samchain/econo-pairs-v1 huggingface dataset:
We routinely run the general equilibrium model and the inflation targeting model as well as Market Implied Models or MIME, a technical word that is used for trying to find things out from people’s normal actions that could be captured in a data system. We also, of course, do single equation estimates as well as pure intuition from graphs and tables and such things. Our staff is generally of the opinion that increased expenditure and tax reduction of moderate amounts will not destabilise the economy. This is predominantly because the economy is still very docile with a capacity utilisation stable for quite a while now at 58%. Cost push inflation from the exchange rate and the oil prices are now substantially absorbed or have been passed on, so cost push also is not presently much of a factor. The important thing though is how to make expenditure useful and constructive in the long run without too much leakage. The important thing is how to make tax cuts reasonable and directed towards the areas where people benefiting from the cuts could utilise it for a spate of new investment. If this were to happen the debt to GDP ratio might not increase significantly due to the resulting increase in GDP over the long term. With abundant liquidity and low interest rates, this is not just a time for a general tax cut for its own sake, but a program must be designed for it to be directed to where investment could best be made.

Page 1  Competitiveness and productive investment: What parts do they play in the reform of insurance regulation? – speech by Charlotte Gerken Given at JP Morgan European Insurance Conference  Page 2  Published on 14 June 2022  Charlotte Gerken talks about the goals of competitiveness and productive investment, and the impact these are having on the Review of Solvency II. She says that changes to regulations for UK insurers could help to achieve these goals. Then she focuses on: investment flexibility the valuation of liabilities process improvements  Speech Thank you for your introduction and for inviting me to this conference. Since the Government announced the Solvency II review, there has been much emphasis on the desirability of reform to enhance the insurance sector’s competitiveness and its capacity to make productive investment. Today I would like to outline how competitiveness and productive investment relate to the Prudential Regulation Authority’s (PRA) approach to the review by focussing on three areas: 1. Investment flexibility 2. The valuation of liabilities 3. Process improvements To put the review in context, though: the core framework underlying the Solvency II regime and its principles are broadly fit for purpose, and are in line with existing and emerging international standards. The review does not involve tearing it up and starting again – not least because of the substantial sums invested by industry in the last decade in adopting it. Industry responses to HM Treasury’s Call for Evidence[1] were largely in agreement with this approach.
Paul Tucker: Monetary policy and the financial system Remarks by Mr Paul Tucker, Executive Director and Member of the Monetary Policy Committee of the Bank of England, at the Institutional Money Market Funds Association Annual Dinner, London, 2 April 2008. *  *  *  Alongside many others, the money market fund industry has for months now been grappling with turmoil and fragility across financial markets. It continues to pose serious challenges for all of us, and so I shall use this evening to summarise briefly a few of the strands in my own thinking about monetary policy and the financial system. Monetary policy First, monetary policy. The tightening of credit conditions domestically and internationally makes it likely that aggregate demand will slow, with a risk that it will slow considerably. There is, in consequence, a meaningful downwards threat to inflation over the medium term. Usually, the MPC would respond by cutting Bank Rate sufficiently to offset more or less entirely what we judged, over time, to be the impact of the tighter financial conditions on the path of spending, so as to ensure that aggregate demand remained broadly in line with the economy’s productive capacity. But conditions do not favour such a “business as usual” approach to demand management. That is because, alongside those downside risks to inflation, there are also upside risks to inflation over the medium term – and I am stressing “medium term” – stemming from the rise in commodity prices and the decline in sterling’s exchange rate.

If we want our children to have peace, I am calling on all of you to act too.
Last but not least, in July the Governing Council updated its forward guidance on interest rates to bring it into line with the new definition of price stability. We agreed to reflect later – that is to say in December - on whether to adjust our forward guidance on the APP. 3. The lessons of TLTRO III and the two-tier system My last point concerns the articulation of long-term liquidity provision and negative interest rates. The third round of targeted long-term refinancing operations (TLTRO III) has proved to be a powerful tool during the Covid crisis to avoid a credit crunch to the private sector. As the euro area financial system is mainly bank-based, our future actions must continue to support bank lending to businesses and households as the recovery evolves. I am therefore in favour of keeping this funding instrument as a liquidity backstop in some form in the future, also to avoid possible cliff effects related to future repayments. However, I think that a careful recalibration of its pricing is required. Now that the recovery is well underway, the generous pricing of TLTRO - lending rates can be up to 50 basis points below the average deposit facility rate since April 2020 - is no longer justified. The present calibration of TLTRO pricing clearly provides riskless arbitrage opportunities for banks.

In particular, the supervisor should have the real capacity to influence bank managers’ decisions through moral suasion and to formulate non-legally binding recommendations, in the sure knowledge that they will in practice be very widely followed. Supervisory actions would otherwise be excessively hampered by a regulatory framework which, despite having been honed in recent years, can hardly envisage all situations of supervisory significance or include the full range of instruments needed to tackle such situations with the speed required in each instance. Finally, it is difficult for supervision to be effective if it does not include a thoroughgoing review of banks’ financial statements. Allow me to elaborate on this point. Evidently, an essential aim of supervision is to oversee banks’ solvency through the monitoring of capital ratios. Insofar as these ratios are calculated on the basis of accounting information, it is essential to ensure that such information properly reflects the value of the bank’s assets and liabilities. It is true that auditors and securities supervisors also perform this task. However, the specific nature and complexity of bank business, the evident relationship between published financial information and financial stability, and the occasional lack of specificity of prevailing accounting principles all make it advisable that the prudential supervisor should contribute to encouraging supervised banks to follow the best practices, in full conformity with current regulations and the distribution of competencies among institutions thereunder.
Today, we are near the juncture of achieving a key milestone, where formal setting is no longer required to mobilise intra-region fund flows such as in the case of ABF1 and ABF2. Instead the intra-regional investments are becoming more self-reinforcing. As a proof of this, we now have more anecdotal evidence on the rising proportion of the regional central banks’ reserves invested in Asian local currency debt. iii)  Credit risk assessment approach  As we tread into uncharted territories of new asset classes, there is a growing need to enhance analytical capabilities, resources and risk controls. For example, many central banks and institutional investors have gradually moved away from over-reliance on credit rating agencies to an internally-based credit rating assessment practice in portfolio management. In the wake of the US financial crisis and recent European sovereign issue, one would question the credibility of credit rating agencies in flagging the risks built up in banks and sovereigns, ahead of the crisis. Most credit rating agencies also tend to apply ordinal ranking of credit, rather than specific risk metrics that can be mapped to default probabilities or expected losses. In my view, one of the major weaknesses of credit rating agencies is their objective to establish rating stability by applying smoothing methodology that can potentially delay minor downgrades, but trigger cliff-like and abrupt downgrades in the event of sharp credit deterioration. The abrupt regrading of credits tend to spook markets and is certainly not good for investors with a heart condition.

4 Jerome H. Powell, New Economic Challenges and the Fed’s Monetary Policy Review, Speech at “Navigating the  Decade Ahead: Implications for Monetary Policy,” an economic policy symposium sponsored by the Federal Reserve Bank of Kansas City, Jackson Hole, Wyoming (via webcast) (August 27, 2020). 5 Richard H. Clarida, The Federal Reserve’s New Monetary Policy Framework: A Robust Evolution, Speech at the  Peterson Institute for International Economics, Washington, D.C. (via webcast) (August 31, 2020). 2/2  BIS central bankers' speeches
On the methodological side, it is quite obvious that imposing caps in ratings based on the sovereign is equivalent to constraining the results of whatever quantitative models rating agencies use. This is arbitrary and reduces the information conveyed by the ratings while leading to severe pricing distortions in assets across countries. Investors in capped securities will require a premium over similar but higher-rated securities while other investors are limited by regulation in their incentives to buy poorly rated securities. Additionally, it should be mentioned that ABS originated in countries under stress have performed considerably well even during the crisis. Indeed, ABS default rates have remained low in these countries and at levels comparable to non‐stressed jurisdictions (including the US). Thus, unless clients and regulators have (also) access to ratings without the cap, there should be minimal regulatory reliance on the ratings. In any case, additional transparency on loans, the existence of reliable credit registers or credit score systems should be mentioned as instruments to help market participants understanding better the  BIS central bankers’ speeches  3  European ABS risk profile. Additionally, such information could even support entrants into the business of assessing credit risk, which currently lacks competition. Whereas the policy conclusions are often hard to come about, one thing seems clear: Europe must avoid ending up with zombie banks as well as with zombie firms. Zombie banks and zombie firms have never been a characterization of a well-functioning financial system and economy.

It is part of the increasingly daunting and uncertain macroeconomic environment that I have just outlined – an environment that differs from previous downturns in the last two decades in that it is largely characterised by an economy running into constraints. In such an environment, it would not be appropriate to expect fiscal and monetary policy to support the economy by sustaining demand. This combination of factors is one of the many good reasons why the Chair of the ECB's Supervisory Board, Andrea Enria, has recently insisted that, even if balance sheets are sound and profitability is favourable, it is still better to be safe than to be sorry in banking supervision, especially in the current uncertain macroeconomic circumstances.3  -and underlying currents are firming Moreover – while the macroeconomic tides may have changed, many of the structural challenges facing banks have not. Indeed, the underlying currents which banks were already affected by last year, are still very much present. In fact, important currents have even firmed with the change in tides. This becomes very clear if we look at the consequences of the ongoing climate and environmental crises. Another year has passed, and we have further confirmation – not that any was needed – that heatwaves, floods, droughts and environmental degradation are on the rise.
The general wisdom was that the inevitable direction of the Hong Kong dollar under a freer exchange rate would be to depreciate. The result would be an end to deflation, a boost to economic growth, a reduction in unemployment, and the elimination of the budget deficit. In fact, all of our problems would be cured - and rapidly - by this single panacea. BIS Review 44/2003  1  If only things could be so simple! But, of course, they are not. I have spoken and written at length on other occasions about the huge risks to financial and social stability that we would expose ourselves to in following such a course. Financial markets have a habit of overshooting and precipitating financial crises that are very costly to the community. And it seems, from recent events, that the very premise on which this panacea of exchange rate depreciation is based may be seriously flawed. For the market exchange rate of the Hong Kong dollar has strengthened over the past two or three weeks to the extent that it has been necessary for the HKMA to inject liquidity into the system in order to dampen excessive volatility. The market has, all of a sudden, chosen to ignore the continuing problems of deflation, unemployment and budget deficit, and the possible implications of these for the exchange rate. The clear message from the market now is that, were the Hong Kong dollar to be allowed to float, its exchange rate would rise rather than fall.

Today’s conference touches on a range of interesting questions concerning both regions: •  Are there policy strategies that can ensure that the global economy will escape from this very long period of very low inflation and very low real interest rates? •  Is there scope for fiscal policy to take on some of the burden of ending this period of persistently low inflation and low interest rates? •  Are we now in a period of secular stagnation or are we in the midst of a deleveraging process that will gradually dissipate? •  Why has investment spending failed to respond to the low level of interest rates? •  What do we believe are the factors underlying the recent slowdown in productivity growth globally? •  Is a banking union with a common deposit guarantee scheme achievable in Europe? •  Are there opportunities for further regulatory and supervisory convergence between the United States and Europe? I would like to thank the participants for addressing these and other questions during today’s three panels, and I look forward to insightful discussion over the course of the day. It is now my pleasure to introduce the European Union Ambassador to the United States, His Excellency David O’Sullivan. The ambassador is extraordinarily well-versed to speak on the issues of interdependence and the policy challenges we face. Welcome, Ambassador O’Sullivan. 2  BIS central bankers’ speeches
Many other central banks have since followed the Bank of England’s lead, and in the HKMA we have published our own Monetary and Financial Stability Report for several years now. More recently we began an internal Banking Stability Report which aims to provide a macro prudential perspective on trends in the banking system that we can then use to target our on-site bank examinations more effectively. The eventual goal is to try to draw these two reports more closely together and to bring a more forward-looking perspective to our banking supervision work. When central banks make their financial stability analysis public it provides financial system participants with an insight into the central bank’s perception of the vulnerabilities of the system. It enables policymakers to be transparent in their views of where they perceive the risks and vulnerabilities to be. Hopefully, by raising warning flags at a sufficiently early stage – for example if we  BIS Review 106/2006  9  perceive risks in a build up of credit to a particular sector – we can encourage banks to review the risks that they are running and, if necessary, to take action to mitigate those risks. But it is important to be careful how the risks and vulnerabilities are presented. The last thing we want to happen is for the predicted problems to surface because everyone has rushed for the exit at the same time.

Third, in terms of economic policy, an explanation for “the resource curse” has been that such “unearned” wealth leads to an extreme focus from various groups on acquiring as much of this extra wealth as possible. It is therefore important that the decision-making processes in the political sphere guard against this kind of “rent-seeking” behaviour. Finally, petroleum revenue spending will have a serious impact on the competitiveness of Norwegian industry if spending is too rapid and variable. It is therefore important that we succeed in maintaining an industry structure that promotes learning, innovation and development, which can give us other sources of revenue than oil. What we are trying to achieve is to transform petroleum wealth into financial wealth, to the benefit of future generations as well. Nonetheless, the discounted value of our own labour force is our main asset. Our livelihood essentially depends, and will continue to depend, on our ability to efficiently produce goods and services and to use our creativity and innovation to become ever more efficient. Economic policy guidelines During the first thirty years of the oil age, economic fluctuations, often linked to oil revenue spending, were strong. Against this backdrop and increasing demands for spending more, new economic policy guidelines were adopted in 2001. A fiscal rule was drawn up for petroleum revenue spending over the central government budget. Government petroleum revenues are transferred to the Petroleum Fund, now renamed the Government Pension Fund - Global.
7 It now appears that capacity utilisation in the Norwegian economy may return to a normal level in one and a half to two years – and with a somewhat lower unemployment rate than today. A different path can be met with an interest rate response. Our understanding of the fiscal rule is that the government budget for 2012 or at the latest for 2013 should be planned with a view to bringing down petroleum revenue spending to 4 per cent of the size of the wealth fund. This does not seem demanding compared with the situation in the years between 1994 and 1996. The tightening at that time started directly after the economy had turned and while unemployment was still high. Should policy now be tightened to the same extent that history in retrospect indicates was the case at that time, 4 per cent would be reached in the course of one year. 7  See for example the National Budget for 2010, box 3.1, p. 53. BIS Review 15/2010  15  It must, however, be added that in real time the tightening was not planned to be that strong. After the tax reform, government revenues from the corporate sector were higher than expected. 8 But even measures on a par with those planned at that time would now rapidly bring down petroleum revenue spending.

Only the public can measure the degree of success and our goal is to provide the public with elements and emotions related to our national identity, through a worthy banknote series, created by renowned brands in the banknote production industry such as G&D, De La Rue and Oberthur, whose logos have been present on our currency since it was first issued. 2/2  BIS central bankers' speeches
However, due to the increase in household net debt, net interest expenses will fall considerably less than this. The impact of the interest rate decline also depends on how long interest rates are expected to remain low. When the sight deposit rate was reduced last autumn, longer interest rates showed relatively little change. The interest rate reductions in December and January, combined with the decline in inflation, have had a stronger impact on long-term interest rates. This indicates that financial market participants expect interest rates to remain low for a longer period. The rise in inflation from February to March, however, gave rise to somewhat higher interest rate expectations and a stronger krone exchange rate. The outlook for the business sector is brighter now. The fall in the value of the krone over the past year has strengthened Norwegian business and industry. The business sector is, however, still feeling the effects of the sharp rise in labour costs over a period of several years. Relative labour costs measured in a common currency are in line with the level prevailing in 1990, but approximately 10 per cent higher than in the mid-1990s. The internationally exposed sector has been scaled back. Companies that are still in operation may be in a better position to cope with the high wage level. In 2003, employment and investment both fell, although investment picked up somewhat towards the end of the year. Efficiency-enhancing measures are expected to continue to characterise the business sector in 2004.

By conducting large-scale repo operations and purchasing sizable quantities of U.S. Treasury securities and agency mortgage-backed securities, we are providing funding and stability at a time of extraordinary volatility in markets.3 These actions averted a potential shutdown in the availability of credit, which would have made the current economic crisis even more severe. In addition to stabilizing financial markets, the Federal Reserve is standing up programs to support the flow of credit to households, businesses, and state and local governments. These actions will enable them to continue to do their work, both now and when normal life resumes.4  2/3  BIS central bankers' speeches  Our efforts supporting the provision of credit include a number of programs aimed at different parts of the economy and work through different channels. One set of programs supports the availability of credit to households and businesses—importantly, including small and mediumsized businesses. A second set of programs targets the availability of credit to states and municipalities. Fiscal policy is also playing a critically important role. In particular, it can do what monetary policy cannot: provide for the public health response and transfer income to those most affected by the outbreak. Fiscal policy is also a vital partner in the delivery of our own programs, supplying the financial support necessary for the extraordinary scale of the credit facilities we’re operating. Conclusion I’ll conclude with this: These are extraordinary times, and the Fed is taking extraordinary actions to ease the economic pain.