samchain/econo-pairs-v1 huggingface dataset:
I want to make every effort to see that Eesti Pank has no need to come to the Riigikogu asking for capital at a time of such crisis. It is to avoid precisely this that the central bank builds up reserves and I am glad that the Eesti Pank Supervisory Board shares this opinion. For the central bank to be financially independent, it needs to maintain and invest its assets. The current situation in the financial markets, where interest rates on sovereign bonds have fallen to very low levels, poses new challenges for the central bank as a long-term conservative investor. Eesti Pank has reacted to changes in the operating environment and has spread its risks by adding further asset classes to the investment portfolio and investing money in the sovereign bond markets of more countries than before. •  Eesti Pank’s return on its investment was several times higher in 2014 than the target set at the start of the year, and reached 22.8 million euros. Falling interest rates throughout the year made investments in bonds profitable and the increasing share portfolio of Eesti Pank meant that we earned significant income from investments in shares. As well as earning income, Eesti Pank is careful to keep control over its spending and to use its money efficiently. For this reason we have put the Maardu manor site up for sale, as we do not need it in carrying out the main functions of a central bank.

Orphanides, Athanasios, and John C. Williams, “Inflation Targeting under Imperfect Knowledge,” in Frederic Mishkin and Klaus Schmidt-Hebbel (ed.) Monetary Policy under Inflation Targeting, Central Bank of Chile, 2007. Reprinted in FRBSF Economic Review, 2007. Reis, Ricardo, “Losing the Inflation Anchor,” Brookings Papers on Economics Activity, Fall 2021, 2022, 307-361. Swanson, Eric T., and John C. Williams, “Measuring the Effect of the Zero Lower Bound on Medium- and Longer-Term Interest Rates,” American Economic Review, 104 (10), October 2014, 3154-3185. 1 Board of Governors of the Federal Reserve System (2012). 2 Board of Governors of the Federal Reserve System (2020). 3 See Orphanides and Williams (2004, 2005, and 2007). There is a large theoretical and empirical literature on the formation of expectations. See, for example, Evans and  Honkapohja (2001), Malmendier and Nagel (2016), Coiboin et al (2022), and references therein. 4 As discussed in Levin and Taylor (2013), data on longer-run inflation expectations were spotty in past periods of high inflation. This situation has improved markedly over  the past 20 years, first with the appearance of inflation-indexed Treasury securities, and more recently with the introduction of the Survey of Consumer Expectations in 2013, and other surveys of businesses and market participants. 5 This is constructed by inferring the expectations 6-10 years from matched individual responses for “the next ten years” and “the next five years,” then taking the median  from the sample.
On 1 January this year, the United Kingdom lost its financial passport. We had actively prepared for this, and fortunately the continuity of financial services has been maintained. Despite the pandemic, by end-2020, more than close to 2,500 jobs had already been transferred and around 50 British entities authorised, with the relocation to France of at least EUR 170 billion of assets. More relocations are expected and should be speeded up over 2021. On a more structural level, Brexit means that Europe has to develop its own financial autonomy. We need to reinforce our market infrastructures, especially for the clearing of interest rate instruments, with the strengths of the Paris marketplace. We also need a genuine “Financing Union” to channel Europe’s savings surplus – close to EUR 220 billion – more efficiently into productive investment. It is now – otherwise it will never happen – that we need to seize the dual opportunity offered by Brexit and the reconstruction to truly build a Capital Markets Union: I stand alongside the AMF and its Chairman in saying this. 2/ It is precisely this private investment that will prove decisive in supporting the economic reconstruction. In this reconstruction, we Europeans will have to be Schumpeterians while also remaining Keynesian: in 2020, the US economy, so to our West, proved twice as resilient as Europe’s.

We have seen progress in this area over the past few years with some firms hiring outside experts, engaging in cultural diagnostic work and implementing programs that focus on improving ethics, behaviors and internal culture. We’ve also seen progress in our direct engagement with boards of directors – and we’ve seen this across institutions of all sizes. When we, as supervisors, first began requiring deeper engagement with directors and senior leaders, the reactions varied, with an initial wariness of the purpose. In fact, directors were often accompanied by a compliance or regulatory relations liaison during our early interactions with them. Over time, though, as senior leaders and board members recognized the advantages of this level of engagement, the process has been smoother and our exchanges are becoming more engaging and direct (and few if any “escorts” are present during our interactions now). While the level of  2  BIS central bankers’ speeches  engagement varies across firms, in general, we are seeing boards being more active in asking questions, providing oversight of management and engaging with supervisors. We, in turn, have deeper insight into decision making dynamics at the board and c-suite level, including the how and why of decision making on key strategic issues. Regular communications also encourage early and proactive surfacing of issues. In addition, we’ve seen good progress in recruiting additional directors to complement current skills on the board – better positioning the board to engage with the senior management team in a productive and appropriately challenging way.
Much of the fall in the unemployment rate is the result of workers in their prime leaving the labour force. 2, 3  1  See, for example, Acemoglu, D and Autor, D (2011), “Skills, tasks and technologies: implications for employment and earnings”, Handbook of Labor Economics, Volume 4b, Elsevier. 2  See Yellen, J (2014), “Labor market dynamics and monetary policy”, Remarks at the Federal Reserve Bank of Kansas City Economic Symposium, Jackson Hole. In addition, Erceg and Levin (2013) show that there was a reduction in US participation rates of around 2½% between 2007–12. Of that, rates fell most markedly among the young (reflecting higher educational enrolment) and ‘prime age’ adults 25–54 years old. There was a sharp up-tick in older workers claiming forms of social insurance; but that was partly offset by higher participation rates among older workers, perhaps reflecting a need to offset lost retirement income. Erceg, C and Levin, A (2013), “Labour force participation and monetary policy in the wake of the Great Recession”, IMF Working Paper No. 13/245, July. 3  The 3pp fall in the participation rate is a marked break from its stable level in the preceding decade. Overall participation was flat at around 66% between 2004–7. It had fallen to below 63% in early 2014 (Bureau of Labour Statistics). By contrast, before that, and over the longer run, participation rates had been essentially acyclical – invariant to business cycle conditions (Erceg and Levin, 2013).

The economy moves from point B to point C, so employment recovers (to above its pre-crisis equilibrium), but wages continue to fall. BIS central bankers’ speeches  15  Weak wage growth With some additional structure, the simple model above can be used to understand unemployment and wage inflation.23 If wages are adjusted infrequently (ie there is nominal wage stickiness), then the following relation between wage inflation, 𝜋 𝑤 , and unemployment can be derived: 𝑤 𝜋 𝑤 − 𝛽𝐸𝜋+1 = −𝜆𝜑(𝑢 − 𝑢�)  (WPC)  𝑤 captures expected inflation, 𝑢� is the ‘natural’ rate of unemployment (which can where 𝛽𝐸𝜋+1 vary over time) and 𝜆 is a parameter capturing the degree of wage stickiness. Equation (WPC) is the Wage Phillips Curve. For a given natural rate of unemployment, WPC traces out the relationship between wage growth and unemployment. Chart 9 contains a reducedform representation of the WPC, taken from Broadbent (2014). As that chart shows, outturns for wages in 2013 and 2014 were considerably below the past relationship, which would otherwise suggest that unemployment would be expected to be around 10% given the observed decline in wages. In light of equation (WPC), one way to interpret this is as there having been a decline in 𝑢�, the natural rate, such that a given rate of unemployment puts greater downward pressure on wages. Broadbent (2014) discusses Chart 9 further. 23  16  See Gali, J (2011), “The return on the wage Phillips curve”, Journal of the European Economic Association, 9(3), June.
19 20 21  For example, Nagel, S and Malmendier, U (2011) Stiglitz (1997) has described a similar process for the price Phillips curve based on asymmetric price adjustment. See Borio and Filardo (2007). 9  All speeches are available online at www.bankofengland.co.uk/speeches  9  Mark Carney has pointed out how global influences will shift the Phillips curve both lower (due to the positive supply shock from increased product and labour market integration) and flatter (due to integration of global value chains, increased competition and contestability of product and labour markets). The downward shifts, which will persist as long as integration continues, are disinflationary, pointing to running the domestic economy at tighter spare capacity to meet the inflation target. 22  For the policymaker a flattening of the Phillips curve poses a more difficult challenge than under-measurement of labour utilisation or a lowering of the natural rate or of inflation or real pay expectations (Chart 9). The latter pose the challenge of judging the timing of policy action right; excess (deficient) demand for labour will drive pay up (down) as before as unemployment falls (rises). But the point – i.e. the level of unemployment and the rate of growth of pay – at which that will happen is lower. Getting the timing of monetary policy right is a formidable challenge for the monetary policy maker. But it is a familiar one.

As I noted earlier, one of the major developments of Phillips’ original work was the incorporation of inflation expectations into the curve plotting the relationship between pay growth and unemployment. This enabled the Phillips curve framework to explain the experience of the 1970s in which unemployment rose but pay did not fall. 12  11  That can happen if the efficiency of matching changes – perhaps due to technology – or because of compositional changes to the workforce – if different cohorts of worker have different rates of frictional unemployment. Somewhat counterintuitively, the data do not tend to support the idea that matching efficiency is improving over time. See Pizzinelli and Speigner (2017) for a discussion. 12  Phillips (1958) does investigate the role of inflation – noting that the relationship was absent in years when a rapid rise in import prices had initiated a wage-price spiral – but does not incorporate inflation or inflation expectations into the mathematical relationship. 6  All speeches are available online at www.bankofengland.co.uk/speeches  6  The inflation adjusted Phillips curve adds inflation expectations as a driver of pay growth alongside excess supply (or demand) for labour relative to the natural rate. In order to preserve the value of real wages workers are assumed to require compensation for expected inflation as well as whatever pay increase or decrease the tightness or looseness of the labour market would warrant.
The SNB takes stock at the end of each year and distributes part of these profits to the Confederation and the cantons. If the SNB had to pay out money ‘debt-free’, as called for by the initiative, it would be giving money away without receiving an equivalent amount in return. However, the SNB would not be able to earn income on the money it gives away. In a system with ‘debt-free’ payments, we would therefore be unable to make an annual distribution to the Confederation and the cantons. It is important to recognise that economically speaking, the two approaches are ultimately equivalent. We can distribute the profits on our investments every year, or we can give newly created money away, but then no longer pay out any profits. In other words: Under established practice today we distribute the interest on our capital, while under a sovereign money system we would be selling off the family silver, as it were. ‘Debt-free’ payments would not make our country any richer. The initiative’s authors also suggest that, with the introduction of sovereign money, the SNB would be able to redirect the profits that banks currently earn from money creation to taxpayers. This idea is based on the assumption that, by creating money, banks are filling their own coffers. But, in reality it is all the banks’ customers – private individuals as well as companies, savers and borrowers – who benefit from the creation of money by banks.

In a sovereign money system, a bank is no longer permitted to use its customers’ sight deposits to finance loans. Instead, it is obliged to call solely on investors who provide it with money for loans on a more long-term basis. These may be customers with savings deposits, investors on the capital market, other commercial banks, or even the SNB, which can grant the bank a loan. Because sovereign money impairs the useful intermediary function played by banks in the monetary system today, lending would become more difficult and complicated – to the detriment of customers, be they savers or borrowers. 1  For more on maturity transformation as a traditional bank function and its importance to the economy, cf. Jordan, Thomas J., How money is created by the central bank and the banking system, speech held at the Zürcher Volkswirtschaftlichen Gesellschaft, Zurich, 16 January 2018. Page 3/8  The initiative’s undeliverable promises Financial stability  So, what benefits do the initiative’s authors see in sovereign money? They want to separate the creation of money from the granting of loans because they believe this will enhance financial stability. To achieve this goal, they call for customers’ sight deposits to be held in so-called sovereign money accounts as off-balance sheet items, just like securities custody accounts are today. This offers security in as far as this money is not at risk should the bank fail. However, barring the banking system from creating money is the wrong approach to take.
Timothy F Geithner: Change and challenges facing the US financial system Remarks by Mr Timothy F Geithner, President and Chief Executive Officer of the Federal Reserve Bank of New York, before the New York Bankers Association’s Annual Financial Services Forum, New York, 25 March 2004. *  *  *  It is a pleasure to join you at the New York Bankers Association Financial Services Forum. The institutions represented in this room, together with the rest of the New York financial community, remain at the center of the U.S. and global financial systems. Your meeting today takes place against the backdrop of a relatively favorable national and global economic outlook. The U.S. financial system is in reasonably strong shape. Financial innovation has enabled substantial improvements in the quality of risk management and in the capacity of the system to handle shocks. But the benefits of innovation have come with significant challenges to the people who run financial institutions and to those responsible for supervision and oversight. How effective we are in responding to these challenges will determine whether the U.S. financial system is as successful in the future as it has been in the past. The consensus forecast for the U.S. economy expects solid growth this year and next, somewhat above the upper bound of the range of most estimates of U.S. potential growth. Confidence in the sustainability of the U.S. expansion, as measured by changes in these forecasts, for example, seems to be increasing.

Furthermore, differences in demographic trends and structural policy choices between countries in the eurozone (or states in the US) may create or perpetuate some heterogeneity across large monetary areas, an issue you will discuss tomorrow morning. 2 – How to respond to such uncertainties? Without pre-empting discussions, let me flag some possible responses. I’ll first, address the issue of policy uncertainty between central bankers. So far, it is, fortunately, the simplest one: we are not in a so-called “game of chicken” and clarity about policy intentions between ourselves are beneficial for all. The frequent exchanges we have at the BIS, G7, G20 and even events such as this Symposium, are valuable to create mutual trust and avoid the possibility of large policy surprises. Our monetary policies are independent, and rightly so, but they are concerted and we are committed to avoid currency wars. Clarity about our reaction functions clearly also extends to financial markets and the public at large. Second, how could we respond to current state and future path uncertainty? The textbook answer, dating back to Theil and Tinbergen, is to work out your best guess and then act as if you are completely sure. This is sometimes described as the certainty-equivalent approach. There are, however, symmetry assumptions in this type of model that do not necessary hold in the real world. Uncertainty around the central projection may be skewed in one direction. Applying the certainty-equivalence approach also assumes that upside errors are regarded equally to downside errors.
The moderation in the contraction of the aggregate stock of credit points to an increase of new lending operations, which is consistent with the economic recovery. In fact, the information available on new credit transactions suggests that the segment of lending to SMEs has started to recover. And in the most recent period, this trend has gradually spread to the other credit categories, such as in the case of credit extended for house purchases. What are the determinants behind these recent developments? In my view, demand-side factors are playing a relevant role in the incipient recovery in credit flows. The improvement in growth and employment prospects and the reduction in aggregate uncertainty have all resulted in an increase in current and expected income, expanding the willingness of agents to spend and their ability to take on new debts while reducing the risk perceived by lenders. In parallel with the recovery in the demand for investment, we have witnessed an improvement in the financial position of borrowers. Specifically, from the peak observed in mid-2010, the gap between debt ratios in Spain and the euro area average has fallen from 37 pp to 9 pp in the case of corporates and from 20 pp to 9 pp in the case of households. But credit flows are also being stimulated in the current juncture by several factors more directly connected with the supply side.

For example, traders on the CCI-ILSTC have to rely on the multi-modal transport bill of lading or MTBL as proof of title as the goods are being carried on land, by rail, and over sea. However, the MTBL is currently not widely used as a negotiable document, unlike ordinary bills of lading which have clear legal status. This limits the access to trade financing facilities for importers and exporters using multimodal trade routes. We must step up efforts to enhance the acceptance of MTBLs amongst trade players in China and ASEAN. In fact, the MTBL will need to be recognised as a negotiable document, not only in its paper form but also its electronic form. Government agencies from Singapore are working with the Chongqing Port and Logistics Office to conduct a pilot to digitalise bills of lading, including the MTBL, using TradeTrust. TradeTrust is an interoperable framework to support the exchange of electronic documents. It uses distributed ledger technology to allow trade actors to establish the authenticity of a digital document. If we can scale the use of TradeTrust within the CCI-ILSTC, banks will be able to use these electronic documents for trade financing and we can effectively eliminate the risk of 1/3  BIS central bankers' speeches  fraudulent MTBLs. More broadly, the greater use of electronic trade documents will make verification checks easier, reduce the incidence of fraud and human error, and ultimately lower costs. But to achieve this, all stakeholders need to adopt digital tools and upgrade their trade practices.
Plus, some short-term elements, for example in January and February the exchange 1  As stated in a box in this Report, from now on, and with the purpose of enhancing the transparency the Board’s vision about the economy and the path of monetary policy, it has been decided to add a third year in the projections published on each opportunity. Thus, starting in March 2018, every Report will include the growth and inflation forecasts for the next three years: the current year and the next two. These forecasts will continue to be reported in two ways; the estimated variable in the baseline scenario. For inflation, it will remain a specific number, while for growth it will be a range, as it is now done for the present year and next. This change adds to those adopted in March 2016, when the Board decided to extend by one year the growth forecast for activity. 2  rate decrease coincided with carry trade operations, foreign flows for company acquisitions, pension fund portfolio adjustments and the entry into the market of the funds from the issuance of public debt. All this has led the peso to appreciate more than other comparable currencies (figure 6). However, some of these factors have a transitory impact, with rapid trend shifts over a few days, making it difficult to establish a clear direction. Therefore, the peso has been very volatile in recent quarters, with peaks of over CLP650 in December and lows of less than CLP590 in February.

Another relevant issue beyond the economic conjuncture is the need for the economy to recover the buffers that allowed macroeconomic policy to operate countercyclically. Chile's macroeconomic policy framework proved especially effective in the current cycle. One example of this is that monetary policy was able to accommodate a significant rise in inflation caused by a depreciation of the currency, by favoring a reduction in interest rates. This, because it was evaluated that the effect of the cyclical weakness of the economy on inflation would weigh more than the effects of the exchange rate increase. In the past, a similar situation would have been solved with a rate hike that would have had negative effects on activity. This has been made possible by our economic policy framework that was built based on a low level of public indebtedness, a high degree of capitalization of financial institutions, the financial solvency of companies and households, the credibility of fiscal and monetary policy, and an adequate level of international reserves. However, the slow growth of the economy over the past several years has partly used up these buffers. The level of public indebtedness has increased, banks have reduced their capital gaps and household debt has grown, while employment, having moved to more self-employed occupations, has less room to sustain itself without an increase in mean productivity (figure 11).