samchain/econo-pairs-v1 huggingface dataset:
The text has also benefitted from helpful comments from Andrew Bailey, Ben Broadbent, Fabrizio Cadamagnani,  Page 11  Jonathan Haskell, Josh Jones, Catherine Mann, Rhys Phillips, Dave Ramsden, Andrea Rosen, Martin Seneca, Fergal Shortall and Silvana Tenreyro for which I am most grateful. Opinions (and all remaining errors and omissions) are my own. 1. See Money Marketeers of New York University  . 2. Another – and, in my view, largely equivalent – way to characterise this process of ‘normalisation’ is as an ‘exit’ from the exceptional and unconventional policy measures introduced in the face of the global financial crisis and its aftermath. From the introduction of those measures, it was recognised widely in the central bank community that such exit would pose challenges for the design, implementation and communication of monetary policy. 3. Moreover, the large portfolio of asset purchases accumulated as a result of QE has been run down in parallel with the rise in Bank Rate. Since March 2022, the Bank of England has ceased to reinvest the proceeds of maturing bonds held in its Asset Purchase Facility (APF) used to house the QE portfolio. As of November 2022, the Bank has sold gilts from the APF to the market. Corporate bond holdings in the APF have been reduced by similar means. 4. The concept of a ‘neutral’ balance sheet remains even more elusive than that of a ‘neutral’ interest rate at both empirical and conceptual levels, so I focus on the interest rate dimension here. 5.

[2] In the UK, the MPC has raised Bank Rate at each of its past nine meetings. Bank Rate now stands at 3½%. [3] Of course, a process of ‘normalisation’ begs the question of what should be seen as ‘normal’. This question is often couched in terms of the level of the ‘natural’ or ‘neutral’ interest rate. [4] In the past, I have been very cautious in quantifying a specific neutral level for Bank Rate. Not only are empirical estimates surrounded by the usual confidence intervals, but the concept of neutral rate is itself elusive: is it an object that evolves at high frequency with the many shocks that strike the economy, or is it a more stable longer-term concept that looks-through such disturbances? Communicating as if there were agreement on these issues where there is not risks causing confusion. [5] That said, for central banks with inflation targets of 2% and that take the view that trend real growth remains positive,[6] there was something unusual in seeing policy rates floored close to zero for such a long time. On this basis, the rise in policy rates to current levels can be seen as representing significant progress in the normalisation of the monetary policy stance. Achieving balance between aggregate demand and aggregate supply But of course, the world does not stand still. In parallel with central banks’ efforts to normalise the  Page 5  stance, new shocks to price stability have emerged in recent years, this time on the inflationary side.
Timothy F Geithner: Economic policy and the sustainability of US productivity growth Remarks by Mr Timothy F Geithner, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Puerto Rico Bankers Association Luncheon, New York, 12 April 2005. *  *  *  Thank you for the opportunity to speak to you today and to support the important work of improving economic and financial education. I am going to focus my remarks on two important dimensions of our economic future - the acceleration in the rate of growth in productivity of the past decade and the more recent decline in our net national savings rate. The former offers considerable promise for future growth in the living standards in the United States. The latter presents some risk and challenges to that brighter prospect. Both are areas where education, education in general and financial education in particular, can make an important contribution. The United States has been through an exceptionally good decade of economic performance. While growth in most mature economies slowed, we averaged a respectable 3.5 percent growth in real GDP a year. Inflation moderated to a rate of around 2 percent, and long term inflation expectations stayed stable for some time at quite moderate levels. The volatility of U.S. output, which declined significantly in the mid-1980s, remained low, meaning growth was smoother, with recessions less frequent, shorter and shallower.

As I have just noted, this is also a feature of the recent strategy changes of the Federal Reserve and ECB. As a slight digression, it may be interesting to note that the tendency to see the inflation target as merely the Riksbank’s concern is not a new phenomenon. Urban Bäckström, Governor of the Riksbank 1994–2002, already pointed out this problem during the National Economic Association’s negotiations in February 1995: “I object to the title of today’s discussion, which is ‘The Riksbank’s inflation target’. Although it is natural for a central bank to strive for price stability, this endeavour must … permeate the entire economic policy.”20 At the time, the problem was the other way around, that is, more policy areas had to help keep inflation down. However, since the purpose of an inflation target is to anchor inflation at a certain level, rather than for it to be as low as possible, the argument is certainly valid even when inflation risks becoming persistently too low. Several good reasons for a more active fiscal policy In recent years, maintaining confidence in the inflation target has primarily been a matter of ensuring that monetary policy can continue to be used in the future to counteract recessions and increased unemployment – and thus provide support to fiscal policy in bad times.
A superficial reading of David Marsh’s book might give the impression that political integration has taken place over the years as a result of some countries dominating others, distrust between political classes of different countries, threats, truces and fights, etc. It’s interesting to relate history in this way. But we should never forget that the creation of the euro has been the result of an unprecedented democratic and peaceful process in Europe, led over 50 years by leaders who have put the interests of the people of Europe ahead of any other objective. The next ten years Where does this leave us in the next ten years? As the euro enters its second decade, conditions aren’t exactly auspicious, as we are facing the most serious economic crisis since World War II. I’m sure the challenges ahead for the euro will be considerable. The global recession is a challenge not only for the euro area but for all countries. It has had and will have serious repercussions on our economies and on the fabric of our societies. They will be exposed to severe stresses and strains. The specialisation model of the past two decades might no longer be viable. I have the impression that some policy-makers think that their national economies will return to the state of balance which existed before the crisis. They don’t seem to realise that that was actually a state of imbalance, characterised by excessive borrowing by the private sector and excessive leverage by the financial institutions.

that monetary union was a political endeavour, and that the final goal was political union, albeit a different union from those we are used to studying in textbooks. Creating the euro, adopting it or not adopting it, are not mere technical decisions but key political choices, and have profound political implications, which are quite different from being a member of the European Union. This might not have been fully realised by all. Let me give an example. No opt-out clause was offered to the Member States which joined in 2004, even though some of them might have been less enthusiastic about joining the euro area than joining the EU itself. A formalistic reading of the Treaty reveals that all countries except the UK and Denmark are committed to converging as soon as possible to the single currency, even in those countries where popular support for it seems to be still limited. A strict interpretation of the Treaty indicates that Sweden should not have had a referendum on the euro in 2003. Indeed, by ratifying the Maastricht Treaty, Sweden committed itself to joining the euro as soon as possible. In practice, nobody complains that the letter of the Treaty is being ignored, because a country cannot be forced into the euro if it is politically unready to join. Being part of a monetary union binds its members at different political levels, not all of which are easily visible. Take fiscal policy.
Some of these are one-off administrative measures rather than broader economic influences: they include the usually large price reductions imposed by utilities regulators to come into effect in the spring as well as the Chancellor’s decision to end automatic over-indexation of excise duties on fuel and tobacco. But there is also evidence, which is harder to evaluate, of more intensive retail price competition, squeezing retail margins across the board, and that also could hold down prices at least for a time. Indeed this last effect could intensify and extend further into the future as a result of the spread of e-commerce. Meanwhile we are faced with all the usual uncertainties about the prospective strength of domestic demand and about overall demand pressure - uncertainties which are currently increased by possible distortions of underlying trends associated with the millennium - the Y2K fog. Final domestic demand growth, including the growth of consumer spending, did apparently moderate in the middle of last year - as it needed, and certainly still needs to do. But there is plenty of evidence to suggest that underlying consumption growth will in fact remain quite buoyant: the strength of the equity market - or at least the “new economy” stocks; rising house prices - and not just in the South East; strong borrowing, including mortgage equity withdrawal, by the household sector; and rising incomes from employment.

It is against this background that financial sector supervision should also be directed at financial institutions that pose the greatest risks, such as, non-bank financial institutions. In this regard, the adoption of the risk-based approach allows the supervisor to devote more supervisory effort to those areas that have a high-risk profile. This therefore, entails that supervisory authorities should shift their focus from the traditional Capital, Assets, Management, Earnings, Liquidity, and interest rate Sensitivity (CAMELS) approach to a more risk-based approach. A risk-based supervisory approach would involve the identification of key risks, the level of these risks and the key risk areas. After identifying these risk factors, a comprehensive supervisory framework with appropriate resources is then assembled to mitigate the risks. The amount of resources required is dependent on the level and intensity of the perceived risk. However, suffice to mention that this does not mean that the risk-based supervisory approach ignores the strengths of the CAMELS approach, but rather addresses the weaknesses by putting more emphasis and resources on areas with potentially higher risk. Ladies and Gentlemen As many of us are aware, financial sector operations have become complex nowadays, as they entail, among others, managing financial, market and operational risks, which depend, to a large extent, on public confidence in the financial system. In this regard, proper supervision is critical to minimising risks as well as ensuring the stability of the financial sector and engendering public confidence.
Second, slower growth of the labor force due to the aging of the population and moderate productivity growth imply a lower potential real GDP growth rate as compared to the 1990s and 2000s. Because the level of real equilibrium interest rates appears to be positively related to potential real GDP growth, this slower trend implies lower real equilibrium interest rates even after all the current headwinds fully dissipate. 1  4  It is worth noting that the views of market participants as expressed in the Eurodollar futures market and those of FOMC participants as expressed in the March Summary of Economic Projections seem consistent with one another and indicate an anticipated lift-off sometime near the middle of next year. BIS central bankers’ speeches  Third, changes in bank regulation may also imply a somewhat lower long-term equilibrium rate. Consider that, all else equal, higher capital requirements for banks imply somewhat wider intermediation margins. While higher capital requirements are essential in order to make the financial system more robust, this is likely to push down the long-term equilibrium federal funds rate somewhat. Putting all these factors together, I expect that the level of the federal funds rate consistent with 2 percent PCE inflation over the long run is likely to be well below the 4¼ percent average level that has applied historically when inflation was around 2 percent. Precisely how much lower is difficult to say at this point in time.

Prasarn Trairatvorakul: Economic transformation for sustainable economic growth in the Greater Mekong Subregion Speech by Dr Prasarn Trairatvorakul, Governor of the Bank of Thailand, at the Euromoney Greater Mekong Subregion Investment Forum, Bangkok, 28 May 2015. *  *  *  Excellencies, Honorable speakers Distinguished guests; Ladies and Gentlemen 1. It has always been a great pleasure to be part of the Euromoney Greater Mekong Subregion Investment Forum. Let me first thank the organizers for inviting me to share with you my views and vision on the prospects of GMS during the last three consecutive events. Today, it is my last remark as the Bank of Thailand governor at this forum to highlight the way forward of our region, and today’s topic on “Economic Transformation for Sustainable Economic Growth in the Greater Mekong Subregion” seems to fit the current context and timing quite well. 2. My first talk here three years ago was on the Greater Mekong Subregion as the “rising star” of Asia. For its rich endowments and strategic locations, the GMS is now well recognized as a new gem that shines through the South East Asian economic frontiers. Over the past decades, I have witnessed the beautiful glory of the GMS. With its impressive economic growth and good prospect for trade and investment opportunities, the GMS has gained much interest from both regional and global investors. 3. According to the ADB, the foreign direct investment inflow to the GMS has increased steadily at the annual average of 8–9 percent.
In these systems, there is a sharp disconnect between the behaviour of individual agents and the behaviour of the system as a whole. Aggregating from the microscopic to the macroscopic is very unlikely to give sensible insights into real world behaviour, for the same reason the behaviour of a single neutron is uninformative about the threat of nuclear winter (Haldane (2015)). The simple aggregation of “micro-founded” models, rather than being a virtue, may then be a cause for concern. The emergent dynamics of these systems are likely to exhibit significant degrees of uncertainty and ambiguity, as distinct from risk (Knight (1921), Shackle (1979)). This uncertainty is intrinsic to complex systems, and makes forecasting and prediction in these systems extremely difficult. There is unlikely to be any simple, stable mapping from shocks through to outcomes, from causes to consequences, from stick to rocking horse. Indeed, in these systems you do not need any shocks to generate variability in the system. This, too, stands in sharp contrast to existing macro-economic orthodoxy, which tends to emphasize the identification of exogenous shocks as a key factor in understanding system dynamics. If I had a pound for every time I had heard someone in the Bank of England say “it all depends on the shock”, I could have long since retired. Yet in complex systems, it is simply not true. There is no simple link between either the size or source of disturbance and its downstream impact on the economy or financial system.

Yet this view jars somewhat with the dominant methodological direction of travel in economics. That methodological lead was provided by Karl Popper in the 1930s (Popper (1934)). In The Logic of Scientific Discovery, Popper argued for a “deductive” approach to advancing knowledge. This involved, first, specifying a clear set of assumptions or axioms. From those were deduced a set of logical propositions or hypotheses. And then, and only then, were these hypotheses taken to the data to be validated or falsified. This pursuit of empirically-falsifiable hypotheses had even-earlier antecedents. The use of dynamic optimisation techniques goes back at least to Leon Walras (Walras (1874)). And he, in turn, drew on the tools developed by mathematicians such as Leibniz, Lagrange and Euler. These techniques were used to construct early “general equilibrium” models of the economy, models which where internally consistent when looked at as a whole. Newtonian physics was built on the same principle of internal consistency within systems, with energy within that system always preserved. Those systems were subject to disturbances which could cause them to oscillate dynamically. Ultimately, however, these systems typically had an equilibrium or steady-state to which they returned. As one of the simplest examples, Newton’s pendulum exhibits damped harmonic motion once displaced before returning to a state of rest. Much of mainstream macro-economics and finance has essentially followed this intellectual lead. It typically starts with a set of assumptions or axioms – in economics often defining the preferences of consumers and the technology facing firms.
This virtually eliminates the possibility of one person holding a double role as both general manager and as chair of the Executive Board. The executive director’s investment mandate sets rules for the Fund’s choice of investments and risk limits for NBIM’s investment management. The financial crisis revealed that the risk measures used previously, and which were based on what was regarded as best international practice, were inadequate. The Executive Board has therefore also set supplementary risk limits, for example for the size of the percentage deviation between the actual portfolio and the benchmark portfolio, the degree of leveraging and liquidity requirements for the Fund’s investments. The mandate is also intended to ensure that active  BIS Review 53/2009  1  risk positions are taken in a balanced manner and to avoid active strategies with a considerably skewed outcome set. NBIM’s monthly and quarterly reports to the Executive Board are to reflect the guidelines in the investment mandate. The results for 2008 were influenced by the global financial crisis. The total return on the Fund was a negative 23 per cent, the weakest in the Fund’s history. There was a negative return of 41 per cent on the equity portfolio, while the return on the fixed income portfolio was close to zero. The real rate of return after costs has been one per cent since 1998. International stock exchanges lost more of their value in 2008 than in any other single year in recent history. Absolute results, especially with regard to equities, were highly abnormal.

Relatively high fiscal and current account deficits may weaken the foundation of the building and adjusting them in a smooth manner is a much more sensible thing to do than letting the market forces make an abrupt correction. As regards monetary policy, strict liquidity management represents a step in the right direction. But, of course, monetary policy alone is not enough. Which brings us to the second rule: there is no substitute for a predictable and coherent economic policy mix. Let me stress that it should remain so even when facing the challenges of election years (there are several election rounds in Romania in 2019 and 2020). A significant pace of economic convergence is desired, but the process should unfold sustainably to preserve macroeconomic equilibria and safeguard competitiveness. As I usually put it, to successfully adopt the euro, one should be a marathoner rather than a sprinter. Last, but not least, the third rule might be as follows: when the normalisation wave eventually hits, the magnitude of the impact will depend on how vulnerable emerging economies are to external financing. A contained current account deficit, a long average maturity on public and private foreign currency debt and a coherent mix of countercyclical macroeconomic policies and structural reforms would go a long way in limiting the risks. If proper economic policy actions are not implemented while there is a window of opportunity, the possibility of a forced resort, in a more or less distant future, to sub-optimal measures in the face of adversity cannot be ruled out.
Yves Mersch: Ructions in the repo market - monetary easing or regulatory squeezing? Speech by Mr Yves Mersch, Member of the Executive Board of the European Central Bank, at the GFF (Deutsche Börse Group Global Funding and Financing) summit, Luxembourg, 26 January 2017. * * *  Introduction There is no doubt that European repo markets today are operating in unprecedented territory. In the past year we have faced the extraordinary situation of collateralised transactions taking place well below the ECB’s deposit rate, and not just for the highest-rated issuers. There are increasing signs that this is indicative of market stress. Though market depth remains relatively stable and the bid offer spreads are not a major liquidity restriction, the decreased average ticket size seems reflective of collateral scarcity in some market segments. If one looks at the distribution of trades taking place by rates towards the end of last year, while German collateral usually traded at around –70 bps, it traded at –4.88% at year-end, reflecting increased demand for “special” German bonds (while overall turnover declined about 50%). In a “special” the repo contract specifies a particular bond to be exchanged for cash, rather than the specification of a broad collateral class such as ‘German government bond’. As a result, specials tend to trade at lower interest rates. The volume of trades conducted at special rates also increased in other markets, pushing the distribution of rates lower. Average French collateral rates have moved from –45 bps before summer 2016 to below –60 bps before Christmas.

They are supported by international lawyers, accountants and rating agencies that provide essential ancillary services in issuing a bond. b. Asian companies are coming to Singapore to issue debt. Bright Food Singapore Holdings Pte. Ltd., a Chinese bond issuer, issued EUR 400 million in 2016. PT Saka Energi Indonesia, also a new issuer here, issued a USD 625 million bond in 2017. Under the Chongqing Connectivity Initiative, first-time bond issuers from Chongqing issued a total of USD 900 million in Singapore. c. Many multinational corporations that have successfully issued bonds in Singapore, continue to tap on Singapore for repeat issuances. This is a clear testament of the attractiveness of our debt market ecosystem. For example, the treasury unit of Japan’s Hitachi International Limited, has been a frequent issuer in our bond market for over a decade. BOC Aviation has issued numerous bonds in currencies including USD, JPY, AUD, CNH and SGD since 2010. d. Singapore’s bond market has also grown in sophistication. For instance in the area of covered bonds, Singapore has transited from a debutant to an advanced covered bond market in the region. Our 3 local banks have established their global covered bond programmes, with wellreceived issuances denominated in USD, EUR and AUD. 9 . We are rolling out the red carpet for new Asian issuers. MAS introduced the Asian Bond Grant Scheme this year to support first-time Asia issuers in Singapore‘s bond market, up to an amount of $ We have received good interest thus far. II.