samchain/econo-pairs-v1 huggingface dataset:
For example, it appears easier for companies to fund themselves directly in the markets. When will the central banks and government phase out their support measures? The extensive measures taken by governments and central banks around the world to counteract the effects of the crisis have contributed strong economic stimulation. But in many countries some of the measures, however necessary they may have been, have led to much poorer government finances. In countries such as the United Kingdom, Ireland, Spain, Greece and the United States public finances are under great strain, for various reasons. This means, for instance, that there is a risk that the long-term interest rates in these countries will rise quickly, which to some extent has already happened. This in turn can hamper the economic recovery. Sooner or later it is also necessary to do something about the budget deficits. This is a cause for concern and we are expecting that such measures will hold back GDP growth abroad somewhat at the end of the forecast period. Most central banks which have managed the more acute phase of the crisis with the aid of various support measures and very low interest rates, are now in a phase where it is time to think about exit strategies and to return to more normal interest rate levels. At present the Riksbank is lending almost SEK 370 billion to the banks, and around SEK 295 billion of this  BIS Review 25/2010  3  is in fixed-rate loans.

We have passed the worst economic trough in several decades and have now entered a new phase of economic recovery. Monetary policy will probably begin to be adjusted to a more normal economic downturn situation in the summer or early autumn this year. And this is a healthy sign. The road ahead of us is certainly not an easy one. New challenges and considerations await us, but we are at the same time more than ready to meet them. The resources that we were forced to use some time ago for more or less acute crisis management can now be partly used for analysis, development of our methods and the work on preventing imbalances in the economy and future crises. No one can say that the latter is a simple task. There are many problems that need to be solved. But we are not alone in this work, which must be conducted on both a national and an international level. As long as we have the motivation and the will to succeed our chances are good. In the most acute phase of the crisis many of the countries of the world joined together and took action to prevent a total collapse. When it has been necessary, the authorities here in Sweden have showed an excellent ability to cooperate. We must make use of the drive and spirit of cooperation that were demonstrated in the crisis.
In other words, what was “lost” was not only current growth, but the opportunity to fix its underlying problems and lay the foundations for future growth. This is not at all the picture that I see in the euro area today – and precisely because we have the Japanese experience to guide us. Certainly, our growth and employment outcomes are currently weak. But below the surface fundamental reform and restructuring is taking place. We are determined not to let our crisis go to waste. A key lesson we have learnt from the Japanese experience is the importance of banking sector repair and structural reform. Indeed, a recent paper on the Japanese experience identified delays in these areas as the main factors retarding Japan’s recovery from the crisis.1 On both fronts, the euro area is now making progress. First, substantial bank balance sheet repair has taken place since 2008. By October this year banks had raised around € billion of fresh capital and a further € billion has been injected by governments – equivalent in total to more than 5% of euro area GDP. As a result, the median Tier 1 capital ratio of euro area banks currently stands above 12%. Nevertheless, we can see that investors are not yet convinced that the banking sector has fully healed – as evidenced by euro area banks’ price-to-book ratios of less than 1. This is why the ECB’s is now undertaking a rigorous and comprehensive assessment of banks’ balance sheets.

Despite the important progress recorded, the overall employment rate in the euro area remains low by international standards (64.5% in the euro area compared with 72% in  1  European Commission – AMECO database. Hours worked data from OECD. BIS Review 82/2007  1  the US in 2006) and the unemployment rate is still clearly too high (7.9% compared with 4.6% in the US on annual average in 2006 and 7.0 % to be compared to 4.5 % in May this year). It has to be noted that in 2006 the estimated number of annual hours worked in the euro area was 1604 compared to 1804 2 in the US. Moreover, while the prime-age male employment rate in the euro area is comparable to that observed in the United States, the disparities remain important when we look at the youth, female and older worker employment rates. In 2006 the female employment rate was 56.5% in the euro area and 66% in the US, the older workers employment rate was 41.7% in the euro area and 61.8% in the US, and youth employment was 37.1% in the euro area and 54.2% in the US. These features appear to be consistent with an “insider-outsider” characterisation of the European labour market, where structural impediments prevent those groups “at the margin” from participating in the labour market. The performance of the labour market in Finland has also been quite impressive these last years with the overall employment rate increasing from 62.4% in 1996 to 69.3% in 2006.
Chart 9: Divine coincidence continued in the euro area post-crisis but not the UK a) UK Great moderation  6 Inflation (%)  Financial crisis and after 4  Inflationary, with trade-off  Inflationary, no trade-off  2 -6  -5  -4  -3  -2  -1  0  1  2 3 4 Excess demand (%)  0 Disinflationary, no trade-off  Disinflationary, with trade-off -2  Sources: ONS and Bank calculations. 15  See, for example, evidence from the Bank’s Decision Maker Panel, a survey of over 8,000 companies. 14  All speeches are available online at www.bankofengland.co.uk/news/speeches  14  b) Euro area Great moderation Financial crisis and after  4.5  Inflation (%)  4 3.5 3 2.5  8  2 -4  -3  -2  -1  1.5 1  0  1  2  3  4  Excess demand (%)  0.5 0 -0.5 -1 Sources: Eurostat, IMF and Bank calculations. Notes: The measure of inflation is the four-quarter change in the harmonised index of consumer prices (HICP). The output gap is the IMF’s estimate from the October 2016 WEO at an annual frequency, interpolated to create a quarterly series.

During exceptional circumstances such as Brexit, the MPC has been required by its remit since 2013 to balance such trade-offs.16 Consistent with that requirement, in August 2016, the MPC judged that it was appropriate to set policy after the referendum so that inflation returned to its target over a longer period than the conventional horizon of 18-24 months in order to support jobs and activity at a time when uncertainty was elevated and the economy was slowing. Chart 10 illustrates the MPC’s framework for setting policy to manage this trade-off. The red lines represent the potential trade-offs that the Committee could strike: mapping the size of the inflation overshoot that it could be prepared to tolerate for a given amount of spare capacity, and vice versa. The flatter the line, the less weight the Committee places on output stabilisation and the more it is willing to tolerate large output gaps in order to eliminate small overshoots in inflation. To be clear, the precise trade-off that the MPC pursues is not determined by the preferences of its members. Rather, it is grounded in society’s choice of the desired end, as captured by the statutory objectives and the remit the Committee is given by government.
Svante Öberg: Productivity and monetary policy Speech by Mr Svante Öberg, Deputy Governor of the Sveriges Riksbank, at a meeting at Handelsbanken, Stockholm, 7 June 2007. *  *  *  Let me begin by thanking you for the invitation to come here and speak to you! The rapid increase in productivity is the most important explanation as to why inflation has been low in recent years. The low inflation has in turn given us at the Riksbank the possibility to keep the interest rate at a low level. But productivity will probably show a slower increase in the future. Combined with higher wage increases, this indicates higher inflationary pressures and thereby higher interest rates over the coming years. In the light of this I shall devote today’s presentation to productivity and monetary policy. My speech will have the following structure: I shall begin with an introduction briefly describing how productivity has developed in historical terms. Then I shall move on to three important issues: The causes behind the strong productivity growth, developments in productivity over the coming years and the significance of productivity for monetary policy. I would like to make it clear from the start that I will not be talking about current monetary policy. I would also like to make it clear that I will today give my own views on productivity and its significance, which are not necessarily the views of the Riksbank.

Conclusion Innovations in digital assets have the potential to impact financial markets in many fundamental ways; it is essential to understand these developments and the impact they may have on the mission of the Federal Reserve. Through ongoing investment in research, experimentation, and collaboration, leveraging the full potential of digital assets is possible. I look forward to building on the successes of Project Cedar and similar efforts. 1 The White House, Fact Sheet: White House Releases First-Ever Comprehensive  Framework for Responsible Development of Digital Assets, September 16, 2022 2 CNBC, "Terra backers vote to revive luna - but not UST - after $ billion crypto  collapse," May 25, 2022 3 Vice Chair Lael Brainard, "Crypto-Assets and Decentralized Finance through a  Financial Stability Lens," remarks at the Bank of England Conference, July 8, 2022 4 Board of Governors of the Federal Reserve System, "Money and Payments: The U.S.  Dollar in the Age of Digital Transformation," January 2022  4/5  BIS - Central bankers' speeches  5 Chicago Fed Letter, "Understanding the Demand for Currency at Home and Abroad,"  No.
4 First, thriving banks exercised a comparatively conservative growth strategy during good times, with a management culture that focused on long-term franchise value and not short-term profitability. Successful banks had lower concentrations in commercial real estate lending generally; and much lower concentrations in construction and land development loans specifically. While profitable during the boom, these loan categories suffered the greatest losses as real estate values declined and the recession set in. As the boom progressed, the more conservative underwriting standards of successful banks led to declines in their market shares as other banks competed for business by relaxing their standards. However, successful banks were able to gain back this market share and then some after the bust due to the relative strength of their balance sheets. The successful community banks were patient and conservative regarding investments – desiring reasonable, sustainable returns, not necessarily “spectacular” returns. It seems that their managers devised their business plans heeding Friar Lawrence’s advice to Romeo as he devised his courtship plan for Juliet: “Wisely and slow; they stumble that run fast.” Other noteworthy characteristics also identified in this research were an engaged board of directors, talented staff who were familiar with the community, sound senior management oversight and thorough due diligence before offering a new product or service.

(If only a single firm needed support they could be directed to the DWF.) Consistent with all the Bank’s facilities, only firms judged to be solvent and viable would be eligible to participate. Subject to that, all counterparties that have access to DWF would be eligible to participate in any ECTR operations. Although the facility has been announced, the Bank has not yet offered any operations under the ECTR. That reflects our judgment that market conditions have not yet been consistent with a likely demand for its use. The Bank would revisit this decision in the event of any marked deterioration in market conditions. Conclusion In this speech today, I have set out some of the principles behind the Bank of England’s revised, permanent and public facilities for providing liquidity insurance to the banking system. We expect banks to self-insure for most of their liquidity needs – and while there has been encouraging progress to date, more is needed on that front. But if necessary, the Bank of England stands ready to provide support to solvent and viable institutions, against sufficiently good collateral, for an appropriate fee. It is important that commercial banks preposition their collateral so that due diligence can be performed and the maximum benefit achieved. The new Sterling Monetary Framework, which has been reformed almost in its entirety since 2007, reflects our experience during the crisis and lessons from some of the temporary measures that had to be put in place.
The risk of a rare event is not an easy thing to judge and, having gone so long without a serious problem in the financial system, our attention was distracted by the more easily monitored task of stabilising the economic cycle. Maybe people were too beguiled by the “Great Stability”, if only because data confirming it arrived with such regularity, to notice what was going on within the financial system. 13  All speeches are available online at www.bankofengland.co.uk/speeches  13  One obvious lesson has been that the stability of inflation is no guarantee of financial stability – hence the (re-)creation of macro-prudential policymaking. I think another lesson is that it’s better to grant these powers to a single, accountable body, “ring-fenced” from the other functions of the central bank. I don’t want to overstate the case and I’m certainly not suggesting any sort of “Chinese wall” between the two functions. There are clear advantages in having them housed in the same institution. Many economic issues are relevant for both and, in the Bank of England, the MPC and FPC regularly receive joint briefings on such matters. Even if the two hands are separate, it is important that the one should know what the other is doing, and in that respect it helps that some people sit on both committees.

In the U.S., we saw a spike in Treasury yields, with the 10-year rate rising by more than 100 basis points from early May before peaking in early September. Most commentary about this period has focused on the shift in expectations with respect to U.S. monetary policy – and, in particular, to uncertainty about the timing and implications of Fed tapering – as the catalyst for these moves. This focus seems generally right to me, although other factors also played a role. 1  1  Market participants also had to evaluate the possibility that growth in China and other EMEs might be slowing even as growth in the U.S. and other advanced economies was picking up. The subsequent market movements as investors withdrew funds from EME investments were an abrupt shock for these EMEs generally, especially after the long earlier period of abundant liquidity and ample inflows. BIS central bankers’ speeches  1  From one perspective, the unconventional nature of recent U.S. monetary policy adds little that is fundamentally new to the challenges that face the EMEs. These policies simply represent a way of easing, necessitated by our coming up against the zero lower bound. Central bankers have managed differences across countries in cyclical positions and policy stances many times in the past. This time should not be fundamentally different. But, from another perspective, we have less experience operating with unconventional monetary policy, and this creates more potential uncertainties.
The standardisation of risk management methods and the resulting herd instinct on the part of market-dealers brings with it a number of disadvantages, such as liquidity shortages on certain market compartments, which lead to more volatile prices, credit rationing for certain borrowers and micro-financial contagion whereby “innocent victims” bear the brunt of imbalances stemming from other economies. Such risks have become greater with the development of over-the-counter derivatives markets, which are a potential source of instability for the overall financial system. Liabilities are generally financed with credit, they are based on asymmetric information and risks are concentrated on some of the largest global financial institutions. These institutions may also be tempted to take excessive risks when they come under pressure from heated competition and shareholders’ demands for value. Of course, the prudential authorities approve of high returns on equity, but systematically aiming for returns on equity of 15%, 20%, or more while world growth averages 3% to 5% could make institutions more vulnerable. Actually, the search for profitability should not induce institutions to resort to extreme gearing in which debt replaces capital, or distort portfolio structures by undue focus on high-yield financial assets which also entail a high degree of risk. Nor should it lead them to curtail operating costs excessively, thus reducing the resources devoted to internal control.

The frequency of financial crises must be reduced by fostering solid financial enterprises. Risk systems must be improved. Market access to information on developments in micro and macro performance must be enhanced in order to strengthen market discipline in the financial industry. Better and uniform standards for accounting and statistics are important. Financial safety nets may offer greater security to households and small enterprises, which have difficulty obtaining an adequate overview of the risks in the financial system. At the same time, however, they must not be so favourable that they encourage irresponsible risk2  2  Bordo, M., Eichengreen B., Klingebiel, D. and M. S. Martinez-Peria (2001). Is the crisis problem growing more severe? CEPR  BIS Review 86/2001  taking. Central banks are also faced with the challenge of ensuring financial stability through their analyses and monetary policy. Developments from the 1800s to the present The regulation of financial institutions has undergone considerable changes. In the 1800s and up to World War I, the regulation of banks and other financial institutions was very limited. Norway was one of the most liberal countries. Regulation in other countries such as the US and the UK was more extensive. In Norway, savings banks were subject to separate legislation, because they were to have a more social function than commercial banks. There were no guarantee funds, and the law for savings banks was designed to ensure that they were operated in a manner that safeguarded depositors’ funds.
The decision-making process can then continue with forecasts for inflation and resource utilisation conditional on alternative repo rate paths, to determine which repo rate path is judged to best stabilise inflation and resource utilisation. These forecasts can be made under two different assumptions. One assumption is that the alternative repo rate path will become credible and be incorporated into market expectations. Forecasts under this assumption can be constructed by using what are known as anticipated deviations of the repo rate path  BIS Review 158/2010  11  (Laséen and Svensson 2010 and Svensson 2010b). The other assumption is that the alternative repo rate path is not credible, that market participants are surprised when the actual repo rate deviates from the expected one. Forecasts under this assumption can be constructed by using what are known as unanticipated deviations of the repo rate path. The assumption used should depend on the circumstances and the motives for this choice should be stated. Normally, the repo rate path that is included in the main scenario of the report should be chosen such that it best stabilises inflation and resource utilisation when it is credible. The starting point should be that the analysis in the Monetary Policy Report/Update and in other information from the Riksbank is so complete, well-reasoned and convincing that it gives the repo rate path credibility. Forecasts for policy rates abroad should primarily be based on market expectations according to implied forward rates.

The banks’ credit assessments and housing  2  See, for instance, Assenmascher-Wesche and Gerlach (2010), Bean, Paustian, Penalver and Taylor (2010), Del Negro and Otrok (2007), Dokko, Doyle, Kiley, Kim, Sherlund, Sim and Van den Heuvel (2009), Edge, Kiley and Laforte (2008), Iacoviello and Neri (2008), Jarocinski and Smets (2008) and Walentin and Sellin (2010). 4  BIS Review 158/2010  cost calculations are actually conservative; based on high mortgage rates, from 6.5 per cent and up to 10 per cent. With an interest rate of 7.5 per cent, 92 per cent of households will have a surplus in a “left-to-live-on” calculation that includes generous standard deductions for the cost of living. Most households have very large surpluses, because it is the households with very high incomes that have the largest debts. If unemployment increases by a good 10 percentage points, that is, from almost 9 per cent to almost 19 per cent, and house prices fall by 20 per cent, according to the report only 4.5 per cent of these households will experience both a deficit in their “left-to-live-on” calculation and a loan-to-value ratio of more than 100 per cent. One important circumstance is that households’ savings ratios are currently high, from an historical perspective (see Figure 1). This indicates that mortgages are not being used to fund consumption to any great extent. Things were different prior to the 1990s crisis. At the end of the 1980s, increased mortgages were used to fund household consumption to a large degree.