samchain/econo-pairs-v1 huggingface dataset:
As the pandemic unfolds, many people are starting to ask questions about our economic future: What will the recovery look like? When will it begin? And how will it be affected by the virus? It's easiest to start with the last of these questions first. The virus will continue to be at center stage throughout the economic recovery. We are traveling down a narrow path, balancing a return of economic activity with effective containment of COVID-19. The overall unemployment rate reached nearly 15 percent in April, and around 20 million Americans have lost their jobs—numbers I hoped I would never see in my lifetime. These figures understate the full extent of the pandemic's toll on the economy. The pandemic and the ensuing economic downturn have done disproportionate harm to communities of color. Black and Hispanic families, as well as lower-wage workers, have suffered the most.2 Those who least can afford it have been hardest hit, making a strong and full economic recovery of paramount importance. As the recent surge in cases in some states demonstrates, much is still unknown about how the pandemic will play out in the months ahead. That said, there have been signs that we may be past the worst of the extreme economic distress, and early indications of a recovery have started to emerge. As states began to open up and people returned to eating in restaurants and shopping in stores we've seen sizable increases in consumer spending. We've also seen increases in building permits, signaling a turnaround in the construction industry.

1 COVID-19 Dashboard by the Center for Systems Science and Engineering at Johns Hopkins University,  accessed June 29, 2020. 2 The impact on lower-wage workers is analyzed in Cajner, Tomaz, L.D. Crane, R. A. Decker, J. Grigsby, A.  Hamins-Puertolas, E. Hurst, C. Kurz, and A Yildirmaz., 2020. “The U.S. Labor Market During the Beginning of the Pandemic Recession.” Becker Friedman Institute, University of Chicago, Working Paper, No. 2020–58 (June). 3 U.S. Census Bureau and Department of Housing and Urban Development, Monthly New Residential  Construction, May 2020, June 17, 2020. 4 An example at the New York Fed is the bi-weekly publication of the Weekly Economic Index. 5 Empire State Manufacturing Survey, Federal Reserve Bank of New York, June 2020; Business Leaders Survey,  Federal Reserve Bank of New York, June 2020. The data on small business revenue come from Womply, a software-as-a-service provider focused on customer relationship management. 6 See Board of Governors of the Federal Reserve System, Federal Reserve Issues FOMC Statement, March 3,  2020; and Board of Governors of the Federal Reserve System, Federal Reserve Issues FOMC Statement, March 15, 2020. 7 See Board of Governors of the Federal Reserve System, Federal Reserve Issues FOMC Statement, April 29,  2020; See Board of Governors of the Federal Reserve System, Federal Reserve Issues FOMC Statement, June 10, 2020. 8 See Board of Governors of the Federal Reserve System, Federal Reserve Announces Extensive New Measures  to Support the Economy, March 23, 2020.
Goldilocks and the three pillars: how much capital is just right? - speech by Anna Sweeney i  Speech given at the Westminster Business Forum  Goldilocks and the three pillars: how much capital is just right? ‐ speech by Anna Sweeney | Bank of England  Page 1  Published on 10 February 2021  Overview Anna Sweeney says regulators must strike the right balance when they decide how much capital insurers need to hold. The three pillars she refers to are the different ways we regulate insurers. They are: the capital an insurer holds its risk management policies its disclosure of risks  Speech We are all familiar with the story of Goldilocks and the three bears. When preparing this speech I was surprised, and a little disturbed, to discover that in the first recorded version of the story, it is not a pretty young girl who enters the forest home of three bears, but a badly-behaved old woman, an outcast from her family. After wreaking havoc in the bears’ house she jumps out of the window, and is never seen again. (Let’s hope that the bears had good contents insurance.) In this earlier telling of the story, the visitor to the bears’ house is a caricature, and not a sympathetic one: I really don’t want to repeat some of the adjectives applied to her.

With substantial excess capacity in the economy during the early stages of a recovery, workers don’t tend to demand higher wages, and firms don’t feel at liberty to substantially increase prices. Since the Great Recession has resulted in substantial excess capacity, it would be unusual to see increases in the inflation rate in the early stages of this recovery. However, while inflation does not normally increase in the early stages of a recovery, some economic observers may be concerned that this recovery will be different, because of the unusual actions that the Federal Reserve needed to take. As you know, the Federal Reserve took extraordinary measures to stabilize the financial system – measures that were critical to setting the stage for the current recovery. Figure 9 depicts the additions to the central bank’s balance sheet from these temporary operations. As you can see in the chart, the liquidity facilities that we set up to restore more effective financial market functioning have wound down. At the same time, however, in response to the severity of the economic recession the Federal Reserve decided to expand its purchases of mortgage-backed and agency securities. These purchases were undertaken to improve market functioning in the mortgage market, and even more importantly, as a way to reduce a key interest rate at a time when many short-term interest rates were close to, or at, the zero lower bound. The purchase program ended in March, and these balances will naturally be dropping over time as households prepay mortgages, sell their homes, or refinance.
(2003), “Monetary Policy and Real Stabilization”, NBER Working Papers 9486, National Bureau of Economic Research. 2  BIS Review 29/2006  time period. But then the usual theoretical models for inflation targeting do not take into account the credibility aspects. If the economic agents are very uncertain as to how the central bank intends to manage target deviations, this may in the long run reduce confidence in the inflation target. It is therefore important to also include these aspects in practical considerations. One means of ensuring confidence in the inflation target is for the central bank to specify in advance what length of deviations from target can normally be accepted. This is how the two-year horizon should be regarded; it sets this type of limit and states how much consideration we can normally give to developments in the real economy. Flexibility in monetary policy should certainly not be allowed to reduce confidence in the inflation target in the long term, and this is why the Riksbank has chosen, in normal circumstances, to bring inflation back on target within a two-year horizon. At the same time, it is not feasible to set restrictions on monetary policy that will always be one hundred per cent binding, regardless of the economic situation. There may – exceptionally – be situations where the consequences of bringing inflation back on target within two years may lead to unacceptable fluctuations in economic activity. When the Riksbank judges that such a situation has arisen, it should make this quite clear.

One reason why we look ahead in this way is that monetary policy’s effects are exerted with a time lag. But the two-year horizon is also motivated by considerations to developments in the real economy. This creates some scope for trade offs in the inflation-targeting policy. Let me explain. If we were only concerned with inflation, we would always want to bring inflation back on target as quickly as possible. On many occasions it would be possible to attain the target sooner than within two years. But we would then need to change the interest rate in larger stages and more often. This type of policy would risk leading to unwanted fluctuations in the real economy. This applies in particular to the situations where inflation has deviated from target as a result of supply shocks. These could be, for instance, sudden increases in companies’ production costs due to soaring commodity prices and/or energy prices. The result could then be that inflation would rise above the target, while economic activity would be weak. The reverse can also occur - a fall in production costs could lead to inflation being lower than the target, while capacity utilisation was higher than is sustainable in the long term. If monetary policy were to aim at bringing inflation back on target as quickly as possible in these situations, it would further reinforce the fluctuations in the real economy.
24  Flexibility When Needed: The Technical Adjustment When overnight rates—including rates on federal funds transactions—edge higher, what tools does the Federal Reserve have to ensure that they generally remain within the target range when reserves are abundant? The federal funds target range is an important feature of the FOMC’s public communications, and maintaining control of the federal funds rate and other money market rates is therefore taken quite seriously. Public confidence in our ability to maintain rates within the target range is important for ensuring that expectations for the FOMC’s future policy stance are properly incorporated into the term structure of interest rates, and thereby appropriately affect financial conditions and the broader economy. At the March 2015 joint FOMC Board meeting, it was decided that in a situation of abundant reserves, the Federal Reserve intends to “adjust the IOER rate and the parameters of the ON RRP facility, and use  23 Recent market intelligence supports the notion that increased awareness among some banks of the LCR benefit to borrowing federal funds from FHLBs, even at rates at or slightly above IOR, has contributed to the upward pressure in federal funds rates. For further discussion of the impact of LCR treatment on money markets, see Potter, “Confidence in the Implementation of U.S. Monetary Policy Normalization,” August 4, 2018. 24 While trading volumes among smaller domestic banks have been largely steady since the beginning of normalization, their borrowing rates have increased since March with the rise in the broader constellation of money market rates.

This could suggest that the increase in funding rates for these entities reflect bargaining dynamics, rather than increased demand or aggregate reserve scarcity. 11  other tools such as term operations, as necessary for appropriate monetary control, based on policymakers' assessments of the efficacy and costs of their tools.” 25 Earlier this year, rates paid on the bulk of federal funds trading had ticked up, although they remained within the FOMC’s target range. The uptick in the federal funds rates raised a question as to whether the effective federal funds rate might print above the FOMC’s target range, absent a change in our operational settings. 26 To address the rise in the overnight rate within the range, a technical adjustment to the IOR rate was made at the June FOMC meeting: the IOR rate was raised by 20 basis points while the FOMC raised the target range by 25 basis points. Following that change, all rates paid on federal funds borrowings, as well as in other money markets, rose by about 20 basis points. This made it less likely that the EFFR would be above the target range. At the September FOMC meeting, the IOR rate and target range were each increased by 25 basis points, maintaining the five-basis-point spread between the IOR rate and the top of the target range, as shown earlier in Figure 4.
This is particularly important as its growth gains momentum both in terms of number of service providers and in terms of business volume and as the internationalisation process continues. The global call for improved regulation and increased oversight in an international financial environment that is fundamentally different will thus also require us to intensify the efforts that have already been undertaken to strengthen the financial regulation for Islamic finance. 2  BIS Review 70/2010  The financial reforms in Islamic finance to support sustainable and responsible innovation , in particular, need to leverage on its inbuilt strengths that set Islamic finance apart in performing its role in the mobilisation and allocation of resources to generate real economic activities. In Islamic finance, innovation is key in pushing the frontier of market development to generate the range of products and services, processes and functions. The key lies in preserving the benefits of innovative initiatives and activities whilst ensuring that they do not result in negative externalities. This comes in the forms of its strong paradigm in governance, disclosure and transparency, as well as the emphasis that innovations are anchored in the objectives of Shariah and thus are for the benefit of the people. Importantly, Islamic finance has the disposition to facilitate financial deepening without financial excesses through the fundamental Shariah requirement for Islamic financial transactions to be supported by an underlying economic activity and for socially-responsible financial innovation.

As Islamic finance transitions to its next stage of development with greater international integration, the immense benefits that will be unleashed need to be accompanied by a higher level of resilience to be well positioned to manage the new challenges that the future will bring. Our collective efforts to mobilise a higher level of global cooperation in promoting this outcome will also enhance the prospects of Islamic finance to contribute towards securing global financial stability and a greater shared economic prosperity. 4  BIS Review 70/2010
The share of income received by the top 1 per cent of the population has also risen since the 1980s across many industrialised countries, including Australia, Canada, the United Kingdom and the United States (Atkinson and Morelli, 2014). 5  See Autor, Katz and Krueger (1998) and Autor, Katz and Kearney (2008). For example the last 60 years have seen US returns to education rise despite a large increase in the supply of more educated workers. And there is evidence that increases in the employment of more skilled workers between the 1970s and the 1990s were greater in more computer intensive industries. BIS central bankers’ speeches  1  Now is the time to be famous or fortunate. There is also disturbing evidence that equality of opportunity has fallen, with the potential to reinforce cultural and economic divides. For example, social mobility has declined in the US undercutting the sense of fairness at the heart of American society. 7 Intergenerational equity is similarly strained across the advanced world. Social welfare systems designed and enjoyed by previous generations may prove, absent reform, unaffordable for future ones. 8 And environmental degradation remains unaddressed, a tragic embarrassment now seldom mentioned in either polite society or at the G20. To maintain the balance of an inclusive social contract, it is necessary to recognise the importance of values and beliefs in economic life.

These resources are to be found in the Exchange Fund, the use of which, as you know, is governed by the Exchange Fund Ordinance. Under this Ordinance, the uses to which the Fund may be put are quite specific. Section 3(1) of the Ordinance states that the Fund “shall be used primarily for such purposes as the Financial Secretary thinks fit affecting, either directly or indirectly the exchange value of the currency of Hong Kong and for other purposes incidental thereto”. Section 3(1A) further provides that “the Financial Secretary may, with a view to maintaining Hong Kong as an international financial centre, use the Fund as he thinks fit to maintain the stability and integrity of the monetary and financial systems of Hong Kong”. Under section 5B of the Ordinance, the Financial Secretary has delegated day-to-day decisions on the use of the Exchange Fund under these sections to the Monetary Authority. The clear indication here is that the use of the Exchange Fund must be for systemic purposes. The guiding principle in considering whether to provide lender of last resort support to an individual authorised institution is therefore whether the failure of that institution, either by itself or through spreading contagion to other institutions, would damage the stability of the exchange rate or the monetary and financial systems. It is neither possible nor necessary to give an exhaustive list of all the instances that might be covered by this principle.
One side effect of this is of course that outstanding government bonds can become very much sought after, and nowhere is this more true at the moment than in our own market. But I think a much more significant change will be to encourage corporate issuers to take up the slack, as it were, and fill the resulting hole. Europe does not yet have a corporate bond market to compare with the US market, but I think the current situation in the markets, with reduced government issuance, the opportunities afforded by Monetary Union and growth of the private pension industry in continental Europe, all combine to provide a very promising environment for the establishment of a genuine European corporate bond market. Secondly, the electronic revolution will continue to gather pace. There are those who wonder if all the hype about dot.com this and e-that is overdone, and certainly some of the current IT stock valuations seem to build in expectations not readily captured by traditional valuation methods. But in the financial markets, I think if anything the effect of the electronic revolution will exceed even the boldest predictions. I am told that there is at least one major securities house which is assessing the ongoing viability of each of their current functions in a future where both data storage and data transmission are characterised by infinite capacity and zero cost.

That still leaves us with quite enough to worry about - and who ever met a central banker - or a sailor - who didn’t worry about what was coming next - it would be a contradiction in terms. The immediate challenge is to cope with the imbalances within and between the industrial countries, and we have more work to do to improve our defences against volatile international capital flows more generally. But for the time being, the rate of world output growth, which had fallen to only about 2% in 1998, about half its long-term trend rate, and which was widely expected to fall further, is now expected to bounce back to around trend over the next couple of years. And whereas, a year ago, many industrial countries were still in the process of easing monetary policy, to offset the impact on world demand of the interruption of the flow of credit and investment to emerging market countries and transition economies, we have recently seen a quite widespread increase in interest rates, designed to moderate the pace of domestic demand growth. And rising interest rates - I need not remind you - are a reflection of a strengthening economy. Against this backdrop of strong economic growth and official tightening, it is not surprising that bond markets in most developed economies have responded with higher yields over the last 12 months.
In Japan, good news comes from the labor market – with unemployment at 3.8%, the lowest rate in eight years – and from private consumption that is waking up after a long period of stagnation. Emerging Asia continues to show high growth rates, led by China and India. In particular, China surprised with an annualized growth rate of 11.9% the second quarter. Growth is fairly widespread with important contributions from retail sales, investment in fixed assets and exports. Despite sharp rises in world prices of foods and fuels, CPI inflation has remained stable in the U.S., the euro zone and Japan. In the U.S., recent indicators show a fall in core inflation and are more consistent with inflation converging to the ceiling of the comfort zone defined by the Fed’s open market committee. In the euro zone, despite 1.9% of annual inflation in the  BIS Review 87/2007  1  past two months, output growing above potential, combined with the closing of output gaps and strong credit growth, there is a higher risk of inflation acceleration, which has led the ECB to continue with its process of monetary policy normalization. In Japan, although inflation is still low, with an expanding economy, the Bank of Japan introduced two rises of 25 basis points each in the policy rate to reduce distortions and vulnerabilities associated to excess liquidity. In China and other emerging economies, inflation is increasing.

On the other hand, long term interest rates are on the rise in industrial economies, mainly reflecting increased real rates rather than an increase in inflation expectation or of duration premiums. The increases in long-term interest rates may be indicating better growth prospects in the U.S. now that a soft landing is more likely. However, overall global financial conditions are very accommodating, with risks premium that, although beginning to rise, are very close to their record lows. This, despite the flight to quality phenomenon observed in the past several weeks as a result of perceived risk increase because of the market status of low-quality mortgage loans in the U.S. In any case, the levels of market volatility in emerging economies are significantly smaller than they have been in earlier episodes. The dollar has depreciated against the currencies of industrial economies, responding to the evolution of the business cycle. In the past few days, this has been aggravated by concern about how the U.S. housing market situation will unfold. The Chilean peso, similarly to currencies in the rest of emerging economies, has also appreciated against the U.S. dollar due to weakness of the latter. Exporting or import-substituting sectors that are selling their produce at a dollar price not too different from the price they were getting towards the end of 2001, have possibly endured a large loss of profitability. This is directly associated with the multilateral depreciation of somewhat more than 40% suffered by the dollar in the world since then.