samchain/econo-pairs-v1 huggingface dataset:
They are largest in managerial, professional and skilled occupations and lowest, or even negative, in elementary, personal service and sales and customer occupations (Chart 13). This is the mirror-image of gender, where pay gaps were largest among the lowest-paid occupations. By sector, pay gaps are largest in the professional and finance sectors (Chart 14). In other words, ethnicity pay gaps are largest among the highest-paid. 16  All speeches are available online at www.bankofengland.co.uk/speeches  16  Chart 13: Median ethnicity pay gap by occupation, sample average Ethnicity pay gap, per cent  London  20  Other 15  10  5  0  ‐5  ‐10 Managers  Professional  Associate Administrative Skilled trades professionals  Ethnic minority minority ethnic  Personal service  Sales and customer  Process and plants  Elementary  White white  Source: ONS Labour Force Survey and Bank of England calculations. Note: A positive ethnicity pay gap in this chart indicates that ethnic minorities earn less than their white counterparts, whereas a negative ethnicity pay gap indicates that ethnic minorities earn more than their white counterparts.

17  All speeches are available online at www.bankofengland.co.uk/speeches  17  Chart 14: Median ethnicity pay gap by sector, sample average Ethnicity pay gap, per cent  London  20  Other 15  10  5  0  ‐5  ‐10  ‐15 Agriculture  Industry  Construction Trade and transport  ICT  Ethnic minority minority ethnic  Finance  Real Estate Professional Public sector  Other  White white  Source: ONS Labour Force Survey and Bank of England calculations. Note: A positive ethnicity pay gap in this chart indicates that ethnic minorities earn less than their white counterparts, whereas a negative ethnicity pay gap indicates that ethnic minorities earn more than their white counterparts. If we look at ethnic minority workers at a more granular level, some interesting cohort effects emerge. There is a very wide dispersion of pay among different ethnic minority cohorts, with some having negative and others positive pay gaps compared with their white counterparts (Chart 15). Median hourly pay is highest for those of Chinese ethnicity, at just over £ or around 15% higher than for whites. There are also negative pay gaps, though smaller ones, for workers from a mixed/multiple ethnic and Indian background. At the other end of the spectrum, there are significantly positive pay gaps for other ethnic minority cohorts, including black and Afro-Caribbean workers. The largest pay gaps are for workers from a Pakistani and Bangladeshi background, which average 13% and 20%, respectively (Chart 15).
Today, our mission is still to promote the good of the people of the United Kingdom, but now we do that by maintaining monetary and financial stability. Let me explain what that means. Maintaining monetary stability means two things. First, providing banknotes that you can use and trust. We have over 3 billion notes currently in use, and they are used in 44% of all transactions. Second, it means maintaining low and stable inflation. Maintaining financial stability means three things. First, making sure that when you put your money in a bank it is safe. Second, it means that if a bank fails, the costs fall on the bank’s investors and senior management, not ordinary people with deposits in banks. And finally it means making sure that if you take out an insurance contract, it will pay out if whatever you are insuring against happens. The work that the Bank does in all of these areas can ultimately be summed up very simply: we maintain confidence in money. This confidence is not, though an end in itself; it is a means to an end. Confidence in money provides the foundations for prosperity. Without it, companies would struggle to provide the goods and services we all use every day; you would face difficulties in knowing how to invest for your futures, be it financing studies or buying a house. Maintaining this confidence is the best contribution the Bank of England can make to the good of the people of the United Kingdom.

Bank of England Future Forum 2017 Opening remarks given by Mark Carney Governor, Bank of England  St. George’s Hall, Liverpool 16 November 2017  1  All speeches are available online at www.bankofengland.co.uk/speeches  Good afternoon. Welcome to the Bank of England’s Future Forum to everyone here in beautiful St George’s Hall, and to those viewing on our webcast. My colleagues and I are delighted to be here in Merseyside. It’s been three decades since I first visited. Back then, I discovered my favourite band the Lightning Seeds, who would later pen England’s football anthem. We’ll learn next year whether the Three Lions can end what’s become fifty years of hurt. 1987 was the Life of Riley for local football. Everton and Liverpool were top of the tables, with the Toffees beating the Reds to win the Championship – sadly their most recent of their 9 titles. How things change. It’s not pure and simple all the time. Just like footballing fortunes, economic conditions in Liverpool have waxed and waned. The de-industrialisation of the 1970s and 80s affected the region particularly badly, with unemployment ultimately rising to above 20%. With the 1990s came revival and regeneration, with particular emphasis on the city’s rich cultural and economic history – a heritage rightly celebrated when city centre riverfront was designated a World Heritage Site in 2004 and when Liverpool became European Capital for Culture in 2008.
To assess the importance of these risks for the industry, I will now outline the latest developments in lending and private sector indebtedness. I will follow by outlining the situation of the banking industry, and will conclude with a more forward-looking analysis of its resilience and the challenges it faces in the current environment. Recent developments in lending and private sector indebtedness  After recording strong growth in 2020, in Spain bank lending to the resident private sector fell slightly in 2021. By sector, lending to non-financial corporations (NFCs) and sole proprietors declined, offsetting the more expansionary behaviour of lending to households, especially loans for house purchase. This pattern intensified in 2022 Q1, when lending overall contracted (-0.5% year-on-year) while loans for house purchase accelerated somewhat (to 1.4%). 3  Overall, thanks to the recovery in turnover and more moderate growth in debt in 2021, the financial situation of the business sector has improved, although on average it is still more vulnerable than before the pandemic. Thus, average debt and debt burden ratios fell in 2021. The percentage of highly-indebted firms1 also decreased across the board, down to almost pre-pandemic levels both in the sectors moderately affected and largely unaffected by the health crisis, although it was still 7 pp higher than in 2019 in those severely affected. In the case of households, favourable labour market and income developments are also contributing to the recovery in their economic and financial situation.

Under a scenario consistent with the Banco de España’s March 2022 projections, the exercise included in the Financial Stability Report estimated that firms’ interest expenses as a percentage of gross operating surplus would begin to increase from 2023 onwards to stand, by the end of 2024, 1 pp above 2021 levels. In any event, the subsequent upward revision to market expectations of future interest rates means that the estimated share of firms’ interest expenses as a percentage of gross operating surplus is likely to rise by a further 1.8 pp by end-2024, increasing by a total of 2.8 pp on their 2021 level.16  16  Given that business income may be expected to fall under this scenario, the increase in the weight of interest expenses should be considered to be the lower bound of the total impact of the rise in interest rates. Meanwhile, every additional 100 bp increase in short and long-term interest rates above the levels currently priced in to market expectations is likely to add an additional 1.7 pp to the weight of interest expenses in 2024. 12  For households, moderate interest rate rises would have a relatively small impact on their debt repayment capacity, partly because of the increase seen in recent years in the proportion of fixed-rate mortgages, which accounted for 24.9% of the outstanding amount at December 2021.
To keep things simple, we can assume that the labour and capital shares are constant in the longer run and concentrate on how the return to capital is affected by changes in total factor productivity (the overall efficiency with which labour and capital are utilised in production). A higher return to capital should imply a higher rate of increase in corporate earnings. Conversely, an accelerating growth of corporate earnings should show up as a rising return to capital at the macro level. 5  BIS Review 137/1999  Conclusions From what I have said this evening it is possible to draw two conclusions that at first sight may seem to be somewhat contradictory. On the one hand we have noted that stock market values are historically high and that in the past this has normally been followed by some form of correction. On the other hand, there may be some grounds for arguing that changes have occurred in expected stock market returns and/or the economy’s potential growth rate which could justify a stock market valuation above the historical level. In the United States there are at least signs that point in this direction. For Sweden, however, figures at macro level have not yet been discerned that would confirm such a change. But these two conclusions are not necessarily contradictory. Present stock market prices could mirror a combination of “irrational exuberance” and a change in the fundamental picture of the global economy. The impact of the new information technology may be leading to higher productivity growth.

It is also conceivable that stock market investment is now considered to be somewhat less risky than before, in which case the expected return may have become somewhat lower. But the stock market reaction to these new signs may have been rather hasty. Experience has shown that financial markets are sometimes liable to overshoot when adjusting upwards or downwards. My intention today, however, is not to opt for a particular view. I am more interested in initiating a discussion and would like to take this opportunity of asking the share investors who are present here: Which conclusion do you find most valid? An increase of 3 percentage points in the growth of total factor productivity above the long-term trend leads to an upward shift in the real return to capital from 6.0% initially to 6.2% (1.031x6) after one year, 7.0% (1.035x6) after five years and 8.1% (1.0310x6) after ten years, that is, an increase of about 2 percentage points after ten years. BIS Review 137/1999  6
Second, crises typically reduce potential supply growth, for example by disrupting the supply of credit to productive firms. A failure to take financial instability into account creates an unduly optimistic view of where the Taylor frontier lies, especially when it is based on data drawn from a period of stability. Relative to a Taylor frontier that reflects only aggregate demand and cost shocks, the addition of financial instability shocks generates what I call the Minsky-Taylor frontier, shown in Chart 5. This reflects the influence of misperceptions, financial cycles and the search for yield. On the Minsky-Taylor curve, for a given degree of inflation variability, output is more volatile in the long run than on the simple Taylor curve. Ignoring financial instability might mean choosing a policy reaction function that is believed to imply a trade-off at point O in Chart 5. In fact, the true trade-off is given by point P. Once that is understood then the optimal policy reaction function might well change and correspond to a trade-off at point Q. 22 The examples I have given suggest the possibility that there is a trade-off between meeting the inflation target in the short run and reducing the risk of a financial crisis in the long run. To shed light on whether that possibility warrants a change to the way we implement inflation targeting, I want now to conduct a counter-factual thought experiment and ask whether monetary policy before 2007 might have moderated the crisis if it had not simply pursued a target for inflation.

Evidence of the persistence of misperceptions can be seen in the imbalances in the world, and especially the European, economies. I do not mean to imply that when economic agents make these mistakes they are behaving irrationally. Rather that in a world of intrinsic uncertainty it is far from obvious how to make decisions. The assumption of rational expectations is very helpful for economists when trying to understand the implications of their own models – it is a discipline to prevent the drawing of arbitrary conclusions. In practice, however, households are on their own in a highly uncertain and complex world where they are learning from experience. When it comes to decisions about how much to spend and how much to save, expectations of future incomes are crucial. In the absence of a complete set of markets for future consumption goods – and labour – there is no mechanism to ensure that decisions today, and so the implied plans for tomorrow, will be consistent with the possibilities available in the future. If revisions to expectations of future incomes are uncorrelated across households, then aggregate spending will be relatively stable. The problem comes when many households have similarly over-optimistic views about the future. Aggregate spending and borrowing can then be unsustainably high and lead to an inevitable correction at an unpredictable date when reality dawns. Financial markets both reflect and propagate that common degree of optimism. Sentiment and animal spirits can change very quickly.
It was observed that countries where weight was given to low inflation recorded favourable economic developments. Theoretical works published some years later showed that expected and rules-based policy could stabilise the economy provided price and wage rigidity existed. Some examples are: Fischer (1977): “Long-Term Contracts, Rational Expectations, and the Optimal Money Supply Rule”, Journal of Political Economy, 85, No. 1, pages 191-206), Taylor (1980): “Aggregate Dynamics and Staggered Contracts”, Journal of Political Economy, 88, No 1, pages 1-24 and Calvo (1983): “Staggered Prices in a Utility-Maximizing Framework”, Journal of Monetary Economics, 12, No. 3, pages 983-998. Only when these articles were published was the theoretical basis in place for keeping promises while at the same time allowing monetary policy to contribute to stabilising the economy. 25  See reference in footnote 13. 26  See Eitrheim, Øyvind (2005) in Eitrheim and Qvigstad (Eds. ): “Tilbakeblikk på norsk pengehistorie. Konferanse 7. juni 2005 på Bogstad gård (Norwegian monetary history in retrospect. Conference, 7 June 2005, Oslo)”, Occasional Papers No. 37, Norges Bank. 27  Bahr, Henrik (1962): “Høyesteretts dom i gullklausulsaken (The Supreme Court ruling in the gold clause case)”, Lov og Rett: norsk juridisk tidsskrift, booklet No. 5, pages 193-211. 28  Two government-guaranteed banks had also issued bonds. BIS Review 136/2008  7  Since the beginning of the 1980s, there has been a broad consensus that monetary policy must be geared towards price stability. This paradigm shift also reached Norway, but not until the end of the 1980s.

36 The inflation target was finally formalised in a new regulation on monetary policy in 2001, a good eleven years after New Zealand, nine years after the United Kingdom and eight years after Sweden. The mandate for Norges Bank states that monetary policy shall, in addition to securing price stability, contribute to stabilising output and employment. It is possible to give weight to cyclical fluctuations in interest rate setting, and to new information, as long as there is confidence that inflation remains near the target. The central bank’s announced interest rate strategy ahead will be adjusted as new information emerges. This stands in contrast to the parity system, which was more rigid. The authorities cannot systematically allow policy to be more expansionary than announced to bring down unemployment. As Kydland and Prescott demonstrated, this would lead to  33  Another difference is that under parity policy the authorities stabilised the price of gold and not the price of a basket of representative goods – the consumer price index. Today, stabilisation of the consumer price index would be described as price level targeting. Inflation targeting, on the other hand, implies stabilisation of changes in the consumer price index. There is also a difference in that there is no longer any redemption obligation. Confidence is not based on gold reserves, but more generally on responsible economic policy as a basis for achieving the inflation target through the active use of the interest rate.
8  Further, the longer interest rates remain high, the greater the likelihood of additional upward adjustments to banks’ funding costs and of a deterioration in credit risk quality. With regard to financing, the gradual reduction in, and increased cost of, Eurosystem liquidity facilities and the developments seen in deposits (with depositors seeking better remunerated financial instruments and having used up part of the savings buffers built up during the pandemic) may accelerate the increase in banks’ cost of funding. The continuation and/or heightening of the recent tensions in the global banking sector could also contribute to this increase. As for the future increase in credit risk, our estimates show that a market interest rate increase of 400 bp, somewhat larger than the gain of approximately 365 bp seen in the 3month EURIBOR, could push up non-financial corporations’ median gross debt burden ratio by between 2.9 pp and 6.8 pp9 and the share of corporate debt held by firms under high financial pressure10 by between 6.5 pp and 8.9 pp. In the case of households, it is estimated that a 400 bp rise in the 12-month EURIBOR (slightly less than the 410 bp increase seen since the beginning of 2022) would raise the percentage of indebted households with a high net interest burden11 by 3.5 pp. This increase would tend to be stronger for lower-income indebted households, which are also those most affected by the rise in inflation.

One of the strengths of the ESRB is its ability to harness data and conduct analysis across all EU Member States. In its work on the leverage ratio, the ESRB collected new empirical evidence showing banking sector leverage has been pro-cyclical at an aggregate level in almost all Member States. Average risk weights tend to fall in credit booms and rise in downturns. Working with EBA data, the ESRB found that systemically important banks in Europe typically have lower risk weights and leverage ratios than other types of banks. Taken together, theory and evidence demonstrate the importance of a dynamic leverage ratio to a robust macroprudential framework. Another way that the ESRB has led in identifying best practice and influencing the international agenda has been to take a macroprudential perspective on how elements of the financial system can support long-term prosperity. For example, in its examination of Solvency II, the ESRB has considered how long-term investors like insurers can bring diversity and stability to the system. In my view, more can be done to ensure that Solvency II creates the right framework for long-term investment. The ESRB can provide a constructive and objective macroprudential perspective as an input to Parliament’s review in 2018 of aspects of the operation of Solvency II. Openness puts a premium on shared understanding of risks. The ESRB plays a vital role for the EU, enhancing members’ assessment of new and evolving risks. The structure of the financial system has changed significantly since the crisis.
Of course the last ten years have, thankfully, not seen any further liquidity crises, but this progress was tested with the preparatory and contingency work conducted around the EU Referendum in June 2016 – where our approach helped firms plan with confidence. 21  17  As well as opening up the SMF, the Bank has expanded access to Settlement Accounts for its Real Time Gross Settlement system (which allows account holders to settle payments real time in sterling central bank money) from 21 in 2006 to 201 today. These now include to new entrants in payments – non-bank payment services providers. We are currently renewing our RTGS system, and a core feature of the new system will be the ability to interface with new and innovative payment systems, designed to encourage a more diverse and resilient financial system. 18 Before widening access to new classes of institution, the Bank considered three key criteria to ensure usage of the facilities remained appropriate; whether they were systemically important, whether they were exposed to sterling liquidity risk, and whether they were appropriately prudentially regulated. 19 The 2017/18 SMF Annual Report can be found at https://www.bankofengland.co.uk/-/media/boe/files/sterling-monetaryframework/annual-report-2017-18.pdf. 20 The IEO report on the Bank’s approach to providing sterling liquidity, together with the Bank’s response, can be found at https://www.bankofengland.co.uk/news/2018/january/ieo-evaluation-of-the-boe-approach-to-providing-sterling-liquidity. 21 See Shafik, M. (2016), “Small is Beautiful but Big is Necessary”, speech at the Bloomberg Markets “Most Influential” Summit, available at https://www.bankofengland.co.uk/-/media/boe/files/speech/2016/small-is-beautiful-but-big-is-necessary.pdf.

But the moves are still small relative to those we saw ahead of the Referendum. On a day-to-day basis, we continue to use our balance sheet in support of monetary policy and financial stability. Our regular market operations will continue to keep market rates anchored to Bank Rate, and we will continue the programme of gilt reinvestments that maintains the stock of APF purchases at its target level for as long as the MPC choose to maintain it there. And our monthly Indexed Long-Term Repo liquidity facility continues to see regular usage, with £ allocated in September’s operation. Looking further ahead, the TFS is now closed to new drawings, and will gradually unwind in the coming years as banks repay their loans. In June the MPC gave updated guidance that it will not reduce the stock of asset purchases until Bank Rate reaches around 1.5%, and any decision on what happens then will of course be a decision for the MPC of the time and will depend on the economic circumstances prevailing at 28  the time. As and when our balance sheet shrinks, it is likely that its size will return to being determined by the level of SMF participants’ demand for reserves (as well as the amount of banknotes in circulation), rather than by the quantity supplied.