samchain/econo-pairs-v1 huggingface dataset:
This delaying effect is likely to be greatest for those spending decisions which are largest, lumpiest and most difficult to reverse. There is already some evidence of this delaying effect among companies’ lumpy decisions. Surveys conducted since the referendum, including by the Bank of England’s regional agents, suggest a significant number, perhaps even a majority, may be pausing or trimming their hiring and investment plans. A great many others are still huddled around their board tables, rethinking their strategic plans. There is no sense of slash and burn. But there is a strong sense of trim and singe. Meanwhile, among households there are signs of a significant slowing in both confidence and in the housing market, which are often inter-twined. The latest survey from the Royal Institute for Chartered Surveyors (RICS), covering the period since the referendum, showed the weakest three-month-ahead house price expectations balance since 2010 and the sharpest fall since 2004. This feels like a market braced for disappointment. And where housing leads, the economy often tends to follow. Third, counterbalancing to some degree this downdraught to domestic demand, there has been a sharp fall in the sterling exchange rate of around 9% in trade-weighted terms since the referendum. This will provide a shot in the arm to the UK’s net exports. And, through higher import prices, it will also help the process of lifting inflation back towards its 2% target, from its current level close to zero.

They may also be linked to the stagnation, or in some cases falls, in disposable incomes in some regions, age groups and income cohorts. A third area of perceived deterioration concerns income. With a sizable fraction of households having seen their disposable incomes stall, especially once account is taken of housing costs, that should perhaps come as no surprise. One metric often looked at here is poverty. For example, Charts 30 and 31 look at the fraction of households whose incomes are below a fixed threshold (“absolute poverty”) and below 60% of median incomes in the UK (“relative poverty”), in both cases after housing costs. 13 It does so for three cohorts: under-16s, those aged 16–65 and the over-65s. Whether in absolute or relative terms, the story is roughly the same. Among those over-65, levels of poverty have declined steadily both prior to and following the crisis, if at a less rapid rate over the past few years. That is not true, however, of the 16–65 cohort. Their levels of poverty have tended if anything to drift upwards slightly over the past few years. In other words, poverty levels among those of working age have increased at the same time as the economy as a whole has recovered fairly robustly. This, too, puts a somewhat different gloss on whose recovery this has been. Monetary policy implications What, then, does this mean for monetary policy? Around a year ago, my assessment of the UK economy was a cautious one.
This is relatively high by the minimum standard, and will allow Thai banks to meet any provision in the future, as well as supporting credit expansion. Non-performing loans, which peaked at 47.7 % of total credit, have now been reduced to 22.5 % of total credit at end-October. A total of B1.1 trillion of NPL have been restructured, while a further B1 trillion of NPL is either in, or is in the process of being submitted to court, with resolutions that need to be accelerated. The remaining portion, B600 billion, of un-restructured debt consists mainly of loans to small and medium enterprises (SMEs), as well as consumer and mortgage loans. To speed up the restructuring of the last portion, especially the SMEs, the Bank of Thailand has set up a scheme of debt restructuring and new lending for SMEs with NPL problems but have viable business prospects. This scheme is made possible through a credit guarantee by the Small Industry Credit Insurance Corp. When the scheme was first introduced, there were some minor problems relating to the requirement for additional personal guarantee. This issue has now been resolved. It is hoped that the scheme will help SMEs in returning to a state of normalcy. In addition, the Bank of Thailand has encouraged financial institutions to separate their non-performing assets either to be sold or transferred to asset management companies. In all, 14 asset management companies have been approved, and approximately B579 billion worth of assets have been transferred as of end-October.

In practice, it is defined as the “available amount of stable funding” over one year divided by the “required amount of stable funding” for one year. The standard requires that the ratio be no lower than 100%. 2. A observation period necessary to calibrate these ratios  While the implementation of quantitative and harmonised rules at the international level represents a major step forward, the calibration of these proposed ratios is not without shortcomings. As regards the one-month ratio, the composition of its numerator must be reviewed, that is to say defining the high-quality liquid assets that are largely composed of government securities. The sovereign debt crisis has shown us that caution is required when assessing the degree of actual liquidity of certain debt instruments. Conversely, equities, which remain liquid even under stressed market conditions, are not eligible for the numerator. Furthermore, it is somewhat paradoxical that collateral eligible in normal times for central bank refinancing operations – i.e. excluding non-standard measures – is not considered to come within the Basel definition of liquid assets and is not fully eligible for the numerator of the ratio. The one-year ratio raises many questions, including in terms of principles, in that it places major constraints on certain maturity transformation activities. Also, can a one-size-fits-all  2  BIS central bankers’ speeches  approach be applied to institutions worldwide even though their business models vary from universal banking to specialised banking models (investment banks, custodians, etc.)?
For the same underlying reasons, in pursuing their mission, central banks now need to follow developments beyond the big banks, and I am very grateful to the hedge funds, CDO managers and others who contribute to the Bank’s market intelligence effort. Does any of this matter? a)  The dispersion of risk, and central banking instruments  The dialogue is, of course, largely qualitative. Given the variety of vehicles and their use of risk transfer instruments, it has become a commonplace that “we” no longer know where risk lies. Most often, the “we” is the official sector, and in particular bank regulators. But “we” might just as well be the management of banks and dealers. Some commentators plainly see this as a Bad Thing. Is it? At least as put, I am not so sure. In the first place, the transfer of risk has been a consequence of the development of wholesale markets, with reasonably broad participation, in all types of credit risk. Provided liquidity is sustained, that should aid the system’s adjustment to shocks. It also means that, while regulators, central banks and other analysts have certainly lost some quantity data, our assessment of credit conditions is enriched by the availability of a wealth of new price signals. Secondly, while credit risk transfer markets are new, derivative markets in interest rates, exchange rates and equity prices have existed – on-exchange and over-the-counter – for approaching two decades. We have not known where those risks are for quite a long time.

Thirdly, if we “no longer know where the risk is”, that implies that it has been dispersed beyond the regulated sector. One might think that was a Good Thing. To take an extreme scenario, if risks were widely and evenly distributed across savings institutions internationally, a very nasty shock causing a sharp fall in asset markets would not obviously destabilise the financial system. It would obviously have macroeconomic consequences, by depleting household wealth and raising the cost of capital for firms. Other things being equal, central banks could respond by adopting an easier path for interest rates than otherwise, in order to maintain aggregate demand broadly in line with aggregate supply, with the objective of keeping inflation in line with explicit or implicit targets. Although the original shock may be nasty, the response would be the routine use of the routine instrument: the price of central bank money. There is no question of a so-called Greenspan (or any other kind of) “put” here; the focus would be not asset prices, but the outlook for spending in the economy and so inflation. This is obviously rather different from a similarly nasty shock producing severe disorder in a banking system that was carrying unduly concentrated exposures of some kind. For a central banker, banks matter because their liabilities are used as money, they are at the centre of the payments system, and they carry an associated asset/liability maturity mismatch. 6 Banking system distress is therefore typically characterised by a liquidity run.
Examples are the slowdown in international economic activity which became evident during the second half of 2011 and the fall in inflation at the end of 2013 and the beginning of 2014. It is easy to verify that these events were difficult to predict – and not merely something that everyone but the Riksbank was aware of in advance – by examining how forecasters in general viewed developments at the time. Thus, I think it is quite clear that the current low inflation is not a logical and predictable consequence of the repo rate not being held at 0.25 per cent after the crisis. As I mentioned at the start, there is an international debate on to what extent the central banks’ policy rates should be used as a complement to macroprudential measures to try to prevent lending and housing prices from rising too quickly, or more generally to counteract the build-up of financial imbalances. This is an important discussion and it would be very unfortunate if the critics’ alarmist but incorrect conclusions regarding the Swedish experiences, which can roughly be summarised as ”don’t try this at home – you may burn down your house”, were to be regarded as a truth in the debate. It is important that monetary policy is evaluated. But one condition for drawing the right conclusions is that the evaluation is based on a correct description of what has actually happened. The recent criticism has, in my opinion, become alienated from actual events.

A fairer description is that the Riksbank has tried to do its bit to slow down a trend where housing prices and indebtedness have been rising rapidly and simultaneously for quite a long time now – where there appears to be some slowdown in periods of weaker economic activity, but where the direction is upwards, no matter what the economic situation, and there are few signs that this trend will be dampened. The longer such a trend continues, the greater the risk that it will be broken in the same abrupt way as in many countries in connection with the financial crisis – that is, when housing prices and debt finally adjust downwards, it is in a dramatic manner, with substantial price falls and drops in consumption, with large and long-lasting negative effects on the economy.15 In general, there is solid empirical support for the idea that the more households  15  Mian and Sufi (2014) describe this sequence of events in the US economy in connection with the crisis. In a really bad scenario, problems may also arise with regard to financial stability, see for instance Financial Stability Report 2014:1, Sveriges Riksbank. 6  BIS central bankers’ speeches  and companies borrow during an economic upturn, the greater the risk that this upturn will be followed by a deep recession and a very slow recovery.16 One can make a few reflections here.
1 Furthermore, in 2018, the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, the equivalent of the Nobel Prize in economics, recognised William Nordhaus for his work on integrating climate change into long-run macroeconomic analysis. 1  Nordhaus, W.D. (1977), ‘Economic growth and climate: The carbon dioxide problem’, American Economic Review 67(1), pp. 341–346. Page 2/12  It may seem obvious, but it is worth reminding ourselves that our planet has undergone numerous climatic changes throughout history. However, in the past, these changes have essentially been the result of natural forces. Today, global warming is largely attributable to human activity – and the rate of warming is faster than it has been in the past. 2 Climate change is a negative side-effect of economic activity – what economists call a ‘negative externality’. The externality arises because the costs caused by the emission of CO2 and other greenhouse gases are not borne by the emitters. When economic agents emit CO2, they do not internalise the effect of these emissions on the planet or on future generations. This is a classic ‘tragedy of the commons’ scenario: 3 the atmosphere – a shared or ‘common’ resource that is available to us all but belongs to no one – is being overexploited and degraded. The mechanism underlying the ‘tragedy of the commons’ is well understood and documented by economic theorists. Yet, in the case of global warming, several factors are in play that make the phenomenon difficult to grasp and remedy.

Such a sale could prove to be doubly problematic. Due to the limited size and relatively low liquidity of the market, the SNB would scarcely be in a position to shorten its balance sheet quickly and efficiently without influencing prices. Its market neutrality would no longer be guaranteed. Moreover, such a sale could well expose the SNB to substantial political pressure. Conclusion Ladies and gentlemen, to conclude: Climate risks are an important issue for our country’s population and economy. However, the objectives and solutions associated with transitioning to a low-carbon economy must be the fruit of a political dialogue and agenda. These questions are not part of the SNB’s remit. Let’s not forget that the SNB has a clear mandate: to ensure price stability. By fulfilling this mandate, it is making a crucial contribution to balanced economic development and a stable financial system – and it is doing so against an international backdrop freighted with uncertainty. Broadening this mandate to pursue other objectives, such as promoting a green economy, would pave the way for conflicts of interest and politicise monetary policy. This would affect the very essence of the SNB’s independence and thus its ability to make decisions that are occasionally difficult but absolutely necessary in order to fulfil its mandate and support Switzerland’s economy. The SNB takes environmental issues that fall within its mandate very seriously.
Futures prices have also risen markedly, indicating expectations of a sustained increase in metal prices similar to the increase in oil prices. Prices for fresh farmed salmon have also exhibited a pronounced rise. Rising commodity prices and buoyant activity in markets that are important for Norway have fuelled growth in the Norwegian economy, even though growth has been low in some of Norway’s most important export markets. Overall, prices for our imported goods are falling in relation to prices for goods we export. Norway’s terms of trade are improving. The impact of the rise in oil and gas prices is particularly strong, but the terms-of-trade gains for the mainland economy have also been high. The domestic economy is partly insulated thanks to the oil fund mechanism. The situation in Norway differs from that of its Nordic neighbour countries. Sales of Swedish and Finnish high-tech products are growing strongly in volume terms, but prices are falling. Denmark has a diversified business sector, which is overall moving on a steady path. Growth among our trading partners remains solid. High commodity prices are exerting upward pressure on consumer price inflation in a number of countries, although underlying inflation remains low. Economic growth in the US probably picked up again in the first quarter. In Japan, growth appears to be solid. In the euro area, confidence indicators point to optimism in the business sector. There is a broad-based expansion in the Swedish economy, while some indicators in the UK have shown weak developments.

5  At the time the FOMC was purchasing an additional $ billion a month of longer-dated Treasury securities while selling an equivalent amount of shorter-dated securities under the Maturity Extension Program. 6  While we specified a current monthly pace of purchases the degree of stimulus depends mainly on expectations for the ultimate size of purchases and how long we are expected to hold the assets that we have acquired. 7  This was made clear in the FOMC statement that the Committee expected to reach the unemployment rate threshold at the same time as the earlier date guidance. BIS central bankers’ speeches  3  make it clear that short-term rates will not be raised at the first sign of economic improvement, before a sustainable recovery has been secured. As a result, households and businesses should be more confident in undertaking additional spending and investment today. The shift to thresholds-based rate guidance has other benefits. Relative to calendar-based guidance, it provides more information about the economic conditions the Fed would need to see before raising rates.8 Importantly, the shift to thresholds should also make the eventual normalization of monetary policy smoother, a subject I will return to later. But this raises an obvious question. If quantitative thresholds are good for interest rate guidance, why not also have such thresholds for the asset purchase program? There are two reasons.
16  See, for example, the main report and sub-reports from the Commission on the Measurement of Economic Performance and Social Progress headed by Professors Stiglitz, Sen and Fitoussi: “Report by the Commission on the Measurement of Economic Performance and Social Progress”, September 2009. BIS central bankers’ speeches  5  shortages and the RU indicator17 – and CPI inflation.18 The correlation is highest for a lag of 4–6 quarters. Also take into account credit expansion and asset prices We should take credit expansion and asset prices into account more when we formulate our monetary policy. And we should develop and formally integrate the forecasts for credit growth and asset prices into the base for the monetary policy decisions, as well as reporting the uncertainty of the forecasts. Far too many countries have allowed their expansion in credit to be too high for too many years and this has led to very large problems when the bubbles have burst. The low interest rates have been a contributory factor to this trend.

There has also been a recent shift in opinions coming out of academic research, from a broad resistance to taking financial stability into account when shaping monetary policy19 to greater openness to the view that there may be good reasons for doing so.20 Even before the financial crisis hit Europe and Swedish with full force in autumn 2008, there were concerns in the Executive Board that the credit expansion was too rapid and that housing prices were increasing too quickly so that a bubble might build up, and later burst to cause a severe recession. This was not the case in Sweden, but did happen in the United States and several countries in Europe. During the crisis years 2009–2010 the endeavour was instead to use low interest rates and liquidity assistance to the banks to avoid a credit crunch that could intensify the crisis. And we succeeded well in this. During the entire period, the banks’ total lending to households and companies in Sweden increased (see Figure 11). Put greater emphasis on the initial situation and the forecasts for the coming year We should put greater emphasis on the initial position and the forecasts for the coming year than on the long-term forecasts. At the Riksbank, considerable resources are put into analysing the state of the economy. The statistics received are analysed and commented on regularly.
It would not be surprising that when we’re done, hedge fund assets (before leverage) will have fallen in half or more from their peak of about $ trillion. Of course, the Madoff scandal and other episodes of misappropriated funds have further undermined confidence, reinforcing the redemption pressure. Most importantly, the pressure on the financial system has been exacerbated by the deterioration in the economic outlook following the Lehman failure. Before last fall, the causality ran mostly from the turmoil in the financial system to the real economy. Since then, the real economy has contracted sharply and this has reinforced the balance sheet pressure on banks and the forced deleveraging process. So where do we go from here? Well fortunately, it is not all bad news – there are a number of programs that have been enacted that have already made a difference. And several new initiatives are being enacted now that should help to support and bolster the financial system. Those areas where the Federal Reserve and the Federal government have responded in force are doing somewhat better. Banks and dealers have plenty of access to liquidity. The Term Auction Facility or TAF – in which funds are auctioned off to banks – and the Term Securities Lending Facility or TSLF – in which auctions are held to borrow Treasuries from the Federal Reserve – have recently been undersubscribed, indicating that the facilities have been sufficiently sized to meet the demand for liquidity.

It should be noted, that under existing circumstances, this effect will be reinforced by accumulated high consumer debt level of certain households. 2  BIS central bankers’ speeches  Decline in investment activities is driven not only by reduced profits and lower accessibility of other financial resources, but primarily by high uncertainty with regard to future economic development. It is expected to be the highest in industries which have not benefited from the ruble depreciation and which suffer from increased debt burden. For reference: According to forecasts, household final consumption expenditure will fall by 5.5–5,7% and 1,5-2% in 2015 and 2016. Fixed capital investment will decrease by an estimated 10–12% and 0,5-1,5% respectively. As for the labour market situation, we do not expect any considerable increase in the unemployment numbers in comparison with the existing level. This is due to both the demographic factors and the specifics of the Russian labour market which normally adjusts through changes in wages and partial employment, rather than by changes in the number of those employed. For reference: According to our estimates, the unemployment will not exceed 6.0%-6.2% in two coming years. In comparison with December, we revised the balance of payment forecast. The expected fall in imports saw the most considerable change (almost by 30% in 2015 compared with 2014 instead of previous estimate of 10%). Therefore, the current account surplus estimate has been revised upward to 64 billion US dollars in 2015 and to 90 billion US dollars in 2016.