samchain/econo-pairs-v1 huggingface dataset:
There may therefore be a relationship between the decline in the correlation between equities and bonds and the low term premiums now observed in the bond market. The previous decision to change the equity share was based on the assumption of a correlation between equity and bond returns of about 0.4. Over the past decade, this correlation has averaged –0.3. In Norges Bank’s opinion, it is not unreasonable to base our advice on a lower correlation than the last time we issued advice. With a lower correlation, the fund will need a lower bond allocation than previously assumed in order to maintain return volatility at about the same level. RISK OF SUBSTANTIAL AND PERSISTENT DECLINES IN VALUE So far, my discussion of risk has focused on the fund’s expected return volatility from one year to the next. If returns are normally distributed, a standard deviation of 10 percent means, in slightly simplified terms, that the value of the fund, at its current size, will change by more than NOK 700 billion in one out of every three years and by more than NOK 1400 billion in one out of every twenty years. Even these enormous amounts may underestimate actual risk. Financial market returns do not follow a normal distribution. Major financial crises occur more frequently and with greater severity than implied by a normal distribution. An example from the recent past is 2008, when the value of the fund’s strategic benchmark index for equities fell by almost 40 percent.

See the following references: Bauer, M. and C. Neely (2013): “International Channels of the Fed’s Unconventional Monetary Policy”, Federal Reserve Bank of San Francisco, Working Paper 2012-12. Glick, R. and S. Leduc (2013): “The Effects of Unconventional and Conventional U.S. Monetary Policy on the Dollar”, Federal Reserve Bank of San Francisco, Working Paper 2013-11. Neely, C. (2010): “The Large-Scale Asset Purchases Had Large International Effects”, Federal Reserve Bank of St. Louis, Working Paper 2010-018C. BIS central bankers’ speeches  1  because asset purchase programs are expected to be scaled back, thereby unleashing a new round of currency tensions. Against the background of currency fluctuations and weak global demand, the problem of global imbalances still lingers. In the debate on global adjustment, there have also been calls for countries with a current account surplus to let their currencies appreciate. For some observers, this includes Switzerland. Our country’s large current account surplus – so the argument goes – is a sure sign that the Swiss franc is too weak. The SNB should therefore abolish the minimum exchange rate and allow the Swiss franc to appreciate further. This in turn would allow the current account surplus to diminish, thereby contributing to global rebalancing.3 I would like to point out that such a critique is not based on a full understanding of Switzerland’s situation. For a comprehensive assessment of the Swiss current account and the Swiss franc, the following factors also need to be considered.
On 27 15 Implementing Basel 3.1 in the UK − speech by Phil Evans | Bank of England  Bank of England  Page 8  February16 we published our ‘Phase 1’ Consultation Paper, setting out a number of simplified liquidity, disclosure and reporting measures that address good suggestions respondents raised in relation to our previous discussion paper17. In addition, we intend to consider possible further changes to regulatory reporting requirements as part of implementing the Bank’s plan for transforming data collection. The Phase 1 consultation closes on 30 May and, in the spirit of my previous comments, we welcome responses on all aspects of it. I would encourage societies to respond individually as well as via the BSA. I’d also recommend the Strong & Simple briefing session we are running later in the conference, which will provide further explanation of the proposals. Following this, we are planning a ‘Phase 2’ consultation on the simpler regime capital framework in H1 2024. Our planning assumption is that the Basel 3.1 Pillar 1 approach to credit risk would be a good starting point for designing the simpler regime risk-based capital framework. Hence, I strongly encourage your engagement with all of the policy developments I have outlined in my remarks today. And I also recognise that you will want to see all our proposals before you can assess the overall impact on your business – which is why we are working hard to get them published in a timely manner.

We are also considering what a layer of the framework for ‘mid-tier’ firms might look like, and are currently undertaking some engagement with relevant firms to understand where they see scope for simplification of the prudential regime. Other Priorities Before I close, I did want to note our ongoing focus on Diversity & Inclusion in the sector. This is an important area which helps enhance governance, decision-making and risk management in firms, as well as the services you provide your members. We plan a consultation paper later this year, building upon the joint 2021 PRA/FCA discussion paper18, setting out proposals to introduce a new regulatory framework on diversity, equity and inclusion in the financial sector. I strongly encourage you to engage with those proposals once they are published. In Conclusion Let me briefly sum up. I’ve stressed today the important role that mutuals play in providing your services to a diverse range of households and business right across the UK. It’s vital those services are 16 CP4/23 - The Strong and Simple Framework: Liquidity and Disclosure requirements for Simpler-  regime Firms | Bank of England 17 FS1/21 – ‘Responses to DP1/21 ‘A strong and simple prudential framework for non-systemic banks and building societies’ | Bank of England 18 DP2/21 – Diversity and inclusion in the financial sector – working together to drive change | Bank of England  Bank of England  Page 9  underpinned by resilient firms.
3 See Box 1, “An estimation of the impact of the recent protectionist measures”, in the “Quarterly report on the Spanish economy”, Economic Bulletin, 2/2018, Banco de España; Box 1, “Implications of rising trade tensions for the global economy”, in Economic Bulletin, 3/2018, ECB; and International Monetary Fund (2018), “Scenario Box 1. Global Trade Tensions”, World Economic Outlook: Challenges to Steady Growth, October, pp. 33-35. 4 See IMF (2018), “Euro Area Policies: Selected Issues”, and J. L. Vega (coord.) (2019), “Brexit: current situation and outlook”, Occasional Papers, no 1905, Banco de España. 5/16  Among the European countries, Germany’s industry and export-based growth model has been greatly affected by external developments. But Italy has been the most beleaguered, given its weak GDP growth, the result of the uncertainty over the course of its economic policy. Indeed, the latest available information generally points to a slowdown in the growth rate across the euro area, concentrated especially in the industrial sectors. Moreover, the weakness of the external sector is also spreading to investment. That means the sluggishness of external demand, heightened political uncertainty in some countries and the easing in corporate profits are already bearing down on firms’ spending plans. Furthermore, the leading indicators of euro area exports show no signs of having touched bottom. The flash estimate for euro area GDP in the second quarter shows quarter-on-quarter growth of 0.2% (compared with 0.4% in the first quarter), with negative growth of 0.1% in Germany and stagnation in Italy.

Inflation and interest rates should be low and in line with those in the other participating countries. The exchange rate should be stable. Last, but certainly not least, the budget deficit should be under control and the level of official debt sustainable. Over the last five to ten years, most member states of the EU have come a long way towards fulfilling these criteria. Inflation rates are at or close to historical lows in various countries. The same is true for interest rates, where differentials have diminished considerably. Much less successful was the quest for fiscal stability. Budget deficits in most countries are still too high and debt levels have often, instead of falling, risen over the last years. Without any doubt, the pursuit of the convergence criteria with a view to joining the EMU has been instrumental in improving economic policies in various member states of the EU. Who, for instance, would have thought ten years ago that Italy would today post an inflation rate lower than the one in Germany? Yet, despite the progress achieved over the last decade, two problems remain: First, convergence in important areas is still far from being satisfactory. Second, the convergence criteria require the aspiring members of the EMU to achieve certain goals by spring 1998. But what about their future policies? There is a widespread belief in the economics profession that nominal convergence -- as expressed by the convergence criteria -- is less important for a successful monetary union than real convergence.
This uncertainty is multidimensional and affects the private sector decisions intricately, hence making consumers and businesses reluctant to spend and invest. The uncertainty is not only related to domestic developments, but a significant part of it also originates from there. Several above-mentioned incentives – concrete-term recommitment to preserving the soundness of public finances and enhancing balance-sheet transparency in the Albanian economy – are the appropriate steps in this regard. Other incentives to reduce uncertainty would be to: •  strengthen the contingency plans and relations with international financial institutions;  •  enhance transparency and consistency of development programs, both at national and intersectoral levels;  •  strengthen the legal, regulatory and fiscal framework, and minimise their volatility;  •  improve the business climate in its relations with the tax administration and the judicial system. Taking these steps would be a significant progress towards development. 3. Third pillar: Structural reforms  The third pillar of development, i.e., the structural reforms in economy, should be stronger and deeper. Sticking to today’s agenda, I would like to say that these reforms would open the way to a healthier and more competitive economy, with a balanced development across sectors. Our resolution and success in implementing these reforms would determine the long-term development of the Albanian economy. 4. Fourth pillar: Convergence with the European Union  I think that the identification, design and implementation of the structural reform package by closely cooperating with the specialised international institutions would be productive.

So, we should gradually pay back our debt, but when an old debt falls due it is common to take a new loan to repay the old one, and if it can be reduced, it will be even better. What will we do when in 2015 an installment of 500 million euros falls due? The amount that will fall due in the public sector is around Euro 380 million. The rest is in the private sector. We have in mind those payments maturing in the next period. We have the potential, in both the foreign reserves and the economy, and certainly we expect that there will be new loans from abroad, which will repay part of the liabilities that will mature. 4  BIS central bankers’ speeches
These days, at least, central bank reserves pay interest[5]. I’ll come back to this point later on. Second, central bank money is created only in the process of buying – and therefore removing – an asset from the private sector (usually government bonds). It’s not a transfer of wealth – it’s an asset swap. As far as the private sector is concerned, QE simply replaces one interest-bearing claim on the public sector (gilts) with another (central bank reserves). Subject to any change in the prices of those assets there is therefore no difference in the value of the private sector’s overall asset holdings immediately before and after a QE transaction. Just as with commercial bank (“broad”) money, the creation of new central bank money, by these means at least, does nothing directly to add to the net wealth of the private sector. And if, therefore, a relationship like [1] prevails, it’s only by changing interest rates and asset prices that monetary policy, including so-called “unconventional” policy, can work. These prices are in some sense a “sufficient statistic” for what policy does. Other indicators (including, say, monetary aggregates) wouldn’t give you any additional information about its impact. An IS-LM refresher This dichotomy in the way monetary policy is transmitted is also a feature of the so-called “IS-LM” model of demand. This is a hardy perennial of macro-economics.

Luis M Linde: An outlook on the Spanish economy Speech by Mr Luis M Linde, Governor of the Bank of Spain, at the Official Monetary and Financial Institutions Forum (OMFIF), London, 9 February 2016. *  *  *  I would like to thank OMFIF and Mr. David Marsh for the invitation to participate in this Forum, an initiative that favours public and private sector interactions and the exchange of views on topics of common interest. According to the title of my intervention, I will comment on the current situation of the Spanish economy, with a special focus on developments in employment, the external sector and fiscal adjustment. I shall continue with a brief review of some of the reforms undertaken that have laid the foundations underpinning the recovery. I will continue with some references to the situation of the banking sector and the challenges it is confronted with; and I will conclude with some comments on the growth perspectives of the Spanish economy. Current performance of the Spanish economy The current performance of the Spanish economy shows robust growth, employment creation and a surplus in the external balance. The simultaneous occurrence of these three positive developments has not been very usual in recent decades in the Spanish economy. We should also mention the ongoing deleveraging process, which should be considered necessary and positive. The recovery of the Spanish economy started in the second half of 2013, following the severe contraction that took place in the preceding years.
Waiting for the exit: QT and the Bank of England’s long-term balance sheet  Speech given by Andrew Hauser, Executive Director, Markets  At the European Bank for Reconstruction and Development, London, and hosted by the Association for Financial Markets in Europe (AFME), International Swaps and Derivatives Association (ISDA) & International Capital Market Association (ICMA)  17 July 2019  I am grateful to Saba Alam, Nicholas Butt, Amber Evans, Rafael Kinston, Nick McLaren, Dave Ramsden, James Rapa, Rhys Phillips, Tom Smith and Tim Taylor for their assistance, guidance and advice in preparing this speech. 1  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  Introduction  For such an apparently arcane topic, the size and composition of central bank balance sheets can provoke passionate reactions.

And hence the commitment I reaffirm today to bring inflation back towards 2% by 2025, is consistent with the full transmission of the monetary tightening at work until summer 2023. b. Against this backdrop of significant transmission "in the pipe" and still to come in real economy, a deceleration in the size of the policy steps (from 50bp to 25 bp) was wise and cautious. We obviously keep our hands free, but we add the capacity of observing and monitoring the pass-through of our massive past hikes. Persistence is now more important than speed; the duration for which we will maintain rates is now more important than the precise terminal level we will reach. Or in other words, for interest rates as with ballistics, "longer" is becoming more significant than "higher". c. Hence, our next rate decisions should not focus such attention; we already have completed most of our rate-hiking journey, and we are clearly in restrictive territory. That said, as I said already last January, I expect today that we will be at the terminal rate not later than by summer, which starts in June and ends in September. Hence we have three possible Governing Councils either to hike or to pause; but don't deduce a guidance from this or a preference for a given terminal rate. We will remain data driven, looking meeting by meeting at the outlook for headline as well as for underlying inflation. Monetary policy is at work and rest assured, we'll do the job: we'll bring inflation back towards 2%.
The expansionary fiscal policy is contributing to a strong development of household disposable income in the coming years, providing a basis for higher private consumption as well as increased saving. Exports rise during the forecast period but the increase is relatively modest both on account of the international upswing being tentative initially and because the krona is expected to appreciate. GDP growth is judged to be 1.6 per cent this year and then accelerate to between 2.5 and 3 per cent in the coming years, which as fare as can be judged is somewhat more than the Swedish economy can sustain in the longer run without giving rise to inflationary tensions. With the high resource utilisation, labour costs are judged to rise somewhat more than we foresaw in the December Report. Partly for this reason, domestic inflation in the forecast period is somewhat higher than foreseen earlier. CPI inflation stops at 2.2 per cent one year ahead and 2.4 per cent after two years. The corresponding forecast for inflation’s underlying rate, UND1X, is 2.2 per cent both one and two years ahead. Monetary policy focuses in the first place on the latter rate. In this price forecast, the supply shocks that are now leaving their mark on inflation are judged to drop out of the twelve-month change figures successively during the late spring. Inflation is accordingly expected to approach 2 per cent in the early summer.

BIS central bankers’ speeches  The core inputs to the analysis are firm-level measures of dividends and equity prices. The average dividend-price ratio in each industry segment is shown in Table 3. The mean dividend-price ratio across the panel is 2.6%. But there is a fairly significant degree of crosssectoral and time-series dispersion. For example, dividend-price ratios are almost twice as high in the energy and utilities sector as the health and pharmaceuticals sector. And mean dividend-price ratios were two thirds third higher in the 1990s compared to the 1980s. Table 3 Mean dividend-price ratio for firms in each industry segment Consumer  Energy & Utilities  Financials  Health  IT  Industrials  Materials  S&P  1.94  2.82  3.19  1.87  1.69  2.55  2.22  FTSE  4.12  3.96  2.63  1.38  2.92  3.81  3.16  To estimate (9), we require a selection of quantitative inputs. Taking these in turn: (a)  Company-specific risk premium  Following Miles (1993), the company risk premium is modelled based on firm-specific characteristics, in particular the company beta and the level of gearing: (10)  where .21 Betas are estimated using daily return data for firms listed on the S&P 500 and FTSE, together with daily data for the indices themselves.22 Mean estimated betas are shown in Table 4. These average below one for both UK and US firms.
The recovery in the property market is welcome but it should not decouple from economic fundamentals. 5 / 11  BIS central bankers' speeches  If property prices rise too rapidly, they will outpace the growth in income. Households will have to take on more leverage than they are able to manage; this risk will be compounded as interest rates rise over time. A rapid increase in prices also raises the risk of a destabilising market correction later when additional supply comes on-stream. MAS, the Ministry of National Development, and the Ministry of Finance, are closely monitoring developments in the residential property market, and remain committed to ensuring a sustainable market. FINANCIAL INDUSTRY TRANSFORMATION MAP: A MID-TERM REPORT CARD I will now move on to the financial services sector. The Financial Services Industry Transformation Map (ITM) sets out strategies co-created by MAS and the industry to make Singapore a leading global financial centre in Asia. We have set ambitious targets over the 5-year period from 2016 to 2020: value-added growth in financial services of 4.3% p.a. and creating 3,000 net jobs in financial services and 1,000 net jobs in FinTech p.a.. We are now exactly at the half-way mark of the ITM; let me give a report card on how the industry has fared so far. Financial services—defined as the finance and insurance industry excluding holding companies, slightly different from the DOS definition—grew an average of 3.3% per year during 2016 and 2017. This is below the 5-year target of 4.3% per annum.

Central Bank’s FX Interventions and FX Auctions (Million US dollar)  Year  FX Buying Auctions FX Selling Auctions  FX Buying  FX Selling  Total Net FX  Interventions  Interventions  Purchases  2003  5652  -  4229  -  9881  2004  4104  -  1283  9  5378  2005  7442  -  14565  -  22007  2006  4296  1  5441  2105  6632  2007  9906  -  -  -  9906  2008  7584  100  -  -  7484  2009  4314  900  -  -  3414  2010*  3376  -  -  -  3376  *As of 15 April 2010. Source: CBRT. Esteemed Guests, 50. In sum, the developments since the last quarter of 2008 demonstrated that inflation targeting is a flexible strategy that enables a timely response to economic shocks. Recent experiences have clearly confirmed that the Central Bank, when necessary, can focus on sudden slumps in growth and employment driven by external factors provided that this does not conflict with its objective of price stability. In the upcoming periods, we will continue to focus on establishing price stability permanently, acting in the light of our past experience and with the awareness of our increased credibility.