samchain/econo-pairs-v1 huggingface dataset:
But the terms of trade  Page 6 of 14 shock could remain large if European countries need to replenish their gas inventories at a still elevated price for the winter of 2023/2024. In any case the terms of trade shock means a decrease of real income for the French economy and hence is a key driver of the slowdown in GDP growth expected for 2023. I.3 Measuring more specifically the energy shock Regarding the energy shock, which is useful to consider since we can more easily look at its distribution between economic agents, we can estimate it by applying the oil and gas price changes between 2021 and 2022 to the quantities of energy imported in a reference year, here 2021. Such a computation leads to an extra energy bill for France of 1.9% of GDP in 2022 compared to the previous year, or 47 billion euros. Note that, given the current exceptional volatility of natural gas prices, this estimation is very sensitive to price assumptions and the reference year. At the time of our previous projections last summer, gas prices expected in future markets for the last months of the year were much above the actual levels  Page 7 of 14 recorded since then. This explains why our estimate has fallen to € from € a few months ago.

John Gieve: The City’s growth – the crest of a wave or swimming with the stream? Speech by Sir John Gieve, Deputy Governor of the Bank of England, to the London Society of Chartered Accountants, Bank of England, London, 26 March 2007. *  *  *  Introduction Over the past few months there has been renewed talk of London overtaking New York as the world’s leading financial centre. And it has reflected fears in the US as much as self congratulation in this country. We should take some of this with a pinch of salt. Talk of an external threat may be helpful to those building a case for change in the US financial system. The US market remains the biggest in the world by many measures. More fundamentally this is not a zero sum game. Even if London establishes a comparative advantage and gains market share, New York (and Paris and Edinburgh for that matter) can prosper too. Yet something interesting is going on. The report by McKinseys commissioned by Mayor Bloomberg concluded that “London is transforming itself into an increasingly sizeable and attractive talent hub for people with … skills that used to be available only in New York …” and “… superior conditions for innovation, capital formation, risk management and investment in these markets [derivatives and debt financing] are beginning to emerge (or have already done so) in London, which is building momentum relative to New York”.
As already noted, the price level under an inflation targeting regime in  14  BIS Review 111/2010  which control errors are bygones should exhibit a unit root, whereas under price-level targeting it should be trend stationary. And the data suggest that outturns have in many cases resembled what we would expect to see under trend, rather than difference, stationarity. 9 This can be seen for eight jurisdictions in Charts 6a (euro area, Japan, United Kingdom and United States) and Chart 6b (Australia, Canada, New Zealand and Sweden – four prominent smaller inflation targeting countries). These plot the deviation of the relevant measure of consumer price inflation from a fixed trend line that grows at the target rate of inflation. For inflation-targeting central banks that is either given by their stated target or else the mid-point of their target range; the data are shown since their adoption of an inflation target. The ECB does not regard itself as formally having an inflation target, but nevertheless has a price stability goal of “close to, but a little below” 2 per cent; we therefore set the price-level trend to grow at 1.9 per cent a year. Finally neither Japan nor the United States have an explicit statement of their inflation objective. For Japan, we assume a target inflation rate of 0.1 per cent a year; that is a little higher than the within-sample trend but consistent with the idea that the Bank of Japan was aiming for a positive rate of inflation.

Researchers are already starting to fill this hole (the Gertler-Karadi model employed in Section 5 is but one example) and it is a reasonable bet that the literature will be in a very different place in a few years time. It may be tempting to think that these frictions will become less important when normal times return and therefore that the ability to model the behaviour of intermediaries will only be  BIS Review 111/2010  23  necessary during bad times. That would be, though, an error. Central bankers, as guardians of overall financial stability, need to understand the risks building up in the financial system better than we did during the run-up to the present crisis. That requires greater attention to such issues during good times. 4. Central bank independence. Nothing that has happened over the past decade or so suggests that the thinking behind the delegation of monetary policy to an operationally independent central bank is flawed. But the application of unorthodox policies during the crisis has inevitably forced the central banks concerned to work more closely with finance ministries and sometimes taken them into politically sensitive territory that they would rather not inhabit. Normal times should make it possible to retreat from these unorthodox policies, but a concern to circumscribe the central bank’s powers may well linger. 5. The pursuit of price stability. Because monetary policy failed to prevent the crisis, some have suggested that the emphasis on price stability has been misplaced and that inflation targeting has “failed”.
To an external observer, especially from Asia, the reform process may seem slow and haphazard, but one has to keep in mind that institutional evolution is almost never a formal optimization exercise starting from a “clean slate”, but rather something that builds on the existing institutional setting and adds additional layers and structures, and the institutional evolution of EMU is no exception, as pointed out in recent ECB research.6 The need to agree on reforms at both the domestic and the European level also introduces an additional element of complexity, which is perhaps difficult to understand from the outside. But it is important to point out that if one looks back it is impressive how much has been achieved in a matter of a couple of years. Let me just briefly describe what has changed in the institutional setting of EMU – and indeed also in the EU more generally – in just a few years. I will start with innovations in the crisis prevention toolkit, and will then move to crisis resolution tools. Fiscal governance reforms. As I mentioned earlier, one of the major weaknesses of the original institutional setting of EMU was that EU fiscal rules were not sufficiently binding and in particular that sanctions were not credible. This has been addressed in a series of reforms, starting with what we call “six pack”, a group of six Regulations which entered into force in December 2011.

Christian Noyer – The main issue being discussed in the G20 – raised moreover by Nicolas Sarkozy – is how to reduce the large global current account imbalances, which weigh on world growth and generate dangerous capital flows. Monetary policy alone will not provide the solution. Each economic area should move towards a better balance between savings, consumption and investment. And, we would all benefit from reforming the international monetary system, but in a structural, orderly and calm manner, and certainly not in a hurry. It  BIS Review 152/2010  1  is a long process to move from a system in which only the currencies of major industrialised countries counted to the multipolar world in which we now live. Le Figaro – This G20 should also provide the opportunity to validate the new prudential framework (Basel III). Do you find it adequate? Christian Noyer – We have reached a balanced agreement. It is out of the question to be confronted with a situation where States fly back to the aid of banks. That is why we are enhancing both the quantity and quality of banks’ capital requirements. But we have also provided for a very long adjustment period to avoid an artificial reduction in funding. This agreement is universal and is intended to extend to the United States and to all developing countries. This too is a balancing factor. Le Figaro – Has the project been completed? Christian Noyer – We have factored in a long observation period for some aspects.
I will close with some thoughts on the challenges ahead for monetary policy. The Great Moderation The substantial decline in macroeconomic volatility we have witnessed in the US and the world during the last decades has been widely documented by a substantial body of empirical research. Kim and Nelson (1999) and Blanchard and Simon (2001) were among the first to point at this phenomena which later became known as the Great Moderation. These latter authors found, for the US, that the variability of quarterly growth in real output had declined by half since the mid-1980s, while the variability of inflation had declined by about two thirds. Similar declines in the volatility of output and inflation occurred in most other G-7 countries roughly around the mid-eighties (Stock and Watson, 2003). BIS Review 74/2008  1  While we know that the control of inflation was achieved by the actions of monetary policy in the US, there is still an ongoing discussion regarding what caused the persistent decline in both output and inflation volatility. In general, the different reasons can be separated into three groups: •  The first argument is that the Great Moderation is the result of smaller and less frequent shocks hitting the economy. This would imply that the observed reduction in macroeconomic volatility would be the result of good fortune and would thus only last until bad luck or larger shocks were to re-appear. Several studies have provided support for the “good-luck hypothesis” (Ahmed, et al., 2002).

In this scenario, it could be argued that one could relax the policy horizon or the target level to accommodate these inflationary shocks with small output costs. However, based on my previous discussion, this could be very detrimental for the future. Giving up on inflation will lead to losing the inflation anchor on expectations, more backward- than forward-looking behavior of wage and price setters, and an increase in output volatility. In other words, we would be achieving an inefficient outcome for monetary policy and losing the benefits of the Great Moderation. Hence, central banks must carefully monitor inflation expectations. However, in the current juncture of extreme uncertainty and inflation volatility, the breakeven measures that compare nominal and inflation protected securities appear to be excessively high world-wide, thus apparently showing an important increase in inflation expectations, which could even reflect the loss of the nominal anchor. This has also been the case in Chile, especially since the deepness of the market of inflation protected instruments tends to make them the natural safe haven. Therefore, in uncertain times like the ones we are enduring today, breakeven measures may increase without necessarily implying un-anchoring expectations, making their timely recognition more intricate. Some could incorrectly argue that a way to avoid the monetary policy reaction to some specific inflationary shocks is to focus inflation control on core rather than headline measures of inflation.
In France, the ACPR is mobilised to support innovation, as demonstrated by the creation of the Fintech Innovation Unit and the Fintech Forum with the French financial markets authority. Within this Fintech Forum, we work closely with other public authorities to promote the development of Fintechs and Insurtechs in France. A year ago, the ACPR authorised the first fully digital insurance company in the health sector, the Insurtech “Alan”. In the case of insurers, the digital revolution starts with a complete overhaul of customer relationships and user habits. But it goes further than that. In the digital revolution, the insurance sector can bring stability and protection – it is this that has always been the raison d’être of insurance. I’d like to underline two topics that I think are essential: cyber-insurance and big data. Coverage against cyber-risk, first, is a very real concern that affects all companies – both small and large – as cyber-attacks are becoming increasingly frequent and costly: in 2016, cyber-attacks were estimated to cost businesses about USD 450 billion a year at the global level, 3/4  BIS central bankers' speeches  according to a report by Lloyd’s and Cyence. Despite these threats, the cyber-insurance market is still underdeveloped. Insurers can and should take inspiration from their own experiences in tackling cyber-risk, and use it to develop a more mature European cyber-insurance offering. The second subject I’d like to focus on is personal data and big data.

Table 1: Google searches related to social consumption  Country  Peak YoY change, %  Italy  -67  Spain  -75  France  -73  Germany  -70  US  -58  Japan  -82  China  -73  UK  -69  Sources: Google and Bank calculations. Table 2: UK “fast indicators” of consumption categories  Category  Peak change, %  Social  -80  Work-related  -65  Delayable  -50  Staple  -5  Total  -30  Source: Bank of England and Bank calculations. GDP data so far broadly corroborates the message from these fast indicators. Compared with the fourth quarter of 2019, UK GDP fell by around 25% during the first four months of this year. The fall in UK-weighted world GDP is likely to have been similarly unprecedented. Unsurprisingly, these would be the sharpest four-month falls in GDP on record, in both the UK and globally. This contraction has affected almost every sector, if to differing degrees (Chart 2). The largest falls have been in the accommodation and dining sectors (over 90%). But sectors such as arts and recreation, construction and education have fallen by more than 40%. Utilities, food production and real estate have been among the least affected. Generally speaking, the greater a sector’s reliance on personal contact, the larger its fall. 4  All speeches are available online at www.bankofengland.co.uk/speeches  4  Chart 2: Falls in output by sector Industry output, hit to level, % Accomm.
BIS Review 78/2000  8  This raises the question of whether to separate production and distribution. Many institutions, particularly smaller ones, may find it beneficial to distribute other companies’ products. Different cooperation agreements make it possible for small players to offer a broader product range than they would have been able to on their own. We have seen several examples of this in Norway, particularly among savings banks. At the same time, some larger institutions may benefit from offering their products for distribution through other institutions. This may contribute to keeping Nordic banks - both large and small - competitive in the retail market. In the segment of large enterprises, however, production and distribution are perhaps more difficult to separate. This may imply that many Nordic banks are too small to compete for the business of large and advanced customers. Competition in this segment is perhaps more international than Nordic. How does cross-border integration change the risk outlook for the financial system? If it improves the long-term profitability, and thus the robustness of institutions, it is clearly advantageous. Spreading production costs over a larger customer base may improve profits. In addition, cross-border competition might lead to efficiency gains and a spillover of best practices. However, there are also counter-arguments. For example, increasing the size of operations may reduce management focus. In general, more integrated financial markets can spread financial unrest between countries more easily. This could have a negative effect on financial stability.

Other complementary policy actions in housing, fiscal policy and structural adjustment or rebalancing of the economy will be essential if we are to achieve the best available recovery. Regional economic conditions Turning now to the regional economy, growth slowed in late 2011 in New York City and New York State, whereas New Jersey has seen a modest pickup. As attendees at previous regional press briefings may recall, the New York Fed produces economic activity indexes to help monitor the performance of the regional economy.2 Based on these measures, economic activity has leveled off in both New York State and New York City since the summer, following above-average growth in the first half of 2011. In contrast, New Jersey’s economy, which was sluggish throughout 2010 and into the first half of 2011, has picked up noticeably in recent months. We monitor Puerto Rico using an index produced by the Government Development Bank for Puerto Rico. This index suggests that the island’s recession, which started back in 2005, may finally be ending. After bottoming out last August, activity has risen fairly sharply – reaching a one-year high in November. Still, Puerto Rico’s recovery has had a number of “false starts” before and this measure is noisy. Thus, the recent improvements will need to be sustained for longer before we can confidently declare that the island’s recession is over. Turning to the employment situation, our region finished 2011 on a mixed note.
By way of conclusion, let me say that there is currently no shortage of challenges. However, the reforms introduced in the regulation and the efforts made by banks to enhance their resilience over the last decade have borne fruits and the European banking system has demonstrated with the Covid crisis not only its ability to withstand enormous shocks but also its ability to support public authorities efforts to overcome difficulties to the benefit of the European people. This is a major positive development. While this is not the time for complacency, this development should collectively encourage us to maintain our attention and efforts and to address the current and forthcoming challenges with both confidence and determination. 4/4  BIS central bankers' speeches

I am also grateful to Senior Deputy Governor Dr. Nandalal Weerasinghe, and the Deputy Governors, Mr. K D Ranasinghe, Mr. S R Attygalle and Mr. H A Karunaratne. Their support and contribution in terms of highly professional advice and excellent technical expertise helped me to effectively discharge the duties as the CEO of this iconic institution. I would also like to acknowledge the extraordinary service rendered by former Deputy Governor, Mr. C J P Siriwardana, who retired from the Bank service last year. I am also thankful to the members of the Monetary Policy Consultative Committee, Financial System Stability Consultative Committee as well as the Monetary Board Advisory Audit Committee for their valuable views and suggestions, which helped us immensely in better calibrating our policies and operations. 42  Last and most importantly, I would also like to express my sincere gratitude to the Assistant Governors, Senior Heads and Heads of Departments, particularly the Director of Economic Research and the Staff of the Economic Research Department for their effort in producing this policy document. It is my pleasure to acknowledge my colleagues in the Governor’s Secretariat who support me on a day-to-day basis. I would be lost without their assistance. In my view, the greatest asset of the Central Bank is its staff without whom we cannot deliver our tasks and achieve our objectives for the nation. I thank all Staff of the Central Bank who serve the nation with professionalism, technical excellence and integrity and more importantly with vigour and enthusiasm even amidst turbulences.
23 For example, Crowe (2010), Eusepi and Preston (2010) and Hubert (2015). 24 Briault et al (1997), among others, make this point. 25 See the survey by Geraats (2002). 26 Morris and Shin (2002) argue that noisy central bank communication can worsen the understanding of monetary policy, if they cause expectations to coordinate away from fundamentals. Kool et al (2011) show how even precise communication could worsen outcomes, if it leads the private sector to reduce investment in information. 22  7  All speeches are available online at www.bankofengland.co.uk/speeches  7  assess some – but only some – of these benefits. Let me set out some of the key lessons from that literature, before identifying places where the existing evidence base is sparse. The richest seam of research has focussed on whether and how central bank communications have affected financial markets, often using event-studies around the time of key announcements. This has concluded, perhaps unsurprisingly, that central bank announcements cause significant movements in asset prices. 27  For example, they cause adjustments along the yield curve, in equity and corporate bond prices, in the exchange rate and in the volatility of these asset prices. This suggests central bank announcements are a significant source of information to financial markets, either about the course of the economy or the course of policy or both. That is despite often sharp differences in communication strategies across central banks.

The Governor gave precisely one speech a year - the annual Mansion House lecture (Chart 4). This tended not to be rich in content. Nor was it not ideally suited to enhancing wider public understanding, being delivered to an audience of around 300 City bankers and merchants, several glasses of wine into the evening. Body language can sometimes substitute for the spoken word. So it was at the Bank of England. In the 1920s, the Governor’s “eyebrows” famously became one of the Bank’s means of communicating. The eyebrows were, in a way, a primitive form of emoji: sterling crisis – sad face. Nonetheless, for even the most malleable-faced Governor, the “eyebrows” were an imperfect communications medium. Beginning in the 1960s, there was a sea-change in central bank communication practices. Speeches by the Governor and his deputies increased, by the 1960s averaging around five per year. They were matched by other communication innovations. December 1960 saw the first edition of the Bank of England Quarterly Bulletin. There was roughly a doubling in the number of speeches in each subsequent decade. In 1992, a formal target for inflation was announced in the UK, together with a regular schedule of monthly monetary policy meetings. In 1993, the Bank began publishing a quarterly Inflation Report, setting out its views on the economic outlook. In 1996, the Inflation Report gained a sister publication, the six-monthly Financial Stability Review.