samchain/econo-pairs-v1 huggingface dataset:
We are particularly concerned about spillover effects of macroprudential policies within the euro area, because the build-up of a capital buffer in one country should, to the extent possible, not impair the functioning of financial intermediation in other euro area countries. Conclusion Let me conclude by emphasising that, in a globalised and financially integrated world, the euro area is not immune to spillovers from other regions, in particular to shocks emanating from the United States. But we are convinced that we have the appropriate policy tools to largely shield the euro area economy and financial system from such spillovers. Monetary policy and macroprudential policy have different objectives and, therefore, different sets of policy tools. Cyclical factors, such as compressed interest margins, pose challenges to banks’ operating environment, but the gains have so far greatly offset the losses. In turn, euro area banks need to address their structural fragilities, which partially explain the very low price-to-book ratios of euro area banks when compared with their international peers. References Avdjiev, S., Bruno, V., Koch, C. and Shin, H. S. (2018), “The dollar exchange rate as a global risk factor: evidence from investment”, BIS Working Papers, No 695. Bernanke, Ben S. and Gertler, M. (1995), “Inside the Black Box: The Credit Channel of Monetary Policy Transmission”, The Journal of Economic Perspectives, Vol. 9, No 4, pp. 27–48. Borio, C. and Zhu, H. (2012), “Capital regulation, risk-taking and monetary policy: A missing link in the transmission mechanism?”, Journal of Financial Stability, Vol. 8(4), pp. 236–251.

For example, Ehrmann and Fratzscher (2005) estimate that, over one day, about one-third of US Treasury bill rate changes feed through to euro area interbank rates, but that beyond this US monetary policy has no significant impact on the euro area. Neely (2015) finds spillovers of a similar magnitude. Curcuru et al. (2018), in contrast, find that during a one-day period, ECB announcement surprises spill over to US Treasury yields in a similar manner as Federal Open Market Committee announcement surprises spill over to German Bund yields. 2 See, for example, Kim (2001), Georgiadis (2016), Chen et al. (2017) and Iacoviello and Navarro (2018). The  5/6  BIS central bankers' speeches  results for conventional and unconventional monetary policy are similar. Rogers et al. (2014) and Chen et al. (2016) provide evidence on large spillovers from the Federal Reserve’s unconventional monetary policy to the euro area. 3 Ca’ Zorzi et al. (2019) and Jarociński and Karadi (2018) draw a distinction between monetary policy surprises  (the so-called shocks) and other surprises, such as news effects. 4 Spreads relative to speculative bonds (below BBB rating), averaged over all maturities. 5 Corporate bond spreads increase by about 10 basis points and stock markets decline by about 50 basis points  in response to a monetary policy shock that increases one-year government bond yields by 2 basis points. 6 See Ca’ Zorzi et al. (2019). 7 See Miranda-Agrippino and Rey (2018).
To stretch our horizons and take different decisions today, a long time before the consequences of inaction will be clear. And to be brave. Both because this is an unprecedented challenge for which we don’t yet have the comprehensive how-to-do-it guide. And because it is a collective action problem where seemingly rational individual inaction makes our collective future problems much bigger. There’s a long way to go. But getting there could not be more important. The future of our planet depends on it. Thank you. 10  All speeches are available online at www.bankofengland.co.uk/news/speeches  10

This is an important function because modern electronic payment systems have the potential to serve as channels of contagion by transmitting the payment difficulties of one, or a few, large financial intermediaries to others in the system. In 2002 a Retail Gross Settlement System based on the Bank for International Settlements’ ten core principles2 was introduced in Malta through which inter-bank domestic payment orders are now transmitted, cleared and settled with greater efficiency than previously. The Bank has also issued a number of directives which seek to provide participating banks with an adequate degree of protection against legal and systemic risks associated with participation in such systems. Other directives seek to ensure that the rights of banks’ clients to adequate information concerning retail payments are upheld by the intermediaries rendering payment services. In this way, credibility in the integrity of the infrastructure used for the settlement of payments is preserved at both wholesale and retail level. The Bank’s role in financial stability has more recently been enhanced by membership of the European System of Central Banks (ESCB) from May 2004. It has started to participate in the ESCB  1  The 1967 Act referred to the Bank’s role in promoting a sound financial structure and to foster an orderly capital market in Malta.
The bubbles in the equity markets burst. Many years of high investment led to excess capacity in some industries, and unemployment increased. The terrorist attacks on 11 September 2001 put a new damper on economic activity. From the summer of 2002 to the spring of 2003, a highly extraordinary accumulation of negative events in the global community - accounting scandals, fear of terror, war and disease - put a brake on growth. US interest rates, which were sharply reduced at the beginning of the downturn, have subsequently been reduced further. Interest rates have also remained low in the euro area. Key rates are now historically very low for several of our most important trading partners. Long-term interest rates are also very low. The economic situation in Norway remained firmer for a long period, and wage growth was surprisingly high in 2002. There was less scope for low interest rates than among our trading partners. As a result, the interest rate differential against other countries widened. This had an impact on krone exchange rate developments. In addition, special circumstances in the global economy led to a stronger krone than might have been expected from the higher interest rate differential alone. Themes in foreign exchange markets shift. In periods, investor focus on stock returns feeds through to exchange rate movements. During periods of political and economic unrest, investors may choose individual currencies as a safe haven. In the autumn of 2002, the Norwegian krone was probably also perceived as a safe haven.

Nominal wages do not readily fall. With some inflation, relative wages can change without a fall in nominal wages. There may also be rigidities in the pricing of goods and services. Some degree of inflation will thus oil the economic machinery. •  In periods, inflation and economic growth will be low. It is then appropriate for real interest rates to be low, or even negative. Nominal interest rates cannot be set below zero. If inflation becomes entrenched at a low level or near zero, the interest rate will be less effective as an instrument. •  There are different ways of measuring inflation. The consumer price index tends to overestimate actual inflation. The most important source of measurement errors is probably the difficulty of distinguishing between changes in the quality and price of goods. In other countries, findings show that the consumer price index overestimates actual inflation to the order of ½-1 per cent. The inflation target is a vehicle for, not an obstacle to, monetary policy’s contribution to stabilising output and employment. This objective is also expressed in the Regulation on Monetary Policy. If demand for goods and services is high and there is a shortage of labour, there will normally be prospects of higher inflation. When interest rates are increased, demand falls and inflation is kept at bay. If demand is low and unemployment rises, there will be prospects of lower inflation. The interest rate will then be lowered.
This could at one level be influenced by the fact that significant increases in housing wealth in recent years may have postponed people’s consideration of these issues, though they may now feel more pressing looking ahead. It is pretty clear that the changes are likely to be spread over a period of years, and from that perspective policy implications are likely to be gradual and manageable. Over time though the degree of change in savings habits – and therefore the impact on consumption and demand – may be quite significant. And the question is whether these changes will be smooth trends, or whether there will be more sudden, and perhaps unpredictable shifts or discontinuities in behaviour. And if the latter, will they be of sufficient magnitude to be relevant to shorter-term monetary policy? The challenges here are considerable, both of measurement, timing, and of our ability to anticipate any relevant changes. But to my mind we certainly need to remain alert. Policy makers in Germany have for some time now wondered if the sluggish performance of domestic demand in recent years is in part the result of such precautionary saving, and here in the UK we have wondered if this could have been one factor in the recent consumption slowdown. While the data will not confirm this for a while at least, the greater public awareness of the issues, brought about by initiatives such as Lord Turner’s report, suggests it is plausible that this has been a contributory factor.

For the statisticians among you: I have voted in 38 MPC meetings since I joined the Bank. In this time there were 9 occasions when I did not vote with the majority – 7 times I voted for a rise when rates were maintained, and twice I voted to maintain rates when they were reduced. In concluding this section on debt, I should say that I am moderately encouraged by the present trends. The rates of increase in domestic debt have recently slowed, and continue to do so [Chart 7]. I do take some comfort from this adjustment, which now seems to be in train. In policy terms I would like it to continue so that leverage continues to adjust downward as incomes rise. And if there were signs  of a reacceleration in debt per capita, it would once again weigh on my mind, and perhaps, if I were still there, on my policy decision. Chart 7: Annual growth rate of household debt Per cent  24 21  Unsecured borrowing  18 15 12  Total borrowing  9 6  Secured borrowing 3 0 94 95 96 97 98 99 00 01 02 03 04 05  Source: Bank of England  Labour market Throughout my time on the MPC we have been thinking about the reasons behind what seems to be a remarkably benign labour market environment with little pressure for higher wages, and yet with levels of unemployment that are at their lowest since the mid-1970s.
As in G7 Working Group on Stablecoins, October 2019, ‘Investigating the impact of global stablecoins’. https://www.bis.org/cpmi/publ/d187.pdf 7 The PRA may require subsidiarisation where firms have material retail banking operations. In making that judgement, the PRA takes account of the value and type of retail deposits and the extent to which they are covered by the FSCS. We expect branches to have under £ of retail deposits, and also take account of the number of depositors and the number of retail and small-company customers with transactional accounts. See: SS1/18, ‘International banks: the Prudential Regulation Authority’s approach to branch authorisation and supervision’.https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/supervisorystatement/2018/ss118 6  6  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  6  banking and traditional payment systems, the regulatory response must be grounded in internationallyagreed standards. Global issues require a global response, particularly for multi-currency stablecoins intended for cross-border transactions. Along with the G7, the Financial Stability Board has been leading co-ordination of the international response to global stablecoins. The FSB consulted in April on the regulatory and supervisory challenges they present, with a final report due in October, and the Bank of England supports the efforts to set a baseline set of expectations. These include that stablecoins should be regulated based on the functions they perform and risks they create, and that there should be comprehensive domestic and international regulation and supervision. Global stablecoins should have robust governance and risk management, and be transparent about their stability mechanisms and coin-holders’ rights.

There was too much financial globalisation, and this led to volatility and systemic risk and it has eroded fiscal resources because multinationals have become footloose. To a certain extent, financial openness cancelled out the benefits of trade openness. We need to come up with a new international order that can overcome these problems. But returning to a system based on domestic priorities alone will clearly not work. Don’t you think that central banks have been charged with too many roles and responsibilities? Yes, I do. People expect too much from central banks, considering what we can do and the mandate they have given us in the first place. If you give a central bank too many objectives, you transform it from an apolitical entity with a narrow mandate into a political institution. We have a duty to deliver on our mandate, that is price stability. But giving us too many objectives would make us political, which we certainly don’t want to be. 2/2  BIS central bankers' speeches
Therefore, the Stability and Growth Pact, which encourages the pursuit of disciplined and sustainable fiscal policies by Member States’ governments, is a crucial element for sustainable non-inflationary growth in the euro area. The consolidation of public finances, which has made considerable progress in the past few years, has to be continued and, in some cases, intensified. Setting the monetary conditions required to maintain price stability in the euro area is certainly the best contribution that the Eurosystem and monetary policy can make. To achieve this aim, the Eurosystem has adopted a monetary policy strategy which is tailored to the unique conditions of introducing a new currency. Our two-pillar strategy takes into account that economic behaviour may change as a result of the introduction of the euro itself. The first pillar lends a prominent role to money, as signalled by the announcement of a reference value for the growth rate of the broad monetary aggregate M3, which is regarded as being compatible with price stability; within the second pillar, the outlook for price developments is assessed on a broad basis, using a variety of financial and economic indicators. This strategy thus takes into account that the start of EMU constitutes a structural break. A better knowledge of the structure and functioning of the euro area economy, and of the transmission mechanism of monetary policy within it, will be gained over time. Similarly, the availability and quality of economic statistics will improve.

Henrique Meirelles: Challenges for monetary policy – Brazil and the international context Speech by Mr Henrique Meirelles, Governor of the Central Bank of Brazil, at the Conference “The Impact of Brazil on the Global Scenario”, São Paulo, 10 July 2008. *  *  *  In mature economies, the years from the beginning of the 1990s to mid-2007 were characterized by low GDP volatility and low inflation, circumstances that led prominent economists to name the period as the era of the “great moderation”. That environment resulted from better monetary policy, a fact that translated into credibility gains for central banks, globalization and advances in productivity linked to information technology developments. At the time there was a substantial consensus that the emergence of Asia, particularly of China and India, would contribute to keep global inflation permanently under control. Thanks to cheap labor and the intensive use of new technologies on the production process, China – and to a lesser extent India – exported deflation (or at least disinflation) to the world economy through a consistent decrease in their export prices. There is now growing evidence that this era might have came to an end with the unbalances between the expansion of global demand and supply. Moreover, there are also signs of increasing labor costs in China, due to both changes in labor legislation and increasing shortages of specialized workforce. In the benign environment that prevailed through mid-2007, central banks of mature economies engaged in neutral or even expansionary monetary policies for relatively long periods.
Dimitar Bogov: We will need foreign loans also in the coming years Interview with Mr Dimitar Bogov, Governor of the National Bank of the Republic of Macedonia, in Utrinski Vesnik, conducted by Ms Nina Nineska-Fidanoska and published on 22 August 2013. *  *  *  Mr. Bogov, in June, lending grew by only 3.7 percent, which is considered a very low rate. Few months ago, businessmen called for an annual credit growth rate of 8 to 10 percent. Is there a chance to reach that goal and when? It is usually considered that credit growth should be two times the nominal growth of the gross domestic product. This means that if we want to achieve long-term real GDP growth of some four to five percent and inflation of two to three percent, then certainly I would say that credit growth of 10 to 15 percent is normal and desirable. But we were in a period of slower economic growth, so that the credit growth rate was relatively low in the last year. This year it continued, and in June we had an annual credit growth rate of 3.7 percent. It is low, but in line with our projections. For the entire year we expect credit growth of 7 percent and we believe we will achieve that rate. In June and July we already have a more intensive monthly credit growth compared to the previous months and we expect that trend to continue.

Nevertheless, efforts are made constantly for fulfilling the necessary legal framework and procedures, covering all possible directions of its activity. Simultaneously, there is worked in terms of organizing the structure, increasing the institution’s staff number and training. Emphasis is laid on the DIA’s cooperation with the Bank of Albania, the supervisory authority, so that the DIA carries out its functions effectively. At the same time, the relation with the Ministry of Finance is taken into consideration in organizing the Deposit Insurance Agency’s structure, so as to have the solid presence of the state in it. The forms of this cooperation are numerous, but all of them should be first consolidated under normal conditions of the banking system activity. The main elements of this cooperation are: •  Exchange of information on supervisory practices and observance of regulatory requirements by the insured entities;  •  Organization of joint trainings in getting acquainted with respective functions;  •  Acquaintance with and discussion on manuals and procedures requiring the commitment of both institutions in certain cases, and the testing of these procedures. The Bank of Albania and the Deposit Insurance Agency are working for enhancing this cooperation constantly. 2/3  A number of legal and regulatory alterations that are being prepared in parallel by both our institutions, and the exchange of information, as well as more frequent contacts between both institutions serve this purpose.
This continued period of low headline inflation is a concern, in part, because it could lead to significantly lower inflation expectations. If this drop in inflation expectations were to occur, it would, in turn, tend to depress future inflation. Evidence on the inflation expectations front suggests some cause for concern. In particular, market-based measures of longer-term inflation compensation derived from nominal and inflation-indexed Treasury securities have fallen to very low levels. In addition, some survey measures of household inflation expectations have recently moved lower. 2  BIS central bankers’ speeches  With respect to the market-based measures, there are some reasons to discount the decline. Several term structure models, including those estimated at the New York Fed, attribute most of this decline to a decrease in term premiums – what investors demand for insurance against inflation risks – and not to a decrease in long-term inflation expectations. These models suggest that, over the indicated horizon, investors anticipate that low growth will occur along with low inflation. Still, given the extent to which inflation compensation has fallen since mid2014, I believe that it is prudent to consider the possibility that longer-term inflation expectations of market participants may have declined somewhat. What I find more concerning is the decline in some household survey measures of longer-term inflation expectations.

This slowdown is not new. Each year since 2012, EME growth has come in well short of expectations that existed at the start of the year. It is difficult, however, for market participants to recognize and adjust to large structural shifts in real time. There is still considerable uncertainty about the trajectory of long-term EME growth, and therefore the appropriate pricing of EME financial assets. In that context, heightened market volatility is not surprising. Second, this slowdown in EME growth is happening after a long upswing in credit expansion in these countries. Based on BIS data for 23 of the largest EMEs, since the end of 2007 credit to their private nonfinancial sectors has risen from roughly 80 to 135 percent of GDP. In several countries, the increase in private credit penetration exceeds 40 percent of GDP – roughly the same order of magnitude that we witnessed in other periods that preceded financial crises. Although the magnitude of the EME credit boom has been apparent for some time, with EME growth now on a more subdued trajectory and the global financial environment less forgiving, market participants have begun to sharpen their focus on the risk of larger than expected credit losses as the credit cycle reverses. Third, China has entered a period of economic transition, from a growth model based on investment, manufacturing and rapid state-directed credit growth to one emphasizing  4  BIS central bankers’ speeches  consumption, services and more sustainable market-directed credit intermediation.