samchain/econo-pairs-v1 huggingface dataset:
[12] At the same time, the large stock of assets acquired under QE continues to provide significant monetary policy accommodation that may run counter to our efforts to bring inflation back to our 2% target in a timely manner. QT will gradually unwind this accommodative impact. Broader market impact of quantitative tightening How QT operates in practice, however, is highly uncertain. There are few historical episodes in which central banks have reduced the size of their bond portfolios. QT may operate differently from QE The experience of the United States points to two polar cases. In the wake of the 2013 “taper tantrum”, the term premium of a ten-year US Treasury yield surged well before the Federal Reserve started reducing the pace of its purchases (Slide 8). If QT was QE in reverse, balance sheet run-off would be expected to increase the term premium, which compensates investors for the risk of holding a longer-term bond. After all, compressing the term premium by removing duration risk is one of the key transmission channels of QE. [13] Yet, the Federal Reserve’s balance sheet reduction that started in 2017 had no discernible impact on the term premium. [14] Instead, during that episode, QT was found to have tightened financing conditions mainly through the impact of scarcer central bank reserves on short-term money market rates. [15] As for the current phase of QT in the United States, the jury is still out.

SPEECH  Quantitative tightening: rationale and market impact Speech by Isabel Schnabel, Member of the Executive Board of the ECB, at the Money Market Contact Group meeting Frankfurt am Main, 2 March 2023 Eight years ago, we launched the asset purchase programme (APP). It was the first time the ECB employed quantitative easing (QE) to help secure price stability when the space for further policy rate cuts was becoming constrained by the effective lower bound. By now, there is a wealth of evidence suggesting that the APP was successful in lowering long-term interest rates, stimulating economic activity and raising inflation at times when price pressures were unusually weak. [1] As risks to medium-term price stability had increased sharply, we decided in June 2022 to end net asset purchases under the APP as of July. In December, we announced that the APP portfolio would decline at a measured and predictable pace as of March 2023. This became effective yesterday when we started limiting reinvestments of maturing securities. Until the end of June 2023, the APP portfolio will decline by € billion per month on average. [2] For our corporate bond portfolio, the remaining reinvestments will be tilted more strongly towards issuers with a better climate performance, in line with the goals of the Paris Agreement and without prejudice to our primary mandate. [3] In the second quarter of this year, the Governing Council will reassess the pace of APP portfolio reduction. I will start my remarks today by presenting the rationale for conducting quantitative tightening (QT).
Many of the mortgages are also interest-only loans. This means that there is a risk that housing prices and indebtedness will now be driven up to unsustainable levels. For those of us making the monetary-policy decisions, the key issue is what measures will be taken to slow down the build-up of debt and, not least, what effects these might have on household consumption and ultimately on inflationary pressures in the Swedish economy while our monetary policy is taking effect. This is an important source of the uncertainty we have to deal with. Unfortunately, there is so far little experience to learn from with regard to the effects of socalled macroprudential policy measures. This makes it difficult for those making decisions and for those of us assessing what the decisions will be and what effects they may have. 1  “Results from a survey on company pricing”, Economic Commentary No. 4, 2014. 2  The Riksbank’s Business Survey, September 2014. BIS central bankers’ speeches  3  One trade-off concerns “dosage”. What one wants to achieve is that the growth in debt and housing prices slows down, but at the same time one wants to avoid a heavy fall in housing prices. This is a delicate task. Another question concerns the fact that macroprudential policy involves getting banks and borrowers to behave in ways that they would not otherwise, for instance, amortising their loans quicker than they do now.

One often sees forecasts as mean forecasts. This means in principle that the risk that the economy will develop less well is as great as the chance that it will develop better. A mean forecast for GDP growth abroad, for instance, balances everything that could give rise to lower growth against everything that could give rise to higher growth. Another way of expressing the same thing is that the forecast is a form of middle way of all the different roads the economy could take in the coming period. This way of working with forecasts means that one acts as though one has succeeded in quantifying the possibilities and effects of all of the different potential courses of events. A year or so ago there were frequent discussions of the risk of a split or disintegration of the euro system – what was the probability that this would happen and what effects would it have for Sweden? Today there may be reason to ask these questions with regard to an escalation of the Ukraine conflict or to a substantial fall in housing prices in Sweden. If one considers these difficulties in quantifying various possible sequences of events and probabilities that they will occur, it may not be as simple a matter to make decisions on monetary policy and make forecasts for future interest rates as it is sometimes made out to be.
[INF*RES*AS]  MONETARY POLICY REPORT FINANCIAL STABILITY REPORT PRESENTATION BEFORE THE FINANCE COMMITTEE OF THE HONORABLE SENATE OF THE REPUBLIC  Mario Marcel Governor Central Bank of Chile 4 December 2017    Both the Monetary Policy Report of December 2017 and the Financial Stability Report of the second half of 2017 can be seen at http://www.bcentral.cl. Introduction Mr. President of the Finance Committee of the Senate, senator Carlos Montes, senators members of this Committee, ladies, gentlemen, Thank you for your invitation to present the vision of the Board of the Central Bank of Chile (CBC) about the latest macroeconomic and financial developments, prospects and implications for monetary and financial policy. This vision is detailed in our Monetary Policy Report (MP Report) of December 2017 and Financial Stability Report (FSR) of the second half 2017. I would like to start by noting that these are the last institutional reports presented in the format that has prevailed since the time of the severe Great Financial Crisis. As we explained to the Honorable Senate last September, as from January 1st, the CBC will begin to apply a new calendar and format for the Monetary Policy Meetings as well as for the presentation of our two Reports. In particular, the MP Report has been programmed for pre-established dates that will coincide with the monetary policy meetings of March, June, September and December of each year.

We have felt some concern that the credit expansion and increases in property prices could go too far, with the risk that demand might fall sharply if there is an adjustment further ahead. However, these risks are difficult to quantify and they may lie far in the future. In this way, they do not easily fit into our usual analysis and forecasting work. We Executive Board members have nevertheless considered in our discussions that we should in some way take these risks into account, and this has been one of the pieces of the puzzle that explains our recent actions. In practice, it is often difficult to estimate how lasting various structural changes and other economic developments will be. For example, both the Riksbank and other forecasters have been uncertain as to whether the strong productivity in recent years has been temporary or a more lasting change. Conducting monetary policy that has substantial stabilisation policy ambitions could thus risk reinforcing cyclical fluctuations rather than subduing them. The conditions for succeeding with an active monetary policy are also complicated in practice since it takes time before the full effects of interest rate adjustments are visible. One therefore should not expect monetary policy to be able to fine tune economic activity to any great extent. There are also other reasons that limit the ambition to stabilise the real economy. The flexible application of our monetary policy must not diminish confidence in the inflation target.
If we have faith in the operation of the market economy, the answer to the question whether we should worry is "No, we shouldn't ". What we are witnessing is no more than the inexorable playout of the process of comparative advantage - perhaps one of the most proven laws of economics. Comparative advantage hinges on relative factor endowments and their productivity. Some of these characteristics are, in large measure, static. Thus, for example, relative to other locations Hong Kong has an abundance of deep water but a dearth of flat land. This, very obviously, yields us a strength in port facilities over agriculture. Other characteristics evolve dynamically, such as our relatively well educated and qualified labour force; when this is set against the shortage of space, it is hardly surprising that Hong Kong should specialise more in providing high value-added services than in labour-intensive or space-hungry manufacturing. As regards absolute cost levels, it is the high value added by members of the workforce in particular sectors which generates and justifies their high pay. The fact that Hong Kong appears to be, overall, a rather expensive place, relative to the majority of neighbouring economies, is a consequence and symptom of its success. As anyone can see by just looking around, this doesn't mean that we can no longer win any business. But we can only afford to pay ourselves what we are worth.

Conversely, the owner should require a higher return on investments with higher risk. The absence of this excess return will reflect social losses. It is important to bear in mind that the government can choose the composition, the required return and the risk profile with regard to its financial investments without taking into account the funding requirements of Norwegian companies. By the same token, Norwegian companies can choose their debt and equity structure independent of the government’s financial investments. The capital market serves as an intermediary between the government as investor and enterprises seeking capital. This market makes it possible to separate the government’s choices from companies’ choices. The distribution of the government’s financial investments and the choice of corporate funding structure should not be based on the notion that we are living in a barter economy. The Norwegian capital market is part of a Nordic market, which is being increasingly integrated into an international capital market. Capital markets are a very efficient tool for channelling funds from savers to investors. Direct strategic ownership could nevertheless be the best solution if it generates a high return and the government has a solid basis for exercising its role as owner. There is some room for doubt concerning both points. The government has often neglected its demanding role as owner. A number of shortcomings stand out with regard to the way government ownership is managed.
2 ASEAN Economic Integration Brief 2017 http://asean.org/storage/2017/06/AEIB_No.01-June-2017_rev.pdf 3 Source: http://asean.org/storage/2012/05/ASEAN_Stats_Leaflet2016_web.pdf 4 ASEAN Investment Report 2015; Infrastructure Investment and Connectivity, ASEAN Secretariat and UNCTAD (Page 65)  http://asean.org/storage/2016/09/ASEAN-Investment-report-2015.pdf  3  In addition, potential growth is hampered by ageing population and large debt overhang. According to United Nations’ World Population Ageing Report5, the number of people aged 60 years or over is projected to increase by 56% by 2030. On top of that, debt overhang has undermined private investment and consumption. These conditions could dampen demand and threaten long-term economic growth. Along with these challenges, movements towards protectionism and geo-political uncertainties could trigger adverse shocks to the global economy. Against this backdrop, we also face profound changes in technology. While technology advancement is needed to improve productivity and our standard of living, its unprecedented speed of change could be disruptive for incumbents in many industries ranging from taxi services to financial services. In the area of exchanges, we see changes in exchange and brokerage business models, the emergence of algorithmic trading, alternative trading, and robo-advisor. Distributed Ledger Technology (DLT) could potentially transform payment, settlement and custodial services. We should be mindful that technology advancements also bring along new forms of risks to the financial system ranging from cyber risks to strategic risks of existing business models. Ladies and Gentlemen, These circumstances pose challenges not only for regulators but also players in the financial market.

The Republic of Macedonia is on the map of foreign investors due to several factors, which were emphasized also by the surveyed companies. Low labor costs, i.e. low wages, low taxes, good qualification structure of the labor force, as well as the macroeconomic stability, mirrored in low and stable inflation, exchange rate stability, low levels of budget deficit and public debt. These were the core pillars the business decisions were laid on. Therefore, we – the macroeconomic policymakers, have an obligation to keep the solid fundaments of the Macedonian economy in the next period. 2  BIS central bankers’ speeches
If the FPC requires lenders to carry higher capital, liquidity or collateral, that will affect credit conditions and so the outlook for aggregate demand and inflation. In the other direction, monetary policy settings plainly affect asset prices, and so influence credit conditions through the net worth of borrowers and lenders. Also, it seems to me plausible that they affect risk-seeking behaviour,11 especially in a world in which many investment managers have nominal return targets. Given those two-way interactions, some commentators worry about co-ordination problems from having separate monetary policy and macroprudential committees with different objectives. 9  “Reforming the International Financial System”, Mark Carney, Bank of Canada 2009. 10  “The role of margin requirements and haircuts in procyclicality”, CGFS Paper No.36, Bank for International Settlements. 11  See, for example, De Nicolo, Dell’Ariccia, Laeven and Valencia, “Monetary Policy and Bank Risk Taking”, IMF, 2010. BIS central bankers’ speeches  9  As I have already explained in the context of having distinctive machinery for microsuperivsion, the UK has favoured having a separate macroprudential committee in order to ensure that the stability of the financial system is not neglected. The “macro” in macroprudential is not synonymous with macroeconomic but, as I have said, points us towards thinking of the financial system as a system. The members of the FPC need a knowledge base that, while overlapping, is different from that of the MPC. They need to know about the microstructure of the capital markets as well as about cyclical credit conditions.

Alongside the somewhat stronger near-term growth we have also seen some improvement in the labor market. Workers are filing fewer initial claims for unemployment insurance. New claims have fallen to levels not seen since mid-2008. Private-sector employees are working more hours. Aggregate hours worked rose at a 3 percent annual rate in the fourth quarter of 2011, up from essentially no growth in the third quarter. Combined with average hourly earnings rising at a 1.8 percent rate, the increase in hours worked suggests an annual rate of  BIS central bankers’ speeches  1  increase in private wage and salary income of close to 5 percent. This is a respectable rate that might support more spending – if sustained. A firmer labor market has been accompanied by partial recovery in consumer confidence over the past few months. Confidence is rising up from levels that were often – in the third quarter of 2011 – lower than at the depths of the Great Recession. It should be noted that while workers’ hours grew at a healthy pace in the fourth quarter, employers added an average of just 140,000 payroll jobs per month, somewhat less than in the third quarter. Despite this rather tepid increase in jobs, the unemployment rate fell a cumulative 0.5 percentage points from September to December. This apparent discrepancy is due to two factors – faster job growth as measured by the household survey and an outright decline of the labor force.
The krone exchange rate functions as a stabiliser. The depreciation of the krone through the past year indicates that this mechanism is functioning. As long as there is confidence that inflation will remain low and stable over time, the krone can depreciate markedly even if the key policy rate is low. The benefit of a national currency is lost if the temporary rise in inflation due to the depreciation is countered by higher pay increases. The result could then be a higher key policy rate and a stronger exchange rate than would otherwise be the case, and higher unemployment. The social partners have a particular responsibility in this regard. Oil companies had already given notice of lower investment, workforce reductions and cost cuts in winter 2014. This tendency has been reinforced by the sharp fall in oil prices, resulting in spillover effects on the mainland economy and rising unemployment. Chart: Key policy rate reduced As long as inflation expectations are firmly anchored, monetary policy can serve as a first line of defence when the economy turns down. Since December 2014, Norges Bank has reduced the key policy rate by a total of 0.75 percentage point, to 0.75 percent. The weaker outlook for the Norwegian economy has been given weight in our assessments. From the end of the 1990s, the price of North Sea oil rose from about USD 10 per barrel to over USD 100 per barrel.

Øystein Olsen: Managing Norway’s oil wealth Speech by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), at the “Desemberkonferansen” oil and gas conference, Kristiansund, 3 December 2015. *  *  *  Accompanying charts can be found on the Norges Bank’s website: Charts (PDF). Please note that the text below may differ slightly from the actual presentation. In 1969, on the day before Christmas Eve, Norway as a nation received the gift of the century: we struck oil! The Ekofisk oil field was the largest subsea oil field ever discovered. The discovery of oil was the start of an extraordinary era for the Norwegian economy. Chart: OECD countries’ per capita GDP in 1971 When the first oil was brought to the surface in 1971, income levels in Norway were low compared with other western countries. Chart: OECD countries’ per capita GDP in 2014 The picture has reversed since then. We have gradually caught up with the wealthiest nations. Measured by GDP per capita, Norway now ranks at the very top. It was established at an early stage that Norway’s oil and gas resources belong to the Norwegian people. The tax system and framework conditions for the petroleum industry were designed so that the large revenues from this sector would accrue to the state. The stage was set for greater prosperity, with prospects for growth in both public and private consumption. The discovery of oil in the North Sea generated a wealth of opportunity for Norwegian business and industry.
James McAndrews: Modern recipes for financial crises Remarks by Mr James McAndrews, Executive Vice President and Director of Research of the Federal Reserve Bank of New York, at the University of Iowa, Iowa City, 4 December 2015. *  *  *  Original presentation is on the Federal Reserve Bank of New York’s website: Slides (PDF). The author wishes to thank Tobias Adrian and Thomas Eisenbach for helpful discussions and comments on the text of the speech. The views expressed are those of the author and do not necessarily represent the views of the Federal Reserve Bank of New York or of the Federal Reserve System. Introduction Franklin Delano Roosevelt, in his first fireside chat on March 12, 1933, cogently explained the mechanisms that led to the complete collapse of the banking system in the United States earlier that month: “First of all, let me state the simple fact that when you deposit money in a bank, the bank does not put the money into a safe deposit vault. It invests your money in many different forms of credit – in bonds, in commercial paper, in mortgages and in many other kinds of loans. In other words, the bank puts your money to work to keep the wheels of industry and of agriculture turning around. A comparatively small part of the money that you put into the bank is kept in currency – an amount which in normal times is wholly sufficient to cover the cash needs of the average citizen.

Consequently, investors remain ignorant of the precise condition of the intermediary to whom they are lending, or of the securities that back their loan. However, once conditions worsen, suddenly the nature of the debt changes, in that the people and institutions that hold the debt  9  See Greenwood, Hansen, and Stein (2010, 2015), Krishnamurthy and Vissing-Jorgensen (2012), and Carlson et al. (2014). 10  This finding is further supported by the finding that the share of safe assets in the economy has been relatively steady since the 1950s. Others confirm those results and show that the substitution of privately-created shortterm debt for the Treasury’s supply of short-term debt has been a consistent feature of the U.S. financial system since 1875. See Gorton, Lewellen, and Metrick (2012), and Krishnamurthy and Vissing-Jorgensen (2015). 11  See Dang, Gorton, and Holmstrom (2009, 2012). 6  BIS central bankers’ speeches  realize they must expend resources to monitor their borrower. But, at that point, they are not in a good position to monitor that firm, so they simply refuse to extend the loan to it when the loan comes due, greatly amplifying the initial cause of the need to monitor further. This has the effect of the old-style bank run: suddenly the financial intermediary is caught short of the ability to finance its portfolio, and must reduce its indebtedness quickly, again, possibly triggering fire sales and creating negative externalities to others.