samchain/econo-pairs-v1 huggingface dataset:
And, as discussed in the Fed’s recent Monetary Policy Report and in Chair Yellen’s testimony before Congress, it is encouraging that unemployment rates continue to fall for most major demographic groups, including AfricanAmericans and Hispanics. At the same time, we should remain concerned about those groups, for which the jobless rates remain above the unemployment rate for the nation. Our outlook anticipates a continued moderate growth trend, with some further strengthening in the labor market and an increase in inflation over the medium term toward our objective of 2 percent. Although job growth in our region has slowed somewhat in recent months, economic activity continues to expand. After outpacing the United States as a whole for a number of years, job growth in New York City is now running a bit below the national average. And, as has been the case for some time, job growth in Northern New Jersey remains a little below New York City’s pace. Over the past year, job growth has flattened out in much of upstate New York, with Albany remaining a bright spot in the region. Unfortunately, Puerto Rico and the U.S. Virgin Islands both remain mired in economic difficulties with no clear signs of a revival. While the post-crisis expansion is now the third-longest on record, by historical standards it has been marked by a relatively weak pace of growth, with annual GDP growth averaging just 2.1 percent since mid-2009. Wage growth has also been comparatively modest even as unemployment has declined.

In closing, given the limited amount of time today, I could only briefly touch on two key themes in the broader opening up of China's capital markets. At the HKMA, we are continuously working with Mainland authorities and the industry towards new policy breakthroughs to better serve global investors and support the development of onshore markets. I warmly welcome your views and ideas on ways to further strengthen the connectivity between China's and Hong Kong's financial markets. Thank you, and I wish today's conference a great success. 3/3  BIS - Central bankers' speeches
But the Committee updates its inflation forecast on a regular basis and so the forecast can be adjusted and revised as the Committee learns about the responsiveness of productivity to a pickup in demand. 7  Indeed, Ben drew attention to this relationship, and why it is not likely to hold in the current environment, in a speech last month (Broadbent 2013). 6  BIS central bankers’ speeches  policy to the level of unemployment makes that clear. Its levels not growth rates that matter. Likewise, those expecting to see the close synchronisation between UK and US policy rates that held during much of the Great Moderation to reassert itself as rates begin to normalise need to remind themselves about the differences in the extent of the recoveries in the two countries to date. The US economy has been growing for almost 4 years; the UK for barely 6 months. The level of US GDP is 5% above its pre-crisis level; UK GDP is 3% below. Its levels not growth rates that matter. I don’t know how quickly Bank Rate will begin to rise. That will depend critically on the extent to which productivity recovers as demand increases. But the MPC’s forward guidance makes clear that, after the worst recession in post-war history and the weakest recovery on record, this time is likely to be different. Its levels not growth rates that matter. Conclusion The financial crisis and its aftermath provided a tough examination of the UK’s inflation targeting regime.

In this sense, after deciding to defer implementation by one year so as to increase banks’ operational capacity, all members of the Basel Committee on Banking Supervision (BCBS) have committed to its full and consistent implementation on the new date agreed. The economy and financial system will thus have sufficient time to absorb the main effects of this crisis and to progressively rebuild any buffers that may have been used. Further, it should be noted that the BCBS is carefully assessing the impact of the reforms, including the lessons learned from the COVID-19 crisis. This analysis will be based on rigorous empirical evidence and will serve to determine whether any additional regulatory aspects need addressing. Low banking sector profitability  Fifth, I would like to reflect on what I consider to be one of the main challenges for the banking sector in the short, medium and long term, namely the low profitability of the banking business. It was already low in many European countries before the coronavirus crisis, but the present crisis will put it under further pressure. To address this challenge, banks need to continue to make efficiency gains, cutting costs and making more use of new technologies. 8  Consolidation processes in the industry could be an appropriate way to achieve this aim. Specifically, there appears to be room for consolidation both in Spain and in other European jurisdictions where the indicators point to some surplus capacity.
We intend to maintain our policy of reinvesting the principal payments from maturing securities for an extended period of time after the end of our net asset purchases, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation. Our policy of reinvesting is another instrument at our disposal. Regarding a change in interest rates, the ECB guaranteed that it will not take place until “through the summer of 2019". Does it mean until the end of next summer? At our last Governing Council meeting we said that we expect our key ECB interest rates to remain at their present levels at least through the summer of 2019. In any case, they will stay at their present levels for as long as necessary to ensure that the evolution of inflation remains aligned with our current expectations of a sustained adjustment path. Our enhanced forward guidance signals that we will remain patient in determining the timing of the first rate rise. The path of very short-term interest rates that is implicit in the term structure of money market interest rates is compatible with our intention of being patient. 2/4  BIS central bankers' speeches  Negative interest rates are one of the most controversial points within the ECB’s current monetary policy framework. Particularly for the banks. What do you have to say to them? You have to look at the whole package of measures that we have implemented.

If the national economy goes into recession, if budget deficits soar and public debt rises, this has immediate repercussions for the banks. European banking is not yet sufficiently diversified geographically. More consolidation, more cross-border holdings between banks from different countries, is needed. There is a need for more geographical diversification within the European Union. Smaller, local banks are also necessary to provide financial services to households and firms in a diversified banking landscape. ITALY We have seen very large market movements, following political declarations that unsettled market confidence. After political campaigns, it is normal that more precise government programmes are set out, and we now have to wait for more information about the fiscal plans of the new government. 4/4  BIS central bankers' speeches
The prudent, fair and realistic valuation that resolution authorities must conduct in resolution (as required in the BRRD) will likely crystallise previously unrealised losses or expected losses on the asset side of the bank’s balance sheet. This suggests that GLAC should at least be equivalent to minimum Tier 1 capital requirements. It is likely to need a capital position at least as strong as other banks in the market. And for a bank that  6  4  BRRD article 43(3). BIS central bankers’ speeches  has undergone resolution to command market confidence, it is likely to need at least as much capital as other banks in the market. It would be sensible therefore for G-SIBs to maintain sufficient GLAC to be able at least to restore fully regulatory capital buffers above capital minima, in order to maintain market confidence that they would be able to absorb any further losses during the restructuring phase without re-entering resolution. One final point on quantum – the ability of stressed systemically important banks to raise their capital position by shedding assets in short order is not sufficiently reliable to warrant a lower GLAC requirement for G-SIBs. So, we can see how much loss-absorbency we might need, but how much of what, exactly? In principle, it should be possible to expose every unsecured, uninsured liability of a bank to loss in resolution, just as would happen in insolvency.

•  Early termination: For resolution to work effectively, resolution authorities need to ensure that counterparties do not use entry into resolution of a firm as grounds for closing out derivatives and other contracts. Disorderly close out could generate exactly the adverse impact of failure on the broader system that resolution is intended to avoid. For that reason, powers to apply a stay on contract terminations and cross defaults are part of the Key Attributes. This power is included in the BRRD, along with to apply a stay power in recognition so that resolution actions taken by non-EU resolution authorities can be enforced within the EU. There are also provisions in the BRRD that will give resolution authorities the power to impose requirements that where EU firms are operating outside the EU, in the absence of a recognition power in the host regime, their financial contracts include terms that ensure the actions of the home resolution authority are enforceable 3. 2  BRRD article 32. 3  BRRD article 55. 2  BIS central bankers’ speeches  •  Bail-in: So to the bail-in where again the KAs and the BRRD are aligned 4. The most important thing to note here is that bail-in must respect the creditor hierarchy. Under BRRD, a small number of liabilities are excluded from bail-in – for example those with an original maturity of less than seven days, and in exceptional circumstances some additional liabilities may be excluded – for example in order to maintain continuity in critical functions.
I could make similar points about the exchange rate criterion where, once again, we believe it is important to focus on the substance rather than on the form. Has a country shown that its anti-inflation discipline, over a lengthy period, has allowed its currency to hold its own without generating significant current account imbalances? For some applicant countries, the answer is evidently yes; for others, no. Once again, that is an issue which we will have to consider carefully as we assess the position of the United Kingdom next year. I imagine that these points would be very widely accepted across the EU, certainly by my central banking colleagues. But our view of the optimal state of preparedness for EMU is rather broader than this. And, here - as I said earlier - we may be less obviously in the mainstream of European opinion. Because we have concerns about the sustainability of an Economic and Monetary Union in which there is too little flexibility in product and labour markets, particularly the latter. Is the monetary union being designed one which retains sufficient flexibility to cope with the kind of differential shocks which may affect different countries within it? This point is, I think, not the same as asking whether the EU is an optimal currency area. I suspect the answer to that question would be no. But one might well give the same answer in relation to the United States, or even to the United Kingdom itself.

We understand that to build one European wholesale financial market will require a staple diet of solid Bundesbank fare, seasoned with a soupçon of Banque de France, a ración of Banco de España, and so on, as well as a couple of pints of Bank of England pragmatism. There is one important area, I think, in which it has not so far been possible to reach an agreed solution, and one on which I might just conclude with one or two observations. That is the question of TARGET, the inter-linking of real time gross settlement systems across Europe. There are two issues of interest, here. First, pricing policy. We have argued that the pricing of the national element of cross-border payments should relate to national costs, rather than being set uniformly. So far we have not prevailed on that point and, as long as the competition authorities approve, it is likely that there will be a common price within the TARGET system for cross-border transactions. Unfortunately, some of our colleagues do not believe this is an area in which competition should intrude. The second important question relates to the terms on which ‘out’ central banks might link to TARGET in the future. We can see no reason why out central banks should not be able to link to TARGET on the same terms as those which apply to the ins. We accept, of course, the need in both in and out countries for rigorous policing to prevent unintended spillover of intra-day credit into the overnight market.
Higher leverage boosts required returns on equity because it simultaneously makes the banking system’s balance sheet more fragile. There is unlikely to be a better case study of these dynamics at play than events over the past decade. So how has the state’s safety net evolved in response? The element of the safety net with the longest historical pedigree is liquidity insurance, typically provided by the central bank in the form of last resort lending. The principles behind last resort lending were first articulated by Henry Thornton at the beginning of the 19th century and were subsequently elaborated by Walter Bagehot. 6 Last resort lending in practice was often rather less elegant than the theory. Writing at the time of the 1825 banking crisis, Jeremiah Harman, Director of the Bank, described it thus: “We lent [money] by every possible means and in modes we have never adopted before; we took in stock on security, we purchased Exchequer bills, we made advances on Exchequer bills, we not only discounted outright, but we made advances on the deposit of bills of exchange to an immense amount, in short, by every possible means consistent with the safety of the Bank…Seeing the dreadful state in which the public were, we rendered every assistance in our power.” 7 Chart 5 plots the Bank of England’s balance sheet in relation to GDP since 1830.

Yet there is one key difference between the situation today and that in the Middle Ages. Then, the biggest risk to the banks was from the sovereign. Today, perhaps the biggest risk to the sovereign comes from the banks. Causality has reversed. State support is one side of the “social contract” between banks and the state. 3 State regulation of banks is the other. Table 1 suggests that the terms of this social contract have  1  Reinhart and Rogoff (2009) provide an outstanding history of financial crises over the past 800 years. 2  Homer and Sylla (2005). 3  Tucker (2009). BIS Review 139/2009  1  recently worsened. That should come as no surprise. At least over the past century, there is evidence of a ratchet in the scale and scope of state support of the banking system (Section 2). Whenever banking crises strike, the safety net has bulged. Like over-stretched elastic, it has remained distended. What explains this ratchet? All contracts are incomplete. 4 Contractual relationships, like personal ones, often break down due to commitment problems. Social contracts between the state and the banks are no exception. This generates a time-consistency problem for the authorities when dealing with crisis – a tendency to talk tough but act weak. This explains historical hysteresis in the safety net (Section 3). So what can be done? There are many reform proposals on the table.
We should then gradually move towards compulsory transparency based on a “comply or explain” principle. Article 173 of the French Energy Transition Law – as it sets the Environmental Social Governance (ESG)-Climate approach as a new market standard – could usefully serve as a reference studied at the European level. 2/ Beyond the "snapshot of risks", the NGFS is working on a "video of risks", with long-term forward-looking stress tests to assess the dynamic effects of climate change on the economy and financial stability. The NGFS is currently developing economic scenarios based on climate change that could be used to conduct stress tests. Meanwhile, the ACPR has conducted a survey on banks and insurance companies to evaluate how they integrate physical and transition risks in their risk management. The results will be published by early 2019. They will be a good point to assess the progress made so far by the industry towards taking both risk factors into account. I would at this stage suggest caution on some NGOs’ analyses concluding that French banks have a “fossil energy bias”. Their large exposures to the oil and gas sector have indeed decreased between 2015 and 2017. This survey will also be valuable as inputs in designing the new framework needed to perform stress-test exercises and assess climate risk across the French financial system as a whole. III. Financing transition opportunities Like any good pilot, we want our plane to “gain some altitude”.

With respect to disclosure, we are going to disclose in March 2019 the climate-risk exposures of our own funds and pension portfolios. We are also working to adopt in the near future a TCFD-like reporting which would fit the specificities of central banks. Regarding the role of monetary policy, some voices have been calling for a “green quantitative easing”. But monetary policy has to be broad based and remain neutral to ensure proper functioning through its transmission channels; it cannot be targeted towards achieving specific social or sectoral impacts. However, this does not preclude the Eurosystem from buying green assets when they fall in the remits of the eligibility criteria of its purchase programmes. For instance, the ECB currently holds around EUR 79 billion viii of eligible green universe bonds from both the public and the private sector, which is already significant. It does not mean though that monetary policy should ignore the question of climate change. Within our price stability mandate, I really believe further analytical work is needed to better understand the medium to long-term impact of climate change on intermediate monetary policy objectives and ultimately on our monetary policy strategy. To this end, a substantial research agenda remains before us and I hope the NGFS can play a role in helping to bridge the “knowledge-gap” in that area.
Looking ahead, I hope that you will bear with me if I become a little philosophical. All knowledgeable observers of Hungarian history, ancient as well as contemporary, agree that Hungarians possess the very rare ability to pull back at the last minute BIS Review 16/1997  -3-  from the brink of disaster or at least to extricate themselves from a seemingly hopeless situation. They unfortunately also note that once the Hungarians have done so, they miss the opportunity offered by their own success to carry out policies with a long-term perspective in mind. I do hope that history will not repeat itself. Admittedly, any further decline in the average living standard would be unacceptable. The standard of living should be allowed to begin to rise - but only to the extent that this does not upset the basic balance of the economy again. At the same time, the reduction in inflation must continue at a pace which puts the attainment of single-digit inflation in sight. You must break out - downwards - of the 18 to 35% range. And, last but not least, the country will have to begin to tackle earnestly the major structural problems related to the pension, health care, education and social security systems. These are daunting challenges. Two reminders may help when tackling them.

This nice circular definition kept academics, bank regulators and central bankers equally happy until the moment when financial innovation started blurring the distinction between money and other financial assets, and securitisation began blurring the distinction between financial intermediation and financial market operations. The proliferation of derivatives, financial futures and the like added to the confusion between balance sheet and off-balance sheet items. The result is that it is becoming increasingly difficult to identify banking on the basis of the old equivalence of “banking liabilities = money supply”. This has now been recognised in the sweeping deregulation of banking activities affecting the whole of western Europe and, though more cautiously, also the United States. In some cases this has gone so far as to allow the emergence of consolidated banking and insurance activities. BIS Review 16/1997  -5-  Second, in a shorter Hungarian perspective, banks in Hungary have a head start on other financial intermediaries in collecting the financial savings of households and of the enterprise sector. Admittedly, Hungary badly needs the large-scale development of life assurance companies, pension funds, mutual funds and the like, i.e. all those institutional investors which can channel savings towards equity investment. But this takes time, since experience and human resources are rare and the reform of the pension system and of health services takes time. Banks should be allowed to fill the gap for the time being, by putting at the disposal of savers a wide variety of financial instruments. 2.