samchain/econo-pairs-v1 huggingface dataset:
As for the price stability component of our dual mandate, the majority of FOMC participants – including me – judge our objective for overall inflation to average 2 percent over the medium term. With my own view that inflation is likely to run below this rate over the next few years, I believe we run the risk of missing on our inflation objective as well. Two different perspectives on the economy Central bankers must formulate monetary policy with the understanding that our knowledge is imperfect. We may have incomplete and sometimes competing views of the forces that generate current economic conditions. This is especially true in the difficult circumstances we face today. In my view, we should try to formulate a monetary policy strategy that carefully balances the risks associated with the reasonable alternative economic scenarios that we face and is as robust as possible to miscalculations as to which of these scenarios is predominantly true. Let me now discuss two quite different perspectives that could account for the disappointing slow growth and continued high unemployment that we confront today. These two conditions are important to consider in that they have markedly different monetary policy prescriptions. The first storyline I will refer to as the “structural impediments scenario”. In this scenario, the recent period, which has been referred to as the Great Recession, was accompanied by an acute period of structural change, skills mismatch, job-killing uncertainties and excessive  2  BIS central bankers’ speeches  regulatory burdens.

In such an adverse situation, the inflation safeguard triggers an exit from the now-evident excessive policy accommodation before inflation expectations become unhinged. We would not have the desired reductions in unemployment, but then again, there wouldn’t be anything that monetary policy could do about it. We would suffer some policy loss in that a 3 percent inflation rate is above our 2 percent target. But we certainly have experienced inflation rates near 3 percent in the recent past and have weathered them well. And 3 percent won’t unhinge long-run inflation expectations. We are not talking about anything close to the debilitating higher inflation rates we saw in the 1970s or 1980s. We would also know that we had made our best effort. Conclusion Today, I have outlined an appropriate course for monetary policy to take when we cannot know with certainty the degrees to which various forces are driving the economic weakness we currently face. If, as I fear, the liquidity trap scenario describes the present environment, we risk being mired in recession-like circumstances for an unacceptably long period. Indeed, each passing month of stagnation represents real economic losses that are borne by all. In addition, I worry that even when the economy does regain traction, its new potential growth path will be permanently impaired. The skills of the long-term unemployed may atrophy and incentives for workers to invest in acquiring new skills may be diminished. Similarly, businesses facing uncertain demand are less inclined to invest in new productive capacity and technologies.
Real prices for office premises in central locations (index 1981=100) 500  450  400  350  300  250  200  150  100  50  Stockholm  Göteborg  c05 de  03 c-  de  c04  02 cde  de  c01  c00 de  de  98  c99 de  97  cde  de  c-  96 cde  c95  c94 de  de  92  c93 de  cde  de  c-  91  90  c89  cde  c88 de  de  86  c87  c-  de  c-  85 de  de  c84 de  c83 de  c81 de  de  c82  0  Malmö  Sources: NewSec AB and the Riksbank  6  BIS Review 105/2006  3.

For the credibility of monetary policy, this objective must be maintained: this 2% target is a medium-term “anchor”, at a time when there is so much volatility and short-termism affecting the economy. 2) What are, with regard to this objective, the challenges central banks are facing? Today, the Eurosystem is faced with two main challenges: deflationary pressures on the one hand, and the risk of an unanchoring of expectations, on the other. a) First, a certain number of factors are currently contributing to low inflation. Primarily, the euro area is faced with deflationary pressures associated with a series of economic shocks: firstly, the fall in oil prices, from over EUR 80 per barrel in mid-2014 to EUR 34 in early March 2016, or more than 2.5 times lower, as well as the decline in commodity prices; secondly, the slowdown in growth in emerging economies and chiefly China; and, lastly, inadequate growth in the euro area with persistently high unemployment, which curbs wage rises and weakens demand and price growth. Moreover, structural factors, such as the ageing population, are likely to exert downward pressure on the “natural” interest rate, a term coined by the Swedish economist Knut Wicksell over a century ago. This rate can be defined as the interest rate consistent with the full employment of the factors of production. In this case, in order to achieve the right balance between savings and investment, markets rates must come down too.
If a product needs to be recalled, the manufacturer updates the common data pool with an instruction, alerting the distributor or dispenser at the next point in the supply chain. If a recalled product has already been sold, the points of sale can be tracked and those affected can be notified. Panic is no longer systemic; it is quickly localised. (c)  Mapping the network  If data are not standardised, mapping complex networks is a high-dimension jigsaw puzzle. Understanding the underlying picture is taxing and time-consuming. Capturing the same data in a standardised way means that plotting the network becomes a much simpler game of join-the-dots. Experience with both product supply chains and the World Wide Web demonstrate the benefits of doing just that. In global product space, the recent work of Ricardo Hausmann and colleagues gives us some tantalising glimpses of the possibilities. They have recently constructed an “Atlas of Economic Complexity”.17 This is a visual representation of the product categories that contribute significantly to a country’s exports. Those product categories can in turn be mapped to measures of complexity. For example, iPhones are the fruits of a more complex manufacturing process than ice-cubes. This product network mapping provides new insights into trading opportunities and risks. For example, it allows country-specific measures of economic complexity to be constructed. These can explain almost three-quarters of the variation in income across countries.

In terms of actual measures – something that Antony also wants me to talk about – I would refer you to the eighty recommendations in the Report of the Focus Group on Financial Services published in January 2007 as Hong Kong's response to the Eleventh FiveYear Plan of the country published in 2006 and as Hong Kong's input to the National Finance Working Meeting in 2007. As you may be aware, the implementation of our overall strategy and many of the detailed recommendations involve the relaxation of controls in the financial systems on the Mainland. While the benefits of financial liberalisation are clear, so are the risks to financial stability, as the Asian financial crisis of 1997-98 and the current turmoil in the developed financial markets demonstrate so vividly. Here there should be a strong emphasis, to quote the Premier again, on gradualism, controllability and the ability to take initiatives at the right time. And in the context of pursuing the complementary, mutually-assisting and interactive relationship between the two financial systems, financial liberalisation should not be seen as helping Hong Kong. We welcome support from the Mainland in discharging our legal responsibility in maintaining the status of Hong Kong as an international financial centre, but I hope I have convinced you that in developing our strategy and our recommendations, we very much have the national interest foremost in our minds.
Indeed, I would like to acknowledge in particular today the very substantial contribution that Nigel has made to the business community here in Northern Ireland over the past two decades, in the face of many challenges and over a period of great change and opportunity. The Northern Ireland economy has made great progress since those days in the late 1980s and early 1990s when I came here with my CBI economist hat on. Through the 1990s and in the 2000s prior to the financial crisis, Northern Ireland achieved an average rate of growth of 3% a year – significantly above the growth rate recorded in the UK as a whole. 1 Unemployment fell by two-thirds, from over 12% of the labour force in the early 1990s to just 4% in the mid-2000s. As in the rest of the UK, the unemployment rate here in Northern Ireland has risen in the recession. But it remains below the UK average – in contrast with the 1980s and 1990s when unemployment here was significantly above the national average. There are clearly some particular challenges facing the economy here in Northern Ireland as we move into the recovery phase of the cycle. Compared with the rest of the UK, employment is more dependent on the public sector and the participation rate in the labour force is lower. Ireland’s fiscal and banking problems may well have a bigger impact on the economy here than elsewhere in the UK.

Continued strong global growth could generate further upside pressure from rising energy and commodity prices. Wage growth could also pick up more quickly as the recovery proceeds, as pay settlements recoup some of the ground lost in the recession and employees seek compensation for relatively high inflation. And the longer this period of relatively strong growth in consumer prices continues, the greater is the risk of a more fundamental upside shift in future expectations of inflation. Raising Bank Rate sooner rather than later would provide more protection against these upside risks, by restraining the ability of firms to pass through higher costs into domestic prices and helping to limit import price inflation through the effect on the value of the pound. With inflation significantly above target and set to go higher, such a policy would reinforce the credibility of the MPC’s commitment to stable prices – helping to keep inflation expectations in line with the 2% target. It should also help build confidence that the Bank of England is “on the case” in terms of its remit, taking appropriate policy action to return inflation to target rather than appearing to just hope for the best. The third important argument is the extremely low level of interest rates we are starting from. Taken together with the monetary stimulus from Quantitative Easing, there is still likely to be a considerable support for growth from monetary policy even if interest rates are raised somewhat from their current level.
The National Bank incurs risks on its investments that cannot be hedged based on monetary policy concerns. Losses from gold and foreign currencies in particular can be significant. An adequate volume of reserves allows the National Bank to bear these risks, especially since such fluctuating values tend to correct themselves over the long term. Greater diversification of both the currencies and the investment instruments can bring about the necessary growth of monetary reserves. Diversification effects permit investments in higher-yielding and - from an individual perspective - riskier investments such as equities and corporate bonds without substantially increasing the overall risk. The return potential of monetary reserves depends on the liquidity and security requirements of the investments in terms of monetary policy considerations. Pursuing an efficient investment policy for the National Bank means achieving a return potential that is as high as possible within the existing restrictions. Under the new Act, the National Bank will pursue a broader diversification of its investments and, in particular, also invest in equities and corporate bonds. Because of the National Bank’s special position as a central bank, the exposure to equities and corporate bonds is subject to some specific considerations: first, a conflict of interest may arise  BIS Review 39/2004  1  between monetary policy and investment policy. For instance, interest rate hikes by the National Bank can have a negative impact on a company’s profits. Second, owing to its responsibilities in the area of system stability, the National Bank has insider information in the financial sector.

Philipp Hildebrand: The new investment policy of the Swiss National Bank Introductory remarks by Mr Philipp Hildebrand, Member of the Governing Board of the Swiss National Bank, at the half-yearly media news conference, Geneva, 17 June 2004. *  1. *  *  The evolution of the new investment policy  The new National Bank Act has been in force since 1 May 2004. The management of monetary reserves is explicitly mentioned in the NBA as part of the Swiss National Bank’s mandate for the first time. The management of these reserves is subject to the primacy of monetary policy and implemented according to the criteria of liquidity, security and return. In so doing, the National Bank must guarantee professional, modern asset management and risk management. Until the mid-1990s, the National Bank only had limited possibilities for managing its assets. Monetary reserves were mainly held in the form of gold and foreign-currency government bonds with a maturity of less than one year. Accounting for approximately 80%, the US dollar was the main reserve currency. An easing of investment regulations came about in 1997 when the legally prescribed maximum term for bonds was repealed and repo and gold lending business was introduced. At the same time, the National Bank began to diversify currency risks on its investments to a greater degree and gradually reduced the US dollar portion. The new Act takes this a step further and leaves the permissible investment universe completely open. 2.
One estimate of r-star in the United States, from a model developed by Holston, Laubach, and myself, is around half a percent in the United States. That’s actually now lower than at any time before the Great Recession.3 We’ve seen similar declines in r-star in other advanced economies, including in Japan and the euro area. In fact, the GDP-weighted average of estimates of r-star for Canada, the euro area, the United Kingdom, and the United States is now also half a percent, nearly 2 percentage points below where it stood at the turn of this century.4 These very low neutral rates are largely a result of global, longer-term structural factors. They’re driven by demographic changes, slow productivity growth, and demand for safe assets—all of which are unlikely to reverse any time soon.5 One key takeaway from these global trends is that interest rates and inflation are going to stay lower than we’ve come to expect in the past.6 This means that monetary policy will likely be more frequently constrained by the lower bound, or LB for short, creating a set of challenges for policymakers. In particular, life near the LB means central banks have much less room to maneuver using adjustments in short-term interest rates when faced with a downturn. The Fundamentals of Inflation Targeting Given that inflation targeting was designed in a world where inflation was undesirably high, does it still work for a world with the opposite problem?

The credit institutions need only comply with the minimum reserve requirement on average within the reserve period. This contributes to the stabilisation of money market developments. A key element for the functioning of the operational framework has been the TARGET payment system. This payment system interlinks the 15 national real-time gross settlement systems and the ECB’s payment system, by providing a uniform platform for the processing of crossborder payments in real time. It has allowed a single interbank market interest rate across the euro area to prevail. Overall, the operational framework of the Eurosystem has proved efficient in providing liquidity to the banking system. This does not mean that this framework is rigid. On the contrary, it must adapt to the situation and evolution of the money market in the euro area. In this regard, the Eurosystem switched from a fixed to a variable rate tender for its refinancing operations on 8 June 2000. Let me make clear that this technical decision does not in any way modify the stance of the Eurosystem’s monetary policy, nor does it preclude renewed use of fixed rate tenders in the future. The sole aim of this  BIS Review 58/2000  2  changeover is to address the severe overbidding problem which developed in the context of the fixed rate tender procedure. Monetary and economic developments in the euro area Turning from theory to practice, I shall now consider current monetary and economic developments in the euro area.
Global policy Globalisation creates the conditions for increased growth and welfare, but entails greater risks in terms of the threat to the environment, access to strategic commodities, security and a growing mutual dependence. Globalisation must therefore be matched by cooperation between countries and regions. It is my conviction that we will need an increasingly international political cooperation to be able to manage the downside of globalisation and to reduce the economic gaps in the world. With regard to the risks related to global imbalances, there is an organisation that was given the role, back when it started more than 60 years ago, of monitoring global financial and economic stability: the International Monetary Fund (IMF), which was formed to provide temporary balance of payments support to its 45 western member countries. 11 Since then there have been major changes in the world economy. The number of IMF member countries has increased to 184, the fixed exchange rate system has collapsed and worldwide capital markets have been established. The IMF’s lending has declined from approximately USD 60 billion in 2003 to around USD 20 billion in 2006, which also entails a major reduction in the income that has so far financed the organisation's activities. At present, there are intensive discussions within the IMF and its member countries as to how the organisation should be reformed in order to better meet the needs and problems of a new age.

This would subdue growth in Sweden, which has around 40 per cent of its exports to the euro countries. Conclusions and ways forward It would be wrong to say that globalisation is a force of nature that cannot be stopped. However, it would be very costly for an individual country or region to try to remain outside of this process. This alternative does not really exist in practice. That applies in particular to a country like Sweden, which is small and strongly dependent on foreign trade, and integrated with the outside world. At the same time, globalisation brings new demands and challenges. Many of these require global or regional solutions. There are thus two additional paths to take: One is that society and the business sector try to manage the changed conditions that globalisation involves in the best way possible, and one is that Sweden together with other countries/organisations actively works to promote regulatory systems,  6  BIS Review 35/2006  infrastructures, foreign aid and cooperation in the fields that require widespread support. This applies in particular to the global imbalances I have described here. Mobilisation of resources In the domestic field, the challenge for Sweden in future is to develop and renew the business sector so that we can meet the increasingly stiff competition. The general government and local governments will probably be unable to create very many new jobs; Sweden’s demographic situation means that taxes will be used to maintain the level of service and transfers that already exists.
At the Bank, we not only recruit widely but also encourage colleagues to collaborate across the organisation and spend time in different areas to develop the varied skills required of a modern central banker. 4  In large organisations, developing future leaders requires discipline. For example, Vittorio Colao, the CEO of Vodafone, reviews the company’s top 200 executives annually to assess performance, set development actions and manage those who are having difficulties. The Executive Committee at Vodafone then discusses the progress of a different subset of their leaders at each Executive Meeting, making the process transparent and rigorous. The Bank of England has adopted a similar approach. Developing the right people also requires a culture of inclusion that values diverse ideas, encourages open debate, and empowers people at all levels to take initiative. In a moment, I will come onto the steps the Bank of England is taking in these regards. Finally, for leaders, having the right people also means being able to draw on trusted outside perspectives such as an external advisory board or informal contacts with other leaders. I’m fortunate that in my role I can regularly share experiences with a wide range of leaders in diverse fields. Of these, the most important sounding boards are my fellow central bankers. In this circle of trust, we can have regular, frank discussions of issues we either don’t understand or that are particularly sensitive. The second critical thing that leaders do is to set the priorities for their organisation.

Administering a systemically important benchmark is a new departure for the Bank – but it is a role we accept given our statutory ability to collect the underlying data. We will administer SONIA as a utility, for the benefit of the market, on a cost-recovery basis. I know François will say more about how the Sterling Working Group made its decision. For my part, I would like to take this opportunity to thank François, members of the Working Group, and their institutions, for their commitment and hard work in getting to this point. However the task is not yet finished. Attention now turns to the adoption of SONIA as an alternative to sterling Libor. The Working Group has an important ongoing coordination role to play. The main focus so far has been on the derivatives markets. Indeed we invited dealers to form the Working Group in the first place because our experience of derivatives reform suggests they can be most influential in catalysing a transition. But it is stating the obvious to say that demand for derivatives stems partly from the desire to hedge underlying cash market instruments. That reinforces the need, ultimately, for a broadly-based transition. 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  That can be to the benefit of any user of Libor who bears exposure to bank credit risk not through preference but through lack of established alternatives. I personally suspect that many users would be in this category.