samchain/econo-pairs-v1 huggingface dataset:
As Figure 3 shows, in the current recovery, growth in consumption has been much slower than in the 1982 recovery and has, unfortunately, tracked the anemic initial recovery from the 2001 recession. While the 2001 recession damaged many a household’s finances, through an abrupt decline in stock-market wealth, the current recovery has been hampered by households trying to rebuild their finances given sharply diminished housing wealth in addition to declines in the value of their other investments. While there have been concerns about business fixed investment, Figure 4 shows that this component of GDP has grown quite well relative to the last two recoveries – although somewhat slower than the 1982 recovery. Despite the concern over economic uncertainty voiced by many businesses, investment has been growing. The real laggard in this recovery has been housing. While housing is a relatively small component of GDP, it can be quite volatile – and often grows rapidly during an economic recovery. In addition, purchases of appliances, home furnishings, and housing-related services are impacted by slowed housing activity. Given the problems that flow from the bursting of the housing bubble, Figure 5 shows that residential fixed investment is roughly where it was at the trough of the recession – and thus not providing its more usual contribution to growth in the early stages of a recovery. Just how moribund the housing market has been is shown in Figure 6. Both housing starts and building permits have leveled off, but are showing no signs of a significant recovery yet.

We can, of course, replicate this financial infrastructure for other currencies, and indeed we are currently exploring the possibility of doing so for the other major international currency not domiciled in this time zone the euro. And if this is appropriate, we can also transfer our technology to others through our advisory services. I am, in particular, thinking of the RMB financial infrastructure, which in my opinion requires urgent strengthening, not just for facilitating the development of the RMB bond market, but also for facilitating the many further measures in financial liberalisation following WTO accession. Meanwhile, our US dollar financial infrastructure in Hong Kong, coupled with the market making arrangements that have been well tried for over a decade, and the critical mass of financial institutions, is ideal for the launching of a US dollar bond programme for the Mainland. I understand, of course, that with foreign reserves well exceeding $ 200 billion, there is arguably little need for the Mainland to raise additional foreign debt. But part of the outstanding foreign debt could be refinanced in Hong Kong through such a programme. Perhaps with a liquid market and a reliable benchmark yield curve established, similar to those of Exchange Fund paper in Hong Kong dollars, the overall borrowing costs could be lowered.
This is the case when a Monetary Policy Report is going to be published; otherwise the process is slightly shorter. In total, around 30  4  BIS Review 77/2008  economists are involved in some phase of the forecasting work, together with the Executive Board members. The material for the monetary policy meetings is mainly produced in the Monetary Policy Department in close cooperation with the Executive Board. The process begins with a risk meeting. The participants at this meeting are the Executive Board, employees of the Monetary Policy Department, some employees from other departments and some advisers to the Executive Board. The purpose of the meeting is to capture at an early stage various types of risk and alternative sequences of events for the economy that we envisage in the future. The discussions at this meeting are relatively unbiased and take a broad perspective. It is at this meeting that the alternative scenarios begin to take shape, those that are later described in Chapter 2 of the Monetary Policy Report and that show how the economy might develop if particular events occur. The scenarios can be used as a kind of counter-example to explain why the Executive Board considers that the main scenario is the one that at present gives the most well-balanced monetary policy. It can also illustrate different risks that an individual member wishes to illustrate or perhaps even a scenario that one person prefers instead of the main scenario.

The agents in the model also have rational expectations, that is, they use the information available in the best possible way when they make their decisions. This type of model is usually referred to in the research literature under the generic term of New Keynesian DSGE models. 7 The methods have been developed in close cooperation between academic researchers and economists at central banks who have exchanged ideas and experiences. The Riksbank has developed its own macro model for the Swedish economy At the Riksbank we have developed a dynamic macro model for the Swedish economy which is known as Ramses. 8 This is a so-called general equilibrium model and belongs to the group of New Keynesian DSGE models. General here means that it tries to explain the whole economy and not merely a particular section of it, such as private consumption or the labour market. The fact that it is an equilibrium model means that it assumes that market mechanisms create a balance between supply and demand in the different markets of the economy. Ramses is currently used to make forecasts, to interpret economic developments and to calculate the effects of monetary policy, for example. Some areas are not yet very well developed in Ramses. This includes, for example, fiscal policy and the credit market. We therefore use partial models that focus on certain individual variables as a complement to Ramses. We also use so-called Bayesian VAR models.
2  Quoting Joseph Brook, a prominent Huddersfield banker, at a meeting of the Huddersfield Banking Corporation in January 1828. 3  Hartley (op.cit.). A “Simpson” was a note offered by local bank Simpson, Chapman and Co of Whitby. Through a sequence of mergers, this subsequently became part of what is today Barclays Bank. BIS Review 108/2009  1  It is easy to imagine, though probably impossible to print, what she might have made of Quantitative Easing. In the period since, banking and finance in Yorkshire have grown steadily and successfully. Among the success stories would be the Yorkshire Penny Bank. This was founded in 1859 in Halifax as a means of saving for the working classes. In 1874, its first School Transfer Department was opened to encourage saving by school children. “Take care of the Pence and the Pounds will take care of themselves” intoned the bank’s posters. Such was the success of the school scheme that, by the end of the nineteenth century, the majority of schoolchildren in Yorkshire had a savings account. The scheme aimed to educate children from an early age on the benefits of thrift and financial planning. And having been nurtured early, the relationship between bank and customer often lasted a lifetime. In 1959, the Yorkshire Penny Bank became Yorkshire Bank which today remains one of the UK’s most successful medium-sized banks.

In this pursuit, greater collaboration among the law enforcement agencies (LEAs) as well as between LEAs and the private sector is essential for us to efficiently and effectively connect and assess all relevant information, which will no doubt further strengthen our efforts to fight ML/TF/PF threats. In this respect, it is observed that the Public-Private Partnership (PPP) is gaining momentum and is fast becoming known as a key success factor for effective information sharing in the 1 the Joint Money Laundering Intelligence AML/CFT/CPF ecosystem. To quote some examples, Taskforce (JMLIT) established by the United Kingdom in 2016 has prompted a key shift in 1/3  BIS central bankers' speeches  addressing ML/TF threats. As of June 2020, JMLIT has completed over 750 cases and detected more than 5,000 suspected accounts linked to financial crimes. Similar achievement was also experienced by the Fintel Alliance in Australia where within the span of one year between 2018 to 2019, over 300 cases were successfully completed through the partnership. Other countries within the region have also followed suit – Hong Kong’s Fraud and Money Laundering Intelligence Taskforce (FMLIT) and Singapore’s Anti-Money Laundering and Countering the Financing of Terrorism Industry Partnership (ACIP). In Malaysia, the PPP is undertaken through the Financial Intelligence Network (MyFINet), which involves collaboration and information sharing between LEAs such as the Central Bank, Royal Malaysia Police and Malaysian Anti-Corruption Commission, and private sectors such as financial institutions.
BIS central bankers’ speeches  17  Chart 12 – Social welfare by Regional GDP* 100.5  2007 = 100  2007 = 100 Real GDP per head (RHS) Social welfare (LHS)  100 99.5 99 98.5 2007  2008  2009  2010  2011  2012  2013  2014*  103 102 101 100 99 98 97 96 95 94 93 92 91 2015**  Sources: ONS and Bank calculations. * Social welfare is calculated as a sum of the natural logs of GVA by region (see for example, Sen A (1970)). Chart 13 – Median regional net wealth North East Yorkshire & the Humber West Midlands London South West Scotland  2006-2008  Median Household Wealth by region, indexed to 2006-2008 160 150 140 130 120 110 100 90 80 70 2010-2012 2012-2014  North West East Midlands East of England South East Wales  2008-2010  Sources: Wealth and Asset Survey, ONS, and Bank calculations.

And the impact of so-called Quantitative Easing (QE) is also likely to be different across cohorts of society. 3 Understanding the differential impact of monetary policy across these sectors is important in general, as well as for gauging whether policy is working through its intended channels. Fourth, and perhaps most important of all, the distribution of outcomes across different groups can matter greatly for the well-being even of the economy as a whole. To see that, consider a simple example. Imagine the economy comprises two regions, one with income of 10, the other with income of 90. Now imagine income falls by 5 in region one but rises by 10 in region two. At least as measured by GDP, the economy and society as a whole is 5% better off. But is it? The income of the already-rich has risen by just over 10%, while the income of the already-poor has fallen by 50%. Does the former really swamp the latter when it comes to the well-being of society? There are grounds for doubt. Empirical studies show that every extra pound of income or wealth yields less satisfaction than the last. A millionaire values a £ lottery win less than someone on the living wage. For economists, this goes by the name “diminishing marginal utility”. Yes, I know we should get out more. If they are sufficiently unevenly distributed, income losses by the poor may more than offset gains by the rich in a social welfare sense, even if not in a GDP sense.
Reliability of a central bank, in turn, can be assessed based on the accuracy of its projections, its ability to identify financial risks, the quality of its statistics and the safety of the domestic currency and payment systems. For adaptability, a central bank must develop its analytical skills to identify structural changes in the economy and emerging sources of risk, telling them apart from necessary innovation. To this end, it may need to deepen its knowledge of markets and agents, and to be on top of technological developments. Adaptability also depends on the preparedness to react to unforeseen events. Central bank integrity requires appropriate access to information, control of conflicts of interest, strong middle office arrangements in market operations, and effective auditing across different areas and processes. For accessibility, communication of monetary policy is essential, as well as analysis and communication of financial risk, consultation in the issuing of new regulations, and well-structured accountability. The fairness dimension of trust can be enhanced through prevention of crises and risk management, financial education and inclusion, and securing equal opportunities in staffing and promotion decisions. Assessing public trust in a central bank across these dimensions does not need to start from scratch. Instead, it provides a framework to organize existing data in a more meaningful way. It can also shed a new light on how to read and use data coming from different streams of the literature. The substantial work on central bank transparency led by some of our participants in this conference is a good case in point.

This certainly underlies the growing popularity of inflation targeting and the forward guidance that comes with it. But even this may be challenging in a changing environment, where the business cycle overlaps with structural changes, and more so in areas, like financial stability, where policy targets may be hard to design and explain. From credibility to trust So, a broader approach to credibility-building may be needed. To this end, it may be useful to acknowledge that credibility is an attribute of a certain individual or institution: that of being believed or trusted. So surely, credibility does not depend exclusively on your own actions but on how far others trust you. Trust, in turn, is defined as a person’s belief or expectation that another person or institution will act in favor of one’s well-being (OECD, 2017). So we could think of credibility as an institutional asset that depends on the factors that influence trust from stakeholders and the public. Credibility in a central bank refers to public’s belief that future actions of monetary policy that are optimal today will be carried out even if they no longer seem optimal in the future. This is related to public trust, but the two concepts are not quite the same. One can imagine the public having trust in the central bank and at the same time the latter adopting a discretionary monetary policy strategy to retain full flexibility regardless of past promises.
Before the EU/IMF programme was agreed, the total Eurosystem loan support for Ireland (combining monetary policy operations to all eligible banks and emergency liquidity assistance from the Central Bank of Ireland) amounted to about 100% of Irish GDP. Our total loan provision now stands at above EUR 125 billion. There are however statutory limits to what the Eurosystem can do, and a clear dividing line between the tasks of a State and the tasks of a central bank. There can also be no doubt that the current amount of liquidity support extended by the ECB and the Central Bank of Ireland  4  BIS central bankers’ speeches  to Ireland’s banks needs to be substantially reduced over time, and we expect that the Irish authorities and the banks are working hard to achieve this. For Ireland’s economy to recover, its banking system must be sound and fully functioning. A virtuous cycle must blossom. That will be difficult to instil with banks that remain dependent on Eurosystem support. With measures in place to break this dependency, the conditions will be in place for recovery. The foundation for this recovery has already been laid. In late 2010, the ECB played a key role in mitigating the challenges facing the banking system, and in designing programme measures to reverse the situation. I hope you share my view that these measures achieved their initial aims: the stabilisation of the banking system.

Measured against these milestones, I must admit that I am truly impressed by the way Ireland has handled its tough challenges, especially since the beginning of last year: the economy is well on the way to restoring competitiveness, reducing the fiscal deficit (–10.6 in 2011; –8.6 goal for 2012), overhauling the institutional framework and restructuring the banking sector. It is the only programme country that has managed to close its trade deficit and to return to growth last year, even if at modest rates (0.7% in 2011; projections: 0.5% in 2012; 2.0% in 2013). This turnaround would not have been possible without Ireland’s biggest asset: a talented, well-educated workforce. This strength is maybe most clearly reflected in the fact that the export sector has continued to attract foreign investment in the midst of one of the worst crises to hit the world economy in the last century. Structural reforms True, structural reforms are helping to restore competitiveness and flexibility, and Ireland, allin-all, benefited from a much more flexible labour market than, for example, Greece or Spain. It is true that some of the structural reforms will take time to show full effect, but their capacity to improve the situation for ordinary citizens should not be underestimated. Just to give you some examples: the market for legal and medical services is currently being deregulated and made more competitive. This is something that will lower prices for Irish consumers, expand activity and increase employment. In the labour market, an important overhaul of employment contracts has been announced.
The rest of this paper goes through the new auction structure in more detail. The ILTR demand curve During the auction, counterparties submit their bids for reserves.13 Some bid against the narrow collateral set, others against the wider set and some against both (using a so-called “paired bid”).14 One could think of bids against each collateral set as separate. The auctions are uniform price so that all counterparties pay the lowest accepted rate (on each collateral set) regardless of their bids.15 In theory, this should mean that there is no incentive for banks to try to “game” the auctions, nor is there a need to speculate on other bidders’ behaviour. Instead, bids should reflect the true demand for reserves since, if their bids are accepted, they will either pay the rate they bid, or a lower one. 12  See Bank of England, Annual Report, 2009. This issue doesn’t arise in the short-term OMOs, as the term of the repo runs from one MPC decision to the next, so the difference between the rate we received in the OMO and that which we pay on reserves is fixed. 13  The Bank places no restriction on the number of bids submitted but places restrictions on the total value of bids received from a single participant. Participants may choose to submit multiple bids against either collateral set.

The fruits of that labour were revealed in the summer of 2010, when the Bank replaced the extended LTRs with its new permanent Indexed Long-Term Repo (ILTR) operations. In the ILTR auctions, counterparties can submit bids against narrow collateral, wider collateral or both. The Bank then allocates a proportion of the funds on offer to the bids against wider collateral, where that proportion depends on the spreads offered. These new auctions solve the problems of the old LTRs. For example, expressing the bids as spreads to Bank Rate (with a minimum spread of zero) eliminates the interest rate risk arising from unexpected movements in the spread of market rates to Bank Rate. Moreover, the price of liquidity against wider collateral is determined within the auction – as the market becomes more stressed, counterparties are willing to pay more to borrow against wider collateral. So the Bank no longer has to make a judgment about the appropriate spread to charge counterparties. The most innovative aspect of ILTRs is that is that, as the degree of market stress increases (as the clearing spread on wider collateral rises relative to that on narrow collateral) the Bank automatically, within the auction, lends a greater proportion against wider collateral. And it gets a signal about the need to expand the overall size or frequency of the operations in future. As far as we know, the new format represents a global first for a public auction in any field.
However, it should be noted that the slowdown in inflation was aided significantly by one-off factors such as the strengthening of the ruble thanks to higher oil prices and last year’s good harvests. Through the concerted efforts of OPEC and other oil producers, the oil market has become more stable in recent months and oil prices have increased. Oil prices have gained a firm foothold over a relatively broad range. This provides more stability in understanding long-term trends. Nevertheless, the range of scenarios that could evolve in the near future remains quite wide. As you will doubtless be aware, the baseline scenario adopted by the Bank of Russia assumes that oil prices will adjust to a level of $ per barrel in the short or medium term. However, the alternative scenario we have forecasted assumes a gradual increase in the price of oil, and this too seems entirely possible. Under highly volatile conditions in the terms of trade it is very important to have a budget that is not susceptible to external fluctuations, including those arising from the commodity supercycle. Last year we adopted a programme of fiscal consolidation to aid in the stabilisation of budget 1/6  BIS central bankers' speeches  expenditures. Beginning this year an interim fiscal rule has taken effect, under which oil and gas revenues resulting from the higher than expected cost of base-level oil are directed to the Reserve Fund.

The ratio of job vacancies to the unemployed is near its all-time high, workers are quitting jobs at a record rate, and employers are bidding up wages. This sizzling hot labor market is also related to the imbalance between demand and supply for goods and housing, as businesses seek to hire more workers to help meet the high demand. And labor supply shortages and rising labor costs are contributing to price pressures across a wide range of goods and services. Finally, global imbalances in supply and demand have also contributed to supply-chain problems that have affected the availability and costs of shipping, as well as a variety of inputs into production-including semiconductor chips used in making cars. The war in Ukraine and recent lockdowns in China have further constrained the global supply of goods and commodities, including food and energy. Turning Down the Heat With clear signs of demand exceeding supply and an economy running too hot, the primary focus of monetary policy is to turn down the heat and restore price stability. Although we are facing highly unusual and challenging circumstances, I am confident we have the right tools to achieve our goals. In fact, we have an advantage over previous inflationary episodes: Our monetary policy tools are especially powerful in the very sectors where we see the greatest imbalances and signs of overheating-such as durable goods and housing. Higher interest rates will cool demand in these ratesensitive sectors to levels better aligned with supply.