samchain/econo-pairs-v1 huggingface dataset:
Recognizing this vulnerability, the Group of Twenty (G20) in its 2009 Pittsburgh Summit statement stipulated that all standardized derivative contracts would be moved to central clearing, and that the remaining non-standard derivatives would be subject to higher capital requirements.2 While there will inevitably be a residual share of derivatives that do not lend themselves to standardization, authorities need to continue to work collaboratively to keep this residual share to a minimum. Why is standardization so important? Standardization has advantages in terms of increasing transparency, price discovery and liquidity. Standardization is also important because it allows the derivatives to be centrally cleared in a CCP. Without central clearing, participants have bilateral credit exposures to each of their counterparties. Moreover, they cannot fully assess their credit risk exposures in this framework since there is no information on the other derivative contracts that their counterparties have with other market participants. Central clearing replaces this complex web with a single set of relationships between the firm and the CCP as its counterparty. This allows for netting, so that a firm’s risk is limited to its net exposure to the central counterparty. This both reduces risk and increases transparency. 2  See Group of Twenty (2009) The G20 Pittsburgh Summit Leaders’ Statement. BIS central bankers’ speeches  5  Consequently, members of the CCP have less of an incentive to pull back in periods of stress and this makes the market more resilient.

The adequacy of the GLAC buffer mitigates the negative externalities from a default, while the possible use of managementheld long-term debt as an element of GLAC could bolster incentives to reduce the risk of a default in the first place. There are implementation details of the FDIC’s SPE resolution framework that still need to be worked out. These arise from the challenge involved in operationalizing the framework with financial firms that conduct business across several jurisdictions and geographic borders. In this international arena, one specific issue needs to be promptly addressed. Due to parent guarantees or other cross-default provisions, the placement by the FDIC of the parent company into receivership may be treated by some counterparties as an event of default. This could trigger the close-out of qualified financial contracts (QFCs) such as interest rate swap contracts at international subsidiaries, which could potentially be destabilizing. To deal with this issue, the Dodd-Frank Act’s Title II one-day stay on the close-out of qualified financial contracts needs to be extended to cover contracts governed by non-U.S. law and involving non-U.S. counterparties. Resolving this issue is important to ensuring a smooth transition to the new bridge company. Addressing the contract close-out issue can be accomplished in two ways that are not mutually exclusive. First, existing derivative contracts could be amended and future contracts written to stipulate that the parent’s placement into a Title II resolution does not trigger the close-out option.
Durmuş Yilmaz: Turkey’s monetary and exchange rate policy for 2008 Speech by Mr Durmuş Yilmaz, Governor of the Central Bank of the Republic of Turkey, at the Central Bank of the Republic of Turkey, Ankara, 18 December 2007. *  *  *  General framework of the monetary policy Overview of 2007 The Central Bank of the Republic of Turkey (the Central Bank) has continued to implement the monetary policy in 2007 based on the principles of inflation targeting regime. The Monetary Policy Committee (the Committee) meetings were held in line with the preannounced annual timetable. Interest rate decisions were made public through press releases on the same day along with the rationale of decisions. Moreover, “Summary of the Monetary Policy Committee Meeting” including details of decisions and the assessments made during the meetings started to be published along with the English translation within eight working days following the meetings in 2007. Inflation Report, which is the main communication tool of the Central Bank, continued to be published quarterly. Furthermore, in order to increase the efficiency in management of expectations, Price Developments Report was also published within a very short time with a detailed analysis of inflation data following the announcement of monthly price developments.

To sum up, despite the fact that nearly half of the CPI is composed of energy, food, and administered goods prices, it is evident that monetary policy is still capable of keeping the main inflation trend under control via other items. As stated also in the last two years’ monetary policy statements, the inflation target would be changed only if sharp and long-term deviations from the target occur due to factors beyond the control of the monetary policy such that the medium-term targets no longer make sense. Within this framework, while considering the possibility that inflation might be exceeding the target for a while in the short run, the Central Bank maintains the 4 percent inflation target hinging on the evaluation that the general trend of inflation is downwards. The forecasts presented in the Inflation Reports will continue to refer to two-year periods. In phases when inflation is above the target, the forecasts presented in the Inflation Report become more important. The forecasts inform the public about the path that inflation will follow while moving towards the medium term target. In other words, the reference value established for economic units is the inflation forecast in the short-run and the inflation target in the long-run. Another message that inflation forecasts contain is the monetary policy stance.
Based on the backdrop of the economic development and the outlook for continued high energy prices ahead, a mechanical application of the 4 per cent fiscal rule implies that the use of petroleum revenues will increase by more than NOK 31 billion from 2006 to 2009. With continued solid growth in the Norwegian economy, it would be in line with the fiscal rule if the use of petroleum revenues is lower than the expected real return on the Government Petroleum Fund – Global over a few years. We estimate an approximately unchanged structural non-oil deficit in 2007, and assume that fiscal policy will provide some stimulus to aggregate demand and output in 2008 and 2009, but somewhat less than a mechanical application of the fiscal rule based on our oil price assumption would imply. The authorities conduct fiscal policy knowing how monetary policy will react. Today’s flexible inflation targeting regime, giving weight to both variability in inflation and variability in output and employment, establishes a firm framework for monetary policy and provides clear guidelines on how monetary policy is to respond in different situations. Monetary policy in Norway is oriented towards low and stable inflation, with annual consumer price inflation of close to 2.5 per cent over time. Flexible inflation targeting builds a bridge between the longterm objective of monetary policy, which is to keep inflation on target and provide an anchor for inflation expectations, and the more short-term objective of stability in the real economy.

The condition of the banks which perform the financial intermediation function is of key importance for the whole economy. This accounts for the Bulgarian National Bank’s enormous responsibility for the fulfilment of the mandate entrusted to us by law and specifically for maintaining the stability of the banking system. This requires that we stay traditionally focused on the high capital and liquidity requirements for banks. These requirements are not ends in themselves, but follow from the need for banks to have reserves at hand. On the one hand, the reserves allow them to absorb costs and losses arising from the worsened quality of assets in the adverse macroeconomic environment. On the other hand, they support banks’ lending capacity. Consequently, it is logical to expect that we would continue to apply the measures of the anticrisis package, approved in March this year. Furthermore, we analyse, on an ongoing basis, the situation, and as a macroprudential supervisory authority we consider the likely scenario of a worsening economic crisis and the related significant deterioration in loan portfolios. Under this scenario, banks may need to temporarily operate under the combined capital buffers requirement, being ready to draw up and implement plans for rebuilding them. The prospect of continuing negative developments in the economy is a reason for us to expect materialization of credit risk and deteriorated quality of assets on banks’ balance sheets. It seems very likely that the trend of decreasing amount and share of non-performing exposures, seen over the last few years, may reverse.
Last summer I said that the decision as to when to start raising Bank Rate would likely come into sharper relief around the turn of this year. Well the year has turned, and, in my view, the decision proved straightforward: now is not yet the time to raise interest rates. This wasn’t a surprise to market participants or the wider public. They observed the renewed collapse in oil prices, the volatility in China, and the  4  Refers to non-farm business sector unit labour costs in the US and unit labour costs based on the MPC’s backcast in the UK. 5  Where openness is measured by the share of exports in GDP. 6  Vlieghe (2016), Rachel and Smith (2015), Carney (2013) and Carney (2010). BIS central bankers’ speeches  5  moderation in growth and wages here at home since the summer and rightly concluded that not enough cumulative progress had been made to warrant tightening monetary policy. The outlook for monetary policy depends on three things: the MPC’s objectives, its strategy, and the UK’s economic prospects. Our objective is clear: to return inflation to the target in a way that avoids undue volatility in output and employment. The MPC’s strategy for achieving the inflation target varies over time, and it depends on the nature of shocks hitting the economy and the risks facing the economy.

If, for instance, there is a shock that leads to inflation being pushed upwards despite weak demand, a very rapid return to the inflation target would entail large negative effects for the real economy – an even greater slowdown in the already weak demand – than if the recovery was allowed to occur at a slower pace. If inflation is instead held back despite good  BIS Review 87/2006  1  growth in demand, attempts to quickly return it to target through very expansionary monetary policy could lead to the economy overheating. Over time a policy that quickly subdues inflationary impulses would perhaps result in more stable inflation, but there would be substantial fluctuations in the real economy. We have chosen a two-year horizon for monetary policy because this is considered to give sufficient scope in most cases to ensure acceptable developments in the real economy. However, the rate at which it is desirable to bring inflation back on target depends on what shocks the economy has suffered and how substantial they are. Sometimes deviations from the target may be so substantial that there is reason to allow inflation to return to target beyond the normal two-year horizon and in this case we explain the reasons when we announce our decision. However, the ambition remains the same; that is, a desire to ensure that inflation is low and stable a few years ahead, while giving some consideration to the stability of the real economy. What significance do house prices and household indebtedness have?
This is the fruitful paradox of recent years: the coexistence of “domestically focused” policies that results in a “globally-cooperative” monetary environment. And for this purpose, monetary policy must be conducted in full independence. That is, independently of political powers, of course, and we regret to have to say it again. But also 1/3  BIS central bankers' speeches  independently of short-term pressures or any particular economic interests. So we take account of market indications, but we must not be market dependent; this includes not relying too exclusively for inflation expectations on market-based measures. We are data dependent and I say this in particular for the ECB: in our coming Governing Council meetings, we will assess actual economic data and we will act accordingly if and when needed. II. Financial stability issues and crises On financial stability issues, the Bretton Woods system has undergone numerous disruptions and crises since its inception, including its quasi break-up in 1971. And a decade after the GFC, we still have to define the future of our current international monetary system, or “non-system” as many describe it. Today we will discuss financial stability risks caused by the growth of cross-border flows and financial assets. Over the past few years, international capital flows have been too abundant in good times, – potentially fueling domestic bubbles and destabilising national financial systems – but also prone to “sudden stops” in bad times.

Our organisation has proved efficient and flexible. Inside the Eurosystem, we have reached the appropriate balance between centralisation and decentralisation. Most recently, we have announced that the maturity of the main refinancing operation settling on 19 December 2007 will be lengthened to two weeks to cover the end of the year, and the operation settling on 28 December 2007 will allow potential further liquidity demands to be satisfied. For France, having banking supervision inside the Central Bank has proved a big advantage and enabled us to react quickly and with flexibility in fast changing circumstances. A broader challenge relates to the policy reaction. To which extent should it be influenced by financial turbulences? Obviously, action by Central Banks has to be fully consistent with their mandate, which, for the Eurosystem, means preserving, first and foremost, price stability. Past episodes of financial turbulences have occurred in an environment of low and stable inflation, with expectations solidly anchored. We live today in a less benign environment. Strong growth in big emerging economies is increasingly putting pressures on the price of oil, food and other commodities. While labour supply in emerging countries will remain abundant, it is not all that clear it will remain cheap and inflation pressures are piling up in many emerging countries. This translates into higher import prices for developed economies. That said, the Governing Council has judged, in its last two meetings, that the ongoing reappraisal of risk in financial markets has led to continued uncertainty.
Advances in the last two decades have made Bayesian econometrics a key tool for central banks. Norges Bank has benefited greatly from this, and two of our most important policy tools are results of such advances. NEMO (Norwegian Economy Model) is our estimated DSGE model. The model is based on international research and model development over the past 20 years. We use it to produce forecasts and guide monetary policy analysis. This year, the hype is “forward guidance”. The Fed does it, the Bank of England does it, and the ECB also. We have done it since 2005. We publish forecasts of the key policy interest rate and NEMO has been essential for the construction and, above all, explanation. When I describe Norges Bank’s policy decision at press conferences, I often refer to NEMO equations in order to explain our decisions. Our second key policy tool is our System of Averaging Models, SAM. The short-term forecast from SAM is the basis for the initial conditions when we use NEMO and when we make our policy decisions – and hence of core importance to monetary policy. Theory and experience suggest that a weighted average of forecasts from different models is often more accurate than forecasts provided by individual models. Norges Bank’s short-term forecasts are based on combinations of statistical and econometric models, where each model is assigned a probability depending on past density forecasting performances. Currently, we are working on how to incorporate mechanically density predictions from SAM into NEMO.

The latest numbers for wage growth, in 2020 and  2020  1 0 3  2021, have been adjusted for the various distortions affecting the official data, and are below the headline figure. But this year’s number is still  4  5  6 7 8 Unemployment, per cent  Regular-pay average weekly earnings (AWE) in the private sector. The chart uses a Bank staff estimate of underlying AWE that strips out Covid-related compositional effects. Sources: ONS, Bank of England, and Bank calculations. noticeably higher than would normally be the case at the current rate of unemployment. (And arguably, if you think that some of those on furlough have actually been looking for other jobs while on the scheme, and therefore helping to depress wage growth to some degree, perhaps a better estimate would have both the red dots somewhat to the right, making the latest figure for wage growth look that much stronger, compared with the pre-pandemic relationship8.) However long it lasts, and whatever the long-run equilibrium rate of unemployment, there looks to have been rise in the shorter-term equilibrium (the so-called “NAIRU”). Conclusion This is an extremely challenging period for monetary policy. Despite relatively weak growth over the past two years as a whole, domestically and globally, inflation has risen very significantly. In this country it was over 4% in October.
Given the post-crisis fall in the economy’s productive capacity we appear to be operating close to full capacity, even at a growth rate of less than 2%. Unemployment is at a 42 year low. Labour market indicators such as job to job flows, quit rates, and recruitment difficulties are signalling tightness in the market. Domestically generated inflation pressure, however, appears low. Measuring domestically generated inflation when externally generated inflation pressure is high, as at present, is not straightforward. Higher import prices work their way into the domestic production chain and can appear as domestic inflation. Bank staff calculations suggest that adjusted for this effect indicators of domestic inflation pressure are below levels consistent with the 2% target. And that is particularly true for the most domestic of the domestic measures, pay and unit wage costs. 23  See Farmer (2013) and Farmer and Nicolo (2017) 11  All speeches are available online at www.bankofengland.co.uk/speeches  11  Whole economy average weekly earnings grew in the year to August at a rate of 2.2%. Higher frequency indicators suggest a faster rate of growth: 3 month on 3 month annualised AWE growth for regular pay is 2.9%. But wage data are volatile and can mislead. Between 2014 and 2016, the 3 month on 3 month measure annualised AWE gave readings well above 3% which did not translate into sustained higher rates of pay growth.

New capital The second opportunity is in new capital. New or alternative capital continues to increase its share in the global reinsurance industry, as alternative risk transfer solutions in the form of insurance-linked securities (ILS) such as catastrophe bonds, collateralised reinsurance and sidecars, among others, gain acceptance. Alternative capital grew 6% in the first half of 2015 to $ billion, while traditional capacity fell by 3% to $ billion. While the influx of alternative capital may have led to excess capacity, softening rates and narrowing of profit margins, this same capital has the potential to unlock opportunities for insurers to access new products and markets. As I mentioned earlier, Asia, in particular, is especially attractive to insurers and reinsurers:  BIS central bankers’ speeches  3  •  Alternative capital, when deployed to markets in need of risk capital for protection against losses, will allow insurers and reinsurers to underwrite more risks and better serve society’s needs. •  As countries in Asia look to strengthen resilience to potentially debilitating events like catastrophes, it is not unexpected that alternative risk transfer mechanisms, such as catastrophe bonds and government pools, will increasingly feature as regional insurers leverage alternative sources of risk capital to complement traditional reinsurance. The management of catastrophe risks in Asia-Pacific is a priority for insurance players as well as governments in the region. A research by Lloyd’s has shown that a 1% rise in insurance penetration translates to a 22% reduction in taxpayers’ contribution following a disaster.
William C Dudley: Household borrowing, student debt trends and homeownership Opening remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Economic Press Briefing on Household Borrowing, Student Debt Trends and Homeownership, Federal Reserve Bank of New York, New York City, 3 April 2017. * * * Andrew Haughwout, Joseph Tracy and Wilbert van der Klaauw assisted in preparing these remarks. Good morning, and welcome to the New York Fed’s Economic Press Briefing. Today, we will focus on recent developments in household borrowing, with special attention on student debt. As always, what I have to say reflects my own views and not necessarily those of the Federal Open Market Committee or the Federal Reserve System. Following a period of steady deleveraging that began during the Great Recession, households have gradually increased their borrowing during the past three years. Later this year, total household debt is expected to reach its previous peak, from the third quarter of 2008. Given past experience, one might wonder whether this level of indebtedness is sustainable or a reason for concern. Answering this question requires a fuller consideration of household balance sheets and a deeper analysis of who is indebted. The increase in liabilities in recent years has been accompanied by significant improvements in the value of assets held by households, due to strong growth in housing and stock prices. Moreover, household incomes have been rising at a moderate pace due to sturdy job gains and modest wage increases.

Over the past two decades, there has been a significant change in the financing of higher education—with state and local funding covering a smaller share, and students and their families bearing a greater proportion of rising college costs. While the federal student loan program has undoubtedly helped mitigate the impact of higher costs on college enrollment, more students now leave college with higher amounts of debt. At the same time, college dropout rates remain stubbornly high, and empirical evidence indicates that graduates from some colleges have had trouble finding good-paying jobs. Another important question concerns the consequences of growing student debt for the overall economy. To investigate this question further, we linked our CCP dataset to student enrollment records from the National Student Clearinghouse in order to analyze the relationship between homeownership, educational attainment and student debt. Not surprisingly, our research shows a strong positive association between educational attainment and homeownership, consistent with the fact that higher educational attainment is associated with higher average earnings. Interestingly, this relationship appears to hold irrespective of family background, suggesting that colleges may be successful in “leveling the playing field” across students from different socioeconomic backgrounds. At the same time, our analysis reveals that those with significant student debt are much less likely to own a home at any given age than those who completed their education with little or no student debt.