samchain/econo-pairs-v1 huggingface dataset:
For example, if you look at my preferred measure of underlying inflation, called trimmed-mean inflation—which removes the most volatile price movements—it’s been running at 2 percent. This measure of inflation hasn’t shown any signs of trending up or down. That said, I will be watching developments closely for signs of a persistent shift away from our 2 percent long-run goal. As I mentioned, the economy started the year with a lot of momentum. But there are reasons to believe that the surge in growth won’t persist through the remainder of the year. Taking into account of all the indicators we follow, I anticipate a step-down of economic growth, from the 3 percent growth recorded last year to a still-solid pace of about 2-1/4 percent in 2019. 1/2  BIS central bankers' speeches  This is good news. It’s above the economy’s underlying potential, but not unsustainably so. Healthy economic growth should in turn fuel solid job gains, higher wages for workers, and some further declines in unemployment. The strong economy and labor market should also support inflation returning to 2 percent, the Federal Reserve’s long-run goal. The Global Picture In addition to the positive data we’ve been getting for the U.S., we’ve also seen encouraging signs that risks from global economic and financial markets are abating. Last year there were worries that the global growth slowdown centered in China and Europe would spill over onto our shores. This was one factor contributing to a more downbeat assessment of U.S. growth and the stock market sell-off.

Fundamental to the growth of internet banking over the years is the confidence which the public has in its convenience and security. This is something that we cannot take for granted and must be continuously preserved. Advancement in technology and innovation has resulted in greater consumer convenience and enhanced efficiency. However, the same technology and innovation have also created new methods of perpetrating fraud that could be executed faster and with greater reach. Cyber criminals have been active ever since the advent of the internet, and are constantly finding new ways to defraud innocent victims. Safety and security of transactions in the banking system is fundamental in ensuring consumer confidence. Hence, an important function and responsibility of the Central Bank is to ensure online transactions can be made in a safe and efficient manner in the economy, in the pursuit of monetary and financial stability objectives. The need for constant vigilance & cooperation This fight that the banks are launching today is something that requires the support of all parties. We are aware of the creative ways in which criminals have attempted to deceive customers over the years and measures were required to be taken by the banks to protect the customers. While it is good to know that banks have played their roles in investing in robust security systems, they must also ensure that customers play their part in protecting their own assets and savings. The reminder and greater awareness from the Banks through this campaign is timely.
It raises the prospect of LIBOR continuing under a new methodology as “synthetic LIBOR,” at least in some currencies. But the FCA itself has warned that whatever it does will not be an alternative to firms’ transition efforts, and that any synthetic continuation of LIBOR will still not be deemed to be a representative rate.10 The FCA has said that any action it takes will be focused on contracts that cannot feasibly be amended by the parties to mitigate the effects of LIBOR cessation. It will not provide a solution for new contracts. And even at that, it will not necessarily address every LIBOR setting or currency. For those it does reach, users will be giving up control of the economics of their contracts to whatever the new methodology may be. In short, if you rely on these new powers to take care of your LIBOR contracts, you may not get what you want, and you may not like what you get. The message is clear: you must still do everything you can, right now, to anticipate the end of LIBOR and take control of your own risks. https://www.newyorkfed.org/newsevents/speeches/2020/hel200929  2/6  30/09/2020  The LIBOR Countdown Has Not Stopped - FEDERAL RESERVE BANK of NEW YORK  In the European Union, there is draft legislation that is similar in approach to the ARRC’s proposed New York law.

Under the solo-approach, capital requirements are also applied to each of Bank A, Bank B and Bank C individually, after having deducted from Bank A’s capital, its investment in B, and from B’s capital its investment in C. Under the sub-consolidation approach, capital requirements would be applied on the consolidated accounts of Bank B, ie after adding the assets and liabilities of B and C and eliminating any intra-group exposures. BIS central bankers’ speeches  3  For groups for which Single-Point-of-Entry – broadly, bail in of debt issued through a holding company – is the preferred resolution strategy, local subsidies need a combination of equity and intragroup GCLAC (ie intragroup bonds) that permits losses to flow smoothly to the topco. By transferring losses upwards, an ailing subsidiary is recapitalised. Whether that suffices for the host authorities will depend on their confidence in the capacity and willingness of the group’s home authorities to execute an effective resolution of the topco. By contrast, for groups for which Multiple-Point-of-Entry – breaking up a group – is the preferred resolution strategy, the host authorities of a subsidiary identified for “separation” must ensure that it has a capital structure and sufficient operational independence to enable them to resolve it themselves with their particular set of powers. Put simply, for firms within a group for which SPE is the preferred resolution strategy, the group as whole is a source of strength on which local supervisors can place weight.
17 The model combines a macro part – capturing macro variables that shape household balance sheets over time – and a micro part – built around a household member level logistic model for its employment status – in a fully integrated manner. The framework allows us to compute probability of default (PDs) and loss given default (LGDs) for mortgage exposures directly at the household sector level and link them to macroeconomic stress scenarios. The model-framework offers, for example, insights into how borrower-based instruments – such as LTV and DSTI ratio caps – influence the economy Intuitively, the effect of LTV caps derives primarily from reducing loss given default (LGD) parameters, as the LTV ratio is directly related to the value of the underlying collateral in a mortgage loan. The effect of DSTI caps, on the other hand, stems mainly from the reduction in household capacity to serve the debt, thus their probability of default (PD). These results are confirmed by the model. This module is being integrated in the ECB top-down stress testing framework to account for a consistent stress scenario and for dynamic adjustments of individual households’ balance sheets in response to shocks and related second round effects. Finally, as just illustrated, enhancements to the ECB macroprudential toolkit go beyond stress testing as the complete set of models also provide a tool for impact assessment of macroprudential policy instruments.

2  See ECB (2009), Financial Stability Review, Special Feature B for a discussion on the concept of systemic risk. 3  For an overview, see Bisias, D., M. Flood, A. W. Lo and S. Valavanis (2012), “A Survey of Systemic Risk Analytics”, Office of Financial Research Working Paper No. 0001, January. 4  Hollo, D., M. Kremer and M. Lo Duca (2012) “A Composite Indicator of Systemic Stress in the financial system”, ECB Working Paper No. 1426, March. BIS central bankers’ speeches  1  short-term interest rate) in a MS-VAR, to illustrate the dynamic interaction of systemic financial instability and the macroeconomy in the euro area. 5 CATFIN, a VAR and Expected Shortfall measure at system-wide level calculated with non-normal distributions with fat tails, showing the predictive capacity of financial volatility regarding real economic downturns was proposed by Allen et al. 6 Similarly, Giglio et al. examine 19 measures of systemic risk for the US and 10 measures for the UK and the EU from the perspective of how well they forecast macroeconomic downturns. 7 They also build dimension-reduced risk indexes using principal components and partial quantile regression to demonstrate the robust performance of some indexes in anticipating future macroeconomic downturns. These efforts in developing composite indexes are complementary to the on-going research on the concept of a financial cycle as a sort of a generalisation of the old concept of credit cycle, distinct from the concept of the economic or business cycle. The ECB paper presented this morning by Hiebert et al.
It is no coincidence that we are meeting here today under the theme "Choices for monetary policy" or that the IMF and other organisations arrange conferences on how our ideas on macroeconomic policy should change and that sessions on monetary policy have titles such as "Many targets, many instruments – where do we stand? "29 Nor is there any major doubt about the direction to be taken. The financial crisis made it clear that much more effort must be put into trying to prevent financial imbalances and manage risk in the credit and housing markets. That central banks will play an important role in this work is also fairly obvious. It is already clear that monetary policy will not be conducted in exactly the same way as prior to the crisis – when the policy rate was in principle set with consideration to the short-term business cycle, and when financial stability was more or less taken for granted. One clear lesson is that financial imbalances must be taken seriously and that central bankers' analyses and model work need to evolve to take this into account. I also believe that the analysis of risks will become more central and that "robust” monetary policy will be discussed more than before while ”optimal” monetary policy will be discussed less.30 It  have proven their effectiveness, so that there is no ground at present to dismiss the relevance of financial stability considerations for monetary policy deliberations.” (p. 22).

One obvious reason for this is that macroprudential policy is not yet in place in many countries and where there is a macroprudential policy, it has often not yet been put into practice – it is quite simply too new and untested.25 The policy rate is thus as yet one of few instruments available for practical use. 22  See, for example, Nyberg (2005), Ingves (2007) and Heikensten (2008). 23  See, for example, Mishkin (2007) and Cagliarini, Kent and Stevens (2010). 24  See, for example, the Committee on International Economic Policy and Reform (2011) and Mishkin (2011). 25  Woodford (2012), who develops a theoretical model for how financial stability considerations can be incorporated into inflation targeting, notes for instance: ”[I]t cannot be claimed that such tools already exist and  10  BIS central bankers’ speeches  But there is also an international discussion on whether the policy rate will have a role to play even when macroprudential policy is in place.26 One reason is that it may very well prove difficult to design a system for macroprudential policy that functions sufficiently well and which inventive market participants are unable to circumvent. The policy rate is a blunt instrument, as it has a broad impact on the economy. But at the same time, this may be a strength compared with macroprudential tools, simply because it is difficult to "circumvent" a policy rate increase.
Different jurisdictions will come up with different arrangements to address this issue, but I would say that every jurisdiction is going to need its own solution. And, perhaps for the first time, that has highlighted the need for some international co-ordination of policies on shadow banks. The FSB is just starting to explore this virgin territory.21 Asset managers and incentives The vast majority of the asset management world is not engaged in shadow banking and, more important, does not of itself jeopardise the stability of the system directly if it gets into trouble. The taking and absorption of risk by unlevered funds is a fundamentally healthy part of the system. But financial stability authorities cannot be indifferent to this industry. By investing in the debt and equity of banks, it is a vital part of market discipline. We do not want – and cannot have – a system where the first line of defence after the management of banks themselves is the cadre of official sector supervisors. For the system to be healthy, we need boards, auditors, equity investors and debt holders to play a big part, and for investment decisions to be subject to constructive incentives. Yet, there is relatively little debate about whether the incentives of asset managers made the system more prone to crisis. Although not a subject for today, an important part of this is the drive to develop resolution regimes that entail debt holders taking losses on their exposures to distressed banks and dealers.

Following discussion at FSB, that gap in the analysis is now being addressed by the IOSCO leadership. Post-trade infrastructure: CCPs as risk managers The other big area of reform is, of course, around central counterparties. Clearing more OTC products; being more resilient; revisiting criteria for access to CCPs, and so on. You don’t need me to rehearse all of that for you. But I would note that this is not just about derivatives markets. LCH’s move to clear repos in Spanish government bonds helped that market stay open during some dark days. And I do want to make one very important general point about the role of CCPs and their management. CCPs simplify the complex web of counterparty exposures through multilateral netting – precisely what the US authorities contemplated trying to achieve ad hoc towards the end of a weekend when Lehman was unravelling. They act as a central market authority for valuing positions and setting minimum margin levels. Having centralised risk upon themselves, they redistribute it to their clearing members through a clear waterfall. They are, in effect, systemic risk managers. They absolutely must think of themselves as that. Their job is not just to deliver ever greater operational and capital efficiency for their clearing members. Too many senior executives at CCPs I have met over the past decade or so have seemed to fall into that trap – a trap encouraged by some being for-profit organisations.
However, I can tell you that the Bank of Thailand will take care of the risks to the system, by maintaining price stability in the long-run while mitigating economic cycles in the short-run. Our flexible inflation-targeting framework targets core inflation between 0.5 and 3.0 percent while taking into account economic growth. And in this framework, the exchange rate is a managed-float and plays a supporting role as an adjustor against external shocks, leaving  4  BIS central bankers’ speeches  room to the interest rate as the main instrument of price stability. The managed-float is based on three elements: volatility, competitiveness, and fundamentals. Volatility is managed so as to limit disruption to the private sector in the short-run. Competitiveness is maintained by containing excessive currency movement relative to the region. And most importantly, fundamentals must be allowed to determine exchange rate movements in the long-run. But monetary policy alone is not enough to ensure competitiveness in the long-run. For that we must have sound fiscal policy that supports our national infrastructure with prudent debt management; and structural polices that address education, productivity, and institutional frameworks. At this point, I hope we have clearly laid out the policy vision for Thailand that can serve as a basis for your investment decisions, risk management, and, ultimately, your continued partnership in the Thai economy. On that note, let me conclude my talk here, so that you can proceed with the other interesting program that will follow after this. Thank you. BIS central bankers’ speeches  5

Inflation prospects difficult to assess One consequence of the Riksbank basing its analysis on conditions in Sweden — and not being guided by the actions of other central banks — is that in the past the repo rate has been held at a considerably lower level than in the United States. There have also been periods when our instrumental rate has been below that of the European Central Bank. The central factor when the Riksbank sets its instrumental rate is the prospects for inflation one to two years ahead. A prospect of inflation above the 2 per cent target normally leads to a repo rate increase, while if inflation is expected to be lower than the target level, the repo rate should normally be lowered, and if the rate of price increases is forecast to lie around the target level of 2 per cent, the rate should be left unchanged. The economic outlook in the rest of the world ought to imply a weak tendency in Sweden as well, with an attendant easing of inflationary pressure and consequently a further reduction of the repo rate. However, the decision-making situation is not that simple. Three things in particular make the picture more complicated: ·  Firstly, inflation is currently above the Riksbank’s 2 per cent target. The greater part of the increase is admittedly attributable to a number of clearly defined transitory factors that are calculated to drop out next spring. Food prices, for example, moved up in connection with mad-cow and foot-and-mouth disease.
This means, among things, that monetary policy is substituting for policies that are traditionally the domain of governments. All this is shifting the focus of the debate from “How deeply negative can interest rates be?” to how to make the two policies work in a particular desired harmony or mix. The former paradigm where they could be independent of each other and hence be regarded as substitutes is turning into one where they complement and reinforce one another. For example, the central bank can help the government by keeping interest rates low, which will facilitate government financing, while fiscal policy can financially support the central bank as lender of last resort, curbing growth 4/7  BIS central bankers' speeches  in its balance sheet and giving it more room for manoeuvre and greater credibility in the pursuit of monetary policy. New remits Besides changes in the central bank paradigm, some central banks have been taking on new, secondary remits in recent years. The Federal Reserve has begun to pay more attention to income inequality, while the ECB and other European central banks are starting to go green. Looking first at income inequality, I should point out again that redistributive policies used to be the sole preserve of elected politicians. Despite this, Federal Reserve Chair Jerome Powell recently announced that the Fed will closely track the shortfalls of employment from its maximum level. It is well known that low-income and low-skilled workers from ethnic minorities are the last to enter the labour market.

As with practically everything else, this assumption is associated with uncertainties that only the future can resolve. One of the biggest surprises of the coronavirus crisis concerns the property market. The memory of the post-GFC house price slump is still fresh in our minds. But we have seen nothing like that over the last year or so. The long-running rise in house prices has slowed but not gone into reverse. On the contrary, the property market has been boosted by soaring demand for housing in rural and mountain areas, fuelled by low interest rates. This is really not what an economy on its knees looks like. If we at the Czech National Bank erred in any of the forecasts we made in the dramatic days of last spring, when the pandemic struck with unforeseen force, it gives me some satisfaction to say that we were by no means alone. Obituary The coronavirus has sadly left a trail of economic, social and human devastation in its wake. Each of us no doubt knows someone who has been struck down by it. I’d like to take this opportunity to remember the well-known Czech economist Michal Mejstřík, who tragically lost his life to COVID-19 earlier this year. We always rightly admired Michal for his broad range of expertise, his intellectual curiosity and energy, and his ability to present interesting information and formulate fresh ideas.
Financial response I: Support for market functioning  At the outset of the crisis in March, important funding markets seized up. Even the government bond market threatened to do so. The underlying cause of the seizure was not concern about the credit of the government; it was that some investors were forced, by their own circumstances, to sell their bond holdings. Investors ‘dashed for cash’ as some faced calls to post cash margin against derivative positions that had moved against them and others faced challenges in rolling the repo financing of their bond holdings.4 The seizing of some markets was a blot on the financial system’s response to the covid crisis. With international counterparts we will need to review carefully the causes of what happened with a view to ensuring markets are resilient in the future.5  As it was, two emergency responses were necessary. [See slide 3 of accompanying deck] First, central banks around the world stepped in with huge purchases of government and corporate bonds to restore market functioning. In the UK, the Monetary Policy Committee is undertaking a £ programme of asset purchases.

The example of Germany's economic history in the 60 years since the Second World War, which may very briefly be described as 40 years of vigorous expansion and almost 20 years of sluggishness, should be food for thought when extracting all the strong and favourable aspects of decentralisation and avoiding those phenomena entailing risks to the efficient working of the economy, on which any lasting improvement in well-being ultimately hinges. Finally, another policy area to which great heed should be paid when seeking to sustain healthy public finances in the medium and long run is that of Social Security. Admittedly, the forecasts available denote a lack of major problems in the Social Security system in the coming years; however, looking further ahead, it is clear that if changes are not made, the system may become a considerable deadweight holding back growth in the Spanish economy. When the long-term consequences are taken properly into account, it is fairly clear that the sooner Social Security reform begins, the less costly it will be. Or stated the other way round, if Social Security reform continues to be delayed, we may find ourselves faced with a truly dangerous dilemma: either changes are undertaken that will have to be more drastic and may be traumatic in some respect, or otherwise growth in the Spanish economy will be seriously impaired. In sum, on viewing recent developments in the Spanish economy we can draw a positive assessment that should not disregard the accompanying imbalances.