samchain/econo-pairs-v1 huggingface dataset:
That guidance should help to give confidence to businesses and households and help to support demand growth. By reducing uncertainty about our reaction function, guidance should also have helped to counteract the pressure in financial markets to price in the chance of a rapid increase in Bank Rate. We chose unemployment as the threshold indicator not because it was ideal – far from it – but because other indicators were all less attractive. Of course, no sooner had we announced a policy linked to the unemployment rate than it began to fall unusually precipitously. But what is there not to like about sharply falling unemployment? After all, getting the economy back to a medium-term path quickly, allowing policy to normalise, would be a good thing? Right? Well, falling unemployment is undoubtedly a good thing for the individuals who are back in work and on many other social counts. It could only be a purveyor of the dismal science who found rapidly falling unemployment disappointing! Yet, in order to see rising living standards on average, it is crucial to see rising output per head (i.e. rising productivity) – which ultimately drives real national income per head and hence how well off we are as a country. So we need to see rising employment accompanied by even faster growth in output.

The answer is in the levels of output and employment, not their growth rates. After nearly 6 years since the start of the crisis, the level of output in the economy is still 2% below its peak in 2008. A conservative extrapolation of the pre-crisis trend would suggest that UK output is some 15–20% below where it would have been expected to be by this time in the absence of the crisis. It seems unlikely that we will recover much of that gap and in any case the calculation is getting less precise and less relevant. Eventually, economic historians may work out what happened to potential output and we should establish a new reference point. As things stand today, it is difficult to know precisely where the new sustainable growth path of the economy lies (especially as data for the past few years are still likely to undergo significant revision by the ONS). But with unemployment still elevated, and diminishing signs of inflationary pressure in both goods and labour markets, we can be reasonably confident that the economy needs to grow strongly for some time to come, to regain a stable and sustainable medium-term trajectory.
This fact has attracted the attention of analysts, who point to the confluence of various factors to explain why the response by wages to the fall in unemployment is not following the usual patterns. First, it is pointed out that the number of workers who are employed part-time, involuntarily, increased notably after the crisis and has scarcely fallen with the improvement in economic activity. 5/7  In parallel, there has also been an increase in the weight of some groups that are not included in the habitual definition of unemployment, such as economically inactive individuals whose reason for not seeking a job is because they believe they will not find one; or who do not seek a job for whatsoever reason, but are available and wish to find a job; or who, although they are seeking employment, are not available to immediately take up a new job. The measure of the unemployment rate that were to include these groups would, for the euro area as a whole, stand at around 18% of the labour force, practically double the habitually estimated rate. In terms of their influence on wage bargaining, these workers could exert downward pressure on wages. Additionally, the excess supply of unskilled labour, which in some cases is amplified by immigrant inflows, may also reduce upward pressure on wages; and, moreover, there is some evidence of changes in wage-setting mechanisms which, against a background of low growth in prices, would be setting greater store by past or actual inflation, as opposed to expected inflation.

And finally, a bank needs a process to ensure that the results of stress tests receive the high-level attention necessary for the bank to respond effectively to the results. In the near term, supervisors also must re-examine how they think about concentrations. One lesson from the recent turmoil is how correlations in market prices arise from previously unsuspected linkages: countries with similar government debt structures or similar exchange rate regimes, institutional investors with similar risk strategies, and instruments traded with widely different customers, but with a common element of market risk, such as a countryrelated risk. Stress testing also can be useful in identifying such concentrations, particularly when accompanied by thoughtful analysis from bank management. These issues will be addressed in the ongoing work of the Committee on credit and liquidity risk management. In two other areas, we have begun work, but the magnitude of the efforts will involve more time. The first area is capital. The added focus on stress testing by banks and by supervisors should also influence how supervisors evaluate capital adequacy at banks. As banks are developing risk management and stress testing approaches, some are beginning to look at how they determine whether their capital is adequate to absorb losses, including losses under reasonable stress scenarios. One lesson from the current environment is the enormous size of market movements that are possible in such a stress scenario—whether in currency or equity markets or in credit spreads, and how quickly losses from even small positions can mount.
11  See William Dudley, “Ending Too Big to Fail,” Remarks at the Global Economic Policy Forum, New York City, November 7, 2013; William Dudley, “Enhancing Financial Stability by Improving Culture in the Financial Services Industry,” Remarks at the Workshop on Reforming Culture and Behavior in the Financial Services Industry, Federal Reserve Bank of New York, New York City, October 20, 2014. BIS central bankers’ speeches  3  As part of this effort, I have proposed four specific reforms to curb incentives for illegal and unduly risky conduct at banks. First, banks should extend the deferral period for compensation to match the timeframe for legal liabilities to materialize – perhaps as long as a decade. Second, banks should create de facto performance bonds wherein deferred compensation for senior managers and material risk takers could be used to satisfy fines against the firm for banker misbehavior. Third, I have urged Congress to enact new federal legislation creating a database that tracks employees dismissed for illegal or unethical behavior. Fourth, I have requested that Congress amend the Federal Deposit Insurance Act to impose a mandatory ban from the financial system – that is, both the regulated and shadow banking sectors – for any person convicted of a crime of dishonesty while employed at a financial institution. III. Supervisory process  In tandem with our attention to capital, liquidity, and risk management, we have made important changes to the process of supervision.

The empirical picture  The different types of problem I have just described have to a varying extent probably characterised Japan in the 1990s, several countries in Southeast Asia recently and, it seems, Sweden in the late 1980s and early 1990s. There are also plenty of examples earlier on of similar periods of economic setbacks in various countries. Experience shows that the subsequent process of adjustment can be very troublesome and sometimes protracted. Inflation is markedly subdued and there is even a risk of a period of deflation. The structural changes that affected the Swedish economy in the second half of the 1990s seem to have been confined to a series of price effects in connection with the deregulation of electricity and telecom markets in particular. Inflation has therefore been lower than would otherwise have been expected from resource utilisation in general. In keeping with the rule of action, in recent years the Riksbank has implemented a stimulatory monetary policy and systematically aimed at the target one to two years ahead. Partly, but not solely, for this reason, the instrumental rate has accordingly been lower than in many other countries. On the other hand, productivity growth has not accelerated as it has in the United States. The rate in the corporate sector has admittedly been somewhat higher than in the 1980s but it had already increased in the early 1990s when the economic crisis eliminated less competitive and low-productive firms. In the second half of the 1990s there was no further improvement in productivity growth.
However, everything did not remain within the United States; large volumes of risky loans were packaged and sold in various forms all over the world. Investors showed a strong desire to buy and drove up the prices of many financial assets to levels that did not at all reflect actual risk. In brief, mispricing, imbalances and complicated structures evolved over a long period of time and when the US subprime borrowers were unable to repay their loans to a greater extent than expected, the ball was set in motion. As I said initially, concerns about the US mortgage market soon expanded into a general distrustfulness of the overall condition of the global financial system. The issue today is less about the original US problems, but rather about a general confidence crisis and how banks around the world will manage in the future. Just as in the United States, the global financial markets have long been characterised by favourable macroeconomic conditions and aggressive growth strategies among financial institutions. As business activity now declines, concern about the European banks is expanding from previously mainly involving losses due to exposure in US markets, to dealing more with the credit quality of their own loan portfolios. As a result of this uncertainty, participants who usually are active in the credit markets are withdrawing, causing disrupted pricing along with a drastic decrease in liquidity.

So, imagine trying to explain, and obtain support for, the following proposal: “to dampen interest rate volatility and lessen the interest rate pain by redefining the monetary base to include debt paper discountable at the HKMA through overnight repurchase agreements and fully backed by foreign reserves without departing from the monetary rule of currency board arrangements which requires the monetary base to change only with a corresponding change in foreign reserves”. This really is a mouthful. And to some, I must have been speaking Greek. But I can assure you that the wording of the proposal is precise and technically 100 per cent correct. In fact, this was exactly what we did when we introduced the seven technical measures in early September to strengthen our monetary system. And the proposal has worked well so far. But had the proposal been presented in those terms, I think even the most learned academics would have taken some time to figure out what we were up to. 10. The likely result is that nobody would be willing to comment on the proposal for fear of exposing ignorance on the subject. This might be considered a good result, in terms of ourselves being able to achieve what in our professional opinion should be done. And if the community has faith in the HKMA, confident that we know what we are doing, we may even get public support. But it is also a risky result. First of all, we can of course be wrong.
Lastly, there have been several structural measures undertaken, aiming to revive both the EU and countryspecific competitiveness. Among others, these measures include increasing labor market flexibility, reforming the pension system, further liberalizations in the goods and services markets. What remains to be done? While arguably late, I think the policy response within the EU has gone in the right direction and has been rather comprehensive. Nevertheless, further work is required in the future. 2  BIS central bankers’ speeches  I would like to highlight two of these areas. -  First, the reform agenda identified by four presidents (of the European Council, of the European Commission, of the Eurogroup and of the ECB) aims to complement the monetary union with a financial union, a fiscal union, an economic union and some higher degree of political union. This is an ambitious goal, but I am fairly convinced it will be accomplished within a reasonable time-scale. In this context, it is not much a wish list as it is a prerequisite for long term growth. It would indicate to the world that Europe has answered the dilemma about its role in the global economy of the 21st century. -  Second, I think that efforts to increase EU integration should extend to include a deeper cooperation with candidate and potential candidate countries in the Eastern and Southeastern Europe. These economies are very much connected to the EU, from an economic and financial perspective.

-  Third, the absence of a fiscal union has meant that the policy response has been lacking, especially in the presence of a monetary policy dealing with the zero lower bound of interest rates. Furthermore, doubts about the long term fiscal position of certain Eurozone countries, such as Greece, Ireland, Italy, Portugal and Spain, increased to unsustainable levels their sovereign risk premia and their public and private sector borrowing costs. What has been the policy response within the EU? The EU crisis management policy aimed to contain and overcome its effects, but, to a large extent, it has been conditioned by some of the constraints I mentioned before. Monetary policy took the lead in providing countercyclical stimulus to the economy, with the ECB rapidly lowering its policy rate and injecting huge amounts of short and long term liquidity. Lastly, the announcement in September of the Outright Monetary Transactions by the ECB has been a turning point in regaining the trust of the financial markets. On the other hand, given the lack of space for stimulating fiscal policies, the public sector has been more interested in controlling long-term public debt trajectories, subtracting rather than adding to economic stimulus. To this end, the agreed fiscal compact and macroeconomic surveillance policies aim to put the Eurozone public finances into a sound and credible longterm footing. On the financial side, the EU has revised its financial architecture by establishing the EFSF (European Financial Stability Fund) and European Stability Mechanism, by agreeing to establish a single banking system supervisor.
This is a balance of payments problem, as 94% of the claims on these banks are foreign and only 6% domestic, whereas 41% of the assets are domestic, including 21% in krónur (See Figure 11). Taking into account the part of these assets that are already financed in foreign currency, we get the result that unfinanced domestic assets that could revert to foreign residents with the unwinding of these estates will amount to 25% of GDP (see Figure 12). When considering the complication that this creates for Iceland, you should bear in mind that it is partly because the resolution of the third-largest bankruptcy in the history of mankind is taking place in one of the smallest countries in Europe. Therefore, potential outflows amounting to 40% of GDP might seek a speedy exit if we were to lift the capital controls tomorrow. If our relatively large FX reserves (30% of GDP) were our first line of defence, they would be wiped out completely, and then the exchange rate would give way, with potentially serious consequences for economic and financial stability in Iceland. We are currently working hard on solutions to this problem, and such solutions do exist. From a logical standpoint, the solution must take the form of either a significant reduction before early exit or a secure longer-term holding period before the controls are lifted. I am coming towards the end of my talk and will have to leave discussion of the lessons learned for the Q&A session.

All the usual suspects were present during the build-up to the Icelandic crisis: very strong capital inflows fuelling a credit and asset price boom that subsequently turned into a bubble at the same time as the economy overheated and an unsustainable external position developed, as could be seen in a double-digit current account deficit. And macroeconomic and prudential policies were not up to the task. Quite the contrary: there was a policy conflict between monetary policy and the demand levers pulled by the Government, and the risks inherent in capital flows, FX balance sheets, and credit and asset price booms were left under-regulated and insufficiently supervised. At a deeper level, the macroeconomic part of the story was related to three factors. The first factor centres on the complications that tend to arise with macroeconomic management as very small, open economies become more and more financially integrated. The second relates to the specific conditions of abundant, cheap credit at the global level. Third, major policy mistakes were made in Iceland, both of the type that would be deemed to be such in any book (such as giving an already overheated economy a demand stimulus), and those more closely related to the orthodoxy prevailing at the time: freely floating exchange rates, interest rate policy focusing mainly on low inflation in terms of goods and services, and good micro-supervision; and let the markets do the rest. In the wake of the crisis, it is better appreciated that this view is deeply flawed.
Due to the expected significant number of applications for exemption from the contingency mechanism, a simplified procedure for consulting EBA is envisaged until the end of 2019. The Bulgarian National Bank has established a procedure for prompt handling and examination of applications for exemption. This will enable the account servicing payment service providers, which comply with the requirements of the Regulation, to be exempted from obligation prior to the 1/3  BIS central bankers' speeches  entry into force of the requirement for providing a fallback mechanism on 14 September, 2019. Strong Customer Authentication According to the provisions of Commission Delegation Regulation (EU) 2018/389 – by 14 September, 2019 the payment service providers in the country must fully implement the requirements for strong customer authentication in respect of all electronic payment transactions. The focus is on the use of at least two independent authentication elements from different categories. The two elements should refer to one of the categories of knowledge (e.g. static password), possession (SMS OTP or generated by token device) or inherence (e.g. fingerprint scanning). Commission Delegated Regulation (EU) 2018/389 exhaustedly stipulates the cases for which payment service providers are allowed not to supply strong customer authentication. Where a payment service provider wishes to benefit from any of the exemptions, it will have to notify BNB in advance, indicating the particular payment service to be exempted.

In addition to the requirement for equal charges, the new Regulation envisages requirements with respect to currency conversion charges related to card payments and electronic credit transfers which are expected to increase transparency and to ensure comparability in cases where a payment service user is faced with a choice between currency conversion alternatives f. According to the requirements concerning currency conversion charges related to card payments, payment service providers and the parties providing currency conversion services at an automated teller machine (ATM) or at the point of sale shall provide information prior to the initiation of the payment transaction for the total currency conversion charges expressed as a percentage mark-up over the latest available euro foreign exchange reference rates issued by the European Central Bank. In addition, the payer must also be provided, prior to the initiation of the payment transaction, with information about the amount to be paid to the payee in both the currency used by the payee and in the currency of the payer’s account. With regard to the requirements for currency conversion charges related to electronic credit transfers, payment service providers will be obliged to inform the payer prior to the initiation of the payment transaction about the expected currency conversion charges applied to the credit transfer, the expected amount of the credit transfer in the currency of the payer’s account, as well as about the expected amount which will be transferred to the payee in the currency used by the payee.
In 2003 heavy emphasis was placed on evaluating the significance of the hypothesis of deflation, not its absence, nor the probability of future inflation. Franco Bruni does not assign to the ECB the same level of responsibility, given that it kept its rates higher than those in the United States. He is not one of the many who belatedly reconverted to monetary rigour ex post, forgetting what was written at the time. On 2 December 2005, Franco Bruni wrote: "The small ECB rate increase was announced. It is a logical increase (which in fact comes a little late) for various reasons. The starting point is very low…". 1 And yet Bruni seems ungenerous. First of all, the European economy grew at a rate of 1.5% over the three-year period 2003-05, below potential and even lower than the US rate (3%). Moreover, in this period, the effective exchange rate of the euro appreciated, by slightly less than 10%, signalling a relative tightening of monetary conditions. I would like to recall that at the time there were many, both in academia and in politics, who argued that the ECB should tie its monetary policy to that of the United States and fix the exchange rate to the dollar. Just imagine how much more liquidity would have been provided to the market in those years and how much more devastating the effects of the bursting of the bubble would have been now!

It can be confirmed from this that the ECB reports with the same intensity and frequency as the US central bank. This does not mean that the quality of interaction cannot be improved, but this depends, to a large extent, on the European Parliament. BIS Review 82/2009  5