samchain/econo-pairs-v1 huggingface dataset:
There is relatively little research on the macroeconomic significance of OFC money.14 The central question is typically seen as whether institutional investors, such as pension funds and life insurance companies, are holding an unusually large amount of money in their asset portfolios, in which case any ‘excess’ might be expected sooner or later to flow into financial markets, pushing up asset values, which in turn would tend to boost aggregate demand and so add to inflationary pressures. Well, since 2003, institutional investor M4 has accounted for less than a fifth of the near doubling in total OFC money holdings. And the share of money in their asset portfolios has remained in a 3-5% range (Chart 7). Moreover, some contacts have suggested that with pension funds and life companies making greater use of derivatives to manufacture long-duration assets, some cash is now held to manage collateral calls or to generate a LIBOR-based stream of payments. Such money holdings would not be readily available to invest in financial assets. Over the past year, the largest contributions to OFC money growth have, in fact, come from two other groups (Chart 8): “securities dealers and other” (8pp)15; and what the statisticians label “Other Financial Intermediaries” (contributing a whopping 17 pp). I would hazard a guess that a significant portion of the money holdings of securities dealers stems from their so-called ‘matched’ repo books.

This means (1) a system in which the major institutions are less vulnerable to shocks; (2) a system that is less vulnerable to margin spirals and a generalized pull-back in liquidity and funding; and (3) a system that is more able to withstand the effects of failure of a major financial institution. Looking past the immediate crisis, a more resilient system must be built on stronger and better designed shock absorbers, both in the major institutions and in the infrastructure of the financial system. At the level of the financial institution, the key financial shock absorbers are capital and reserves, margin and collateral, liquidity, and the risk management and control regime. Financial stability starts with ensuring that individual institutions in periods of expansion and relative stability hold adequate resources against the losses and liquidity pressures that can emerge in economic contraction or instability. For the infrastructure of the financial system, these shock absorbers include the resources held against the risk of default by a major market participant across the set of private sector and cooperative arrangements for the funding, trading, clearing and settlement of financial transactions. Simplifying and consolidating the regulatory architecture will be instrumental to these efforts by establishing a common framework of rules, clear responsibility and authority, and by reducing opportunities for arbitrage. Through close coordination across central banks, supervisors and market regulators, we need to adopt an integrated approach to the design and enforcement of capital standards and other prudential regulations critical to systemic stability.
We continue to take a close interest in both of these areas, but they have crowded out discussion of everything else in the barriers to growth area – so today I want to fill in the rest of the picture. Now remember: these regulatory thresholds are a direct result of decisions to exercise proportionality by exempting smaller firms from bits of regulation. So they are a good thing from a competition point of view. 1 The robot’s research, including code, is being published today. See: Amadxarif Z., Brookes J., Garbarino N., Patel R. and Walczak E. (2019), ‘The Language of Rules: Textual Complexity in Banking Reforms’, Bank of England Staff Working Paper. 2 My focus today is on deposit-takers, but there are also of course important competition questions for us to examine on the insurance side. 2  All speeches are available online at www.bankofengland.co.uk/news/speeches  2  They also ensure that the regulation of different-sized firms is commensurate to the risks that they pose to the financial system, and are therefore sensible from a risk perspective as well as a competition one. But thresholds do create the “slope” issue: as firms grow, they come up against these thresholds and have to clamber over them. The key question for us is: does the design of these thresholds, and the way they come together across different bits of regulation, present unnecessary barriers to firms looking to climb the mountain? Have we created any unnecessarily perilous cliff-edges?

It is not possible collectively to commit to enforce a monetary policy contract with an institution such as a central bank. And, even if we could, we would not want to because that would prevent us from exploiting new knowledge about the world. In essence, I want to argue that the relevant theoretical framework could be described as “public goods meet incomplete contracts”. Institutional design is at the heart of collective decisions in a world of incomplete contracts, and, interestingly, discussion of monetary issues in recent years has focussed on institutional arrangements. I shall illustrate the importance of institutional design for the operation of monetary policy by reference to three case studies: the collapse of exchange rate regimes in Brazil and the United Kingdom; currency arrangements in Iraq and their reform after the war last year; and the relationship between central banks and governments when the zero constraint on nominal interest rates is binding. 1  I am deeply grateful to James Proudman, Jan Vlieghe and Tony Yates for their research collaboration and for many of the ideas in this lecture. They are truly co-authors. I am also grateful to Peter Andrews, Andrew Bailey, John Campbell, Forest Capie, Philip Evans, Niall Ferguson, Charles Goodhart, Simon Gray, Oliver Hart, John Moore, Tom Sargent, Lars Svensson, Greg Thwaites and Geoffrey Wood for their helpful comments. Kath Begley and Ed Bolingbrooke provided valuable research assistance. All errors and omissions are my responsibility.
Economic theory can contribute insight into the factors that determine the equilibrium rate, but attempts to quantify the equilibrium interest rate based on theory yield a broad interval for a possible level. Quantification also presents problems, as estimates must be made for unobserved variables such as consumer impatience. An estimate of the equilibrium interest rate in industrialised countries presented in the publication Penger og Kreditt 2/003 indicate an interval of 3-9 per cent. The upper limit in particular seems unreasonable in relation to observed real interest rates, for example. An alternative is to use historical average interest rates on the basis of an assumption that actual real interest rates will vary around the equilibrium interest rate. This method also poses problems. Each historical era will, for example, be affected by the specific characteristics of that era. Credit rationing, for example, has influenced interest rate formation for long periods. In addition, both population and productivity growth have varied over time. Throughout the period 1870-2003, the average for long-term real interest rates in Norway has remained close to the average in the UK and the US: Norway 2.2 per cent, the UK 2.0 per cent and the US 2.8 per cent. The economy has changed substantially in this period. Thus, the average for this period probably provides little indication of what a long-term equilibrium interest rate is today.

More broadly, the FPC has judged the UK banking system to be resilient and “well placed to continue supporting the economy in a wide range of economic scenarios, including in a period of higher interest rates.” And so while there are clearly lessons to be learned from this episode, I  Page 8  think experience in the UK shows the benefits, including to corporates, of our post-GFC banking reforms. Banks are not the only providers of finance to the real economy. UK corporates, particularly large ones, have become increasingly dependent on financial markets as a source of lending. Indeed, market-based finance as a share of aggregate corporate debt has increased from 40% in 2009 to over 50% in 2022, accounting for nearly all of the increase in net lending since 2007. In theory, the availability of market-based finance helps mitigate credit supply disruptions, as the existence of a strong market channel avoids over-reliance on bank funding. In addition, some market-based investors have long-term investment horizons and may be well placed to look through short-term dynamics. [3] But increased dependence on market-based finance leaves UK corporates exposed to new shocks, especially in riskier market segments, like high-yield bond, leveraged lending, or private credit markets. Globally, these markets have almost doubled in size over the past decade. A sudden or disproportionate reduction in investor appetite for these assets, in combination with forced sales and sharp falls in asset prices, could impact UK firms’ ability to access funding, potentially forcing some companies to delever or even default.
The nature and speed of change pose some opportunities for smaller firms that are not weighed down by massive infrastructure and can be nimble in decision making; but there are also a number of threats from the bewildering investment choices, the costs of investment and the ongoing need to adapt. Mutuals face particularly difficult decisions as you are essentially investing your members’ (past, current and future) money and will be highly aware of the potential damage caused by delays and cost overruns; and balancing the need to invest to meet the needs of today’s and tomorrow’s customers with the the risks to the firm’s future if investment doesn’t pay off. It is also important to note that maintaining technology can come with high fixed costs alongside the people associated with supporting that technology. Gaining relevant technical expertise at Board and senior management is one option that some firms determined to make the most of the right technological advances take. Pooling expertise or outsoucing – subject to tight and expert oversight – are other options. Organisational transformation projects are always difficult to achieve in a fast-paced environment. Firms, faced with declining demand for their current services and lacking the resources to invest in new services, may take the path to merge. For Friendly Societies, this could be achieved through a Part Eight transfer. The PRA currently has an open consultation on Insurance business transfers, CP16/211, which welcomes comments and feedback until 28 October.

Let me finish by saying that this crisis underlined the need for policy makers to have a holistic approach to tackle all the sources of gender disparities which are entrenched in the institutional, regulatory, educational and even traditional setting norms. Thus focus on overcoming the crisis, which is definitely a burning issue for all of us, should not be a reason to sideline the fight for gender equality. On the contrary, it should reinforce it. Thank you. 3/3  BIS central bankers' speeches
32  Inflation rises by up to an additional 3.2 pp in average year-on-year terms in 2022-2023 under the adverse scenario and by up to an additional 3.6 pp under the severe scenario. GDP growth slows, by an average of 2.8 pp under the adverse scenario and 5.4 pp under the severe scenario. The impact on average growth in house prices is -5.4 pp and -8.6 pp, respectively. As for interest rates, the increase in short-term rates is larger under the adverse scenario (2.2 pp for 12-month EURIBOR) and smaller under the severe scenario (0.9 pp) on account of weaker demand. There is a notable increase in long-term rates under both scenarios, with the average 10-year sovereign bond yield climbing by 2.6 pp and 3 pp, respectively. 17  Overall, the adverse scenario entails a negative impact of 1.8 pp on the aggregate CET1 ratio of Spanish banks; this impact rises to 3 pp under the severe scenario. By components, the largest adverse impact would be on credit quality, leading to greater losses on loans to the private sector in business in Spain and a sovereign bond value adjustment. There would also be a lower generation of funds. In turn, the lesser need for new provisioning (owing to the greater use of existing provisions), deleveraging at banks and more enforcement of guarantees to meet the expected credit losses associated with ICO-backed loans, would mitigate the fall in the CET1 ratio in 2023.

Paul Fisher: The corporate sector and the Bank of England’s asset purchases Speech by Mr Paul Fisher, Executive Director for Markets and Member of the Monetary Policy Committee of the Bank of England, for the Association of Corporate Treasurers Winter Paper 2010, London, 18 February 2010. The original speech, which contains various links to the documents mentioned, can be found on the Bank of England’s website. *  *  *  The start of corporate sector asset purchases On 19 January 2009, the Chancellor announced 1 that the Bank of England was being authorised to purchase “high quality private sector assets”, financed by the issue of Treasury Bills “… to increase the availability of corporate credit, by reducing the illiquidity of the underlying instruments …”. In this talk today, I want to address the rationale for intervening in this way and the opportunities and limitations of such operations. I will then go on to review the individual schemes and evaluate the results so far. I will not be talking very much about the wider programme of gilt purchases, which had different objectives – namely to directly boost the money supply and nominal demand. But there are some interactions which I shall come back to later. At the time the policy was announced, output in the United Kingdom economy was dropping sharply. GDP has fallen by 6% during the recession overall and fell by 2 ½% in 2009 Q1 alone, at the time these policies were being put in place (Chart 1).
Initiatives include: anchoring more regional and global VC and PE players in Singapore; 7 / 10  BIS central bankers' speeches  deepening the talent pool; enhancing ancillary professional services to better support VC activity; and building a pipeline of alternative market platforms that can facilitate private market exits for PE/VC investors. Second, we are working to strengthen Singapore’s value proposition for Asian companies to issue bonds. The growth potential for Asian bonds remains strong, particularly as companies in the region are looking to fund their growing operations and raise longer term capital. Let me mention three schemes that MAS has put in place to make Singapore the choice location for regional bond issuance. To attract new Asian issuers to Singapore’s bond market, MAS introduced the Asian Bond Grant scheme earlier this year. Under the grant, MAS will co-fund up to $ of issuance-related expenses for firsttime Asian issuers. To support bond issuers adopting environmentally sustainable practices, there is a Green Bond Grant scheme. The scheme will offset up to $ of the costs relating to the external review required of a green bond. And the latest – To encourage issuers to be rated and to nurture a healthy credit rating  culture in the SGD bond market, MAS will soon be introducing a SGD Credit Rating Grant. Issuers can claim 100% of their credit rating expenses, up to $ per issuer. Details will be released shortly. We strongly encourage regular domestic issuers to consider obtaining ratings.

Today, I will speak about how we are working closely with the industry to ensure that our financial sector remains purposeful for the economy – - financing the growth of local and Asian companies; and - creating good jobs for the Singapore workforce. FINANCING GROWTH OF LOCAL AND ASIAN COMPANIES MAS has been working with the industry to deepen the financing ecosystem for regional and local companies in three ways. First, we are working to strengthen the venture capital and private equity financing ecosystem to serve Asian growth companies. The next-generation Asian growth companies, with their new ideas and models, have injected vibrancy to our corporate landscape. Venture capital and private equity (VC/PE) play an important role in supporting the growth of such companies and stimulating innovation. We have a small but thriving VC/PE industry. VC/PE assets under management has grown at a compound annual growth rate of 28% over the past 5 years. But we need to do more – given the growing numbers of Asian growth companies and their tendency to stay private for longer and not go the IPO route. We are simplifying the regulatory framework for VC managers. We are working with the industry to foster a deeper and more comprehensive ecosystem for venture capital and private equity.
The forecast for domestic cost pressures this year has been revised down somewhat all the same compared with the assessment in December on the basis of new data for 2004. Resource utilisation in the Swedish economy was low last year. In particular, the demand for labour is still limited even though some indicators of labour shortages show an upward tendency. Indicators from manufacturing also suggest that capacity utilisation has picked up recently. The Riksbank’s overall assessment is that resource utilisation has risen – albeit from a low level – and will continue to increase as more and more spare resources are put to use. The inflation outlook As I mentioned, both domestic and imported inflation were low in the past year. Domestic inflation was expected to be low at this point in time and the rate of price increases for domestically produced goods in recent months has also been broadly in line with the Bank’s previous forecast. In spite of this, the forecasts for domestic inflation this year and next year have been revised down. One reason is that the downward pressure on prices in the retail food trade is anticipated to be greater than previously assumed. How big the effects will be is difficult to say, though, as is their significance for the general inflation rate in the longer term. Over a longer horizon, domestic inflation is expected as before to rise gradually as the cyclical upswing continues and resource utilisation picks up.

The relaxation on the policy on payment gateway would promote greater competition in the payments system while the flexibility accorded on the issuance of credit cards would enable the partnering of licensed institutions with non-banking institutions in offering greater choices to consumers. Ladies and Gentlemen, In conclusion, I would like to re-emphasise that banks should continuously seek to educate and familiarise consumers in the use of electronic and other technology based banking applications which are more efficient and cost effective. The occasion today is an important step towards maximising banking convenience that technology can offer to the consumers. I am delighted to take part in today’s  2  BIS Review 22/2003  launch and would urge the participation of all financial institutions in this effort to promote the use of electronic payments in the country. Thank you. BIS Review 22/2003  3
It is therefore no wonder that concerns about Icelandic sovereign debt default have largely evaporated. This can be seen in the spread on Iceland’s sovereign credit default swaps, which has fallen significantly this year and is currently at 288 basis points, well below those of Ireland and Portugal. Before turning to the outlook and near-term policy challenges, let me mention two important problems that Iceland will not face if present policies remain on course. The first is an unsustainable public debt level. As Graph 6 shows, the gross debt of Iceland’s general government (central and local government) exceeded 100% of GDP at the end of 2009. That is very high, of course, although there are countries with higher gross debt, as the graph shows. However, Iceland’s net public debt is significantly lower and is sustainable given the prospects for repayment of Treasury debt in net terms from 2013 onwards. In addition, if we factor in the Central Bank’s foreign exchange reserves, the bulk of net public debt is denominated in Icelandic krónur. But what about the unsettled Icesave debt? The answer is that it will not fundamentally change the picture, as present estimates of the amount and speed of recovery of the assets of the failed Landsbanki and indications of what might be on the table in terms of financing costs in a new settlement suggest that the net present value of the settlement will be significantly lower than in previous agreements.

We’ve seen it popularized by the Bank of Canada and Bank of England, and it figured prominently in the statement recently released by the Federal Open Market Committee (FOMC) of the Federal Reserve after our meeting of March 18–19 and again during the post-meeting press conference of the Fed Chair, Janet Yellen. It is front and center on the agenda of the FOMC. To understand forward guidance and its prominence in current discussions within monetary policy circles, it helps to retrace recent history. Adieu quantitative easing To encourage economic recovery from the debacle of the financial crisis of 2007–09, the FOMC cut interest rates to near zero. The Fed introduced an array of special lending facilities during the most panicked stage of the crisis. These credit and liquidity programs were largely self-liquidating as market functioning improved. But still being “zero bound,” we embarked upon a program of massively expanding the Fed’s balance sheet, referred to internally as “large-scale asset purchases” and popularly known as quantitative easing (QE). By buying copious quantities of longer-term U.S. Treasury bonds and mortgage-backed securities (MBS), our balance sheet has grown from slightly under $ billion prior to the crisis to $ trillion at present. When the Fed buys a Treasury note or bond or an MBS, we pay for it, putting money out into the economy with the expectation that the money will be used by banks and other creditors and investors to finance job-creating investment, the purchase of homes and other expansive economic activity.