samchain/econo-pairs-v1 huggingface dataset:
For the first fifteen years of the current regime, from late 1992 until the beginning of the financial crisis in late 1997, there was very little growth of “narrow” money (and none until reserve remuneration began in 2005), yet “broad” money grew rapidly, by over 7½% a year. By contrast, during the ten years or so between the first use of QE in 2009 and the onset of the pandemic, central bank reserves rose  Page 15  very significantly, as one would have expected. Yet broad money growth slowed, to less than half the rate it had been during those earlier, pre-crisis years. In terms of the money that really matters for the economy – deposits held by households and firms in commercial banks – its rate of creation has been much lower during QE than beforehand. Chart 1: Reserve creation neither necessary nor sufficient for strong growth of broad money  Sources: ONS, Bank of England and Bank calculations. Page 16  Chart 2: Broad money growth slowed significantly after the financial crisis, inflation still close to 2%  Sources: ONS, Bank of England and Bank calculations. And over both periods, despite these gyrations in the respective measures of money growth, average CPI inflation was pretty much bang on 2%. What might explain this? How is it that the central bank’s balance sheet can expand so rapidly without a commensurate impact on those of commercial banks?

As a result the demand for (broad) money rose alongside its rising supply – “velocity” declined, if you prefer – and the rate of M4 growth consistent with on-target inflation was significantly higher than 2%. These were deposits accumulated not as a “medium of exchange” but as a “store of wealth”. What those years also demonstrate is that commercial banks can supply and create such deposits with any commensurate growth in the balance sheet of the central bank. QE is neither necessary nor sufficient for broad money to expand. To take a more recent example, it’s not clear that the jump in household deposits during the pandemic was the direct and inevitable result of the central bank’s asset purchases at that time. If that were true one would presumably have expected to see something similar after every other previous episode of asset purchases. That’s not the case. For me, the more plausible cause is the combined impact of severe restrictions on spending and, thanks in part to fiscal support (in the shape of the furlough scheme), continuing growth in household income. At least in the first instance the resulting jump in saving had nowhere to go but into household deposits. More generally I think it’s better to understand the impact of QE through the lens of asset prices – what it does to bond yields – than quantities (still less as “printing money”). As with commercial banks, the demand for central bank money can change (sometimes very abruptly).
The preservation of financial stability remains crucial for the long-term economic development and under constant consideration in the Bank of Albania decision-making process. In this context, confidence in the banking system and in its balance sheets would be the most rational behaviour of any individual, business or other agent in the Albanian economy. Global experience shows that the mutual interaction between the real economy and the banking system in terms of savings, use of payment infrastructure and expertise in the area of financial counselling and support with funds is a key feature of economies that have managed to progress and leave behind the transition countries’ level. BIS Review 29/2009  3  In conclusion, I would like to assure the public that the Bank of Albania remains committed to creating the proper premises which boost economic activity at home, without infringing the objective of price stability. In addition it will keep working on firming up financial stability in the country. The Bank of Albania decisions will be a direct contribution to smoothing out the negative effects deriving from the international crisis and they will help to ensure the further maintenance of economic and financial balances at home. 4  BIS Review 29/2009

The underlying inflation measured as the CPIF (CPI with a fixed mortgage interest rate) is expected to be just below 2 per cent during the greater part of the forecast period. CPI inflation, on the other hand, will vary significantly, as CPI also considers changes in interest rates on mortgages, which are affected by the decisions we take regarding the repo rate. 4  BIS Review 11/2010  Inflation measured in terms of the EU harmonised index, the HICP, has recently been higher in Sweden than in the euro area (Figure 20). During the autumn, this was just below 2 per cent in Sweden, while it was negative in the euro area. HICP does not include prices of owner-occupied housing, and thus inflation measured in terms of HICP and CPIF are largely the same. The relatively high HICP inflation in Sweden is primarily due to the heavy increase of unit labour costs in Sweden over the last three years, averaging approximately 5 per cent per year (Figure 21). In addition, the Swedish krona weakened during the financial crisis, pushing up import prices. In turn, the rapid increase of unit labour costs over the last three years is primarily due to the fact that productivity fell for three years in a row, in addition to which hourly wages increased more during that three-year period than during the immediately preceding three-year period. This development will be reversed during the forecast period.
As can be seen in Chart 2, the uneven pace of economic recovery is evident: countries, such as Greece, Italy and Portugal, are registering a contraction in their economies, while Germany, Austria and Malta are among the countries that have recorded modestly positive growth rates. Chart 3 shows that unemployment rates vary between less than 5% in the Netherlands, Austria and Luxembourg to over 25% in Greece and Spain. …and in terms of monetary policy transmission Even on the monetary side, the transmission of accommodative monetary policy measures across the euro area remains weak and uneven. Loans to the private sector have been declining and the pace of contraction has actually accelerated in recent quarters, particularly in the stressed countries. Although, on the demand side, subdued loan dynamics in the weaker economies can largely be explained by the slow pace of economic activity, the supply of credit is also constrained by banks’ efforts to repair their balance sheets and strengthen their capital position. For all these reasons, it will perhaps take a while for the ECB’s monetary policy to be reflected in credit creation in the weaker economies. Though Malta is positioned with the stronger economies… Various indicators place Malta with the stronger performers. Chart 2 shows a growth rate for Malta that generally exceeds the corresponding rates for both categories of countries. A similar conclusion can be drawn from Chart 3, which deals with the unemployment rate.

I welcome especially the intention of the Spanish EU Presidency to lend impetus to this ongoing process. The Eurosystem also supports the strategic conclusions of the Committee chaired by A. Lamfalussy on the integration of the European securities markets, ratified by the European Council meeting in Stockholm in March 2001 and approved by the European Parliament in early February 2002. We are convinced that the implementation of these broad guidelines and the new cooperation structures at the European level will help make it possible to take full advantage of the introduction of the euro. 7  -  Since the tragic events of 11 September and their impact on financial stability, concerns over the potential abuse of the financial system for the financing of terrorism have received top priority in international and European regulatory discussions. The international community and, within it, the financial community, should step up its efforts to hunt down money used by organised crime and terrorism. We shall not be successful overnight, but, today, there is a strong political determination on the part of the international community to cooperate on this issue. As far as the fight against organised crime and terrorism is concerned, we can no longer accept that certain players are not prepared to observe the rules of international legal cooperation. Beyond structural reforms and financial stability, the accession of new Member States to the European Union and to EMU is the third challenge that I have identified. The last challenge but not the least.
Let me say at the outset what I and other members of the Executive Board have said on many occasions – Sveriges Riksbank does not have a target either for the level of house prices or for house price inflation, or for any other asset price for that matter. However, when we observe long periods of high growth rates in asset prices and debt, growth rates that appear to be unsustainable in the long run, our view is that it is not reasonable to completely ignore that there may be risks associated with this, even though it is difficult to give consideration to these risks in any simple manner in our regular forecasting process. What this view has meant in practice is fairly marginal changes in the timing of our interest rate changes and substantial public oral and written focus on the issue. Having said that, and for the benefit of those not familiar with the monetary policy framework in Sweden, let me provide a short background. Sveriges Riksbank is an inflation targeting central bank, having adopted an explicit target for inflation in 1993, effective from 1995. Our goal is to keep inflation at 2 per cent in terms of changes in the CPI. The regime has now been in place for well over ten years, and there is broad agreement that the regime has been a successful one; CPI-inflation has been low and stable over the period, averaging around 1.3 per cent, while the real economy has experienced annual growth of around 3 percent.

Until we are confident that our various formal models adequately capture the risks that we in the Executive Board are concerned about, we will have to continue relying heavily on judgement when taking such effects into account in the conduct of monetary policy. Let me reflect a bit on what in my mind has brought about this stance. On the one hand we normally talk about inflation targeting in a two year time perspective, on the other hand there are risks associated with credit and asset prices that may lead to substantial deviations from the forecasted inflation and output paths. The judgement issue then becomes one of meeting or not meeting the target at the two-year horizon versus the risk of costly deviations both within and beyond the normal forecast horizon. Such deviations are likely to be low probability events but with high costs in inflation and real terms should they occur. We know that these developments are very hard to predict using the standard models we normally rely on but I do believe it is our responsibility ex ante to reflect on how to avoid future negative outcomes. The nature of such outcomes will vary depending on what part of the asset market that generates the risks, the market microstructure available for sorting out a problem in an efficient manner and the extent to which monetary policy is able to counteract the risks. Here we certainly can deepen our understanding of how different imbalances unwind and what the costs are.
lower even than England’s ranking in the World Cup. 20  This is far  Moreover, that diffusion ranking has fallen very 21  sharply over recent years, again in lockstep with England’s world football ranking. It is not just that the UK has a lowly ranking on R&D expenditure by international comparison – at 1.7% of GDP, more than 1 percentage point below our main competitors. 22  It is that three-quarters of the UK’s  private R&D spending is concentrated in only 400 companies, less than 0.01% of the UK’s business population. 23  Among smaller firms, the UK ranks low down the European league table on in-house  innovation and the introduction of new products and processes. 24  Typically, we think of “Research and Development” (R&D) as a rhyming couplet. In the UK’s case, the R and the D do not seem to rhyme. The UK does R well, as a world-leading innovation hub. But it does D poorly, where the D refers not just to development but the diffusion and dissemination of innovation to the long, lengthening, languishing lower tail. When it comes to innovation, the UK is a hub without spokes. Understanding the Barriers to Diffusion  What explains why the UK is poor at disseminating and diffusing the innovation it is rich at generating? Answering that question is important for identifying potential barriers to improved diffusion and, hence, for devising policies for breaking down these barriers and supporting productivity growth.

This expansion has also been noted in the microfinance sector which is growing to fill the supply gap for finance that arose from the closure of banks  4  BIS Review 99/2008  and branches in rural and peri-urban areas earlier on. With the microfinance regulations issued in 2006, the number of microfinance institutions licensed by BoZ, for instance, has grown from 3 in 2006 to 15 as at June 30, 2008, with several other applications currently under consideration. This change in strategy is partly due to the strengthened fiscal position of the Government and the significant fall in annual inflation to single digit levels in 2006 for the first time in three decades. These developments have resulted in reduced returns on investment in Treasury bills and Government bonds thus compelling banks and NBFIs to actively seek other investment avenues. To this end, domestic credit to the private sector as a percentage of GDP has increased from 18.7 percent at the end of 2005 to 43.0 percent at end of 2007. In the same period, the proportion of national savings increased from 18.1 percent to 21.6 percent. 4 These statistics are good indicators of improving access to financial services. 4.1.2  Government  The Government is encouraging the state-owned NBFIs, that already deal with the lowincome market to deepen and broaden their services. Some of these already have an increasing presence country wide and have developed strategic development plans, aimed at extending financial services to the low income population.
I know of no-one who has argued that the problem with the UK economy is that it has not had a sufficiently deep recession. Inflation rose to over 5% but has now come down to 2.7%, and the Committee believes that it is likely to come back to the target over the next two years. In effect the MPC has allowed a longer inflation overshoot than usual in order to avoid pushing up unemployment. Our current remit does not specify how the MPC should strike a balance between growth and inflation in the short run. The horizon over which inflation should come back to target is effectively delegated to the MPC. But should the MPC itself choose how quickly to bring inflation back to target, or should the government use its annual remit to set that horizon? Is there a gain from trying to quantify how the MPC should manage the trade-off between growth and inflation in the short run? The recent guidance by the Federal Reserve about the conditions under which it would continue to hold interest rates at close to zero is a way of quantifying the “flexibility” in flexible inflation targeting. It describes how the Federal Reserve will interpret its freedom to balance its twin objectives for employment and inflation.

And it is interesting to note that within the past year both the Federal Reserve  BIS central bankers’ speeches  5  and the Bank of Japan have adopted a target for annual inflation of 2%. The anchoring of inflation expectations has been the most successful aspect of the inflation targeting regime and it has allowed the Bank to avoid an unnecessarily damaging tightening of policy in response to short-run movements in inflation. It would be irresponsible to lose that. Second, the inflation target is not an impediment to achieving recovery today. It has not prevented the MPC from taking measures to combat the downward momentum in the economy following the shock of 2008. It is precisely because inflation expectations have so far remained firmly anchored that the MPC has been able to respond flexibly to weak demand. So the challenge we face is not the inadequacy of the framework, but the fact that there is no easy route to recovery after a major banking crisis. Recovery is inevitably slow and protracted. The healing process will take time, and patience is not a quality associated with our political debate. Patience and a sense of realism are sometimes mistaken for fatalism. Our economy is recovering, more slowly than we might wish, but we are moving in the right direction. The Bank has not been, and will not be, inactive. Low interest rates will not be withdrawn prematurely, but we should not rely solely on general stimulus to aggregate demand.
All in all, the financial industry should seek to collaborate with the regulators, more as partners than as adversaries, in developing risk management framework and practices that are most suited for Hong Kong’s circumstances and needs. There is no one-size-fits-all solution for risk management and Hong Kong must find its own path to success by learning from the best practices elsewhere and by striving to upgrade on a continuous basis. Finally, may I wish all of you a fruitful and productive time in today’s Treasury Markets Summit! Thank you. 4/4  BIS central bankers' speeches

But, the stress tests we have performed at the Banco de España to calibrate the potential scale of this risk for banks show, broadly speaking, that the policy followed in recent years of accumulating  4  BIS Review 44/2008  provisions and capital has given rise to a buffer that would enable shocks of an order of magnitude comparable to those experienced at the height of the crisis in the 90s to be absorbed. I now come to what I consider to be the main source of uncertainty at the present moment. This is none other than future developments on the international wholesale financing markets, where the possibilities of raising funds have been at extraordinarily restricted levels that are not in keeping with a developed international financial system. Spanish banks have so far largely managed to evade the consequences of this sudden financial market squeeze. Firstly, because their liabilities were issued at relatively long maturities, so that the need to refinance the loans granted is arising much more smoothly than in other systems in which the relative weight of short-term securities is greater. The low level of dependence on funds raised in the interbank deposit markets has been another mitigating factor. I should point out here that once the subsidiaries and branches of foreign banks have been excluded, whose liquidity management is strongly governed by the geographical diversification strategies decided by their parents, the rest of the Spanish credit system does not borrow in these markets but instead maintains a net credit position in them.
On the one hand, private salaried employment is increasing at annual rates above 1%, something not seen for several quarters, and shows some dynamism in important sectors, such as construction and trade. On the other hand, evidence has been emerging that suggests that the effective growth of employment would be somewhat greater, since the labor market has been able to absorb a significant influx of immigrant workers. This figure is not yet captured by the employment surveys, which are based on population projections that have not yet been updated according to the 2017 Census. This leads us to evaluate that the lag we observed between employment and activity is beginning to dissipate (Figure 2). At the same time that private salaried employment has increased, the unemployment rate has increased too, as exemplified by the figures from the National Statistics Institute (INE) employment survey for the May-July moving quarter. This is so because during the phase of low growth of 2015-2017 many people became self-employed, others worked fewer hours than desired and others simply quit the labor market because they could not find what they were looking for. In recent months, this process has been reversed, with the workforce growing around 2.5%, more than the 1.5% of the period 2015-2017. It is important that in the next few months the speed of job creation, especially salaried jobs, match and hopefully surpass the workforce’s growth. Every September, the CBC revises its potential growth estimates.

These include both an improved regulatory framework for the Libor fixing, as well as enforced oversight by the relevant authorities. The aim is to make the Libor more representative and to restore the trust of market participants. Aside from these regulatory  2  BIS central bankers’ speeches  steps, what is also vital for the continued existence of the Libor is that an adequate number of banks participate in the Libor fixing, and that the money market upon which the Libor fixing is based recovers its importance. Credible and representative reference interest rates are of major importance for the financial markets. They serve as benchmarks in the pricing of loans, financial products and derivatives. In Switzerland, approximately 80% of banks use the Libor as a benchmark for loans, especially for mortgages. The responsibility for the provision of reference interest rates therefore lies primarily with the market participants. They should be aware of this responsibility, and become involved, where necessary, in exploring alternative reference interest rates. The SNB is playing a supportive role in this regard, in that it is participating in discussions with market participants, as well as with Swiss and foreign authorities. Future of the repo market infrastructure in Switzerland With regard to repo market infrastructure, it is important that we are well prepared for the future. A functioning, secure and efficient repo market is vital for the implementation of monetary policy, as well as for market participants’ access to central bank liquidity.