samchain/econo-pairs-v1 huggingface dataset:
Also, if we were to sell assets in a rising rate environment, we could also experience some capital losses on these sales. In combination, depending on the future trajectory of short and long rates, remittances could even fall to zero for a period.13 There are several important points to make here. First, the potential impact of the purchase program on future Fed remittances was known at the onset of the program – we have no new information here. The outcome depends on how the economy evolves, how we respond, and whether we decide to sell long-dated assets in the portfolio or not. Second, it is important not to put excessive weight on the possibility of a period of zero remittances. Our mandate is economic not fiscal – our job is to return the economy to full employment and price stability. Moreover, in considering the fiscal consequences of our actions, what matters is not what happens to our remittances – that is far too narrow a perspective – but how our actions affect the federal debt-to-GDP ratio over time. This is the metric we should be focusing on in assessing the potential fiscal consequences of our actions. In this respect, it is important to note that the narrow impact of Fed remittances on the federal debt-to-GDP ratio depends on the cumulative amount, not the timing of remittances. Cumulative remittances to date have been hundreds of billions of dollars higher, all else equal, compared to if the Federal Reserve had not expanded its balance sheet.

Moreover, rising house prices are likely to encourage a further loosening of credit and appraisal standards that remain unduly tight. Third, the international economic outlook has improved somewhat. Global financial market strains relating to concerns about the euro-area have receded since last summer, though  1  The household obligation ratio is the sum of payments on mortgage and nonmortgage debt, automobile lease payments, rental payments on tenant-occupied property, homeowners’ insurance, and property tax payments divided by disposable after-tax income. BIS central bankers’ speeches  1  recent developments in Cyprus highlight the challenges that remain. Chinese growth appears to be climbing after a slowdown in 2012 and Japan is making renewed efforts to grow faster and exit from a long period of deflation. Fourth, U.S. corporate profits relative to national income are at an all-time record (Exhibit 5) and cash balances are very high. As uncertainty recedes and the outlook improves, I expect business will increasingly shift towards real investment from mainly buying back shares and hoarding cash. Fifth, the U.S. is in the middle of an energy revolution marked by a steady rise in oil and natural gas production (Exhibit 6). Just as significant, the sharp fall in natural gas prices in the U.S. has created a huge impetus to investment in energy-intensive manufacturing, such as in petrochemicals. Because the lead times on such investment are long, this impulse will likely persist for many years.
This generates further underestimation of institutional risks. Consider again those 90th percentile VaR measures for UK banks. But instead of looking at unconditional VaR, consider now conditional VaRs (CoVaRs) – that is to say, VaRs conditional on other institutions in the network simultaneously facing stress. 8 As Chart 12 shows, this raises the median risk facing UK banks by around 40%; and for some banks, risk estimates almost  4  Gell-Mann (1994). 5  Morris and Shin (2008). 6  See, for example, Brunnermeier, Crockett, Goodhart, Persaud and Shin (2009) and NYU Stern School of Business (2008). 7  For example, a survey of stress-testing by the CGFS in 2005 found that only a small minority of firms considered the effects of multiple shocks on their balance sheet. 8  Following the methodology of Adrian and Brunnermeier (2008). BIS Review 18/2009  5  double. For a financial firm leveraged 20+ times, those risk revisions could be the difference between success and failure. Network risk externalities of this type impose formidable informational demands on banks. For example, understanding the full consequences of Lehman’s failure would have required information on the entire topology of the financial network. This is unrealistic even for the authorities, much less an individual firm. Absent that knowledge, the financial system was seized by network uncertainty. If this informational failure is not easily rectified by the actions of individual firms, there is a case for the authorities attempting to provide that missing informational public good, however difficult that might be in practice.

In part, domestic wage growth and other business costs could be temporarily tempered by the initial cyclical productivity uptick in some capital intensive sectors of the economy. For the year as a whole, headline CPI inflation is projected to average between 2.5% and 3.5%. MAS underlying inflation, which excludes the cost of accommodation and private road transport, will come in at around 2%. BIS Review 103/2010  1  6. When Singapore entered the recession in 2008, monetary policy, followed by fiscal policy, was eased to provide support to the domestic economy. As economic activity recovered swiftly in 2009, macroeconomic policy settings were recalibrated to levels which were conducive to sustainable growth and medium-term price stability. In a pre-emptive move, MAS tightened monetary policy in April 2010 by re-centring the $ policy band upwards and restoring its modest and gradual appreciation path. 7. Looking ahead, the outlook of the industrialised economies remains uncertain. However, there is sufficient momentum from the Asian economies and domestic industries that will continue to support Singapore’s economic activity at a high level for the rest of the year. While CPI inflation is expected to pick up towards the latter part of the year, it has evolved broadly as anticipated during the April review. At this stage, we assess that the current monetary policy stance of a modest and gradual appreciation of the $ policy band remains appropriate. Strengthening the financial system 8. Singapore’s financial system remained resilient during the global crisis.
As stated by the President of the National Bank of Poland, Mr Sławomir Skrzypek, an in-depth assessment of the costs and benefits of the euro adoption in Poland needs to be periodically repeated in order to make sure that we take into account all important factors of the fast changing global economy. The National Bank of Poland is willing to play a key role in stimulating the public debate about the costs and benefits of the euro adoption. Today’s conference is a good moment to contribute to this debate, and I would like to thank the organizers for offering this opportunity. Let me begin with the benefit side. Economists typically concentrate on the following sources of economic benefits related to monetary union. These are: •  lower transaction costs,  •  lower interest rates,  •  financial integration,  BIS Review 67/2007  1  •  trade creation. Elimination of transaction costs incurred by companies and households in relation to the zloty/euro exchange rate is among the most obvious benefits of the single currency. These costs include, inter alia, the bid-ask spreads, fees accompanying exchange rate operations and costs of hedging against exchange rate risk. Any company could possibly calculate how much it would save on transaction costs if there were no exchange rates. This is also relatively unsophisticated for the whole economy, and has been estimated to be approximately 0.2% of GDP in Poland (NBP 2004). Not much, but worth saving.

This is a price we have to pay to be able to exploit the benefits of the new technology. Existing payment solutions cannot be phased out until we are certain that they will be replaced by other solutions that satisfy customer needs and enjoy customer confidence. This is important in normal times, and not least in terms of crisis preparedness. That has a cost, but a situation where payments cannot be executed would entail a much greater cost to society. As such, there can be no compromise with regard to contingency requirements. Conclusion Norway has an efficient payment system. This is positive, but there is room for improvement. In some respects, other countries are now ahead of us, for example Denmark and Sweden, particularly in terms of instant payments. Payments should be faster than is the case today – both for end users and between banks. We must develop new infrastructure linked to instant payments and render payments faster through today’s infrastructure. Mobile payments can best be organised based on common underlying solutions. They should be cheaper and faster, and various apps must be able to communicate between banks and use the same shop payment terminal. Banks and the wider business sector do not have a choice in the long run. If the new solutions are to be viable over time, standards and common solutions for mobile payments must be developed. We may have started in this direction, but time is pressing. Common solutions and standards are not an obstacle to effective competition.
To be able to assess monetary policy during a certain year, it is important to remember that such considerations also lie behind the decisions. In order to gain a picture of the initial situation for a certain year, it is necessary to study the course of inflation in earlier years. The fact that inflation has been allowed to deviate from the target may be due to poor monetary policy decisions. But it may also have been part of a deliberate strategy by the Riksbank to be able to balance production and employment. If we do take such considerations, we shall however have clearly explained this in connection with our decisions. So how did it turn out? After this general discussion, allow me to conclude with a very brief description of the considerations that monetary policy faced during the assessment period. The development we envisaged in 2005 and 2006 was that economic activity would continue to strengthen. Cost pressures and resource utilisation were expected to rise gradually, but a strong development of productivity was nonetheless assumed to hold back inflationary pressures. The most important consideration was the rate at which the repo rate should be raised. It was a question of the low inflation rate initially rising towards the target, but in a way that did not involve a risk of an overly rapid increase in the rate of inflation later on. At the beginning of 2006 we began a phase with increases, which continued in 2007.

I do not intend to say a great deal about any conclusions in the material in this brief introduction. The point is that it is the Committee on Finance that assesses us. However, I would like to raise several issues of principle about assessment in general and about assessing monetary policy in particular. These issues have in various ways left their mark on the formulation of the material. For several reasons, it is important that we are assessed. As I mentioned earlier, one reason is that we become more efficient and develop our work methods. Monetary policy acts with a lag and must therefore be based on forecasts. If we are to be as proficient as possible in forecasting future developments then we must continuously take heed and incorporate new knowledge, both new theories and everything else that is happening in the economy “right now”. One might say that it is similar to navigating with a nautical chart that is continuously being redrawn a bit. But it is not enough to have the latest shipping forecast and an up-todate chart in order to be a skilful skipper. In order to learn just how much the rudder needs to be adjusted in rough seas, one has to learn from experience. Hopefully, one becomes more skilful at maintaining one’s course each time one has to parry. And, for monetary policy to be as efficient as possible, we must, in the same way, learn from past events. Another reason concerns our role as an independent authority.
William C Dudley: Lessons of the crisis – the implications for regulatory reform Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Partnership for New York City discussion, New York, 20 January 2010. *  *  *  It is a pleasure to have the opportunity to speak here today. I will focus on the important lessons of the recent crisis and how those lessons should inform the regulatory reform effort. As always, what I have to say reflects my own views and not necessarily those of the Federal Open Market Committee or the Federal Reserve System. In my opinion, this crisis demonstrated that a systemic risk oversight framework is needed to foster financial stability. The financial system is simply too complex for siloed regulators to see the entire field of play, to prevent the movement of financial activity to areas where there are regulatory gaps, and, when there are difficulties, to communicate and coordinate all responses in a timely and effective manner. Effective systemic oversight requires two elements. First, the financial system needs to be evaluated in its entirety because, as we have seen, developments in one area can often have devastating consequences elsewhere. In particular, three broad areas of the financial system need to be continuously evaluated: large systemically important financial institutions, payments and settlement systems and the capital markets. The linkages between each must be understood and monitored on a real-time basis.

In the same way, the crisis revealed the critical deficiencies in the toolkits available to the regulators to deal with nonbank institutions in duress. Emergency lending by the Fed might be enough to forestall the disorderly failure of a systemically important institution and all the wider damage such a failure might cause, but it was a blunt and messy solution, employed as a stopgap measure because better alternatives were not available. What is needed – what our country still lacks – is a large-firm resolution process that would allow for the orderly failure even of a systemically important institution. 2  BIS Review 6/2010  Thus, in the fall of 2008, regulators and policymakers found themselves facing the prospect of the total collapse of a complex and interconnected system. It was these circumstances, and the prospect they created for an even deeper and more protracted downturn in real economic activity and employment, that required truly extraordinary actions on the part of the Federal Reserve, as well as the Treasury and many other agencies. This is a situation in which the United States must never again find itself. For its part, the Federal Reserve is hard at work on developing and implementing new regulations and policy guidance that take on broad lessons of the recent crisis. We are working with other banking regulators in the United States and overseas to strengthen bank capital standards, both by raising the required level of capital where appropriate and improving the risk capture of our standards.
This autumn the krone appreciated during the period of market turbulence, but has weakened somewhat in the past two weeks, reflecting shifting themes in foreign exchange markets. However, it appears the krone will be a good 3 per cent stronger on average in the second half of this year compared with the first half, and about 1.5 per cent stronger this year than last year. Exchange rate developments have a dampening impact on inflation. Given our inflation-targeting regime, we will be mindful of the effects of higher interest rates on the krone exchange rate when inflation is low. High oil prices have resulted in substantial growth in the petroleum fund’s capital, and there are prospects of further growth ahead. The Government uses the central government budget to influence economic developments. Government petroleum revenues are transferred in full to the Government Pension Fund – Global and invested in securities abroad. However, as part of the budget resolution, the Storting decides on an annual transfer from the Fund to cover the deficit in the government budget when petroleum revenues and capital income earned by the Fund are excluded. This annual transfer – direct petroleum revenue spending – has been sharply reduced in recent years, but is expected to increase somewhat next year. Developments reflect a marked increase in the government’s general tax revenues as a result of the current period of strong expansion.

As major players in credit provision, Banks have an urgent challenge to provide products that are suitable to SMEs and within their reach. Honourable Minister, at current levels, interest rates are too high for the SMEs to access credit. We urge banks and other financial institutions to continue reviewing the cost of borrowing as part of the process to improve SMEs access to the much needed finances to expand their operations, employ more people, and thereby provide impetus to significantly reduce poverty rates in the country. Honourable Minister, distinguished ladies and gentlemen, in view of the financing gap for the SMEs, the microfinance sector in Zambia has taken a leading role to fill this vacuum. However, the services provided by the microfinance institutions fall short of meeting the demands of SMEs. The sector can be said to be relatively young with the pioneers being established in the early 1990’s. Distinguished ladies and gentlemen, I am glad to note that the conference will also focus on the very important aspect of corporate governance. Corporate governance is vital to building a solid, efficient and sustainable financial system and growth of businesses. Without these sound foundations, the institutions capable of reaching out to the poorest in society will never be encouraged. It is generally agreed that there is a strong link between corporate governance and access to finance.
But, for this to be possible, it is essential to strive to contain expenditure, by means of countermeasures in those areas that offer the most scope for cost reductions, at all levels of general government. It would seem, then, that the promotion of structural measures and reforms, geared towards improving the functioning of markets, making wage and price-setting mechanisms more flexible and facilitating the reallocation of factors of production across sectors, is the main instrument available to economic policy makers and economic and social agents to enable each, in their respective areas of responsibility, to contribute to easing the downturn and promoting prompt recovery. All matters relating to the functioning of the labour market, good industrial relations, collective bargaining and outstanding reforms take on great importance in the current situation. This is because the dynamism of the Spanish population as a supportive factor for limiting the intensity and scope of the slowdown largely depends on labour market flexibility. This is especially so at the current juncture, with rising wages and a deteriorating inflationary situation. Hence, the search for formulas permitting a resumption of a trajectory of wage moderation has become a priority, such moderation, with the support of social agents, having yielded such good results in terms of employment generation in the recent past. Among other measures, I have in mind changes to the current wage indexation arrangements, which tend to prolong the impact of inflation surges.

Miguel Fernández Ordóñez: Situation of the Spanish economy and financial sector Speech by Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, at the XV Financial Sector Meeting “The way forward for the Spanish banking business model”, Madrid, 15 April 2008. *  *  *  I shall be focusing today on the Spanish economy which, naturally enough, has been affected by the changes in the international environment prompted by the further slowdown in the US economy, the rising course of oil prices and the prolongation of the bout of financial turbulence. To this end, I shall begin with a brief reference to the situation in the United States and in Europe, focusing thereafter on the macroeconomic outlook for Spain in an attempt to define its degree of exposure to the international financial turbulence. Finally, I shall offer some economic policy considerations. It is in the United States that the deterioration in macroeconomic conditions has been most marked. The effects of the sharp adjustment in the US real estate sector have been amplified by the consequences of the instability in international financial markets, severely affecting business and household confidence. The outlook of most analysts for 2008 points to a strong deceleration in the first two quarters of the year, and even to a recession at some point along the line, although any more medium-term projection is shrouded in considerable uncertainty. In the euro area, some of the risks to continued economic dynamism progressively materialised during 2007.
Which central bank path is the most likely over the next 25 years? Your guess is almost certainly as good as mine. AA Milne ends his 1924 poem: “And all sorts of funny thoughts Run around my head, It isn’t really anywhere It’s somewhere else instead!” A quarter of a century on, I am confident central banks will be “somewhere else instead”. I am much less confident precisely where, whether upstairs or down. Central banking may need to await the 50th anniversary of Central Banking to find out. BIS central bankers’ speeches  5

3/ How can we give further impetus to Europe? Getting back to the European level, I would like to point out that many improvements have also been made in the field of crisis prevention and management. Prevention is based on much more 2/3  BIS central bankers' speeches  efficient financial regulation and on a European governance framework that is better organised now with well-designed monitoring mechanisms on fiscal performance as well as on macroeconomic imbalances and structural reforms. Banking Union contributes to strengthening financial stability in the euro area and the EU as a whole and to ensuring that the banking sector is safe and reliable. The global European picture is of substantially enhanced resilience since the crisis. The Common Equity Tier 1 ratios of significant banking groups in the euro area have risen from 7% in 2008 to 14% today. Crisis management – including for Greece – has also evolved considerably with the creation of the ESM. So you can be fully confident about the resilience of the euro and of the euro area. It is not only an economic asset, it is also a political one, supported by each of the 19 governments and – which is still more important – by 68% of euro area citizens (and even by 70% of French citizens and 73% of German citizens). Moreover, monetary policy played its full part to maintain euro area cohesion. Europe has clearly succeeded with monetary union, but monetary policy should not remain the only game in town.