samchain/econo-pairs-v1 huggingface dataset:
Longer maturities have smoothed the growth of borrowers' debt burden in terms of monthly payments of a mortgage. Of course, looking at total loan servicing costs, the overall debt burden has increased. When we compare Estonia and other Baltic countries with more developed economies, there is obviously room for further credit growth: total bank credit as a percentage of GDP in 2004 was over 100 percent in the euro area, around 60 percent in Estonia, and only 20 percent in Lithuania. And although it is rapidly increasing, the debt burden of Estonian households, at 32 percent of GDP by end-2005, was still about two times lower than in the Nordic countries. Secondly, the increase in incomes enables people to upgrade their living conditions. For example, the number of square meters per capita in Estonia (at around 30) is relatively small compared to Sweden  2  BIS Review 81/2006  (45) or Denmark (50). Moreover, older housing stock needs quality improvements. Both these factors may indicate that real estate markets may continue to perform reasonably well over the medium term, even if some slowdown might be ahead. Indeed, the relative contribution of Estonia's construction sector to GDP is hardly exceptional if compared to many other EU countries. Are risk premia sufficient? However, this rapid growth poses important questions of sustainability and stability, especially in countries with shorter borrowing experience.

In general, one may say that the level of risk depends on three factors: speed and sustainability of GDP growth, sectoral concentration of exposure (real estate), and currency mismatch in borrowers' assets and liabilities. Faster GDP growth allows one to expect faster accumulation of assets and, therefore, faster improvement in the ability to service loans. However, estimating potential output growth is tricky. Such estimations are roughly based on the average of the past few years' performance. Today we think that potential output growth may be around 7 percent in Estonia. Let me remind you that a few years ago we thought it was 4 to 5 percent. Upward revisions are not the problem, of course, but there are also several examples of downward revisions: Portugal, Greece... even Poland. While credit growth has given a significant contribution to output growth, it is hardly sufficient in the long run. Too high indebtedness will limit output growth potential, as loan-servicing costs will eventually curb consumption and investment. The effects of economic slowdown or recession on loan quality may be quite different over the business cycles, however. All things considered, Estonian borrowers weathered the effects of the Russian crisis of 1998 relatively easily. However, one has to keep in mind two things. Firstly, the household credit to GDP ratio was at around 10 percent. Now it is around 30 percent. Secondly, the households' loan servicing ability did not deteriorate dangerously, as low-income households who suffered the most in that recession had not had access to credit.
That’s important, but it does not change the need to make judgements, or even make the judgements any easier. Data get revised; models over simplify; forecasts are fallible. It’s essential to invest in state of the art techniques; indeed the Bank has just introduced a new macro economic model. But progress depends just as much on recognising all the uncertainties and allowing for them in a systematic way. The monthly interest rate decision requires a complex assessment of all the evidence. We need to be both sceptical and open minded, if we are to avoid major error: sceptical when it comes to interpreting the data, but alert for signs that we may be getting it wrong. The decision to raise rates in February, while inflation was still well below the new target, reflected a top line view that inflationary pressures were likely to build over the next couple of years. While this has been the emerging picture for some months now, we have been surprised by a number of developments pointing in different directions, which have needed careful evaluation - notably, the resilience of household spending and the strength of the exchange rate. We have also had an opportunity to reconsider earlier judgements, especially about the amount of spare capacity and the likely growth in potential supply. That is the nature of the exercise. March will be another month. There can be no foregone conclusions when it comes to setting interest rates.

On the other hand, the U.S. is less dependent on oil imports than the European Union, let alone Switzerland. Structural characteristics of an economy can also affect the economic impact of an oil price shock. Rigid labor markets, for instance, can lead to asymmetric effects on output. The output loss in the event of a rise in oil prices can exceed the output gain in the event of a corresponding decline in oil prices. It is generally assumed that the overall impact of an oil shock is somewhat less pronounced in the U.S. than in Europe. Finally, exchange rates can play a role. As a result of the substantial decline  3  See eg M A Adelman (1995): “The Genie out of a Bottle: World Oil since 1970”, MIT Press, Cambridge. BIS Review 69/2004  3  in the U.S. dollar against most non-Asian currencies, the recent increase in the price of oil in local currency has been less pronounced in Europe. For a central bank concerned with maintaining price stability as the bedrock condition for sustained economic development, the crucial question is how a level shift in the equilibrium price range of oil would impact longer-term inflation rates. Oil prices have a direct impact on inflation because the price of crude oil immediately impacts gasoline and heating oil prices. The inflation effect depends on the weight of oil based products in the CPI. In Switzerland, heating oil makes up 1.2% of the CPI. Total oil based products represent 3.8% of the CPI.
Removing barriers is one thing and if, for example, investment in green assets is being held back by excessively backward-looking forms of measurement of risk, then that is something we should change. But it is a fundamental pillar of the prudential regime that it be risk-based: disregarding the risk in individual investments is a recipe for an under-capitalized financial system that would not be a robust or sustainable source of investment. For example, we should make sure that we and firms have the best possible understanding of climate exposures, in order to make sure that firms can make the transition to net zero safely, and we should take account of this in capital where the evidence supports it. But the wider economic, environmental, and social benefits of investment in assets to support transition are in my view better recognised using other tools of public policy. Enhancing accountability Nonetheless, although I do not believe we will suddenly go rogue if given more rule-making powers I absolutely recognise the need for enhanced accountability arrangements to Parliament if our role expands somewhat as a result of Brexit. I hope you recognise that we already make policy in a transparent, engaged and consultative manner, encouraging input from stakeholders including industry rather than leaping straight to the solution. But to me it seems natural that if our rule-making role were expanded then Parliament might choose to expand the amount of time it spends examining our regulations.

In Iceland’s case, it was both part of the problem and part of the solution. 6. We need to think of ways to protect the sovereign from failing banks. Bailing out bondholders is probably not always the best policy. 7. Finally, some elements of the so-called “Icelandic model” merit further consideration as regards wider applicability: allowing banks to fail, using the exchange rate as a tool for adjustment, and using capital controls as a tool for stabilisation. But we need  2  BIS central bankers’ speeches  to avoid hype and over-simplification. Some of what Iceland did was due to a lack of other options, and the cost-benefit analysis of allowing banks to fail or imposing capital controls might look quite different in larger countries or countries with different connections with the rest of the world. BIS central bankers’ speeches  3
Sapienza, P and Zingales, L (2013), ‘Economic Experts versus Average Americans’, American Economic Review, Vol. 103, No. 3, p. 636-642. Sentance (2015), ‘We expect too much of the new masters of the universe’, article in the Financial Times. Shafik, M (2017), ‘In experts we trust?’, speech available at http://www.bankofengland.co.uk/publications/Documents/speeches/2017/speech964.pdf Shannon, C (1948), ‘A Mathematical Theory of Communication’, Bell System Technical Journal, 27 (3) Shiller, R (1997), ‘Why Do People Dislike Inflation?’, Reducing Inflation: Motivation and Strategy, NBER, p. 13-70. Shiller, R (2017), ‘Narrative Economics’, NBER Working Paper, No. 23075. Smart, L (2016), ‘Full disclosure: a round-up of FCA experimental research into giving information’, Financial Conduct Authority, Occasional Paper 23. Stockton, D (2012), ‘Review of the Monetary Policy Committee’s Forecasting Capability’, available at www.bankofengland.co.uk/publications/Documents/news/2012/cr3stockton.pdf Strunk, W and White, E (1979), The Elements of Style, Idg Books (3rd edition). Sturm, J and de Haan, J (2009), ‘Does Central Bank Communication really Lead to better Forecasts of Policy Decisions? New Evidence Based on a Taylor Rule Model for the ECB’, CESifo Working Paper Series, No. 2760. Taylor, J (2011), ‘Legislating a Rule for Monetary Policy’, Cato Journal, vol. 31(3), p. 407-415. Taylor, J (2012), ‘Monetary Policy Rules Work and Discretion Doesn’t: A Tale of Two Eras’, Journal of Money, Credit and Banking, 44: 1017–1032. Tetlock, P and Gardner, D (2016), Superforecasting: The Art and Science of Prediction, Broadway Books. Thaler, R and Sunstein, C (2008), Nudge: Improving decisions about health, wealth, and happiness, Yale University Press.

34  All speeches are available online at www.bankofengland.co.uk/speeches  34  Chart 16: Flesch-Kincaid reading grade level of  Chart 17: Percentage of adult population for  other Central Banks  whom Elvis lyrics and 2016 communications are accessible  18  Reading grade level  FOMC minutes  16  BoC MPR  14  RBI Misc RBA MPS  12  Beige Book summary The Economist on monetary policy  RBNZ MPS Broadsheet  Mainstream press on monetary policy  The Economist  US political speeches  10  Tabloid  8  UK Political Speeches  Elvis lyrics Trump campaign speech 0%  2016  2012  2007  2002  1997  1992  1987  1982  6  20%  40%  60%  80%  Percentage of adult population  Sources: Nexis, Bank of England calculations. Source: Bank of England calculations. Notes: Newspaper and journal content matches a search for ‘monetary policy’. Chart 18: Dispersion of Flesch-Kincaid reading grade for 2016 Bank of England publications (minimum, first quartile, median, third quartile and maximum) Reading grade level 20 18 16 14 12 10 8 6 Knowledge Bank  Bank Underground  Speeches  Inflation Report MPC Statement MPC Minutes Working Papers  Source: Bank of England calculations. 35  All speeches are available online at www.bankofengland.co.uk/speeches  35  Table 1: Timeline of selected communication and transparency innovations for major central banks 1993  Bank of England  1994  Inflation report launched.
We would like to see only a gradual increase in non-performing loans or a gradual decrease in credit quality, given the extent of the crisis. We try to make sure that this is a gradual process and nothing unexpected or unforeseen happens. Next: lay the foundation for the longer term Aside from an immediate task of keeping the recovery intact, the other thing we have been doing is to lay the foundation for the longer term. Specifically, we try to ensure that our financial sector responds well to the landscape post-Covid-19. It is hard to say how exactly the post-Covid-19 landscape would look like, but there are at least two trends that will become significant in the future. Firstly, the world will become much more digital, and secondly, there will be a much greater emphasis on sustainability. On this, we have published the Bank of Thailand’s financial landscape consultation paper that put out our view about how we see things evolving in the financial sector. The paper indicates what we want and do not want to see and what are the red lines in each of these areas that we regulate. In the digital space, the first element of our plan is an open competition. For instance, the current financial landscape in Thailand, as in many markets in the region, is dominated overwhelmingly by banks.

It is when the investors sell off assets that are seen as risky and return to safe assets. Typically, they sell off things in emerging markets then move their money to safe things like the US Treasury. We see that happening today but fortunately for us in Thailand, risk-off trade is not a very substantial risk because we are solid on the balance of payments or the external front. We have a low level of external debt compared to our high level of international reserves and are running large current account surpluses consistently in the years preceding the crisis. Therefore, our overall external position is strong. Unlike other countries in the region, which have lower international reserves or higher external debts, they are more vulnerable to these swings in investor sentiment and resumption of risk-off trade. This transmission channel is thus not very worrisome for us as we are in a good position to handle capital outflows given our external strength. The second channel is the impact on the real economy from trade and investment, both direct and indirect. The direct channel is very small as the share of Thai exports to Russia and Ukraine are only about 0.4 percent of total Thai exports, and the same applies to investment flows. The main issue we are more concerned about is the indirect effects that the situation will lead to supply chain disruptions or other impacts on the world economy that will have a knock-on effect on Thailand.
Miroslav Singer: Central Bank Governor of the Year for Emerging Europe 2013 Acceptance speech by Mr Miroslav Singer, Governor of the Czech National Bank, at the Central Bank Governor of the Year for Emerging Europe 2013 awards, Washington DC, 12 October 2013. *  *  *  Let me start by thanking you for this award. I see it not so much as personal recognition, but more as recognition of the team of people that make up and define the Czech National Bank that I have the pleasure to represent here. Special thanks go to those I work with directly, among others to my colleagues on the board for their unlimited patience with my generally awful manners and attempts to claim leadership. Whenever I meet a group of investors or analysts, I always start by noting that any issues and questions requiring knowledge and wisdom would be better addressed by our experts, those requiring only wisdom would be better be fielded by my colleagues on the board, and those requiring neither knowledge nor wisdom can be safely left to me. So, let me share some of my knowledge- and wisdom-free observations with you. Ten years ago, when I was working in restructuring, I could never have imagined that I would join the central bank in less than two years and later rise to the top job there. But the offer came, and it was one I truly could not refuse.

The National Authorities will conduct the exercise at the national level, on the basis of data requirements and centrally developed methodology, and may ask for the support of third parties if they deem it necessary. To ensure consistency in execution across banks and countries, quality assurance processes will be in place at every stage. It is in the interest of all that this exercise be rigorous and transparent, so as to fully restore confidence in the European banking sector. 4  BIS central bankers’ speeches  Conclusions We have in front of us a year “fully loaded” – to use the jargon we all use in connection with of the Regulatory Basel Framework. The European Union is trying to make a big step forward and we will need the intelligence and best cooperation of all for this great design to be carried out. Thanks again to the Official Monetary and Financial Institutions Forum and to his Chairman, David Marsh, and to all the participants. I wish all of our visitors a very good stay in Madrid. BIS central bankers’ speeches  5
Vehicular finance This uncertainty stems from changes not just in instruments and markets, but also in institutions – ie in the nature and structure of financial intermediaries. This is the age of what I call Vehicular Finance. The key intermediaries are no longer just banks, securities dealers, insurance companies, mutual funds and pension funds. They include hedge funds of course, but also Collateralised Debt Obligations, specialist Monoline Financial Guarantors, Credit Derivative Product Companies, Structured Investment Vehicles, Commercial Paper conduits, Leverage Buyout Funds – and on and on. 5 These vehicles can fit together like Russian dolls. By way of illustration – and, I fear, slipping for a moment into alphabet soup – SIVs may hold monoline-wrapped AAA-tranches of CDOs, which may  2  See chapter on “Risks in the international financial system”, in Bank of England Financial Stability Review, December 2004, p. 50. 3  See chapter on “Shocks to the UK financial system”, in Bank of England Financial Stability Report, April 2007, p. 16. 4  For example, hedging of Power Reverse Dual Currency Notes might in certain circumstances amplify movements in the yen; and hedging of Range Accrual Notes, for which the gamma exposure can flip sign, might amplify yield curve movements. The general question of the potential for dynamic hedging of short option positions to amplify market movements was discussed in Tucker P M W (2005), “Where are the risks?”, Speech at The Euromoney Global Borrowers and Investors Forum, London, June 2005, Bank of England Financial Stability Review, December 2005, pp 73-77.

Measures such as bank levies or the taxes on bank transactions, etc., may be very close to crossing that “red line”. The global crisis has not changed the fact that financial development is a powerful driver for economic growth. Let us not make the banks a scapegoat! Thank you for your attention! 4  BIS central bankers’ speeches
I am not appointed by a president of the United States or subject to confirmation by the U.S. Senate. I, along with the 11 other Federal Reserve Bank presidents, operate the business of the Federal Reserve as efficiently as any bank in the private sector. And as Kirk mentioned, we make money for the U.S. taxpayer: We returned over $ billion to the U.S. Treasury in 2009 and 2010. You are looking at one of the few public servants that make money from its operations, rather than just spending taxpayer money. This wouldn’t be possible without a first-rate staff, led by my chief operating officer, Helen Holcomb, and the other senior officers that Kirk introduced. I love and admire these folks and too rarely get to single them out for public praise. So, please join me in applauding them. Two matters As Kirk has already said much of what I planned to say today about how the Fed works, I would like to address two non-operational matters. First is the record of job creation in Texas. For obvious reasons, this has become a subject of intense interest to the national media; my staff and I are being hounded by the national press corps for data and commentary. Today I will try to separate fact from fiction, with a heavy focus on the data. The second matter I wish to address is why I dissented from the consensus at the last meeting of the Federal Open Market Committee (FOMC).

First, in reporting my views to the committee, I noted my concern for the fragility of the U.S. economy and weak job creation. It might be noted by the press here today that although I am constantly preoccupied with price stability – in the aviary of central bankers, I am known as a “hawk” on inflation – I did not voice concern for the prospect of inflationary pressures in the foreseeable future. Indeed, the Dallas Fed’s trimmed mean analysis of the inflationary  BIS central bankers’ speeches  5  developments in June indicated that the trimmed mean PCE turned in its softest reading of the year. The trimmed mean analysis we do at the Dallas Fed focuses on the price movements of personal consumption expenditures. It is an analysis that tracks the price movements of 178 items that people actually buy, such as beer, haircuts, shoe repair, food and energy prices. In June, the trimmed mean came in at an annualized rate of 1.3 percent, versus 2.1 percent for the first five months of the year. The 12-month rate was 1.5 percent. My concern is not with immediate inflationary pressures. Core producer prices are still increasing at a higher than desirable rate.
The CEBS mandate is to promote harmonisation of regulatory frameworks and not to conduct ordinary supervisory work. And even if the consolidated supervisor has group responsibility it is an undeniable fact that the authority answers to the home-land constituents. Thus, the EOFS would contribute important functions in addition to the present regulatory structure within the EU. What I have in mind is an institution with real resources and not a “talk shop” primarily designed to build consensus. BIS Review 83/2007  5  Conclusions Let me summarise. During the last decade, the banking sector has increasingly become cross-border. We should welcome this rather new form of financial integration as it enhances competition and stimulates economic growth. This development also raises challenges for the regulatory community. Our answer to these challenges should not be increased protectionism. Instead, we need to find new forms for cooperation and supervision that allow the benefits from integration to be realised. Today I have presented to you my thoughts on the need for a special body with the mission to supervise the major European cross-border banks. Since this proposal to some probably seem rather radical and not very conceivable in the shorter term, I have advocated a gradual approach. In my view, the time has now come to set up the modalities for achieving this goal.

There are in short negative externalities. BIS Review 83/2007  1  As you all know, the impact of industry emissions on the environment is the classic example of what we economists call negative externalities. If the market is left without any intervention at all, the costs for the pollution will be borne by others than those who have actually been directly involved in the polluting business. The same reasoning can be applied to financial crises. A crisis that severely affects the functioning of the financial system will cause substantial costs to the entire economy, ultimately in the form of loss of output. These costs go far beyond what the financial firms can possibly take – or are willing to take – into account when conducting their day to day business activities. Both with regard to pollution and financial crises there are ways to manage the negative externalities. Public interventions can be used so that the negative externalities are internalised in a way acceptable to society as a whole. For industries polluting the environment, authorities can for example impose taxes or issue emission rights to compensate for the social cost of pollution. For banks and financial firms this is achieved by regulatory and supervisory measures, such as capital requirements and rules for the establishment and conduct of business as well as provisions giving central banks the right to grant emergency liquidity assistance. Many stakeholders, but no single authority If the negative externalities are limited to a national scale, sufficient public intervention may be possible.