samchain/econo-pairs-v1 huggingface dataset:
But as students of economic history know (and policymakers learn at their cost), without the right institutions, structural changes – whether large changes to trading relationships or technological revolutions – can be painful. Whitaker recognised that “Readiness to adapt to changing conditions is a sine qua non for economic 1  success” and that adaptability required a series of changes to Ireland’s institutions. Major reforms to education were essential to match the skills of the Irish workforce to the potential jobs that increased inward investment could bring. A 1964 report on Manpower Policy, which Whitaker oversaw as chair, advocated 2  greater investment in the STEM subjects, readying a generation for the IT revolution. More broadly, Ireland repeatedly increased standards of education, beginning with the introduction of universal secondary schooling in 1967, resulting in levels of educational attainment today that exceed the OECD average. 3  Whitaker also advocated reforms of labour market institutions – to tackle restrictive work practices and ensure pay was more closely linked to productivity. 4  Emphasis was also placed on a competitive environment for business to help attract foreign capital, in part through the overhaul of the corporate tax regime. And improvements were made to infrastructure, such as power supplies and transport services. 1  Taken from “Economic Development”, a report on the Irish Economy overseen by Whitaker and published in 1958. Whitaker played a central role in improving education in the public sector.

The Future of Work Speech given by Mark Carney, Governor of the Bank of England  2018 Whitaker Lecture, Central Bank of Ireland 14 September 2018  I am grateful to Clare Macallan and Jennifer Nemeth for their assistance in preparing these remarks. I would also like to thank Will Abel, Andy Haldane, Carsten Jung, Rana Sajedi and Greg Thwaites for the background research and analysis they conducted. 1  All speeches are available online at www.bankofengland.co.uk/speeches  It is a pleasure to deliver this lecture in honour of TK Whitaker. Whitaker’s career in public policy spanned a period of profound structural change in the Irish economy. In 1956, when he became Secretary of the Department for Finance, the Irish economy was isolated and uncompetitive. Growth in output per capita was lagging the rest of Europe and the steady tide of emigration was gradually shrinking the population. By the time Whitaker’s career drew to a close, the Celtic Tiger was roaring: Ireland had caught up with even the most prosperous nations in the EU, GDP growth was averaging over 5%, and the population had increased by two-thirds as emigration switched to immigration. The catalyst for this transformation was opening up to foreign trade and investment. Beginning with the 1958 report Economic Development, Whitaker strongly advocated replacing the old strategy of self-sufficiency with a new one of export-led growth, which led in time to Ireland joining the EU. For many, this is the greatest long-term consequence of his work.
Addressing this gap would support the banking and capital markets by creating a homogeneous product of a high quality and significant size that could become a benchmark for investors. If designed in a way that doesn’t undermine incentives for sound national fiscal policies, a safe asset would help to mitigate the bank-sovereign nexus, reduce cross-border safe-haven flows and improve financial integration, thereby also enhancing the effectiveness of our monetary policy. And, last but not least, this would contribute to enhancing the attractiveness of European capital markets and ultimately support the international role of the euro. Promoting European responses to achieve CMU Let me conclude with two messages. First, convincing investors and companies to venture outside their borders requires certainty and homogeneity on the regulatory conditions that apply abroad. This means that the core aspects of national policies need to be further harmonised and implemented in a consistent way to support the integration of capital and banking markets. Banks and capital markets should complement each other in channelling savings for productive uses and fostering investment in innovative firms. Second, moving towards CMU and banking union should also reflect the ambition we have shown in our supervisory and regulatory set-up. It should support a coherent European response to new challenges such as Brexit and the development of non-bank finance. And it should not shy away from addressing gaps in our regulatory and institutional framework.

Outcome of the exercise for Spanish banks  a)  Of the 15 Spanish banks assessed, 14 have passed the examination, i.e. they exceed the minimum capital required in the three phases of the exercise. One bank, Liberbank, does not reach the minimum 8% ratio set for the comprehensive assessment, standing at 7.8%, i.e. 0.2 pp below the minimum required. b)  This bank has already concluded a capital increase for an amount exceeding € million, meaning that it has already made good the shortfall. c)  The remaining banks comfortably meet the minimum requirements in all the phases of the exercise. 8. Interpretation of the results  The result of the asset quality review – which, unlike the stress tests, is not based on scenarios or future assumptions, but is a detailed review of the balance sheets at end-year 2013 to verify that they give a true and fair view of the position of the banks – shows that it is the Spanish banks that have had to make fewer adjustments, less than 0.2% of risk-weighted assets. The findings of the stress tests are somewhat more difficult to compare, because the scenarios used differ from country to country. But the results obtained show that all the Spanish banks would be resilient in a hypothetical, very severe scenario. In recent years, Spanish banks have substantially written down real estate developmentrelated assets, especially following the requirements of Royal Decree-Laws 2/2012 and 18/2012.
A related problem is that it is extremely difficult for management to observe the risk being taken on by their traders, particularly when innovative financial instruments have unusual return distributions. Take, for example, a deeply out of the money option. This pays a steady income premium and has little variation in value when the underlying instrument is a long way from the strike price, but generates rapidly escalating losses in bad states of the world. In good times this looks like a high return, low risk instrument. Only in very bad states of the world do the true risks taken on become apparent. Information problems Information problems have also been central to the crisis. Most of the asset-backed securities that have proved toxic are far from simple. A plain vanilla Residential Mortgage Backed Security (RMBS) typically contains tens or hundreds of thousands of underlying mortgages and even the documentation on them can run to a couple of hundred pages. These instruments provide diversification, but unless the mortgages are fairly homogenous in nature, it will be difficult for an individual investor to monitor the evolution of the underlying risk exposures at all precisely. The problem is compounded when the pool of mortgages is continually topped up to replace maturing mortgages, as is the case with Master Trusts, as the characteristics of newer cohorts may differ from those of older cohorts. 8  BIS Review 101/2009  In addition, US RMBS contain embedded options that further complicates the evaluation of their worth.

The development of securitisation has spurred the demand for new types of instruments. This demand led the financial system to generate new assets even at the cost of extending credit to ever riskier sub-prime borrowers. This, for a time, helped sustain a rapid increase of real estate prices which in turn stimulated the growth of mortgages. BIS Review 76/2010  1  The main causes of the crisis therefore lie in the growing “real” imbalances and the uncontrolled development of financial innovations. Overall, these combined evolutions led to a generalized increase in leverage and financial fragility. Against this background, it is quite unlikely that too accommodative monetary policies played a central role in the crisis. Some analysts have pointed out to what they see as an “asymmetric response” by monetary authorities to asset price increases: Central Banks would not lean against asset price bubbles, but were prepared to clean the consequences after they burst. However, we need to ask ourselves whether the unusually rapid credit growth in the years preceding the crisis should not rather have called for complementary policy actions on the supervision side. Some attempts were made in the Eurosystem. In particular, the Bank of Spain enforced dynamic provisioning to curb domestic credit expansion. But the crisis hit globally nevertheless and it raises several challenges for authorities in charge of macroeconomic policies. II –Managing the crisis Starting in august 2007, Central Banks were confronted with major and unprecedented tensions. Increasing uncertainty led to liquidity hoarding by financial institutions.
These complementary measures have helped the financial markets to function more effectively, eased the supply of credit and increased the impact of monetary policy. BIS Review 32/2010  21

The response to Brexit should be the economic and financial strengthening of the euro area: if we remained mired in technical nit-picking with self-satisfaction from some, disparagement from others, and distrust on all sides, we would not only have missed an opportunity, we would, collectively, have failed in our duty. ** I would like to conclude on that note. The unity demonstrated by the EU27 in their Brexit position, behind their negotiator, Michel Barnier, who has done a remarkable job, has been impressive. And everyone now better appreciates – at least in the sense of what they would miss – all the advantages offered by our Europe and our common market. This political desire to “protect” must now unfold into an ambition to “construct”, to build a more effective Europe. Thank you for your attention. 1 European Central Bank press conference, 25 October 2018. 2 Four-quarter cumulative flows. 3/3  BIS central bankers' speeches
The main thing is that our future decisions shall remain dependent, first and foremost, on the economic data. Amidst the uncertainty, I am calling, more than ever, for pragmatism. What is the current level of market inflation expectations? After remaining fairly stable for a long period below the 2% inflation target, expectations initially increased markedly in the recent period – including five-year ahead expectations which are the most important for us – and rose to over 3% in spring 2022. 6  See François Villeroy de Galhau (2022), Jackson Hole Economic Symposium, 27 August 2022, “Monetary policy post pandemic: balancing between science and art, predictability and reactivity”. 5  Page 6 of 19  But these expectations have since improved spectacularly as energy prices have subsided; swap markets are now expecting inflation to fall rapidly towards 2%, including in one year’s time. This can also be seen in five-year options markets. 6  Page 7 of 19  These expectations can be regarded as too volatile, or a little too premature when it comes to the inflation decline. But they still have a significant impact on the rise in expected real rates, and this leads me to the channel of financial conditions. The channel of financial conditions and demand The fact that an expectations channel exists does not mean that monetary policy only works like a magical incantation.

We may already have entered into the next phase of the crisis: a sovereign debt crisis following on the financial and economic crisis. Fiscal policy challenges Most governments in the advanced countries will exit from the recession with the highest deficit and debt-to-GDP ratios recorded in times of peace. 2  BIS Review 51/2010  As can bee seen in the chart, the general government deficit in the euro area is expected, according to the latest projections by the European Commission, to exceed 6.0% of GDP in 2009, 2010 and 2011. In Japan, the government deficit-to-GDP ratio is foreseen to reach around 9.0% of GDP in these years, whereas the UK and US government deficits are expected to be in excess of 10.0% of GDP in the period 2009–11. These high government deficits are reflected in mounting government debt, which will reach 88% of GDP in 2011 in both the euro area and the United Kingdom, 100% of GDP in the United States and 200% of GDP in Japan. These developments are the consequence of sizeable fiscal stimulus measures and of interventions in support of financial institutions in many advanced countries, but also of the sharp contraction in economic activity. In the euro area, adverse fiscal developments are a cause of particular concern in several countries, generally those that did not exploit more buoyant economic times to firmly consolidate their public finances. In the United States, too, some States (e.g.
(Exhibit 7) Similarly, price impact – the effect on price from a $ million trade – has also been trending down since the early 2000s apart from the jump during the financial crisis. (Exhibit 8) Although liquidity in the Treasury and corporate bond markets does not appear to have changed much recently, liquidity risk may have risen. For the Treasury market, our liquidity risk measure increased sharply with the financial crisis, and declined from 2009 to 2013. However, over the last two years Treasury liquidity risk has moved higher and relative to the pre-crisis period is currently somewhat elevated. For the corporate bond market, liquidity risk also increased sharply during the financial crisis, and then quickly fell as the crisis passed. BIS central bankers’ speeches  3  Corporate bond liquidity risk subsequently increased again in 2012 and early 2013, but is now back down close to its pre-crisis level. (Exhibit 9) In sum, there is limited evidence pointing to a reduction in the average levels of liquidity. However, there are reasons to think liquidity risk may have increased, and there are some data to support this conjecture. Two cautionary notes are warranted in evaluating the available evidence. First, the Treasury market evidence is based on the inter-dealer markets, and we do not have comparable evidence on liquidity conditions in the dealer-to-customer market. Second, it is important to note that the FOMC’s unconventional monetary policy may have affected recent measures of liquidity in ways that could make it more difficult to clearly discern any potential changes.

To the extent that this may be the case, then a clearer picture on liquidity conditions may only emerge as monetary policy is normalized. What factors could influence liquidity provision? Clearly many factors could affect liquidity provision. On the regulatory side, capital and liquidity requirements are probably the most important factors. Dealers have been an important provider of liquidity. Higher capital requirements reduce dealers’ returns on equity for a given level of intermediation activity and margin. At the same time, liquidity requirements increase the cost of holding less liquid assets. To compensate for the higher capital and liquidity requirements, dealers can shrink their activity in lower margin businesses and raise the price for the liquidity services they provide. Presumably, both adjustments occur in most markets with the ease of entry, the degree of economies of scale, business model and overall client profitability influencing whether the adjustment occurs more through a resizing of the activity or a change in unit trading margins. For the U.S Treasury market, the most important change in regulatory requirements is probably the introduction of the supplementary leverage ratio (SLR) in the United States. The SLR limits how leveraged a dealer balance sheet can be. Because in the SLR all assets require regulatory capital, the SLR is much tougher on low risk assets compared to the riskbased capital measures it complements.
And it would not stop speculators from exploiting the reality that sharp capital movements can themselves affect an economy’s fundamentals and panic other investors. For the avoidance of any misunderstanding I should state once again, for the record, that I am not advocating capital controls of any kind for Hong Kong. The concerns that arise from ‘hot’ capital flows are particularly acute in Asia, whose markets are relatively small by the standards of the large industrial countries, yet relatively liquid by the standards of developing markets as a whole. The world will not become a safer place for such countries — or a better place for intermediating capital flows that ultimately foster growth and development — until we take concrete steps to reform the global financial architecture. Transparency is a critical issue. On the one hand, there is widespread support for the notion that governments should be more open in their operations — and I am happy to say that Hong Kong is at the leading edge in this area. On the other hand, there is only lukewarm support for the notion that the operation of markets could be enhanced by increased transparency on the part of private participants. I fail to see the basis for this asymmetry on conceptual grounds. On practical grounds, there are no doubt important issues to be resolved and obstacles to be overcome. But progress will not be made until all parties concerned start to address the issue in a more energetic and concerted manner.

I am happy to report that this experience has been a successful one, particularly from the point of view of monetary autonomy. Indeed, the Basic Law has, since 1 July 1997, provided Hong Kong with far greater autonomy in its monetary and financial affairs, and this autonomy has been confirmed in practice by the clear confidence that the Central Government has placed in our ability to manage things on our own. I make this point, not because Macau needs any reassurance from Hong Kong, but because it is a striking illustration of how some of the deepest forebodings about future events can often be the product of the most dismal misjudgements. Two years ago, gloomy scenarios were being painted - not about an Asian financial crisis - but about the impending demise of Hong Kong’s monetary autonomy under Chinese rule: about the breaking of the link between the Hong Kong dollar and the U.S. dollar, the absorption of Hong Kong’s substantial foreign reserves by the Mainland, and so on. Of course, nothing of the kind has happened, and there may well be lessons here to apply to some of the more lurid scenarios that are being drawn up for the first of January 2000. Our topic this morning, however, is not the Year 2000 problem, but the perennial question of how to devise sustainable and realistic monetary and exchange rate policies in an uncertain global financial environment.
In the pursuit of this objective, we also try to draw as much as possible from synergies with existing work and resources both within the ECB and the ESCB, as well as at the supervisory authorities. I conclude on this point that the establishment of ESRB will be a watershed event in developing a macro-prudential framework for Europe. Having said that, I should also say that the ESRB does not have an easy mission and it certainly faces many challenges. Macroprudential supervision is relatively new, which implies that a well-established framework with a clear operational objective, as we know for monetary policy, must yet be set in place. The ESRB will therefore have to develop its own thinking and strategy, and will probably have to advance in a pragmatic way. The interplay with the micro-prudential function will be crucial, not only because the ESRB will have to rely to a large extent on micro-prudential supervisors for the information and the data, but also because a number of the tools that can be expected to address potential weaknesses in the financial system are of a micro-prudential nature. In that respect, I should recall that the ESRB will not have any binding powers but will have to rely on moral suasion and peer pressure for the follow-up to its risk warnings and recommendations. And finally the ESRB will have to strive for effectiveness and efficiency in the pursuit of its tasks, given its relatively wide composition (over 60 members).

William C Dudley: “US Economy in a Snapshot” Opening remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Economic Press Briefing on the US Economy in a Snapshot, Federal Reserve Bank of New York, New York City, 19 May 2016. *  *  *  Jonathan McCarthy, Paolo Pesenti, Robert Rich and Joseph Tracy assisted in preparing these remarks. Welcome to our Economic Press Briefing. Today we are going to introduce you to a data product that we have been making available to the public, U.S. Economy in a Snapshot. My role is to put this product in the broader context of the Federal Open Market Committee’s (FOMC) communication strategy about the economy and policy. My colleague Robert Rich will then walk you through the structure of the product and discuss excerpts from the May release. 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. Conventional U.S. monetary policy is conducted by targeting the level of the federal funds rate—an overnight interest rate on bank reserves. Few participants in our economy have any direct interaction with this interest rate. How, then, is controlling this interest rate such an important part of setting monetary policy and steering an 18 trillion dollar economy toward the Federal Reserve’s dual mandate objectives of maximum sustainable employment and price stability? This is the remarkable aspect of monetary policy.