samchain/econo-pairs-v1 huggingface dataset:
The less optimistic scenario — the U Some observers see a risk of the upturn occurring more slowly than the V scenario assumes. They see a path that instead resembles a capital U, with a downturn that is more protracted. Investment has been a strong factor behind the upward phase in recent years and proponents of the U scenario consider the economy has been hit by excessive investment, so that an unduly large capital stock must now be adjusted. This adjustment is accentuating the economic slowdown, making this more difficult to counter than seemed likely earlier. It will take time — perhaps a long time — for the interest rate cuts to have an effect on demand from households and firms. Moreover, the conditions for a quick recovery have been worsened by the imbalances that have accumulated in the economy. This scenario envisages that the U.S. labour market is still so overheated that if IT prices fall while commodity prices rise, at the same time as a weaker dollar adds  2  BIS Review 20/2001  to the cost of imports, then inflation will move up even though growth is weak. The Federal Reserve might have more difficulty in handling this scenario because if inflation is threatening to rise, the interest rate would be less available for turning activity upwards. There is also the possibility of the promised tax cuts taking time to materialise, which would be liable to postpone a recovery.

Any structure needs to be funded. The use of emergency support should be reduced over time. Maximise Value – The Bank of Cyprus has received substantial capital. It needs to manage its loan book, restructure loans and maximise value. This will not be best achieved through a fire sale. Support the Economy – As the largest and most important bank in the country the recovery of the Bank of Cyprus is vital to the recovery of Cyprus. The bank must continue to prudently lend to business and consumers. BIS central bankers’ speeches  1  The Cypriot economy and the Bank of Cyprus have undergone a severe shock. However, both Cyprus and the bank are resilient and can emerge strongly. It is important to recognise that substantial progress has been made. The Bank of Cyprus is now adequately capitalised and has exited resolution. New management is in place and they are working on preparing the strategy and restructuring plan. The ECB’s Governing Council has recognised the steps taken to restore confidence. Continuing the efforts to create a stronger and safer Bank of Cyprus is in all of our interests. I look forward to hearing the panellists’ views on how this can best be achieved. 2  BIS central bankers’ speeches
Following the introduction of CRDIV we now have a wide range of new tools available to the competent authorities in the euro area and, with the creation of the SSM, a stronger framework to coordinate those tools and prevent inaction bias at the national level. Should we see any indications that low interest rates are leading to financial imbalances, the first line of defence is for the competent authorities to make full use of these new but hardly tested instruments. The division of labour is clear: monetary policy should focus on price stability; macroprudential policy on financial stability. Yet I am also sympathetic to the view expressed by the BIS that we need to approach macro-prudential with “a mix of ambition and humility” – that is, we need to be ambitious in using the new tools we have, but we also need to be humble in recognising their limitations. Research is so far relatively limited about the channels through which macro-prudential policies work and the magnitude of their effects. Moreover, as most macro-prudential tools are in fact micro-prudential, conflicts of competence between respective authorities could occur. This all the more that the degree of Europeanisation of micro- and macro-prudential  4  BIS central bankers’ speeches  competencies is not the same – not to speak of the competence pooling of sovereignty in monetary policy. And in any event, macro-prudential tools tend to be more effective in building resilience against financial shocks than preventing those shocks in the first place.

Interest payments, defaults and the proportion of households spending a very significant (>40%) proportion of income on servicing debts are all at historical lows. Interest rates would have to rise a lot – certainly by a lot more than financial markets expect – for this to change significantly. 3  All speeches are available online at www.bankofengland.co.uk/news/speeches  3  But underneath any aggregate, there are always more concerning stories. According to the Bank/NMG survey 7% of households say they are “very concerned” about their debts, even if they are able to service them. And we know from extensive research that financial worries can be an important contributor to poor mental health. High levels of debt are, for example, associated with anxiety and depression, and studies using changes in local house prices and foreclosures have found that changes in households’ financial situation can affect health.1  One thing we also know is that people are generally prone to over-concentrate on present, urgent needs, and neglect things that are more important for us over the longer term. Economists are naturally interested in how people trade off the future against the present. In standard models that seek to describe these choices, it is assumed that people discount the future at a constant rate: the extent to which we care more about things one rather than two months from now (say) is the same as between today and a month away.
Faced with these foreseeable changes in the regulatory and supervisory framework, and irrespective of whether the ongoing assessment exercise is likely to be generally satisfactory, Spanish banks must evidently seize every opportunity to strengthen their capital position as the improvement observed in financial conditions progressively firms, be this through gains in efficiency, retained profits or new securities issues. 5. Conclusions  To conclude, I believe the major structural changes sweeping the banking industry will have been reiterated in this conference. We should assume that in the future the banking sector will be better capitalised and safer. As a counterpoint, however, it will likely be smaller and, probably, less profitable. All these changes will have appreciable consequences for banks’ business models and competitive strategies. The concurrence of this global process and the start-up of the banking union in Europe poses, in the short term, additional and considerable logistic and strategic challenges. Yet far from being a disadvantage, the banking union will over the medium term improve the European banking sector’s competitive capacity. Banks will benefit not only from a genuinely unified market but also, more directly, from the added strength this project brings to the monetary union. And the soundness of banks and the stability of the financial system as a whole will hinge crucially on the proper functioning of this union. Thank you. BIS central bankers’ speeches  5

The effect of the expansionary monetary policy on capital incomes, via rising equity prices, should therefore have led to a more unequal income distribution. However, capital income is only one part of households’ total income; the largest part is comprised of labour income. As with capital income an expansionary monetary policy can affect the labour income of different households in different ways. For some households the hourly wage may be what primarily determines their income development, while for others the number of hours worked is the most important thing – and above all  6 Lundberg and Waldenström (2016). See also Waldenström (2016). 7 Sveriges Riksbank (2011), Swedish Fiscal Policy Council (2013) and SoU 2013:78. 9 [14]  whether or not one actually has a job. As monetary policy affects these quantities in different ways, income distribution will also be affected. In Sweden, it is primarily the differences between the income of those who have a job and those who do not that is important to the income distribution, rather than the wage differences between those who work. 8 This is clearly visible in the dispersion of disposable income, that is, income including work and capital income, as well as various transfers and after taxes are deducted. The higher the disposable income, the less common it is that one’s main source of support is from something other than labour and capital.
8 But that does not mean that equity-financed booms and busts cannot have sizeable macroeconomic consequences via other channels, such as misallocating resources, wealth effects and their impact on confidence. In the 5 years  4  King (2010). See also Tucker (2009) and Haldane (2009). 5  Bean (2010). 6  IMF (2010). 7  See Tucker (2009). 8  See Mishkin (2008). BIS Review 161/2010  5  following the dotcom bust, GDP growth in the US averaged almost two percentage points lower than in the preceding 5 years; this despite a very aggressive easing in monetary policy. Third, as Claudio Borio of the Bank for International Settlements and others have stressed, actions necessary to preserve the resilience of the banking system may not be sufficient to prevent credit cycles altogether. 9 A much-studied example of this comes from Spain. Since 2000, Spain has had a system of dynamic provisioning whereby banks had to put aside more capital as they increased lending. This increased the resilience of the Spanish banks, but it did not prevent a large run-up and subsequent crash in house prices in the Spanish property market. If – and it is a big if – macroprudential policy could be used to prevent such credit cycles it could potentially have even greater benefits for our economy.

The upturn followed a period of slower growth as from 1998 and a mild recession in 2002 and into 2003. Even though there have been cyclical changes, growth has been very high over the past 15 years. Norway is one of the nations that has gained most from trade liberalisation and increased cross-border flows of capital, technology and labour. Norway has experienced the benefits of shifts in the division of labour across countries and regions. First, Norway’s terms of trade have improved markedly. We can buy one and a half to two times the volume of imports for the price paid for our exports than was the case only 5-6 years ago. Prices for oil and gas, shipping, fish, industrial commodities and engineering products have increased considerably. Moreover, Norwegian importers have gained access to new markets in central Europe and Asia which offer considerably cheaper consumer goods. A similar situation has not been seen since World War I, when earnings in the shipping industry and other export industries were exceptionally high for a period.16  16  Tore Jørgen Hanisch, Espen Søilen, Gunhild Ecklund (1999): Norsk økonomisk politikk i det 20. århundre (Norwegian economic policy in the 20th century), HøyskoleForlaget, page 60. 2  BIS Review 15/2007  Second, the supply of foreign labour has increased markedly after EU enlargement in 2004. Over the past two years, these labour inflows have accounted for more than 30 per cent of growth in our labour force.
When the RMBS market closed and Granite could not continue to expand, the management team had a backlog of mortgages that the bank was temporarily warehousing but was likely to be unable to finance permanently. That undermined confidence in the bank itself. And if the bank had been downgraded, Granite might have had to pull its funding. So they were very inter-twined. For accounting purposes, Granite had to be consolidated. For regulatory capital purposes, Granite was largely off-balance sheet. The Basel Supervisors Committee is now reviewing its capital rules on securitisation. But another basic principle may commend itself; we should not allow one management team to run two apparently separate and significant vehicles in a completely joined up way – one a de jure bank, the other a de facto bank – when the funding and risk interlinkages are so strong. Some commentators have argued that the extent to which the securitisation market has the economic characteristics of banking goes deeper than that. 10 This account goes broadly as follows. The Lehmans crisis and its aftermath had at its core a run on repo financing of holdings of, amongst other things, RMBS and other ABS. The banking system had originated assets and issued them into capital markets via ABS. But the same banking industry financed investors’ purchase and holding of those ABS; and then financed themselves via short-term reverse-repo of those assets.

For instance, during a press conference in 2015, when asked whether he was dovish like Janet Yellen or hawkish like Paul Volcker, he replied ‘My name is Raghuram Rajan and I do what I do’. Of course, the next day this James Bond-ish remark made headlines in the financial press. When his three-year tenure ended, inflation was near the five percent inflation target, thereby improving conditions for ordinary citizens. Interest paid by the government had been reduced and bonds with maturities up to forty years were being issued for the first time. The value of  Page 3/4  the rupee had stabilised, foreign exchange reserves were at a record high, and India was the world’s fastest growing major economy. The three pillars of society Let me finish by saying a few words about one of Raghu’s latest publications. Next to an impressive list of about 90 peer-reviewed papers on specific economic and financial topics, Raghu has also written four books with a broader perspective. In his book, The Third Pillar: How Markets and the State Leave the Community Behind, which was published this year, Raghu emphasises that society is supported by three pillars: the state, markets and the community. Society can prosper if it achieves the right balance between the three pillars. Raghu argues that today, these pillars are seriously out of balance. While states and markets have expanded their powers, communities have been left powerless in dealing with the consequences of technological change and globalisation. As a result, people turn towards populist politicians.
Paul Tucker: Developing an EU cross-border crisis management framework Remarks by Mr Paul Tucker, Deputy Governor for Financial Stability at the Bank of England, at the Eurofi Financial Forum, Brussels, 30 September 2010. *  *  *  Thank you very much for inviting me to join you here today. It is terrific that the EU, and the Commission in particular, have been taking resolution really seriously as part of the programme for reforming the financial system. This is a domestic issue, an EU-wide issue, and a global issue. In introducing this session of the conference I’ve got five points, and I’m going to try to be quite crisp on those five points once I have made an introductory comment about resolution regimes in general. It may be helpful to say a few words about what resolution is. Resolution is what happens when we are in the “last chance saloon”. That is to say when supervision, however enhanced, has not prevented distress. When higher capital and liquidity requirements have proved insufficient. When any Cocos or other instruments have been converted or written down but have proved insufficient to absorb the distressed firm’s losses, and so the institution is still teetering on the edge of failure. That is we are talking about the point at which all the usual remedies have been exhausted, and the authorities face a desperate choice between taxpayer bailout or chaotic liquidation unless special resolution tools are available. All those other, essential measures are about reducing the probability of distress.

The goal, of course, is to be able to resolve distressed giant institutions, complex institutions, without taxpayer solvency support, but also without disastrous disruptions to the flow of essential financial services to our economies. I would say two substantive things about the tools needed to make this feasible. First of all, as the crisis around the world has demonstrated, we need to extend the basic resolution toolkit I was talking about beyond commercial banks to bank holding companies and to affiliated companies; in other words, to groups. And we must extend the scope of the basic resolution regime to non-bank financial institutions and groups in circumstances where their distress could prove systemic. This is essentially what the Dodd-Frank Act does in the United States. It makes it possible for the FDIC to manage and run down a SIFI from a bridge company. This could work well in some circumstances; for example, where there are buyers for parts of the business in the wings, as with Lehman. This is, therefore, a resolution instrument which we should seriously contemplate adopting in Europe. I am not certain that it would definitely work in all circumstances; eg if there were no buyers in prospect, the state ends up running the group, which could be quite a thing, with a risk that staff and counterparties may drift away. But even in those circumstances it would surely be preferable to a normal liquidation.
Science means that the costs of producing notes – both economic and environmental – are lower. 2  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  2  This is good for the society; the society that the Bank of England serves; and the society that is reflected on our banknotes. The Bank is committed to ensuring that the nation’s money is as inclusive as possible. Being inclusive means: -  ensuring our notes are accessible to everyone. That’s why we have increased the range of features that help the blind and visually impaired distinguish between different denominations, adding tactile dots in the upper left-hand corner. These dots join existing features, such as differing colour palettes, raised print, tiered sizing and bold numerals; and  -  being inclusive means an open and transparent approach to decide the characters that feature on our banknotes, by seeking nominations from the public, which can then be considered by an Advisory Panel. Today, I’m here to deliver on that second objective. Following the success of the polymer fiver and tenner, and the forthcoming £ last month the Bank confirmed that it will issue a new £ note. And this new £ will need a new character to feature on its design. I am delighted to announce today that the field from which nominations will be sought for the new £ note is – if you hadn’t guessed by now – science. Our Advisory Panel chose science in recognition of the United Kingdom’s extraordinary scientific heritage.

£ character selection and Future Forum launch Remarks given by Mark Carney, Governor of the Bank of England  Science Museum, London Friday 2 November 2018  I am grateful to Clare Macallan and Jennifer Nemeth for their assistance in drafting these remarks and to Lizzie Levett, Emma Sinclair and Toby Davies for providing background information. 1  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  It is always a pleasure to visit the Science Museum. Its galleries and exhibitions showcase the rich history of human ingenuity in the sciences, technology, and medicine. You might think that the Bank of England has little in common with such lofty endeavours, but science spans all aspects of life, extending even to central banking. Within this Mathematics Gallery alone, there are multiple examples of where the worlds of central banking and science converge. Take the Moniac machine, which illustrates the circular flow of income around the economy using an assortment of pipes and coloured water. Or Babbage’s Analytical Engine, developed in collaboration with mathematician Ada Lovelace. This precursor to modern computers helped estimate mortality rates, techniques that are still central to underwriting life insurance policies today. The same life insurers that we regulate at the Bank of England. Among those who are supervising, modelling and policymaking, are the Bank’s very own scientists. Almost 10% of colleagues across the Bank have a science or maths degree and 1 in 10 of our graduates starting this year studied chemistry, biology or physics at university.
Environmental protection  Due to the high dependence of rural communities on common property, it is necessary for local governments to implement environmental policies in order to protect the rights of the poor, who are the most affected when the quality of the environment worsens. Data from villages in Zimbabwe estimate the proportion of household income from common property as high as 40% (Dasgupta, 2002). A number of environmental protection campaigns are currently being executed in several African countries. One such campaign is the National Soil Fertility Action Plan, which is currently being prepared in 23 countries. In addition to this development, 15 National Action Plans have been submitted within the United Nations Convention to Combat Desertification (UNCCD). Natural resources need to be maintained in order to provide a livelihood to largely communal rural communities, which for the most part depend on forests, and other open natural resources for their survival. It has been shown that in Tanzania the poor derive as much as half of their cash incomes from the sale of forest products, such as charcoal, honey, firewood and wild fruits (UNDP 2003). This is true for most Sub-Saharan African countries In addition, most methods used to purify minerals such as gold by most small-scale rural people involve pollution of rivers with toxic chemicals. Regional institutions in Africa have worked towards the implementation of development programmes aimed at reducing pressure on natural resources in the various areas of the continent.

The element that marks a growing concern with regard to restrictiveness relates to the capital of banks. Clearly, the considerations in respect of the need to replenish capital are starting to exert a strong influence on the decisions of banks to grant new credit. This dynamic is worrying. It indicates that the banking system is interpreting the new regulations restrictively for credit. This approach is undesirable and out of line with the objectives so far followed by the economic policy authorities of supporting the financial system, not as an end in itself but as an essential function of savings intermediation. The outcry surrounding the effects that future capital standards and risk management – the so-called “Basel 3” – will have on credit developments in the short term seems unjustified. The new rules are specifically intended to ensure a more orderly and sustainable flow of credit, not a reduction. Moreover, as I said earlier, a gradual process of adaptation to the new requirements is foreseen. The new capital requirements may be attained in two different ways, although they have opposite effects on banking activities: reduction in banking activities, particularly in credit to firms, on the one hand, and capital increase on the other. The alarm that seems to be widespread in the banking sector concerning the new rules seems to mask the intention of adapting to them via a reduced exposure to the real economy, rather than via a capital increase.