clear, they are no substitute for a proper alignment of macroeconomic policy. The challenge, therefore, is how to appropriately utilise macroprudential policies in the context of managing both economic and financial stability. Going forward, therefore, emerging markets Asia will have to address these important policy challenges, and the way they go about meeting the challenge will have important implications not only for Asia’s own growth and stability, but also for the continued resilience of Asian financial systems, as well as the future of international banking. Against this background, I want to leave you with a few thoughts on the way forward. My overriding message is simple: given the complexity of the proposed reforms, the recent experience of implementation and coordination gaps, and the implications that the new global standards can have for Asia’s growth prospects and the stability of the financial system, it is important that Asia plays a stronger role in shaping global policies.
As I have said before, easily the Committee’s biggest judgment in recent years has been that inflation will gradually fall back to the 2% target – initially as the effects of higher VAT, energy  4  BIS central bankers’ speeches  and import prices diminish; and then as slack in the economy bears down on wages and prices. Though it has fallen significantly over the past six months, from over 5% to 3.5% on yesterday’s reading, it remains uncomfortably above target. The MPC will guide inflation back to target in the medium term, but in the near term there is considerable uncertainty about the path that it will follow. In its February forecasts on the outlook for growth and inflation, the MPC saw a gradual pickup in activity as the headwinds from weakness in the world economy and tight credit conditions receded and as the squeeze on household incomes is ameliorated through lower inflation. Big picture, that view on the growth outlook still looks broadly on track, but it is not always going to seem like that over the next few weeks and months as the ONS data for the first half of the year are published. Two temporary factors look likely to muddy the waters, leaving the headline ONS figures for GDP growth well short of what has been suggested by surveys. First, data for construction output over the turn of the year were extremely weak.

If one thing is clear from that brief and incomplete survey, it is that, sadly, the repair of the credit system will take time. Stopping this happening again: the Financial Policy Committee So will the even broader task of putting in place better “rules of the game” for the financial system. For all the measures in train internationally on banks’ capital, resolution regimes, over-the-counter derivative markets, central counterparties, shadow banking and so on, they will I fear eventually be found wanting. Conditions change. One generation’s reforms are eventually overtaken by the evolution of the structure of the financial system or by temporary bursts of misplaced exuberance. At its simplest, that is why the government has established the Bank of England’s new Financial Policy Committee – to ensure that the moment when the financial system’s resilience is critically impaired does not get overlooked; that it is anticipated and appropriate action is taken. A standing body, meeting regularly, transparently, and backed by powers to take decisions on regulatory measures – the FPC is the body charged with being on the case. It won’t be perfect, but it can be much better than the pre-crisis regulatory regime. The initiative to create the FPC is necessary, because both macroeconomic policymakers and financial regulators have had to learn some tough lessons. On the one hand, we all need to be attentive to the effects that easy monetary policy globally can have on risk-taking behaviour.
Overall, we salute the US firms and the US authorities for their actions, achieved at a time which for many involved was one of acute personal anxiety. There are a number of lessons for firms based in this country. All of those firms, including in particular those providing key infrastructural services, will want to review the robustness of their contingency and back-up plans. Risk modelling and regulatory capital That takes me to my second topic this evening. The damage to physical infrastructure in the US represents an extreme example of a particular type of risk - "operational risk" in the jargon of financial regulators. But the more general question of risk measurement and risk management has assumed a central position in both private and public sector efforts to reinforce the stability of the financial system. From the regulators' point of view, perhaps the first attempt to answer this question at a global level came with the 1988 Basel Accord, which required that all internationally active banks should - at a minimum - carry capital equivalent to 8% of risk weighted assets. The risk weights were very broad brush, and related only to credit risk. Set against the background of a concern about decline in the capital held by banks in the late 1980s, however, the Accord was a clear success. The average capital ratios of G10 banks rose substantially in the following ten years, and a more level playing field was established between banks based in different countries.

Mojmír Hampl: To be or not to be in the eurozone? An answer from Prague Speaking points by Mr Mojmír Hampl, Vice Governor of the Czech National Bank, at St. Antony's College, University of Oxford, Oxford, 21 May 2018. * * * Ladies and gentlemen, Good afternoon. First let me thank Dr Charles Enoch for his kind invitation to speak here today. It is really an honour for me. I was thinking for quite some time about what approach to take today. Should it be a totally rigorous, perfectly balanced and as-full-of-data-as-possible description of the macro and monetary realities of our country? Or should it be more the personal testimony of a policy maker co-responsible for the monetary zone called the Czech Republic for almost 12 years now? On the advice of my adviser I decided that the second option might be more appropriate. We should listen at least sometimes to our good advisers after all. So, the Czech Republic is a mid-sized European country of 10.5 million inhabitants. It entered the EU in 2004 and has no opt-out from euro adoption, so legally we are obliged to join and to make every effort to be there as soon as possible. Yet there is basically no major political power in our country pushing for euro adoption at the moment.