samchain/econo-pairs-v1 huggingface dataset:
17  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  17  the economy was given over to the war effort – and it ran a deficit of over 20% of GDP (versus an average of 5% from 1792-1815). Under pressure from this scale of spending inflation averaged 16% (versus 2%). As a result, the deflation required to return to gold, in 1925, was far larger and more economically painful than it had been a century earlier23. As such, it’s not clear that the prior belief in such a return was as firm as it had been the first time round24. Nonetheless, even a partial belief in such a policy would have limited the cost of government borrowing in the interim. Long-term bond yields were higher than the 3% average of the pre-war decade but again remained below 5%. It may also have prevented an even worse outcome for inflation itself (by ensuring newly printed money was willingly held). In the 1970s, with no nominal anchor either in place or expected to remain so, the restraining force on inflation expectations was largely absent. So after the end of the Bretton Woods regime, and even though government indebtedness was lower than it had been for decades, inflation itself became harder to control and yields on new borrowing rose precipitously. The series for long-term yields on government debt goes back almost as far as the founding of the Bank of England in 1694.

26.02.2019  Keynote speech Bloomberg Capital Markets Forum Madrid Pablo Hernández de Cos Governor  Introduction Let me begin by thanking Bloomberg for their kind invitation to participate in the opening session of the Bloomberg Capital Markets Forum Madrid. In my address I shall refer firstly to the phenomenon of banking disintermediation in Spain in the European context, discussing the main implications. And secondly, I shall focus on the importance of the Capital Markets Union project as a private risk mitigation and sharing mechanism in the Economic and Monetary Union (EMU) which, in conjunction with the Banking Union, will provide for an increase in financial stability in the euro area. Banking disintermediation in Europe and in Spain As is well known, in the continental European countries banks have traditionally played a key role in the intermediation of economies’ financial flows. However, recent years have seen an increase in European firms’ preference for tapping capital markets. Fixed-income financing has thus risen from accounting for 8% of European firms’ total financial debt at end-2007 to 12% in the third quarter of 2018. Spain has been no stranger to these global trends of banking disintermediation. Indeed, the proportion of fixed-income securities relative to the business sector’s financial debt has risen over the same period by 10 percentage points (pp). This has been mirrored by a fall, since 2010, of 9 pp in banks’ weight in the total financial assets of the financial sector.
The problem is that the level of potential output is inherently difficult to measure. For an individual firm, the notion of capacity is slippery. A car manufacturer might be able to say how many units can be produced if all production lines are operating 24/7, but he knows that to do so would prevent essential maintenance and impair the firm’s ability to produce output later. And in the service sector, the notion of capacity is even more complex. What is the capacity of a law firm, for instance? One might be able to say how many hours the existing partners could work, but that is not the same as how much output they could produce. Moreover, it is impossible to match unemployed workers to unfilled vacancies instantaneously, so it is not appropriate to ask what level of output could be achieved if all  3  Of course the margin of spare capacity is only one determinant of inflation. Other factors include commodity prices, the exchange rate and inflation expectations. And the rate at which the margin of spare capacity is closed may also matter – so-called “speed limit” effects. BIS Review 142/2010  3  those who wanted a job were actually in one. The frictions and the institutional characteristics of labour and product markets need to be taken into account too. Economists studying business cycles have used a variety of approaches to construct proxies for potential output.

Joseph Yam: Exchange fund notes Opening remarks by Mr Joseph Yam, Chief Executive of the Hong Kong Monetary Authority, at the signing ceremony for the appointment of retail exchange fund notes distributors, Hong Kong, 3 May 2005. *  *  *  I have often emphasised the need for diversification in the financial intermediation channels to maximise the contribution of the financial system to economic growth and development. Diversification can also promote financial stability through reducing the over-dependence of financial intermediation upon one particular channel. Such diversification is therefore clearly in the public interest, to the extent, I think, of requiring the involvement of the public sector in its promotion, if the free market does not produce the desired results. Indeed, Hong Kong’s non-interventionist Government finally got around to this view back in 1989 and on 14 March 1990 the first weekly issue of 91-day Exchange Fund Bills, amounting to $ million, was launched. Since then the Exchange Fund Bills and Notes Programme has become a central feature of Hong Kong’s debt market. The total amount of Exchange Fund paper now outstanding is $ billion. And it was not just a matter of bringing supply to the market to meet demand. We developed a benchmark yield curve, a market-making system and a sophisticated market infrastructure, including a paperless clearing and custodian system. But more needs to be done.
BIS Review 110/2007  3  Figure 3: Share of Non-Cash Money in Africa (in%) 100 90 80 70 60 50 40 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 South Africa  Northern Africa (median)  Sub-Saharan w/o SA (median)  How can central banks foster the further development of safe and efficient payment instruments in Africa? First and foremost, central banks must take a leading role in the development, operation and oversight of necessary infrastructure, such as interbank and retail payment systems. In doing so, it would seem natural to take advantage of international knowledge and expertise. As financial sector regulators, central banks can further create a market environment which encourages the entry of new service providers, as well as the development of innovative payment instruments, such as SMS-banking and mobile-banking. As an oversight authority, it is then the task of the central bank to ensure that new payment services adhere to the security requirement desired by businesses, households and financial institutions. 4. Financial sector development  Third, let’s take a brief look at financial sector development. An efficient and deep financial sector provides enterprises with debt and equity to finance their growth, thus spurring economic activity. At the same time a deep financial sector can provide households with savings and credit products to smooth their consumption patterns, again increasing their return from economic activity, and reducing poverty. To what extent have financial sectors grown and become more efficient in Africa in recent years?

Together this implies that the interest rate spread charged and earned by banks has increased substantially in the last 15 years. Figure 5: Lending and Deposit Rates in Sub-Saharan Africa (w/o SA) 25 20 15 10 5 0 1993  1994  1995  1996  1997  1998  1999  Deposit Rate (median)  2000  2001  2002  2003  2004  2005  Lending Rate (median)  What can African central banks do to foster deeper and more efficient financial sectors? In most African countries, central banks are responsible for regulating and supervising banks. Here central banks should ensure that regulatory requirements are not prohibitive for new  BIS Review 110/2007  5  market entrants, particularly foreign financial institutions who may bring cheaper capital and new technology to the sector. Moreover, central banks can foster the development of sustainable microfinance and rural financial institutions to cater to the vast agricultural and microenterprise sector. They can do so by adopting regulatory requirements which suit the limited sphere of activity of these institutions. 5. Conclusion  Ladies and gentlemen, let me conclude these brief introductory remarks. How can we assess the contribution of central banks to improving the business environment in Africa? Most African central banks have been successful in reducing inflation. This enables the private sector to plan ahead and engage in contracts without worrying excessively that their proceeds may be eroded by rapidly rising inflation.
Such challenges relate, in particular, to the potential consequences of the “low for longer” scenario on the profitability of financial intermediaries in general, and of banks in particular, and on their attitude towards risk-taking. In addition, financial intermediaries are now facing a number of relatively new sources of uncertainty, including the simultaneous rise of new regulations, technologies and market players, against a backdrop of rising environmental, social and governance (ESG) concerns. Along with these novel factors, new risks are emerging, ranging from cyber-risks and risks related to crypto-assets to misconduct and legal risks, physical and transition risks associated with climate change, and risks related to regulatory arbitrage. Both regulators  3  and market players are just starting to learn how to deal with and address all these new threats. Let me now share some thoughts on some of the risks I have mentioned and then suggest some policy actions that policy makers could consider implementing in an effort to mitigate them. -  Low bank profitability  Starting with low bank profitability, I would like to highlight three messages. First, this is more a regional than a global issue. In fact, the profitability ratios of banks across countries show marked heterogeneity. For example, the return on equity of Canadian, Swedish and US banks is relatively high. In contrast, banks in Japan and the euro area find themselves in the lower part of the distribution.

In any case, the latest data for the euro area show that, after some stabilisation of the growth dynamics in Q3, activity remains subdued and fragile, with 0.1% GDP growth in Q4 and with French and Italian growth rates in negative territory. In the same vein, after some improvement in the balance of risks to the euro area growth outlook, since some of the uncertainty surrounding international trade seems to be receding, the Coronavirus outbreak in China – with a negative impact on the global economy that is still difficult to estimate –  2  has compounded other geopolitical factors and vulnerabilities in emerging markets, keeping this balance of risks on the downside. In this context, monetary policy is expected to remain highly accommodative for a prolonged period of time. This aims to support a firm recovery in inflation towards our medium-term objective. Our forward guidance on the key ECB interest rates will ensure that financial conditions adjust in accordance with changes to the inflation outlook. And, in any event, the Governing Council continues to stand ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner, in line with our commitment to symmetry. In this context of “low growth”, “low inflation” and, as a result, “low for longer” interest rates scenario, other policies – in particular, macroprudential policy and micro supervision – will have to remain vigilant and poised to address and mitigate any future forces posing a challenge to financial stability.
Christian Noyer: International financial stability and the role of central banks in the crisis Address by Mr Christian Noyer, Governor of the Bank of France, at the Plenary session: “The international economy in transition” of the Montreal Conference, Montreal, 9 June 2008. *  *  *  Ladies and gentlemen, It is a great honour for me to take part in this conference and to set out, before such a distinguished audience, my thoughts on the role of central banks regarding financial stability in the current environment. I should like to organise these thoughts around the following five questions: 1)  Do central banks have a role to play regarding financial stability? 2)  What have they done since the start of the financial turmoil in the summer of 2007? 3)  Were they right to take these steps? 4)  Why have they responded differently as regards their monetary policy stance? 5)  What lessons can we learn for the future? 1)  Do central banks have a role to play regarding financial stability? This question might appear paradoxical when we recall that historically the raison d’être of central banks has been to ensure financial stability, that is, the smooth functioning of financial markets and payment systems. In this context, they play the role of the ultimate liquidity provider, in other words, of lender of last resort. However, some people now regard this role as inconsistent with that which in the meantime has universally become the primary task of central banks, i.e.

Isabel Schnabel: Interview in Die Zeit Interview with Ms Isabel Schnabel, Member of the Executive Board of the European Central Bank, in Die Zeit, conducted by Ms Lisa Nienhaus on 16 March 2020 and published on 18 March 2020. * * *  Ms Schnabel, where are you speaking from at the moment: your home office? No, I’m in the main building of the European Central Bank in Frankfurt. As the board member responsible for market operations, I need to be on site. But many of us, including other members of the ECB’s Executive Board, are indeed working from home. And I am also keeping at a safe distance from colleagues. Indeed, it would not be good if you were absent from the ECB. Market prices are collapsing, loans are defaulting, firms are threatened by bankruptcy if they don’t get help. Is the virus crisis now turning into a financial crisis? We are living through turbulent times: stock markets are showing exteme volatility, equity prices have fallen dramatically. And the events are gradually being reflected in the data that we receive from the real economy. We know that production in China collapsed in January and February. All that will also have an impact on the banking system, but there is no acute banking crisis at present. We are, however, carefully monitoring the current situation so that we are able to respond swiftly to new developments should that become necessary. Which indicators are you looking at?
Bank lending to households and firms is growing at almost 6% per year. This is good news, but we must avoid excesses. There are thus several efforts to be made in 2018 to ensure the smooth financing of our economy:  Remain vigilant to ensure financial stability, first and foremost. At last December's meeting of the Haut Conseil de Stabilité Financière (HCSF – High Council for Financial Stability), we decided to take a macroprudential measure to limit the sharp rise in the debt of certain large companies, including bond debt. It will apply as of 1 July after approval by the European authorities. If credit cycle risks persist – i.e. growth that is significantly higher than that justified by economic fundamentals – we stand ready to act further at any time in 2018, including if necessary by implementing a countercyclical capital buffer. Promoting the attractiveness of the Paris financial centre in the context of Brexit, second: irrespective of the possible transition, the City will most likely lose its EU passporting rights. The Paris financial centre must continue to develop, notably in the area of the clearing of financial instruments, and promote its numerous qualities, enhanced by the arrival of the EBA, in order to become the main euro area centre for market activities. This is our collective challenge, over and above announcements of welcoming registered head offices. Lastly, better channelling our savings. Overall, the French economy has no lack of financing, thanks also to the soundness of its financial institutions.

And because now is the time to strengthen our economic instruments in order to deal with a future European recession, the day it comes. Otherwise monetary policy may be overburdened. My second wish concerns our country. The French economy is in much better shape, but there are still major drags on growth. At around 1.9%, we are above our potential growth rate, which means that we are coming up against more structural limiters. There are at least two indications of this: a persistent negative growth differential vis-à-vis the euro area of around half a percentage point, and a current account deficit and hence a lack of competitiveness. In order to increase the speed of the French economy, we need to boost the power of the engine: reforms, including those underway, are therefore necessary. And, beyond bureaucratic barriers or corporate interests, the greatest priority is to reform vocational training and apprenticeships: we cannot remain in a situation where we have almost 3 million unemployed, of whom 600,000 are young people, and companies cannot recruit the skills they need. I hear this everywhere from the entrepreneurs who participate in the advisory boards of the Banque de France, from Besançon to Châteauroux last week. According to INSEE, hiring difficulties have been the main obstacle to corporate activity. My third wish is for financing. Often, the Governor of the Banque de France encourages banks to lend more; this is not the case at present! Bank lending in France is very buoyant.
BIS central bankers’ speeches  9

But there is much to suggest that fiscal policy as early as next year that is, the policy which is being decided this autumn - will be important in this context, at least if the timing that is now being discussed, with full participation in 2005 or 2006, is achieved. Thus, more and more of stabilisation policy's burden is transferred to fiscal policy. But this does not mean that the Riksbank should refrain from using the scope for monetary policy that may exist during the ERM2 period. It is up to the Riksbank to do what is possible to make Sweden's accession to the monetary union smooth and stable. Low and stable inflation in Sweden is one important element here; another is a stable exchange rate. Sweden must fulfil the convergence criteria in both these respects. In practice this means that there may be grounds for continuing to produce inflation forecasts and to publish Inflation Reports in much the same way as at present. We should also do what we can with the interest rate to direct inflation onto our target. But the closer we come to adopting the euro, the smaller will be our repo rate's effect on longer term interest rates. That is because as the entry date approaches, the Swedish yield curve will be increasingly determined by European interest rates. BIS Review 65/2002  5  The fact remains that exchange rate stability is one of the convergence criteria for Sweden's full participation in the monetary union.
One way to think of this is to liken prices and interest rates to the speed of travel for a person attempting to ascend a downward-moving escalator. The nominal interest rate can be thought of as the person’s own effort to climb the steps; the rate of inflation can be thought of as the rate of speed of the escalator itself, descending against the stair climber. If the climber is ascending as fast as the escalator descends, she makes no vertical progress. This outcome can be likened to a real interest rate of zero – the nominal rate of interest just offsets the inflation eroding the value of money. If the climber ascends more slowly than the escalator descends, the outcome is analogous to a negative real interest rate. If the escalator stops for some reason, then the only way to have a negative real interest rate is for the climber to descend by climbing down the escalator – a negative nominal rate of interest. It is not uncommon for countries to experience negative real interest rates. When nominal interest rates are positive, but real rates are negative, conditions are “conventional” in the sense that the debtor still pays positive gross amounts of interest to creditors. So the innovation in the negative nominal policy rates we see at Danmarks Nationalbank, the ECB, the Riksbank and the SNB is in the “nominal” aspect of their policy. It is unusual to set nominal policy rates at negative levels.

When nominal rates are negative, creditors pay debtors interest, and debtors earn interest on their debt. That is, instead of your money working for you, you have to work for your money. To explain why we are seeing these negative nominal rates, we can invoke the Fisher equation. In Denmark, Sweden, Switzerland and the euro area, rates of inflation, and  2  BIS central bankers’ speeches  expected inflation, had been falling and were near zero. Other things equal, the resulting real interest rates were too high for comfort. In an environment of low inflation, one policy to reduce real interest rates would be to boost expected inflation. However, there may be few or no easy ways to raise those expectations quickly; policies such as quantitative easing may take time to implement and have complications of their own. An alternative approach to reducing the real interest rate, the Fisher equation suggests, is for the central bank to set a negative nominal rate. In addition to this straightforward influence of negative nominal rates on real rates, setting negative nominal rates may stimulate the economy in less predictable and clear ways. For example, setting a negative nominal policy rate – a move that is, by nature, unconventional – may surprise people and thereby send a strong signal of the central bank’s intent to pursue its policy objective. Such a signaling channel may reinforce the effect of the negative rate and have an independent effect on boosting inflation expectations.