samchain/econo-pairs-v1 huggingface dataset:
But central banks have also long been worried that, left to themselves, banks will try to avoid holding the best-quality, most liquid assets, because they yield less. If, in an attempt to induce banks to hold truly liquid assets, the central bank were to declare that it would lend against only the highest-quality collateral, the banking system would know that those assets could be converted into money in all circumstances. But if an otherwise solvent bank gets into trouble and still faces a liquidity problem after taking all of its eligible high-quality assets to the central bank, the authorities face a choice between letting it fail through a lack of liquidity or lending against a wider class of assets. Their choice will turn on an assessment of the trade off between, on the one hand, the risk of financial instability today that could flow from immediate bank failures and, on the other hand, the risk of financial instability in the future that may flow from the central bank being seen to protect banks from their mistakes. 11 If during peacetime a bank judges that its failure would be likely to cause widespread systemic distress, it will probably conclude that the central bank’s collateral policy will, during wartime, be relaxed, leading it to choose to hold less of the highest-quality eligible assets than otherwise. Crucially, the central bank may then, after all, not be able to stick to its declared collateral policy, just as the bank suspected.

In particular, while growth and employment rates have been converging upwards across the euro area, significant gaps still remain in terms of levels. In large parts of the euro area there are still substantial under-utilised resources, reflected in a negative output gap and high unemployment rates. And this is of course crucial for our assessment of the path of inflation – namely, whether we see a sustained adjustment that would warrant a scaling back of our exceptional degree of monetary policy accommodation. Let me remind you that we have established four criteria to confirm a sustained adjustment: first, that headline inflation is on a path to levels below but close to 2% over a meaningful mediumterm horizon; second, that inflation will be durable and stabilise around those levels with sufficient confidence; third that inflation will be self-sustained, meaning it will maintain its trajectory even with diminishing support from monetary policy. And finally, it goes without saying that in each case the relevant metric is euro area inflation not the inflation rates of any individual country. For the first criterion, the assessment does now seem to be improving: our latest projections foresee the path of headline inflation now much closer to the target over 2017–2019. But the inherent uncertainty in the forecasting process needs to be mitigated by cross-checking with other available information on inflation dynamics. Particularly useful here are measures of underlying inflationary pressures, since they can be monitored in real-time and tend to be more informative than headline inflation for medium-term price developments.
So the central bank’s mandate needs to permit a temporary undershooting of its inflation target if it thereby reduces the risk of a subsequent painful bust. The past few months have, however, seen questions asked of our inflation-targeting framework for other reasons. According to some, the framework has constrained the ability of monetary policy to support the recovery; an objective giving higher priority to growth or employment might have produced a better outcome. A particular, and increasingly popular, variant of this involves combining growth and inflation into a single target for nominal income. The first thing to be said is that the MPC’s mandate already incorporates a growth and employment objective. While our primary objective is to maintain price stability, subject to that we are also expected to support the Government’s policies for growth and employment. The Chancellor’s annual remit letter puts flesh on those bones, by specifying not only the 2% target for CPI inflation but also the Government’s desire for high and stable growth and employment. And the letter goes on to note “that the actual inflation rate will on occasions depart from its target as a result of shocks and disturbances (and that) attempts to keep inflation at the inflation target in these circumstances may cause undesirable volatility in output.” If we had tried to offset the impact on consumer prices of, say, sharp movements in import prices, then we would need to engineer countervailing movements in domestically generated costs, in particular pay.

Eddie Yue: The development and future of the offshore Renminbi market Keynote address by Mr Eddie Yue, Deputy Chief Executive of the Hong Kong Monetary Authority, at the Euromoney Global Offshore RMB Funding Forum 2013, Hong Kong, 8 May 2013. *  *  *  Tony (Shale)1 Richard (Morrow),2 Distinguished Guests, Ladies and Gentlemen, Good morning, and thank you all for coming. I’m honoured that Euromoney has invited me to speak at the Global Offshore RMB Funding Forum for the second year in a row. I recognise many familiar faces in the audience today, and I note the presence of a wide range of panellists who will no doubt examine the offshore RMB market from every possible angle and perspective. Here in Hong Kong – the world’s premier offshore RMB business centre – we have had a front row seat to watch the offshore RMB market take shape over the past few years. Since I last addressed this forum in May 2012, this market has continued to expand and evolve at a dizzying pace, which will provide for an interesting and timely dialogue today. However, before we get into what will be a spirited discussion, I want to use my role as the opening keynote speaker to take a step back and gain a broader perspective of developments to date. I also want to look at the macro context, which is likely to play a major role in shaping future developments.
The monetary policy mandates of the Federal Reserve are clear: We must foster monetary and financial conditions that support maximum employment and price stability. Since January 2  BIS central bankers’ speeches  2012, the Fed has set an explicit goal for inflation of 2 percent, as measured by the price index for total personal consumption expenditures, or PCE. So, how are we doing with respect to this 2 percent target and our Zimbabwean risks? Despite many earlier predictions of unacceptably high inflation, total PCE inflation has been hovering around just 1 percent since early 2013. Other inflation measures, notably, the wellknown Consumer Price Index (CPI), are also well below their related benchmarks.1 Forecasters often look at core inflation, which excludes volatile food and energy prices, because it is a better predictor of where overall prices are headed than is total inflation. Our progress toward the inflation target is not noticeably faster by this metric either. Core PCE inflation was just 1.1 percent over the past year and has been at this rate since last spring. Most private sector forecasts and survey measures of inflation expectations have remained well anchored and do not ring any alarms of high inflation. Expectations embedded in asset prices tell a similar story. Sophisticated models that extract inflation expectations from the yield curve show that investors’ inflation expectations at the three-year horizon are below 2 percent and will be below 2 percent for several years. All told, the risk of high inflation seems very low.

In the case of Chile, this duty to impart information is stipulated in the Central Bank’s Constitutional Organic Law which mandates that once a year the Bank must inform the President of the Republic and the Senate about its deliberations and developments. This takes place in September when the Central Bank Board presents its Monetary Policy Report to the Senate. Nevertheless, the Central Bank of Chile goes beyond this requirement and reports not only to the Senate in September but also presents a monetary policy report to the Senate’s Finance Committee in January and again in May. The same happens with the Financial Stability Report which is published in January and June each year. Similarly, the Bank gives an account of its management of international reserves once a year as part of its Annual Report. However, this is not enough. The legitimacy of the Central Bank is upheld by direct, open, and non-excluding communication with the general public and so these documents are uploaded on the Bank’s website at the same time as they are being presented. Moreover, the Bank issues other reports, communications, minutes, specialized studies and statistics, all of which are available to the public. There are also press conferences and interviews with Bank board members and staff. The time when the workings of central banks were something complex and mysterious has also passed. We want the community to understand our work since it consists of providing a public good – stability – which enables the country to progress.
For example, “popular narratives” can emerge which shape collective expectations among the public – optimism or pessimism, exuberance or depression – and which can then drive aggregate economic fluctuations. 19  Recent research has demonstrated just how powerful those emergent popular narratives can be, economically and financially. As one example, the work of Nick Bloom and co-authors has constructed various measures of businesses’ degree of uncertainty around key issues, based on the words used in media reporting. 20  These narrative-based measures of uncertainty have been found to be important for  explaining the investment behaviour of companies over time. David Tuckett and co-authors have constructed measures of the popular narratives used by participants in 21  financial markets. They find that these narratives can play an important role in explaining asset price  dynamics, over and above the impact of macro-economic fundamentals. In a similar spirit, the work of Michael Bailey and co-authors has found, using Facebook data, an important role for shared social narratives in explaining behaviour in the housing market. 22  At a macroeconomic level, the work of George Akerlof and Robert Shiller has looked at the popular narratives which emerge during periods of boom and bust. 23  Using words extracted from newspapers, they  find the prevailing popular narratives about the economy have played a significant role in accounting for the heights of the peaks and depths of the troughs during macro-economic booms and busts. Public expectations, embedded in the stories they tell, are a key macro-economic driver.

Jon Cunliffe: The role of the leverage ratio and the need to monitor risks outside the regulated banking sector Speech by Sir Jon Cunliffe, Deputy Governor for Financial Stability of the Bank of England, at the Financial Reporting Council annual conference, London, 17 July 2014. *  *  *  In early 2009, around the height of the financial crisis, the market valued the combined equity of the major UK banks at less than 2% of their total assets. In other words, the market thought these banks were, on average, over 50 times levered. Measured by their regulatory returns, average leverage was “only” 30 times or so. And on a risk weighted basis, the banks had 6.7% common equity capital – well above the 2% minimum. Tier 1 capital ratios were almost 9%. This was of course the time when fear in the market was at its peak. The message was crystal clear. When it mattered most, the market did not at all believe the published numbers for bank capital adequacy. And the market reacted accordingly bringing funding markets to a halt. This episode tells us two things. The first is that financial reporting matters. It matters at all times. But it matters most in times of stress. As an illustration here, I can recall heated discussions between European leaders about mark to market rules and about the transfer of assets from banks’ trading to their banking books in 2008 and 2009.
9 The ARRC Selects a Broad Repo Rate as its Preferred Alternative Reference Rate 10 Information about SOFR can be found at apps.newyorkfed.org/markets/autorates/sofr. 11 In addition to the London Interbank Offered Rates, the other major interbank offered rates (IBORs) are the Euro  Interbank Offered Rate (EURIBOR) and the Tokyo Interbank Offered Rate (TIBOR).

But the fact that firms are starting to grapple with implementation means that they’ve got past denial and bargaining and settled down to acceptance. Smaller firms may be lower down on the preparation curve, although presumably their total risks are also smaller. In December, the Federal Financial Institutions Examination Council presented a one-hour webinar on LIBOR transition that drew about 1,300 participants from supervised firms. Of those who responded to a polling question during the webinar, about one-fifth said it was the first time they were hearing about the topic. To continue forward, several issues must be resolved. For example, what events should trigger the shift from LIBOR to SOFR or another alternative rate? A definitive end to LIBOR is an obvious trigger. But, short of that, what events should prompt the switch? What if LIBOR was nominally available, but the UK FCA used its supervisory power to declare that LIBOR is unrepresentative of the underlying market? Last month, an FCA official highlighted the possibility that this is exactly how the end of LIBOR might come about, and urged market participants to seriously consider this possibility when crafting their fallback triggers.23 In their various consultations on fallback language, the ARRC has proposed that such a declaration by the FCA would trigger the switch to an alternative rate. A clear majority of respondents supported that proposal. I think every market participant should ask how the fallback triggers in their contracts would respond. In addition, the precise mechanism of changing from LIBOR to, say, SOFR will vary.
1 This broad based deterioration in the global economy was carried through into the first and second quarters of 2009. The most recent projections by the IMF suggest that global growth will contract by 1.4% in 2009 before recovering to a growth rate of 2.5% in 2010. For the United States of America and the Euro Area, growth in 2009 is projected to contract by 2.6% and 4.8%, respectively; whilst in Japan and the United Kingdom, growth is projected to contract by 6.0% and 4.2%, respectively. Although emerging and developing economies are projected to perform much better, with a projected growth rate of 1.5%, this rate of growth is significantly below the estimate of 6.0% growth in 2008. Further, growth in Sub-Saharan Africa is projected to decelerate sharply to 1.5% from 5.5% in 2008. Thankfully, as we meet today there is growing evidence that in many parts of the world, the worst of the crisis may be over. At the epicenter of the crisis, i.e. the United States of America (USA) and Europe, the collapse in output has decelerated – with the most recent evidence pointing to some increase in growth both in terms of actual output as well as some of the leading indicators of output. In the USA, second quarter GDP growth figures of -1% indicate a deceleration in the pace of contraction. Further, in the second quarter of 2009, important Euro areas economies such as Germany and France actually posted positive rate of GDP growth.

It is expensive to use, however, and in one way or another we all as bank customers pay for the use of it. For reasons of security and efficiency in retail payments, a more widespread use of cards would be desirable. Forces driving the development of the card payment market The forces of supply and demand shape the evolution of the card payment market in much the same manner as they influence the evolution of any other market. Demand is influenced by factors such as acceptance, convenience and relative prices. It has sometimes been argued that demand for payment instruments is not price elastic - that relative prices 1 do not greatly influence users' preferences for different payment instruments. The Nordic experience does not support this view. The rapid expansion of card payments and other electronically initiated instruments in Norway clearly point in a different direction. Norwegian consumers' shift of preferences followed immediately after banks' change of pricing strategy, where (among other changes) a price was put on the use of cash (as a small fee on ATM withdrawals). In Sweden, as previously noted, the use of checks fell sharply when banks started to charge for their use, although the charge was fairly small. Of course, good substitutes must be readily available. But if alternative ways of payment are present, fees seem to matter and matter a lot.
Despite the importance of the labor force increase, its impact on trend growth is not immediate or transmitted one for one. The economy must undergo a process of adjustment while the sharp increase in the supply of labor is completely absorbed, so that new workers are placed in positions that match their skills. The international experience is not conclusive regarding the duration of this transition, because, as I mentioned, the characteristics of the migratory processes have been very different. In any case, it can be expected that as the immigration flow is accommodated, a gradual increase in capital accumulation and productivity will be observed. Thus, we estimate that the trend growth of the Chilean economy is between 3.25% and 3.75% for the period 2019-2028 (Table 1). This estimate compares with the 3.0% to 3.5% range that we considered before. It is important to note that the use of a range reflects the uncertainty regarding several of the factors that have been mentioned. In particular, this projection considers that the total factor productivity of the non-mining sector will grow 1% in the next ten years. However, there is uncertainty in light of this variable’s volatility of recent years. II.4. Potential GDP The updating of trend GDP is important for determining the potential GDP of the economy. Regarding the latter, we estimate that in the period 2019-2021 it will be around 3.4% (around 3.2% was the previous estimate), somewhat below its trend growth (Table 2).

It must be noted that this occurs in the context of high inventory buildup towards the end of 2018 and the increased uncertainty surrounding the external scenario. In any case, the other part of investment—construction and other works—has remained dynamic and forward going forward signs are still positive. On one hand, related stock market data point to a favorable development. On the other, the large-scale investment projects that are currently in progress—especially in mining—do not register delays and have been unfolding according to plan. Along the same lines, the various surveys of investment projects have not seen any downward and continue to foresee larger amounts for 2019-2020, compared with the amounts invested in the period 2017-2018 (Figure 8). Turning to concessions, the authorities have announced a significant increase in them as from 2020, in particular in hospitals, roads and airports. Add to this the announced approval of a set of complementary works that will be executed in 2019 and 2020. The information of the Association of Engineering Consulting Firms (AIC) for the first quarter of 2019 shows that detail engineering—which covers projects scheduled for one or two years ahead—shows high annual growth rates. In terms of housing investment, although it began the year with a zero contribution to construction GDP, sales remain high and the outlook reflected in the May Business Perceptions Report is positive. In any case, the Monthly Entrepreneurs Confidence Index (IMCE) for the construction sector posted a decline most recently but is still higher tan its all-time average.
It can be said, in simple terms, that the application of quantitative easing entails a focus on the liability side of the balance sheet, while the state of the asset side becomes less important even though this is also reflected in the balance sheet. The express purpose of this shift from price to quantity is usually that "the price" can no longer be affected as the policy rate is zero. It could therefore be said that quantitative easing is a type of monetary policy that is more directly dedicated to dealing with a zero interest rate than credit easing. The latter focuses more directly on reducing the spreads and improving the supply of credit in the economy. It should be emphasised, however, that a zero interest rate is not necessarily a precondition for either quantitative easing or credit easing and it may sometimes be possible to find a use for both methods even when the policy rate is positive. The measures that the Bank of England began to implement at the beginning of March can be characterised as quantitative easing. In its communication, the Bank of England has  12  BIS Review 41/2009  talked about injecting money directly into the economy. This is done by buying government securities and, to a certain extent, securities issued by private players, for example corporate bonds. The latter implies that the strategy also includes elements of credit easing in the sense that the supply of credit to companies is eased.

Global imbalances were built up If we are to understand the origins of the crisis, we cannot ignore certain factors in the macroeconomic landscape. This applies in particular to the major global imbalances that were built up over a long period of time. In the rapidly-developing economies in the oilproducing countries and Asia, particularly China, domestic saving reached a level that was higher than required to fund domestic investments. This led to substantial current account surpluses. Large amounts of capital were built up which sought an outlet on the global financial markets. These were used, for example, to buy assets in the West. At the same time, the economies in the West, especially the USA, experienced an unusually long, uninterrupted period of favourable conditions with strong growth and low inflation. Policy largely focused on maintaining these good conditions. It was possible to stimulate domestic demand at the cost of a gradually increasing current account deficit. The large capital flows on the financial markets helped to keep interest rates down. With consumer prices held in check, it was also felt that there was no real reason to conduct a stricter monetary policy. The result was that significant global imbalances arose – a lasting savings surplus in some countries and a deficit in others.