samchain/econo-pairs-v1 huggingface dataset:
What I want to use the rest of this speech to talk about is how I think about stability and resilience in light of those three lessons now that I’m at the Bank of England, and how that has influenced my approach to monetary and financial policy setting in the face of recent and future shocks. 4  All speeches are available online at www.bankofengland.co.uk/news/speeches  4  2 A broader assessment of resilience  My first lesson from the financial crisis was that the past is not necessarily a good guide to the future. For the MPC this is most obviously true when it comes to thinking about supply growth – that is, the economy’s underlying growth potential. The experience of the crisis showed us that it wasn’t enough to think about business cycles relative to a fixed supply trend: that might have worked for the decades before the crisis, when supply growth averaged around 2½ %; these days we have to think about supply as much as we do about demand. That’s because once the economy is on trend the growth of supply sets the “speed limit” for how fast demand can grow without generating above-target inflation. Reflecting that, for instance, the word “productivity” – a concept which is integral to our assessment of the speed limit – now appears almost three times as frequently in our Inflation Report as it did before the financial crisis (Chart 5).

Google Trends indices show the number of searches on a specific topic as a proportion of all searches, normalised to give a maximum value of 100. For instance in my recent speech “Resilience and innovation in post-trade”, available online at https://www.bankofengland.co.uk//media/boe/files/speech/2019/resilience-and-innovation-in-post-trade-speech-by-dave-ramsden. 2  2  All speeches are available online at www.bankofengland.co.uk/news/speeches  2  improvements in policy, better able to adjust to shocks when they did happen? One way analysts at the OECD and at the UK Treasury tried to answer that question was by looking at graphs like these (Charts 2 and 3).3 These try to quantify the resilience of different countries in specific time periods in terms of shocks to GDP. They show a statistical estimate of the average GDP shock to hit the G7 economies in the first and second half of the available pre-crisis data – roughly, the pre-crisis decade and the previous decade – and how long that average shock persisted for. The scale on the X axis shows the number of years from the point the shock first hit. And the scale on the Y axis shows the deviation from trend output in each year. Broadly speaking, the smaller the average shock, and the faster it goes back to trend, then, as defined, the more resilient the economy. There were a few conclusions that we drew from this analysis back in 2008. First, the scale of economic shocks, measured by the size of the initial impulse, had fallen significantly across all the G7 economies.
Recent Bank of England research has suggested this may have been a potent crisis propagation channel for smaller businesses during the crisis. 14  As asset  prices have recovered, however, this channel cannot explain the persisting productivity puzzle. A third channel through which the crisis might have slowed productivity is by hindering resource reallocation between firms and across sectors. 15  Flows of capital and labour between companies are one of the key  channels through which technology and ideas are diffused. 16  Since the crisis, rates of labour market churn  between companies have been low and the dispersion in rates of return across sectors has been high. 17  Both are consistent with lower rates of factor reallocation having contributed to low productivity. (c) Forbearance and monetary policy  Some have contended that productivity may have been held back by the actions of the authorities, in particular regulatory forbearance and accommodative monetary policies. By supporting low-productivity companies who would otherwise have failed, policy actions may have prevented the “creative destruction” of 18  firms. Certainly, the level of company liquidations and firm exits has remained low in many countries since  the financial crisis, probably lower than would have been expected given the path of GDP. A number of studies have considered the evidence on the impact of regulatory and monetary policies on firm death and productivity.

The monetary reform in 1965 replaced the earliest Lek banknotes with new ones, in a ratio of 10 to 1, by changing at the same degree the value of prices, wages and, of any other financial operation. Since then, most of citizens have not been adopted yet with this change and are used to communicate with the outdated term “old lek”, driving to confusion in both the communication of prices of goods and services and the accurate reading of economic and financial indicators. Even before the launching of this awareness campaign -postponed due to the difficulties caused by the restrictions imposed to tackle the Covid-19 pandemic situation – the Bank of Albania has been attentive in encompassing this message in its educational publications and programmes, such are: Global Money Week, or the campaign on the issue in circulation of the new banknotes. Recently, we have conducted the measurement on the use of terminology “new lek” – “old lek” on a national level, through the inclusion of dedicated questions in the survey on measuring financial literacy of the Albanian population structured pursuant to the model of International Network of Financial Education (INFE, OECD). The analyses of these questions provides information on the degree of wrong use of terminology by: location-residential, age-group, gender, education, employment and average level of income, as well as the settings where it is more frequently used; aimed at adopting the campaign undertaken by the Bank of Albania on the elimination of the outdated terms “new lek”- “old lek”.
•  Mr Heng Swee Keat, IBF Chairman from 2005 to 2011, launched an impressive set of 53 standards under the FICS and secured a range of accredited training providers offering quality training and assessments benchmarked against the FICS. BIS central bankers’ speeches  1  The Pioneers of IBF comprise not only its past Chairmen but the many captains of industry who served on IBF Councils over the last 40 years. They provided practical industry insights which helped make IBF’s programmes relevant and meaningful. I would like to acknowledge in particular a few recent Council members who have shaped much of the work that culminated in this evening’s presentation. •  Mrs Euleen Goh, as the first Chair of the FICS Steering Committee, marshalled an impressive army of industry contributors to put together our first set of FICS standards in 2005. •  Mr Wee Ee Cheong, current IBF Vice Chairman and Chairman of the FICS Steering Committee, worked hard to drive the adoption of FICS and led the review of the FICS which will be re-launched later this evening as the IBF Standards. We also salute this evening the hundreds of industry practitioners who stepped forward in ways big and small over the last 40 years to help raise standards and build competencies. •  You have served on IBF workgroups, reviewing consultation papers on competency standards or industry examinations or frameworks for continuous development. •  You have volunteered as speakers, trainers and mentors, acting as industry ambassadors at IBF’s outreach programmes.

After a long period of high housing investment and rising prices, activity in the housing market now appears to be slowing. Seasonally adjusted, house prices have fallen for four consecutive months. In recent years, house price inflation has been accompanied by strong growth in household debt. Credit growth remains high. Higher interest rates and falling house prices may lead to slower consumption growth and a higher saving ratio ahead. There are large regional differences in house price developments, but the trend has been the same since year-end 2006. House price inflation is decelerating in all regions, with a 12month decline in house prices in Hedmark and Oppland and a rate close to zero in Trøndelag. The strong rise in house prices has been accompanied by an increase in turnover up to the summer of this year. The stock of homes for sale has varied somewhat in recent years, but since summer 2006 there has been a sharp increase. This may explain some of the decline in house prices in recent months. The present economic expansion differs from previous upturns in that inflation has remained low so far despite strong growth and increasing capacity utilisation. There are several reasons for this. First, low import prices and high prices for our commodity exports have improved Norway’s terms of trade appreciably. Prices for oil and gas, freight, fish, industrial commodities and engineering products have increased considerably.
It was once widely held that monetary policy could achieve somewhat lower rates of unemployment by allowing somewhat higher rates of inflation, and that it could do this without risking a  BIS Review 54/2006  1  substantial acceleration of inflation. This view proved to be mistaken because it did not correctly account for the role inflation expectations played in inflation dynamics. Economic concepts that are critical to our understanding of the economy may be difficult or impossible to capture in practice. One such concept is the neutral or equilibrium interest rate, which is the rate that, if sustained over some period of time, is likely to be consistent with an economy growing at potential with low inflation. Plausible estimates for the prevailing level of this rate have a range of at least 100 basis points, and the center of the estimates tends to move around quite a bit. Another concept that is difficult to estimate precisely is the economy's potential, or sustainable, growth rate. The acceleration in productivity growth in the United States in the late 1990s, for example, led us to revise our estimates of how fast the economy was likely to be able to grow at that time without undermining price stability. We also face considerable ignorance about the precise channels through which policy actions ultimately affect the economy, as well as how long those effects will take to show up and how large they will be when they do show up.

I am looking forward to learning from what I hope will be both an open-minded and a constructive dialogue about the future of monetary and macroprudential policies. Thank you. BIS central bankers’ speeches  1
17 However, in line with the previous discussion, instruments other than interest rates are likely to be much more effective in avoiding excessive credit growth and asset-price booms, and should thus be used as a first best alternative. Interest rates that are high enough to have a noticeable effect on credit growth and asset prices may have strong negative effects on inflation and resource utilization, and a central bank will probably rarely have sufficient information about the likely beneficial longer-horizon effects on inflation and resource utilization for the trade-off to be worthwhile and motivated. 18  16  Walsh (2009) points out that when financial factors cause distortions, these distortions will in general introduce corresponding terms in a loss function for monetary policy that is a second-order approximation to household welfare. Curdia and Woodford (2009) present a model where the second-order welfare approximation is a standard quadratic loss function of inflation and the output gap between output and potential output, but where potential output is affected by financial factors. Then inflation and the output gap remain the target variables, with and without financial factors. The neutral rate in the model, that is, the real rate consistent with output equal to potential output, is then also affected by financial factors. 17  Adrian and Shin (2007, 2009) argue, in a model with a risk-taking channel as in Borio and Zhu (2008), that short interest-rate movements may have considerable effects on the leverage of securities broker-dealers in the market-based financial sector outside the commercial-banking sector.

Essentially we took the view that unbalanced growth was better than no growth at all - which was the only other option we had. This "two speed" economy has, I know, been reflected in the pattern of your own activity as FLA members, with consumer finance volumes growing strongly in recent years where business volumes have been relatively flat. In the past year alone new business written to consumers was nearly three times that written to business customers. Now clearly the imbalances can't go on increasingly indefinitely. The build-up of household debt and the related strong rise in house prices we saw last year in particular must begin to moderate at some point. So much of the recent debate has been about whether the eventual adjustment will occur gradually, within the context of continuing overall expansion, or more abruptly in which case the overall expansion could prove more difficult to sustain. On the macro-economic data it seems clear that the global economy in fact bottomed out around a year or so ago, and that we have since seen the beginnings of a recovery, notably in the US, on which so much of the rest of the world currently depends. And it is also clear that monetary policy generally and in some countries also fiscal policy - remains supportive.
This should, in time, ultimately lead to a situation where it is simple and cost effective for any eligible participant to become a direct participant in CHAPS. Improved governance In bringing CHAPS in-house it has been important to develop a strong and robust governance framework and retain the strong ‘user voice’ that CHAPS Co facilitated. At the heart of this was the establishment of the RTGS/CHAPS Board (the Board) chaired by the Bank’s Deputy Governor for Markets & Banking and comprising four non-executive members selected for their experience and expertise, together with a number of the executive, myself included.9 The Board provides a strategic focus with particular attention to the Bank’s role as a systemic risk manager to the CHAPS system, broader financial stability remit and other public interests. The Bank’s operation of CHAPS is subject to the Bank’s full ‘three lines of defence’ risk management model and close engagement and oversight on relevant matters from the Governors, the Bank’s Court of Directors and the Financial Policy Committee. In its capacity as Payment System Operator, the Bank’s delivery of CHAPS is supervised by the Bank’s Financial Market Infrastructure Directorate10 to the same standards as other systemically important payment systems. It is also essential to understand the views of industry, and we have established forums to facilitate an open dialogue with a variety of key stakeholders. This includes the CHAPS Strategic Advisory Forum (SAF) and the RTGS Renewal Programme’s External Advisory Body (EAB).

The Bank of England is actively researching both how technology is changing financial services today (through our Fintech Hub1) and how financial services might evolve over the next decade.2 We are assessing what technological change means for users, businesses, and the financial sector, as well as the risks that this might pose to the Bank’s mission. In the context of this rapid change in payments, an area of critical importance to the UK economy, the Bank is undertaking two major initiatives to strengthen core payments architecture, and to enable it to better meet the needs of the industry and the public. These initiatives are closely linked: renewing the RTGS service and bringing the operation of CHAPS into the Bank. Before I go any further, I will define these two acronyms that might sound unfamiliar, but whose role is crucial to everyone in this room - indeed to everyone in the country. The RTGS (Real Time Gross Settlement) service is the core payments infrastructure in the UK, providing the ultimate settlement for a number of payment systems and other financial market infrastructures, including retail systems such as Bacs. As part of this, it provides accounts for banks, building societies, and, from very recently, to non-bank payment service providers (PSPs),3 which use it to settle payment obligations. It is also the platform through which monetary policy decisions to change Bank Rate are implemented. Settlement takes place across the books of the Bank, in central bank money and in real-time. This is efficient, settlement risk free and irrevocable.
Residential real estate prices and lending to the non-financial private sector continue to grow steadily, with no clear evidence of a reversal in the upward phase of the financial cycle. Therefore, the CNB has decided to continue with further tightening of the capital based macroprudential measures. While the muted response of interest rates of Croatian banks reduces the risks to financial stability of sudden, unexpected and until very recently unprecedented monetary policy tightening, it may also weaken the pace of disinflation. However, it is interesting to note that inflation rate in Croatia remained amongst the lowest in Central and Eastern Europe, currently running at 7.9%, despite much lower interest rates. Sugar rush? Rising interest rates will prove to be a boon for the European banking industry – at least in the short term. Profits are already reaching a decade high, not least thanks to the ECB's deposit facility in an environment of abundant liquidity. The banking system is already looking much better than only a few years ago, putting to rest painful memories of the "low for long" period. However, we know that the benefits for banks of rising interest rates are frontloaded, while the costs associated with rising rates are backloaded for a number of reasons. First, the corporate sector has so far managed to benefit from the high inflation environment, but as inflation gradually converges back to target, we might expect the profit share in GDP to revert back to the pre-war level.

Not all of them disappeared though, for example, Charlemagne capital bought four regional banks and consolidated them into a single bank. Cleaning up the market, by removing inefficient banks, laid foundations for a healthier banking system, resistant to macroeconomic disturbances and improved risk management. Moreover, these two crises made us attentive to emerging risks, such as rapid credit growth or lax risk management practices and generated political support required to provide us with the toolkit needed to prevent future disruptions in the financial sector with large spillovers to the real economy and potentially huge costs to the budget. Since then, we continued cleaning up the system with no threat to either the financial stability or the budget. Navigating the Boom and the Bust The resumption of growth and resolution of weak banks eventually stabilized the banking system, setting the stage for the period of rapid international integration and financial deepening of the 2000's. After the first clean-up at the turn of the century, the number of banks has fallen to slightly above 40, and consolidated institutions started to compete strongly. In their pursuit of higher market shares, banks turned to foreign sources of financing, facilitated by extremely favourable financing conditions and high liquidity at the global level. At the surface, the financial sector supported the story of economic growth and convergence. However, experiences from the 1990s provided an optics needed to spot risks emerging underneath.
And, this teacher continued, “in the unlikely event that you physicists become rich, you will not only need accountants to look after your money but the accountants could also end up spending your money for you!” The teacher’s name was Brother Conrad, and I have no doubt that many of the senior accountants here tonight will remember this very learned Marist Brother. Anyway, in 1973, seven of us from the “SJC Class of 1972” won scholarships to study in New Zealand to become a doctor, engineers, a teacher, a lawyer, an air traffic controller and a master mariner. No scholarships were offered for accountants or physicists! The end result was, the Minister (Niko Lee Hang) and most of our other class mates eventually became Accountants, whilst one became an Economist and another an Engineer. I suppose because of Br. Conrad’s warning, there was no physicist from our group. And, fortunately for me, I don’t have any money to start worrying about an accountant spending it on my behalf! We have just witnessed the awarding of Certificates to those who have passed their “final qualifying exams” (or FQEs). And, later on this evening, we will also witness the Induction of New Members into the Samoa Institute of Accountants. On behalf of everyone here tonight, I wish to congratulate all of you on the achievement of these important milestones in your education and career lives. You have continued to make your families both proud and happy.

Leasi Papali’i Tommy Scanlan: Samoa’s economy, interest rates and the expanded mandate of its central bank Address by Mr Leasi Papali’i Tommy Scanlan, Governor of the Central Bank of Samoa, on the induction of new graduates to the Samoa Institute of Accountants, Apia, 25 March 2010. *  *  *  Distinguished Guests Ladies and Gentlemen 1. Introduction  At the outset, I want to thank the President and her Committee for inviting me to address you on this special occasion. It is indeed both a privilege and an honour for me to be here this evening. In 1970, when the Minister of Finance (Hon. Niko Lee Hang) and I attended form 4 at Saint Joseph’s College, we were told that a number of students in our class will need to take “physics” as an option, while the rest will take “accounting” or “bookkeeping”, as it was called in those days. Physics was a relatively new subject at that time, and they needed some guinea pigs to continue their experiment with. And, that was where we came in. We were never given the chance to decide which subject to take. So, from 1970 to 1972, nine of us studied physics while the rest of our colleagues studied accounting. I can never forget what one of the best accounting teachers in the country in those days used to say to us. He said, “you can study physics all your life, but none of you will ever go to the moon”.