samchain/econo-pairs-v1 huggingface dataset:
5 At the same time, the effect of policy rate changes on household indebtedness is very small. •  The IMF estimates that hiking interest rates by 100 basis points for a year reduces the probability of financial crises by 0.04 to 0.3 percentage point at most. Back to Tinbergen: an enhanced role for regulatory policy So, we are back to where we started: if monetary policy has at best a limited role, what do we do with financial stability? •  As Stefan Ingves put it recently: “We deal with inflation, we keep an eye on the exchange rate, we do our best to reach our inflation target. But that means that somebody else has to deal with the problem we have in our housing market.” 6  And that someone else could well be regulatory policy. And that includes both the oldfashioned microprudential variety as well as the “new kid on the block” – macroprudential policy. Old is gold: microprudential regulation The lesson of the Global Financial Crisis is not that microprudential policy was ineffective in achieving financial stability and therefore we need to look elsewhere. •  The more pertinent lesson was that microprudential regulation – and might I add, supervision – was inadequate and had to be strengthened. 5  Svensson, L (2014), “Inflation Targeting and ‘Leaning against the Wind’,” International Journal of Central Banking, Vol. 10, No. 2, June. 6  “Riksbank Stefan Ingves sees flaws in crisis-busting tools,” Financial Times, 13 September 2015.

Specifically, our research indicates that when college tuition rises in a state, it leads to higher levels of student debt and a lower homeownership rate. These factors matter for inequality and social mobility, because increasing home equity is the major form of wealth accumulation for the great majority of American families. Thus, rising tuition and changes in the way that college is financed appear to have diminished the ability of higher education to lift people from poverty into the middle class. Of course, students’ reliance on debt and the returns from graduating vary across educational institutions. Of particular interest here is recent work by Raj Chetty and his co-authors showing that some colleges—some of which can be found in the CUNY and California state systems— appear to be much better at fostering economic mobility than others. In other words, they accept relatively large numbers of lower-income students while also producing large numbers of high earners, which means that these institutions facilitate considerable upward mobility. Learning exactly how they do it and how it can be replicated strikes me as a first-order question for further study. Recent research by Caroline Hoxby to assess differences in productivity across educational institutions makes important progress in that direction. In summary, academic research on the financing, costs, and returns of higher education is more important now than it has ever been. We are pleased to have many of those researchers participating in this conference.
In addition to the European Commission’s green bonds, these instruments have also been issued by both governments and the private sector. Overall, green bonds worth $ billion were issued worldwide in 2022. Added to the issuances of social bonds $ billion), sustainable bonds $ billion) and sustainability-linked bonds3 $ billion), this takes the total to $ billion.4 This is 23% down on the 2021 figure, since the geopolitical context – together with the economic and financial uncertainties – has had an impact on both sustainable finance markets and on the overall volume of issuances. If we also consider financing channels other than issuances, such as sustainable lending, the overall volume of funding in 2022 was down on the previous year. Nonetheless, Spain again set a new record, with a total of € million, representing a 9% increase thanks to the growth in bank financing, which offset the fall in bond-based financing.5  2  Up to the deadline of 19 October 2022. 3  Sustainability bonds are issues whose proceeds are used to finance a combination of green and social projects. Sustainability-linked bonds are instruments whose financial and/or structural characteristics can vary according to whether the issuer achieves a pre-defined sustainability objective. 4  Source: “OFISO Annual Report. Sustainable Finance in Spain in 2022”, based on data from Environmental Finance. 5  Source: “OFISO Annual Report. Sustainable Finance in Spain in 2022”, based on data from Environmental Finance.

Bahrain and Malaysia has one of the strongest relationships among the countries in the Middle East. It was further cemented with the signing of a Memorandum of Understanding between the Central Bank of Bahrain and the Central Bank of Malaysia in 2001 to jointly develop Islamic finance internationally. In fact, an 80-strong Malaysian delegation led by HRH Raja Dr. Nazrin Shah, Crown Prince of the State of Perak and Malaysia’s financial ambassador, visited Bahrain in October 2009 to forge greater financial ties with the Bahraini Islamic financial community. It is heartening to note that common grounds have been reached on the standard contracts that the Association of Islamic Banking Institutions Malaysia or AIBIM, and the International Islamic Financial Market, or IIFM, have produced. This is invariably a reflection of the growing cross border harmonisation of interpretations of concepts and agreements. Furthermore, AIBIM’s interbank Murabahah master agreement (IMMA) and the corporate Murabahah master agreement (CMMA), recently launched in Malaysia, would further unlock the potential of the Malaysian Islamic money market, which saw around $ billion worth of transactions daily last year. In the global scene, it is estimated that the global commodity murabahah market is valued at more than $ trillion, giving rise to a huge business potential. I would encourage you to focus more resources here as it is one of the key areas that we can jointly promote in our regions.
Prior to the introduction of the euro, the internal market came under pressure from exchange rate crises: national currencies sometimes fluctuated sharply in value. After the launch of the euro, the euro area enjoyed a number of calm years but, unfortunately, the member countries did not make use of this time to carry out the necessary reforms at national and European level nor, in particular, to put efficient crisis management arrangements in place. And the countries that experienced serious difficulties three or four years ago, such as Ireland, Portugal, Spain and Italy, are nonetheless beginning to recover, thanks in part to ECB policy. We also see that Germany, the strongest economy in Europe, is not experiencing any major disadvantage from that same ECB policy. Admittedly, it’s a continuous search for a policy that is as favourable as possible for everyone. What does one do with Greece, say, which has fundamental problems with its competitiveness? The Greek crisis would not have become so large if the European institutions had not been so weak and if more decisive action had been taken, with better crisis management. Are you surrounded by enough people who dare to contradict you? Do you speak to people who dare to question ECB policy? Oh yes, definitely. I listen to people who say that the ECB should take a different approach. I respect those opinions. We ourselves naturally reflect on whether our policy is correct.

For example, we explore what the consequences would be if we were to raise interest rates rather than lower them. But our analyses convince us that we are following the correct strategy. Besides, that strategy has not been determined by Mr Draghi and a handful of ECB Executive Board members; it came about with the agreement of the large majority of the Governing Council, on which all national central banks governors in the euro area have a seat. I would never have imagined that the euro area could break up, as almost happened in 2012. Nor did I think it possible that the ECB would have to print more than an additional € trillion (i.e. € and pump it into the economy in order to respect its mandate. The ECB has acted resolutely but the story is not over yet. In order to emerge from the crisis, it is crucial that the other authorities also do their homework. It is not up to monetary policymakers to resolve structural problems. 2  BIS central bankers’ speeches
Fortunately, we didn’t get to that point during this crisis. The Federal Reserve, and many other people around the world, pulled out all the stops to avoid the collapse of the banking system, of 5 / 15  BIS central bankers' speeches  the financial system, and as a consequence, we had a bad recession – worst recession that we’ve had since in the post-WWII period, but far short of what happened in the Great Depression. The Great Depression, the unemployment rate I think climbed above 20%. The price level, the level of prices dropped by about I think a third. So it was a really absolutely horrendous experience. If you talk to someone like my mother, my mom’s 94 years old, she was a relatively young girl during the Depression. She still remembers and talks about it, just incredibly searing. People were out of work for really until WWII. The Crash started in 1929, the U.S. economy really didn’t get back to close to full employment, only in the 1940s, and because of WWII. Dr. Olajide Oladipo: Thank you. President Dudley: So this time was quite a bit different, thank God. Dr. Olajide Oladipo: I’m sure that everybody here invests. And they are ... students in economics and finance. We talk about investment. I wanted to shed light or your perspective on how the fixed income investor performed in the last eight years, please.

It has broadened its representation and established three sub-committees, which deal with issues ranging from market practices and product development to training and education. The Committee also expects to adopt a higher profile – for example, through the publication of standard documentation and promotional literature, and by organising seminars of the kind that we are having today. 3. The reconstructed MPC has already begun to show achievements. Some of its contributions may seem a little quaint, such as its work in formulating a set of standard typhoon and rainstorm procedures for settling foreign exchange and money market transactions under extreme weather conditions. But just imagine the chaos and confusion if everyone were to adopt a different methodology for interest calculations and use a different date to settle the trades every time the markets close down because of bad weather. The MPC has also been advising the HKAB on other payment and settlement standards. Again, the advice given may seem insignificant or prosaic, like the creation of a standard format for the settlement code needed by participants in our new US dollar clearing system; but it is often tiny creations like this one that go a long way towards strengthening efficiency in payment and settlement systems. 4. Apart from this “domestic” work, the MPC has also served as a window connecting the local forex and money market industry with the outside world. It has already started to strengthen its ties with overseas foreign exchange committees.
Martin Flodén: The low inflation – should we be worried and can we do anything about it? Speech by Mr Martin Flodén, Deputy Governor of the Sveriges Riksbank, at SACO (the Swedish Confederation of Professional Associations), Stockholm, 14 May 2014. *  *  *  Thank you to Björn Andersson, Charlotta Edler, Gabriela Guibourg, Kerstin Hallsten, Marianne Sterner, Christina Nyman, Stefan Palmqvist, Ulf Söderström and other employees at the Riksbank for valuable discussions and views on earlier versions of the text, and to André Reslow for help with data production. The views expressed in this speech are my own and are not necessarily shared by the other members of the Executive Board of the Riksbank. Those of you who follow the debate on monetary policy will probably not be surprised that the theme of my speech today is the low rate of inflation. This is the most important question for monetary policy right now. Over the past year, I have emphasised the importance of ensuring that inflation does not get stuck far below the target of two per cent and said that monetary policy therefore needs to focus on avoiding such a situation. Consequently, I entered a reservation against holding the Riksbank’s policy rate unchanged at the most recent monetary policy meeting in early April. Instead, I was in favour of a repo rate cut of 0.25 percentage points. Today I intend to focus on two issues. First, I wish to explain why I am worried by the low inflation rate.

This seems to be feeding, with about a two years delay from the start of reforms, into a gradual recovery in employment. But these achievements are not yet showing any signs of feeding into productivity growth. Total factor productivity has actually fallen by 0.8% in the euro area since 2008, whereas in the US it has grown by almost 7% in the same period. Higher competitiveness may well contribute to raising productivity, but we know that cheap labour alone will not produce innovative firms. Thus, I see a need today to rebalance our focus: to focus less on achieving internal devaluation, and more on raising productivity. And this entails a broader set of reforms than countries have adopted thus far. Creating a productivity-enhancing environment For advanced countries in today’s globalised economy, productivity is increasingly linked to investment in knowledge-based capital and moving closer to the technological frontier, especially in high value-added sectors such as the digital economy. While this is ultimately about the effort and ideas of individuals, not governments, public policy plays a crucial role in creating the right environment.
During the first phase of the upturn, output growth was largely attributable to a sharp increase in person-hours worked. This partly reflected a marked increase in average working hours when sickness absence declined in 2004. Higher activity did not therefore result in substantial labour market tightening. Additional labour inflows following the enlargement of the EU and the EEA in 2004 also contributed to increasing potential output. A substantial share of inward labour migration is accounted for by foreign companies with contracts in Norway. Labour inflows from the new EU member states still appear to be growing rapidly, with the construction industry absorbing a particularly large share. On the other hand, a rise in sickness absence and the number of persons on disability benefits are pushing down potential output this year. Over the past six months, labour shortages in the Norwegian economy have come into increasing evidence. Unemployment has shown a marked decline and is now at a low level. Employment is still on the rise, while the labour force has remained virtually unchanged in recent months. Registered unemployment, seasonally adjusted, stood at 2.5 per cent of the labour force in August. The number of registered unemployed adjusted for seasonal factors was around 61000. Unemployment has declined for all occupational groups, and has been most pronounced in manufacturing, the construction industry and in the engineering and ICT sectors. BIS Review 80/2006  1  Norges Bank’s regional network also supports this picture.

In the case of solvent institutions, we have known theoretically since Thornton (1802), and probably over a century, as a practical policy, how to deal with that vulnerability in a domestic setting: with central bank LOLR operations, later complemented by deposit insurance. In the current setting, it is far from guaranteed that this process can be replicated at the international level. Of course, in normal times and with developed capital markets, banks can use foreign exchange swap markets to convert domestic liquidity into foreign exchange liquidity speedily and relatively cheaply. However, this process broke down almost completely during the global run on cross-border non-US bank liabilities in the immediate aftermath of the Lehman collapse. In a situation like this, the home central bank’s ability to assist banks to acquire the foreign liquidity denied them on the market and thus avoid a failure of banks to deliver on their foreign currency payments is limited by the size of its reserves or the willingness of the central bank issuing the international currency in question to help. Although the provision of foreign currency liquidity through reserves was clearly important during the crisis, most studies seem to support the conclusion that the dollar swap lines made the crucial difference, especially when they were uncapped vis-à-vis some key central banks. To a significant degree, this was the domestic LOLR process replicated at the international level. Does this mean that we have the solution? At the conceptual level, yes, but at the practical level, maybe not.
A smaller rate increase is then needed to stabilise the economy than if the cost shock had only affected inflation. In the model exercises, it is assumed that the hand-to-mouth households do not have debt, but if we had introduced debt for this group, an interest rate increase would have reduced disposable income to a further extent. In most New Keynesian models, monetary policy primarily works  through the real interest rate, which is also the case in the model simulations I have shown. But, in practice, the nominal interest rate probably has a greater effect than the real interest rate on the cash flow of indebted households, at least in the short run. Chart: Decomposition of main drivers behind rate path When we make forecasts for the purpose of interest rate setting, we incorporate that an increase in prices and costs influences household real disposable income and firms’ profits. [12] We also incorporate that the effect of interest rate changes has likely increased over time due to higher debt ratios. We also assume that both real and nominal interest rates have a bearing on demand. The decomposition chart in our Monetary Policy Report shows the contribution from different types of shocks to changes in the policy rate path from the previous Report. In the latest Report, the decomposition showed a negative contribution from demand, represented by the dark blue bars. These negative contributions reflect, among other things, the fact that we take into consideration many other conditions than those included in the simplest models.

More (and more highly specialised) workers, better and more broadly invested capital and a rapid exchange of knowledge – all this led to higher economic growth and greater prosperity worldwide. Globalisation also had a major impact on monetary policy. The most important change in this respect was the increasingly global production of goods, which reduced inflationary pressure. The latter also fell because the global economy was able to satisfy increases in demand in individual countries comparatively easily. In the less integrated economy of the Cold War era, higher demand quickly led to bottlenecks and rising prices. With inflationary pressure lower, central banks were able to react more strongly to adverse economic developments. And this was often appropriate, in retrospect. For the global integration of the financial markets did not just foster growth, it also made it easier for local crises to spread to other countries. In the past 15 years, there have been repeated instances where such global crises have prompted the major central banks to substantially ease their monetary policies to prevent severe economic declines and persistently negative inflation rates. This easing was initially achieved through interest rate reductions, but then increasingly by means of unconventional measures such as quantitative easing and, in the case of Switzerland, foreign exchange market interventions. The expansion in the range of monetary policy instruments also has to do with globalisation. The traditional way to ease monetary policy is by lowering the policy rate below its neutral level.
The board of directors must have full and direct access to the heads of the internal control functions (risk management function, compliance function and internal audit). In other words, the interaction between the board of directors and the heads of the internal control functions should not have to go through an intermediary level of executive management. Reporting to the board should be supported by agile internal systems capable of producing reliable information to facilitate meaningful discussion and effective decision-making processes. Overall, the internal audit and risk management functions are more mature in their functioning than the compliance function, whose role has changed/increased in recent years. There is therefore more room for improvement in the compliance function. The main focus areas identified by the SSM related to internal control functions are: (i)  the board’s challenging capacity and ownership in addressing deficiencies. (ii)  in most SSM institutions, the heads of the internal control function have direct access and report any concerns directly to the board of directors, in line with the EBA guidelines on internal governance. However, the frequency and level of detail of the information provided is also a focus area. (iii)  the right balance between sufficient involvement and independence. (iv)  the stature of the control functions, with the internal audit function performing better and the compliance function worse or even inadequately. (v)  the central steering and oversight of the control functions of group subsidiaries.

(vi)  there has been a slight increase in the staffing of control functions (especially compliance), but there are still shortages of qualified staff in some specialised areas (e.g. cyber, digitalisation, internal models). 4  (vii)  the scope covered by compliance is often not comprehensive, clear or well documented. The role of the board of directors, in particular through its oversight committees (Audit, Risk, Appointments and Remunerations) is key to ensure that the internal control functions have the appropriate stature within the institution and are sufficiently resourced. Moreover, the board of directors and its committees should empower the internal control functions to complement the role of the first line of defence. The board of directors needs to challenge the control functions and properly oversee the follow-up of the findings and weaknesses flagged by these functions. It must also demonstrate a willingness to take ownership and be actively involved (“tone from the top”). Risk data aggregation The last point I would like to make is the importance of accurate, relevant and timely data. The SSM pays close attention to supervised institutions’ general data quality, risk data aggregation and risk reporting (RDAR) capabilities, which are deemed essential for proper risk governance and sound risk-based decision-making. Indeed, they have been a key aspect of the ECB’s supervisory roadmap since the SSM was created.