samchain/econo-pairs-v1 huggingface dataset:
Instead I want to discuss how to approach some of the challenging issues faced by many central banks as we seek to decide how best to organise our work and to allocate resources in order to promote financial stability. We need to be clear, accountable and transparent as to how we devote our resources in this area. And just as the financial system becomes more complex, so the judgements as to what we do and what we do not do are increasingly difficult. That is why we need a framework – a set of organising principles – that enables us to provide context and understanding to our endeavours, to provide a source of focus and rigour to our approach, and to motivate our people. The issues are, I believe, of general application. Though you will forgive me I am sure if I start by looking at the framework within which the Bank of England, as a non-regulatory central bank with a remit for system-wide stability, addresses the vulnerabilities. 2. Challenges in Creating a Framework  i)  Monetary Policy  I want to start by considering the governance of the Bank’s accompanying mandate, the conduct of monetary policy. This highlights the clarity of our accountability in the monetary policy arena. In line with many central banks, we have a mandate in statute – the Bank of England Act – to conduct monetary policy. The Government sets a target inflation level which we are required to meet.

Widespread consultation would be needed, and due account taken of confidentiality rules, before any reporting framework can be implemented.”  7  See Communique Meeting of Finance Ministers and Central Bank Governors Washington, DC, April 18–19, 2013 “We also call for a feasibility study on how information from trade repositories can be aggregated and shared among authorities, so as to enable comprehensive monitoring of risks to financial stability.”  8  See CPSS / IOSCO. Report on OTC Derivatives Data Repository and Aggregation Requirements. January 2012. BIS central bankers’ speeches  7  The goal of financial stability will remain elusive so long as we have financial firms that are judged as “too big to fail.” Some might argue that this is reason enough to break up these firms. I do not believe that this is the best course of action. As I have outlined here today, I prefer a multi-faceted approach that strives to: (1) minimize the risk that a large complex financial firm faces default, (2) have in place a credible resolution regime if a default becomes imminent, (3) improve the resiliency of our financial system so that any shocks resulting from a resolution are not amplified across the system, and (4) build out a global data model for effectively monitoring global financial markets.
BIS Review 26/1998  -7One final point that I would make in connection with state law initiatives is what lawyers call conflicts of laws law -- that is, most of the legislative efforts just described do not address the degree to which the state enacting the legislation will recognize electronic signatures created in compliance with another state’s statutory scheme. These statutes also generally fail to address the validity of unsigned electronic documents or the evidentiary use of electronic records generally. If you are interested in learning more about these statutes, you might want to visit the www.mbc.com web site. This web site provides a summary of all existing and pending digital and electronic signature legislation in the United States with links to the actual legislation where possible. Like the states, Congress is also divided on the appropriate scope and content of electronic authentication legislation. In September 1997, the House passed “The Computer Security Enhancement Act of 1997”. If passed by the Senate, that act would establish a national policy panel for digital signatures. The panel, which would be composed of Federal and state Government as well as private technical and legal experts and interested members of the public, would serve as a forum for exploring all relevant factors associated with the development of a national digital signature infrastructure. The panel would be expected to produce model practices and procedures for CAs, standards to ensure consistency among jurisdictions that license CAs, and audit standards for CAs.

By way of example, we need to design mechanisms so that large multinationals, particularly in the technological field, do not ultimately pose a risk to market competition conditions and so they may contribute to the sustainability of the welfare system. In this connection, the OECD is currently spearheading initiatives to improve the taxation of these companies. Another good example of the importance of concerted action concerns the need to urgently tackle the consequences of climate change. c. The case of the Economic and Monetary Union The Economic and Monetary Union is a good example of the dual need to improve the governance framework and, in parallel, to apply policies at the national level enabling growth and citizens’ well-being to increase. 5  In fact, despite the improvements made in the past decade, it is vital to strengthen European integration, especially through the completion of the EMU governance reforms. Specifically, as I have said on various occasions2, we must move promptly towards creating a single capital market and completing the Banking Union. These two initiatives are key both to the financing of investment and business innovation and to achieving a more robust and resilient monetary union in the face of adverse shocks. The Banking Union is a crucially important and far-reaching project for European construction. And this is why it is essential not to leave it unfinished. Following the start-up of the Single Supervision Mechanism and the Single Resolution Fund, efforts should focus on reaching an agreement on the launch of the European Deposit Insurance Scheme.
Our experience in Malaysia shows that a more diversified and sound financial sector, a more efficient and competitive financial industry and all the structural enhancements made, have evolved a more effective and resilient financial system. This has enhanced the tolerance level to withstand the more difficult and challenging environment. Such fundamental changes, however, cannot be expected to be achieved within a short period of time. Enhancing the tolerance level in the financial sector of the East Asian economies is one of the important elements in strengthening the growth prospects for the region. The overall economic and financial transformation that has occurred has resulted in an Asia that is a mutually reinforcing region of growth; an Asia that has an increasing role in the creation of wealth; and an Asia that will be an important region in promoting and supporting global stability and global growth. BIS Review 40/2003  7

Completing the topic of mitigating the aftermath of the pandemic, I would like to say that during the pandemic period we have been implementing measures to help reduce the impact of inevitable restrictions and support households and companies, without disrupting fundamental interconnections in the market and compromising stability. The latter is critical for the financial sector and essential for people and businesses using services provided by the financial sector. Currently, the financial system is functioning normally, is resilient and able to cover the needs of the growing economy. The slump of early 2020 was followed by a rather rapid recovery. This surge was coupled with a global rise in commodity prices and faster inflation both in Russia and worldwide. Demand has already restored, which is evident from all indicators. Contrastingly, production will need more time. This is due to disruptions in production chains that have not been fully restored yet. There are shortages of some components and materials and workers in certain professions. As the borders are closed, it is impossible to engage non-residents as much as before the pandemic. For instance, this problem is severe in construction, services to a certain extent, and agriculture. All these factors are pushing up prices. Taking into account the nature of inflation, namely the steady growth of prices across a broad range of products observed in recent months, it is clear that we may not just wait until this period ends. The Central Bank needs to use available instruments to bring inflation back to the target.
Even when the exchange rate is freely floating, and therefore theoretically free of any precise exchange rate target, when sentiment is one-sided, which is often the case in financial markets, exchange rate overshooting can be quite common. 18. Largely against the background of financial crises in the 1990s, in which the choice of exchange rate regime has been a prominent issue, there has been a clear trend in thinking on what constitutes an effective and credible choice. This choice boils down to two options, in what is now commonly referred to as the two corner solutions: either an exchange rate target that is perceived to be impregnable or a regime that does not involve any exchange rate target, as in a free float. Neither solution is, admittedly, immune to crisis, particularly in the case of open and liquid markets. And the precondition has to be that any exchange rate regime, if it is to be credible, is built upon sensible economic policies, strong institutions and robust market infrastructures. BIS Review 114/2000  4  19. Clearly, no exchange rate regime can be perfect, and no simple regime can suit all. The present trend is towards floating regimes, though these seem to work best for the larger economies, whose foreign exchange markets are big enough to absorb voluminous capital flows, and for the smaller economies where controls and restrictions are practised.

I made reference earlier to the emphasis in international financial reform on laying down connections, rather than on raising up walls and restrictions. So let me turn to the process of technological advance, my final topic today. This is intricately linked with the question of globalisation, particularly in the case of information technology. Indeed, without it, globalisation as we understand it would not be taking place. Again, this is not a new trend: over the centuries new navigation aids, railways and steamships, the telegraph, the telephone, and later radio, television and satellites have all boosted the speed and quantity in which information travels around the world. Now the internet and other electronic channels have vastly expanded that capacity. 21. In the field of financial services, recent advances in information technology have played an enormous role in determining the speed and manner in which money circulates and the nature of the competitive landscape. Money, which was once solid, heavy and difficult to shift around, turns into electronic pulses, which can be sent around the world at the touch of a button in a matter of seconds. At the consumer end of the industry many of us now rarely enter a bank, but carry out our transactions on cash machines, over the telephone, and increasingly through computer terminals, and, no doubt in time, over WAP telephones. The little plastic card, of which we all have at least one in our pockets, has seen a growth in business by more than thirty times in the past thirty years.
The spread is currently relatively high – on this measure housing is unusually “cheap” compared with government bonds – and, taken at face value, would point to somewhat faster growth of house prices over the future. But perhaps this is justifiable. If you thought relatively weak economic growth was likely to persist over the next few years – and that’s  11  All speeches are available online at www.bankofengland.co.uk/speeches  11  certainly the consensus view – you might reasonably expect the same for rental prices. Amidst higher uncertainty, prospective homebuyers might need an additional discount, relative to rents, to buy a house (the warranted “risk premium” on housing might be above average). Recent house price growth is already quite a bit lower than the rate crudely suggested by Chart 12. Near-term survey indicators – Chart 13 plots the RICS balance – offer little prospect of an acceleration any time soon, let alone the kind of pick-up you’d need to make much of a dent in the longer-term, 15-year average used in Chart 10. All this is why it seems to me improbable that aggregate mortgage debt will grow that rapidly over the next few years. People coming into the housing market, and trading up it, are unlikely to have to pay (or therefore borrow) much more than their predecessors did, several years earlier.

Chart 13: The near-term indicators of house price growth have weakened  Chart 14: Interest cost of mortgages will probably remain below average for a while  Balance 80 60 40 20 0 -20 -40 -60 -80 2000  Per cent 12  Per cent 8 6 4 2  8  0  6  -2 -4 -6 2005 2010 2015 RICS price expectations balance (LHS) House price growth (RHS)  Sources: Royal Institution of Chartered Surveyors (RICS) Residential Market Survey, ONS, Land Registry and Bank calculations. RICS price expectations are three month ahead net balances. 10  4 2  Average 1993-2007Q2  0 1987 1992 1997 2002 2007 2012 2017 2022 Sources: ONS, Thomas and Dimsdale (2017) sheet M12, Bank of England, Barclays Live and Bank calculations. The fan is calculated using probability distributions implied by options on sterling interest rate swaps. For further information on how option-implied distributions are derived, see Clews, Panigirtzoglou and Proudman (2000). I can now (finally) get to the point I wanted to make about interest payments. Even if low bond yields don’t presage rapid growth of house prices, one thing they do suggest is that interest payments on mortgage debt will also remain relatively low. Chart 14 plots those payments over the past, as a share of household income. It also includes a range for the future. This assumes that mortgage debt continues to grow in line with household income (whatever that turns out to be).
Real GDP growth has decelerated in 2018 compared with the growth we have seen since the second half of 2014. This slowdown mainly reflects weakness in net trade. Looking forward, global protectionism and weakening conditions in emerging markets represent further downside risks to growth. Internally, the present low savings rate of Spanish households and the need to restore savings in the near term, points to moderation in consumption going forward. Let me point to the three main challenges that the Spanish economy is facing at present, in my view. The first relates to the process of fiscal consolidation. While well advanced, it is still incomplete. The government deficit ratio is still the highest in the EU and it needs to be further reduced to bring the government debt ratio on to a downward path. In fact, adequate buffers need to be rebuilt now, in times of solid growth and favourable financing conditions. This would enable fiscal policy to support the economy in the event of any future shock. Secondly, unemployment remains very high, as does the share of temporary employment. Spain’s unemployment rate remains well above pre-crisis levels and is roughly the double of the euro area rate. This situation calls for further reforms to address the duality of the labour market and more effective active labour market policies to re-integrate young people and the long-term unemployed. Finally, productivity remains low and needs to be raised to maintain economic growth and enable sustainable wage growth.

Indeed, the notable reduction in business activity further to the restrictions associated with the state of alert prompted a much sharper decline in non-financial corporations’ operating revenue than that in the payments they must meet. The latest Central Balance Sheet Data Office figures give an idea of the severity of this shock to firms’ liquidity. There was a strongly adverse impact on these agents’ profits already in Q1, despite the fact that the sharp contractions in activity and operating revenue associated with the declaration of the state of alert only affected the last two weeks of this quarter. The reduction in the return on assets for the overall sample of firms was so significant that it pushed ROA below the cost of borrowing, a development not seen since 2014. The information on bank lending shows firms resorting to this source of financing to cover a large portion of these liquidity requirements. Specifically, the outstanding balance of bank financing granted to Spanish non-financial corporations rose to 8.7% in May after having shrunk by 1.1% year-on-year in February. And the preliminary data for June would suggest that this trajectory has been holding in the most recent period. Yet for financial institutions to have been able to meet such a notable increase in firms’ applications for credit, the contribution of the support measures launched at both the European and national levels has been decisive.
In recent years, this tendency has been amplified by high immigration and hence strong population growth. BIS central bankers’ speeches  7  In spite of vigorous building activity, the number of completed dwellings is still low in relation to population growth. This housing gap has developed over several years and is pushing up house prices. A tight labour market and low interest rates are pushing in the same direction. The rise in house prices and the rate of debt accumulation are closely linked. Since the mid1990s household debt in Norway has risen appreciably faster than income. On average, household debt is now twice as high as disposable income. A rising share of households are facing a debt burden that makes them vulnerable when the interest rate again moves up to a normal level or if economic developments in Norway should take a turn for the worse. In such a situation, many households might find it challenging to service their debt and may reduce household spending. A pronounced fall in household demand will have a negative impact on corporate earnings and enterprises’ capacity to service loans from Norwegian banks. The key policy rate influences a number of variables, including the krone exchange rate, debt and house prices. In its interest rate setting, the Bank seeks to take into account all the key relationships in the economy, those that influence the real economy and inflation. But there is a limit to the tasks that can be given to monetary policy.

The ECB operations during winter contributed to boosting liquidity and reducing risk premiums in the European banking system and in the sovereign debt market. 2  BIS central bankers’ speeches  Financial market turbulence has flared up again recently, with particular focus on the macroeconomic situation and budget developments in Spain and other countries in southern Europe. The political unrest in Greece and growing fears of a Greek government debt default have curbed risk appetite in the markets. Yields on Italian and Spanish government bond have increased, while US, UK and German government bond yields have fallen to historically low levels. International equity indices have declined, particularly in Europe. BIS central bankers’ speeches  3  Despite a prolonged downturn abroad and financial market turbulence, activity in the Norwegian economy is remains robust. Capacity utilisation has been close to normal over the past year. GDP for mainland Norway expanded by 2.4 per cent in 2011 according to preliminary figures. Prices for Norwegian export goods are favourable relative to import prices. The oil and construction industries are booming and both employment and the supply of labour are on the rise. Unemployment is low and fairly stable. At the same time, house prices are moving up and household debt is still rising faster than household income. On the other hand, some segments of the export industry are feeling the adverse effects of developments in Europe and a strong krone.
We will also consider how to best channel the expertise, experience and ingenuity of the financial sector to develop innovative approaches to meet the biggest challenges in the transition to net zero. This will mean: 1. Understanding which new financial products, such as transition bonds and transition indices, can make a real difference to climate finance and support efforts to scale them up rapidly as needed. 2. Promoting the most promising climate innovations in insurance sector, such as contingent liability structures for climate policy risk and micro- insurance in emerging economies, drawing on the leadership of organisations such as the CCRI and IDF; and 3. Evaluating the prospects for private markets in carbon offsets and nature-based solutions, drawing on the sector’s expertise in creating and running efficient and transparent market infrastructure. Conclusion With sustainable finance moving from CSR to the C suite, the UK COP 26 Presidency in partnership with Italy will help build the foundations of a system that will be able to seize the opportunities of transitioning to net zero. 7  All speeches are available online at www.bankofengland.co.uk/news/speeches  7  The UK has been at the forefront of innovation for centuries. It was the birthplace of the industrial revolution that brought unimagined progress. The City financed the steam engines, the railroads and the new energy sources that powered this transformation. And now – on the cusp of the sustainable revolution – the world once again needs your innovation, resources and leadership.

In the long run, however, inflation cannot be explained solely as a function of nominal exchange rate movements, as it reflects, on the one hand, rises in wages and prices in excess of those in other countries and, on the other, changes in the real exchange rate, which stem from developments in underlying economic conditions such as terms of trade. Inflation that remains above target levels for a protracted period can only be explained by weaknesses in economic structure and policy, particularly monetary policy. In the short run, however, under- or overshooting of the nominal exchange rate can cause swings in the inflation rate, particularly if inflation expectations are poorly anchored to the target and exchange rate movements are significant. In trade-weighted terms, the króna has fallen by 5.8% year-to-date and just over 7½% since November, when it last peaked. The depreciation seems to stem from several causes. It appears that net foreign currency inflows from trade in goods and services have been at a low ebb in recent months. While seasonal factors are at play here, it could also be that foreign currency subject to repatriation requirements is not being returned to Iceland in full. This situation is being investigated by the Bank’s Capital Controls Surveillance Unit. In addition, firms and municipalities have been paying down foreign debt. In many instances, they are forced to do so, as they have no access to refinancing from abroad and would otherwise default on these loans.