samchain/econo-pairs-v1 huggingface dataset:
Page 3  One such source was CHAPS, the UK’s high value payments system, which we have operated within the Bank of England since 2017. This provides individual payment-level data on corporate revenues received from debit and credit card expenditure. As the operator of CHAPS, this transactional data is accessible in real time to the Bank. Such data will only ever give a partial picture and the Bank’s Monetary Policy Committee and the staff who support them, are experienced in contextualising and framing such data in nowcasting and other applications. The most obvious benefits of the data were its timeliness, granularity and availability. GDP data is published with a lag of weeks and sometimes months whereas we had a proxy for it in two days. The CHAPS data provided signals on sectoral performance. And it was coming in to the Bank via our payments systems at a time when a lot of official data couldn’t even be collected because of the pandemic. The MPC referred to the use it made of the data in supporting its policy response in its March 2020 minutes and subsequently[2] . In case anyone is worried that we kept this public good to ourselves be assured that as soon as we could we made it available to our statistical authority the ONS who included it in the regular data release they developed as one of their responses to the pandemic. Improving the quality of payments data I’ve provided what is hopefully a relevant case study but it’s a narrow one.

Page 4  RTGS and ISO 20022: enhancing the quality of payments data In the UK the way that payments are made and settled is being transformed with the renewal of the Bank’s Real Time Gross Settlement (RTGS) Service. This is the critical infrastructure which delivers final and risk free settlement and virtually every sterling payment is settled over RTGS eventually. As an integral part of upgrading its hard payments infrastructure the Bank is joining to global push to enhance the soft infrastructure of payments by introducing ISO 20022 messages in the renewed RTGS and in CHAPS. As everyone at this conference will no doubt be aware ISO 20022 is a gamechanger for the financial system. It is an open international data standard that allows financial institutions to communicate through a common data language. It will enable financial systems to understand each other wherever they are in the world. One of you could walk down the road and send a payment from a local bank branch in Kaunas and the information conveyed within the message would be the same information as available to my local bank here in London. ISO 20022 also allows for more structured and enhanced data, which can be user driven. In other words it can develop according to the user’s needs either through adapting the language by adding new data fields or by adapting to meet different technology needs.
But now that we have passed the worst phase of that crisis, a reassessment of policy is needed. I have been arguing for some time that we should be gradually removing some of the monetary stimulus provided in the depths of the recession by raising interest rates to reflect the improvement in the economy at home and abroad and to counter the rather worrying tendency of inflation to run significantly above the 2% target set by the government. In recent months, however, there have been concerns about the sustainability of the UK economic recovery which might seem to weaken this case for higher interest rates. The GDP data for the final quarter of last year were disappointing, even allowing for the impact of the snow, and there are worries about the impact of fiscal tightening as it begins to have an impact through public spending restraint and higher VAT. There are also concerns about volatility on the international scene, with political instability in the Middle East and North Africa and the effects of the earthquake and tsunami on Japan, the world’s third largest economy. In today’s speech I want to discuss the growth of the UK economy over the current recovery and how it should be reflected in the MPC’s decisions on monetary policy.

I will aim to cover three topics: first, the progress of the economic recovery to date; second, the prospects for UK economic growth looking ahead over the next couple of years; and third, and most crucially, the role of monetary policy in supporting sustainable economic growth in the UK economy over the economic cycle. The current recovery – progress to date Economic recoveries are normally uneven – particularly in their early stages – and we should not be surprised to see significant fluctuations in the GDP growth rate from quarter to quarter. We have seen this in previous recoveries, with the quarterly rises in GDP fluctuating from zero to 1.5% in the first three years of the 1980s recovery and from –0.2% to 1.4% in the equivalent period when the UK economy was recovering in the early 1990s.2 In this context, the performance of the UK economy over the recovery so far does not look unusual. Before the snow arrived at the end of the year, we had four quarters of economic growth in which the rise in GDP fluctuated from 0.3% to 1.0%. In fact, until the snow-affected fourth quarter, the growth of the UK economy over the first year of this recovery was stronger than in the equivalent period of the early 1980s and early 1990s recoveries.
On the other hand, authorities like Finansinspektionen may need to take the same type of measure for their task of protecting the consumer. Their proposal for a ceiling for loan-to-value ratios, for instance, is based on consumer interests. The question of how responsibility and roles should be divided between the different authorities will probably be discussed in detail in Sweden and abroad in the coming period. And it is important to find a system that works efficiently. Some of the criticism of the strategy of “leaning against the wind” with the policy rate also applies to alternative measures. If the central bank or another authority takes such measures, one must have a good understanding, as with the policy rate, that the measures are really being implemented at the right point in time. Otherwise there is a risk that the fluctuations in the banks’ credit granting will be greater rather than smaller. Monetary policy and house prices Credit volumes and house prices are not targets for monetary policy. They are indicators that should affect monetary policy if they are expected to affect inflation and resource utilisation in the economy. But my assessment is that there may also be occasions when indicators such  6  BIS Review 70/2010  as house prices and credit growth contain information on future economic developments over and above what we can capture in our quantified forecasts.

Afterwards it often appears fairly obvious that certain price movements were not rooted in reality. However, during an upturn phase in the economic cycle it is obviously easy to get carried along on a tide of optimism and leave common sense on the shore. Many may be pulled in by others acting as though the trend of large profits will continue – assuming that “so many” investors surely can’t be wrong, even though the fundamental forces indicate otherwise. An investor may also consider it costly to go against the tide and act on the basis of a view that does not appear to be shared by others. In this situation, being the one who points out that current developments are not sustainable and that the expectations are unrealistic may be rather like trying to stop a runaway train with your bare hands. At least, if one lacks the right tools. …the consequences can be severe when the bubble bursts. Not all bubbles that arise have serious consequences for the rest of the economy. So are there any common denominators in the worst scenario cases? Yes, these cases often involve a loan-financed price upswing in the property market that has accelerated at an untenable rate over a long period of time. And when this kind of bubble bursts, it almost always does so with a bang rather than with a whimper.
This is because highly indebted households are more likely to cut their consumption sharply to keep paying their mortgages, deepening the economic downturn (Chart 12). Given this evidence, the Bank of England tracks a range of intermediate indicators of GDP-at-risk created by build-ups in mortgage debt including housing market activity, credit growth, price and non-price lending terms, and household vulnerability indicators like the distributions of debt-service, loan-to-income and loanto-value ratios. Chart 12: Highly indebted borrowers restrict consumption more in downturns Percentage point change in consumption to income ratio 0 -5 -10 -15 -20 -25 0 to 1  1 to 2  2 to 3  3 to 4  ≥4  Mortgage LTI ratio  Sources: Living Costs and Food (LCF) Survey, ONS and Bank calculations. 20  All speeches are available online at www.bankofengland.co.uk/news/speeches  20  The FPC’s housing tools could reduce GDP growth (secondary objective) in the short-term. The housing tools reduce housing activity and prices, and therefore demand as some borrowers are restricted from obtaining a mortgage. The impact on GDP is temporary however, as it can be offset by monetary policy. There are several ways that the housing tools could, in theory, impact the supply capacity of the economy. Lower mortgage availability could reduce labour mobility. Collateral values for small business loans could fall because of lower house prices. Or the LTI flow limit could increase investment if it discourages lenders from prioritising mortgages that would crowd out business lending.

UK banks will be required to hold a CCyB of 2% of UK risk-weighted assets when risks are around standard – that is when risks are neither particularly elevated nor subdued.26 We can use the GDP-at-risk model to provide a lens for understanding the risk environment: for example, the 35th to 65th percentile of the historical distribution of GDP-at-risk (see Chart 4) is a range of around -0.8 to 0.8. 25 At the time, the FPC also noted that there were gaps and shortcomings in the measurement of risk-weights (for  example, risks associated with defined benefit pension fund deficits were not captured). In light of this, the FPC judged at the time that the appropriate level of Tier 1 capital requirement for the UK banking system was 13.5% of risk-weighted assets, based on existing measures of risk weights. In December 2019, the FPC reviewed the judgements underpinning this assessment, and confirmed that its 2015 benchmark remained appropriate. 26 In December 2019, the FPC announced that it was raising the level of the UK CCyB that it expects to set in a standard risk environment from the region of 1% to the region of 2%. Consistent with this, and given its assessment that risks were standard, the FPC raised the CCyB from 1% to 2%. This takes effect with a one-year lag, and so will become a binding constraint from 16 December 2020. For further information, see the December 2019 Financial Stability Report.
The results of the testing over the first year suggest that the operations have been successful working with IOER to establish a floor for the level of money market rates. Our analysis has found that, offered at a spread of 20 basis points to the IOER rate, ON RRPs have kept overnight repo rates above where they would otherwise have been, in part by influencing the bargaining power of our counterparties. All of the Desk’s eligible RRP counterparty types participate in the operations, with money funds accounting for the largest share of take-up. Take-up generally increases when the spread between market rates and the ON RRP offered rate narrows. Take-up also rises substantially around quarter- and year-end financial reporting dates, when some money market participants’ access to other overnight investments is more limited. To further examine how ON RRPs might best be structured to supplement IOER in controlling the fed funds rate while limiting the potential for unintended effects in financial markets, the FOMC recently directed the Desk to make several changes to the design of its ON RRP operations.

If, however, ON RRPs are offered above the level of money market rates that would be produced by IOER alone given prevailing frictions, ON RRPs should become attractive and help to form a floor for money market rates, either directly through increased take-up that reduces reserves or indirectly through the competitive pressure I described. Since money funds – the majority of the Fed’s ON RRP counterparties – don’t face the same balance sheets costs as banks, the floor formed by ON RRPs should be relatively firm. While ON RRPs are a potentially useful tool for monetary policy control with large amounts of excess reserves, FOMC and market participants have noted the potential for very large regular usage to alter patterns of financial intermediation. Further, a fixed-rate structure with no usage limits could exacerbate liquidity pressures during times of stress. 11 The FOMC recently authorized testing of a cap on the total daily usage of the ON RRPs that could help mitigate these risks. I’ll return to these risks and some ways that they may be mitigated in a bit. In sum, arbitrage activities by banks, complemented as needed by ON RRP operations, should cause a higher IOER rate to lead to higher levels of market rates. However, if the pressure on market rates from the Fed’s administered rates turns out to be insufficient, the Committee has a range of other tools – including term deposits, term RRPs, and asset sales – that could be used to help tighten the stance of policy.
We have therefore moved further and further away from capital-intensive production to production that is more dependent on human capital than heavy plant and machinery. Another factor to take into account is the decline in housing construction, which has also contributed to the drop in the figures for capital formation. However, housing construction does not have the same importance for productivity growth as industrial investment, for example. This means that the dramatic decline in capital formation does not have to imply an equivalent fall in productivity growth. Nevertheless, I still have the impression that we are focusing less on capital formation than before. This is indicated by the fact that structural change is currently relatively limited. 4  BIS Review 56/2003  The labour supply Permit me now to discuss the other component that determines a country’s long-term growth capacity besides productivity, namely the labour supply. This is determined by the number of people in work and the number of hours they work. The number of hours worked rose during the years after the crisis at the beginning of the 1990s. This was partly due to greater demand for labour, to a rise in the working age population (20-64 years) and relatively low numbers on sick leave. The trend in the number of hours worked has been broken in recent years, however. This is because the total number of people on sick leave has risen in Sweden since 1997-1998.

So growth in capital per employee was slower from the mid 1970s, and new technology was not employed to the same extent as before. Such a dramatic change has to have consequences. This is evident in the bottom curve showing the current account, which was almost always in deficit during the 20 years after 1975 because Sweden’s saving declined even more than investment. It was only during the first half of the 1990s that a surplus was restored, as a result of a weaker krona, higher capital formation and even higher saving. Figure 1. Saving, investment(net) and the current account, as percentage of disposible income 20  15  10  5  0  -5 1950 52 54 56 58 1960 62 64 66 68 1970 72 74 76 78 1980 82 84 86 88 1990 92 94 96 98 2000 02 Saving  Investment (net)  Current account  Source: Associate Professor Lennart Berg, Uppsala University  BIS Review 56/2003  3  In order to illustrate the importance of the lower capital formation, I have compiled productivity data from the period when the marked change took place (see Table 1). In the 1980s, the lower capital growth had been established. Capital per employee - capital intensity - had been more than halved both in industry and in the business sector as a whole. Productivity growth followed this trend and was more than halved from the high growth levels of the 1960s.
As the Manager of Public Debt, the Central Bank raises local and foreign debt to meet expenditures approved through the Consolidated Fund, maintains such loan records and service such loans out of funds at Government Account with the Central Bank. The popular criticism here is the monetization of the budget deficit through Central Bank funds. The Central Bank’s purchase of Treasury bills is the cause of this criticism. The Central Bank purchases Treasury bills in order to use them for regulation of the domestic market liquidity (Open Market Operations) as permitted in the MLA and not for lending to Government. Further, under the MLA, the Central Bank is authorized to provide provisional advances to the Government up to 10% of the estimated Government revenue of the current financial year, subject to recovery of each advance within 6 months, and such advances are only to meet the expenditures authorized under the Consolidated Fund. Managing public debt by the Central Bank is beneficial for the country since the Central Bank can raise public debt in line with interest rate structure envisaged in its monetary policy. If the debt management is undertaken by a separate Government office, it may attempt to raise debts without regard to market interest rates and monetary policy and that will cause immense conflicts with the current monetary policy. The opposite view is that as the Central Bank manages public debt, its monetary policy is constrained by the need to attempt to raise and maintain public debt at low cost.

Arjuna Mahendran: Role of the Central Bank in the Sri Lankan context Speech by Mr Arjuna Mahendran, Governor of the Central Bank of Sri Lanka, at the Sri Lanka Legal Summit 2015 “Governance, Regulation and Investment – The Way Forward“, Colombo, 5 March 2015. *  *  *  Ladies and Gentlemen, I am greatly privileged to address your distinguished audience on this topic with which I am reasonably conversant. The Central Bank of Sri Lanka today is a talking point among the public. Further, world over, central banks are in the public eye due to their specific role in staring off the global financial crisis, which caused a mini depression in 2009. The Central Bank of Sri Lanka is probably the single state authority with enormous influence in the economy and economic welfare of the general public. This influence comes from the powers and functions conferred upon the Central Bank from a number of statutes led by the Monetary Law Act (MLA) of 1949. In my view, when compared with statutes governing Central Banks in other countries, MLA is the single piece of legislation that provides for time invariant powers and functions of the Central Bank. The law has worked reasonably well during last 65 years without any major amendments. The drafting of the law in 1949 has been supervised by the renowned economist Mr. John Exter from the Federal Reserve Bank of New York who also in recognition of his stellar efforts was the first Governor of the Central Bank.
The short-term part concerns dealing with the legacy of the previous financial cycle – that is, repairing bank balance sheets and reintegrating the euro area’s financial markets. This is necessary so that capital can once more flow “downhill” from higher income to lower income  18  Buccirossi et al (2013), “Competition policy and productivity growth: an empirical assessment”, in The Review of Economics and Statistics, October 2013, 95(4). 19  European Commission, Product Market Review 2013: Financing the Real Economy, European Economy 8, 2013. 20  Albertazzi, U. and Marchetti, D. J. (2010), “Credit crunch, flight to quality and evergreening: an analysis of bank-firm relationships after Lehman”, Working paper, Banca d’Italia. BIS central bankers’ speeches  7  countries, and so that banks in those countries are sufficiently capitalised to be able to allocate credit efficiently. The main policy initiative that will support this is the Banking Union project and, as part of that, the ECB’s Comprehensive Assessment. Its aim is to dispel doubts about asset quality and levels of capital and provisions, and in doing so to accelerate the process of deleveraging and restructuring in the banking sector that is the inevitable consequence of a major financial crisis. Over the longer-term, however, it is important that policy-makers also reflect on the quality of financial integration in the euro area – that is, the incentive structures in the financial sector that can lead to inefficient credit allocation, and the channels for sharing risk when financial crises do arise.

For example, we are working within the framework of the Swedish Retail Payments Council to survey the possibilities of making card payments and withdrawing cash in an offline situation, which is to 14 See Mancini Griffoli, T., Martinez Peria, M. S., Agur, I., Ari, A., Kiff, J., Popescu, A., and Rochon, C. (2018) “Casting Light on Central Bank Digital Currency”. IMF Staff Discussion Note. SDN/18/08. 15 It may, however, be difficult to know what the right price is in such a market. Theoretically, an efficient market is considered to be one in which no company makes excess profits. The price of one product should approximately reflect the cost of producing one more product, known as the marginal cost. But if the price were to reflect the marginal cost, the company would make a loss in these special markets. In normal industries, the marginal cost normally rises when production encounters bottlenecks. For natural monopolies, fixed costs dominate instead, so that a price corresponding to the marginal cost will be too low. 6 [8]  say when disruptions have made it impossible to check the balance of the account or credit to which a card is linked. 16 At present, certain cards do not function at all in an offline situation, while others do. If we were to be impacted by a complete breakdown of both the Internet and telecommunications, it would not be possible to withdraw cash. Consequently, we cannot, at present, rely upon cash being available in a crisis situation.