samchain/econo-pairs-v1 huggingface dataset:
08.07.2019  The Banco de España and its promotion of economic history research Presentation of the “Guide to Historical Banking Archives in Spain” Pablo Hernández de Cos Governor  Good morning, ladies and gentlemen. It is a pleasure for me to close this conference, which has presented the “Guide to Historical Banking Archives in Spain”. This publication, both for the quality of its information and the wealth of data it contains, will no doubt contribute to increasing knowledge on the historical development of the Spanish banking system. I would like to thank all those who have participated in this project for their efforts. My gratitude in particular to the academic historian, Pedro Tedde, to Professor María del Carmen Angulo, and to all those institutions and individuals who have enthusiastically collaborated in the publication of the guides to their respective archives. And naturally, too, to the Banco de España teams behind this initiative. The value of the initiative lies in the very value of the Spanish banking and Banco de España archive collections. These archives are fundamental to the study of our history and the development of Spain’s banking system. In this respect, I wish to highlight the importance of having historical archives that allow documents to be held and conserved and that guarantee their traceability and integrity. Without these archives, our knowledge of the past would no doubt be limited. Indeed, their subject matter provides for well-founded historical analysis and for a better understanding of the reasons that led to specific financial decisions.

In the most recent monetary policy update, from December, we saw ahead of us fairly strong GDP growth for this year and the next two years (Figure 11). GDP is expected to increase by an average of just over 3 per cent per year during the years 2010–2012. Swedish exports will also increase at the same rate as economic conditions in the rest of the world improve. Despite the weak development of incomes, private consumption is expected to continue to rise over the forecast period, due to increased optimism regarding the future. Investment is also expected to contribute towards GDP growth during the forecast period – first housing investment and public investment, and then also investment in the business sector. However, despite this growth in GDP, the economy will take a long time to recover. GDP is not expected to return to its pre-crisis level until 2011 (Figure 12). As a consequence, resource utilisation will be low during the forecast period. The labour market will also remain weak during the entire forecast period. Employment is expected to continue to fall this year, but to increase again next year (Figure 13). Unemployment will amount to approximately 10 per cent by the end of the year, but will then decrease over the following two years (Figure 14). The most recent Labour Force Surveys indicate a slightly better development than we expected in December. The manner in which this may affect the forecasts is a matter we will return to at our next monetary policy meeting on 10 February.
But not only that. The banks should also hold buffers over and above the minimum requirements. One such buffer is what is known as the capital conservation buffer. The further a bank is from meeting the capital conservation buffer requirement, the more limited its capacity to pay dividends to shareholders. The reason is that one wants to prevent the banks from showering its owners with riches in the good times, and then being caught unprepared when the economic climate changes. If one adds this buffer, the requirements for common equity Tier 1 capital is 7 per cent. Moreover, national authorities will have the opportunity to force the banks to build up extra buffers during economic upturns, so that they can more easily weather difficulties when there are downturns. The Swedish banks already comply with the capital requirements stipulated in the new Basel regulations. And this is an important condition for them to be able to fund themselves on the markets. 4  BIS Review 159/2010  Liquidity regulations increase resilience when funding is difficult But even if a bank is well-equipped in terms of capital, it can nevertheless come unstuck if it does not have sufficient liquidity buffers. And this is what happened to many banks during the crisis. To ensure the banks are better-equipped, the Basel Committee has agreed on introducing requirements regarding the banks’ liquidity management. These are entirely new regulations – there have previously not been any regulations in this field at all.

Exhibit 1  The percentage of paragraphs in the FOMC minutes that mention the phrase “financial conditions,” excluding the directive and paragraphs associated with administrative matters such as election of the chairman. BIS Review 23/2010  5
In fact, the crisis of 2007–09 was characterized by runs on all four of the money-like instruments I mentioned earlier, namely repo, asset-backed commercial paper, money market mutual fund shares, and auction-rate securities. Those runs can lead to selling off the loans or securities that were financed by the issuance of those instruments and also may initiate fire sales. A fire sale is caused when assets are sold at a time when many of the likely buyers of those assets do not have the capacity to purchase them, leading to severe downward price adjustments. These price movements create additional problems for other financial sector players, as the declining value of the securities that were sold often means that the value of the securities that they hold are also marked down, reducing their ability to obtain or retain financing to hold their portfolio of securities. This can lead to additional sales, worsening the fire sale conditions, in a negative feedback loop that amplifies the initial shock to the financial sector. The emphasis on fire sales when private intermediaries encounter difficulty rolling over their short-term debt is complemented by research that posits that the role of banks is to create and preserve liquidity of their money-like liabilities such as deposits, repos, and other short-term debt.11 In normal times, these instruments are very safe and it is believed by people and institutions that invest in them that no special monitoring of those instruments is needed.

With the perspective that the passage of time accords, history will acknowledge JeanClaude’s leadership and his ability to maintain the appropriate degree of flexibility needed to respond to the crisis. These qualities were key to ensuring that the ECB and the Eurosystem were up to the task, contributing decisively, through the discharge of the responsibilities legally entrusted to each, to maintaining financial stability across the euro area. Thank you very much. BIS central bankers’ speeches  3
To repeat, inflation has been above the 2% target for most of the past five years. There are good reasons why policy wasn’t tightened in order to bring inflation back to target more quickly. But ultimately, the MPC will be judged by the success of our actions, not the elegance of our arguments. We need to demonstrate our commitment to bring inflation back to target and to keep it there. But we have also needed to trade off the speed with which we bring inflation back to target against the support that monetary policy can provide to the recovery. The MPC’s forward guidance gives greater clarity about our view of the appropriate trade-off. More important for us today, our guidance is rooted in the recognition that it’s a long way back to the economy being fully recovered. The damage and losses associated with the financial crisis and the years of frustration and disappointment that followed won’t be reversed simply by one or two quarters of strong growth. Our guidance makes clear that we intend to maintain the current exceptionally stimulative stance of monetary policy until we’ve  BIS central bankers’ speeches  5  seen a sustained period of strong growth and the margin of slack in the economy has narrowed significantly, as long as this does not pose risks to either price or financial stability. As you may know, our guidance was framed in terms of so-called thresholds and knockouts.

The dominant role of the household sector in the early stages of the recovery is not particularly surprising: businesses are likely to need a sustained pickup in demand before they have either the need or the confidence to increase capacity. But the durability of the recovery will depend on the baton of growth being handed over to the corporate sector, whose spending and investment will help to foster stronger growth in productivity and real incomes. And here the reduction in uncertainty may continue to play an important role. It’s perhaps easy to see how reduced uncertainty may help to prompt a one-off increase in business spending, as companies move away from defensive, wait-and-see strategies and blow the cobwebs off plans for deferred investment projects. But the impact of diminished uncertainty may stretch beyond simply a short-run boost. In part that reflects the possibility that the combination of reduced uncertainty and increased spending by households and companies may become self-reinforcing: reduced uncertainty helps to spur additional spending and investment, which in turn further reduces uncertainty about future demand and so on.7 Movements in uncertainty can amplify the recovery just as they amplified the downturn. This virtuous circle may be enhanced by the benefits reduced uncertainty can have for the supply-side of our economy. Increased investment will add to our productive capacity. A strengthening labour market may give employees confidence to move jobs, so better aligning available skills with vacancies.
The problem naturally lies in the negative rates of credit flow for productive activities other than construction and development, and in the contraction of credit for households, both for house purchases and for other purposes. And, in addition to a problem of volume, there is a problem of prices; our households and firms are paying higher interest rates than the average rates paid for comparable transactions in the euro area as a whole, although these spreads are small in the case of financing for house purchase, very high for consumer loans and also substantial for credit obtained by non-financial corporations. To explain this we must look both at supply-side factors relating to loanable funds by banks, and to demand-side factors on the part of borrowers, households and firms. Concerning the demand for credit, the recessionary environment, high unemployment, the hitherto scant growth prospects and uncertainty are evidently affecting potential borrowers. On the supply side, neither liquidity – provided in a stable fashion and at a low cost by the Eurosystem – nor the shortage of capital would appear to be significant explanatory factors. We believe that on the supply side the two most influential factors are the deleveraging of banks and the lack of projects that may be deemed solvent, or offer sufficient guarantees. There are in fact figures confirming that the most dynamic and productive companies obtain financing; the trajectory of exports is a good indicator in this respect.

Competitiveness and market reform To put the favourable external sector performance on a firm footing, we must build on and further the improvements in competitiveness. In this connection, the markets for factors and goods and services must function in a way conducive to containing costs, margins and prices. Clearly, in the labour market, we need a stable employment-promoting regulatory framework which, at the same time, affords sufficient flexibility to attune working conditions to the circumstances of the business cycle. Indeed, greater moderation and flexibility can be seen in wage-setting in recent quarters, as can – and this is also important – a lesser degree of indexation. A more intensive use of the wage and non-wage flexibility mechanisms envisaged in the new regulatory framework would lend continuity to this ongoing improvement in competitiveness. But our problems of lack of flexibility and competition were not and are not only in the labour market. In the market for goods and services, the recently approved National Reform Plan includes a set of measures aimed at removing obstacles to competition, attaining productivity gains in various sectors and improving the functioning of various institutions. Private-sector deleveraging and lending The overindebtedness of households and firms is another of the major problems that arose in the last upturn in the Spanish economy. Private debt/GDP ratios have fallen from their peaks in 2010, but at a relatively slow pace. The main explanation for this sluggishness lies in the downturn in private-sector nominal income since the onset of the crisis.
Although economic activity slowed down rapidly in the second quarter of 2020, the decline in many areas was slightly smaller than was feared during the spring and, above all, the economies began to recover quickly later in the year (see Figure 8). It is unusual for a recession to be so short-lived. Without the comprehensive support programmes, the development would probably have been quite different. Figure 8. Quick recovery after the pandemic Index, 2019 Q4= 100 respective percentage of population aged 15-74 years  Note. Seasonally adjusted data. Sources: Statistics Sweden and the Riksbank. Second, purchases of bonds other than government bonds appear to have pushed down the rates on these bonds. The left-hand panel in Figure 9 shows that rates on covered bonds and local government and corporate bonds fell more than the  20 See Gustafsson and von Brömsen (2021) for a detailed description of all the measures. 21  Covered bonds accounted for almost 60 per cent of purchases, government and municipal bonds for about 20 per cent each, while purchases of corporate bonds were limited to SEK 10 billion, i.e. 2 per cent of purchases. 12 [30]  rate on government bonds after the Riksbank had presented its purchase plans. The figure shows that the risk premiums on these assets were also lower than before the pandemic, which was hardly the intention of the measures.22,23 This indicates that market participants now considered that the authorities had entered the market as guarantor of the risks on these markets. Figure 9.

Companies have been unable or unwilling to invest as a result of earlier investment mistakes and poorer prospects for the future. The banks have suffered severe credit losses, which has further intensified the recession, as their capacity to provide new credit has been limited. The situation becomes particularly serious when losses have led to acute bank crises, which has often been due to the banks being greatly exposed to a particular sector. For instance, it was an overheated property market with banks strongly exposed to this sector that was one of the main reasons behind the bank crises afflicting several countries – including Sweden – at the beginning of the 1990s. Adaptations to large financial imbalances have also put a burden on central government finances and increased uncertainty. This has in itself prolonged and intensified the crisis. Japan is a well-known example of what can follow in the tracks of a serious financial crisis if confidence cannot be recreated in economic policy and future growth potential. The consequences of financial imbalances have proved particularly serious in countries with a fixed exchange rate, partly because interest rates need to be kept high when confidence in the fixed exchange rate policy declines, and partly because there has often been a large foreign currency debt. When the fixed exchange rate has to be abandoned and the country's own currency is weakened, the burden of debt increases. Should the central bank then concern itself with asset prices?
Peter Praet: Long-run saving and monetary policy Speech by Mr Peter Praet, Member of the Executive Board of the European Central Bank, at the Parliamentary evening on "Challenges for long term savings products in the context of the zerointerest rate policy", Brussels, 14 November 2016. * * * Accompanying slides The European Central Bank (ECB) has carried out a number of unconventional monetary policy measures since the crisis to bring about a return of inflation to our objective. These measures include targeted long-term repos, negative deposit facility rates since 2014 and large-scale asset purchases. We have received criticism of these unconventional policies from some quarters surrounding their potential negative consequences. In the light of that criticism, I wanted to answer three crucial questions tonight relating to our unconventional measures: Why have we implemented them? Have they been successful in their aims? And, finally, have they had unduly large negative side effects on the distribution of wealth and income? The determination of long-run interest rates First of all, I would like to spend a few moments discussing the determination of interest rates and what has happened to long-run interest rates over the past three decades. These two things have significant bearing on the rest of my remarks. Put most simply, saving is the decision to forgo consumption today, in return for higher consumption in the future. Since people are by nature impatient, they require compensation for delaying consumption, compensation usually in the form of interest payments.

Structural reforms are needed to unleash the productive potential of the euro area economy. Such reforms fall beyond the remit of the ECB and are the responsibility of other national and European policymakers. Now is the perfect time for such reforms, since the current accommodative policy of the ECB can help offset any short-term adjustment costs of their implementation. This is a window of opportunity that needs to be seized. Doing so will raise future income in the euro area, supporting an increase in the natural rate and boosting the returns to saving. 1 See Orphanides, A and J. Williams, (2002), “Robust Monetary Policy Rules with Unknown Natural  Rates”, Brookings Papers on Economic Activity, Vol.2, 63–145, Laubach, T and J. Williams (2003), “Measuring the Natural Rate of Interest”, Review of Economics and Statistics 85, No4, pp 1063–70, Laubach, T and J. Williams, (2015), “Measuring the real natural interest rate redux”, Federal Reserve Bank of San Francisco Working Paper, No. 2015–16 and Taylor, J.B, and V. Wieland, (2016), “Finding the Equilibrium Real Interest Rate in a Fog of Policy Deviations”, Economics Working Papers 16109, Hoover Institution, Stanford University. 2 Notwithstanding the uncertainty over estimates of the natural rate, key drivers of long-term interest rate in a  standard Solow growth model such as productivity and population growth have been slowing for decades in advanced economies, suggesting that the natural interest rate may have indeed declined.
Statistics Norway’s business tendency survey indicates continued favourable prospects for Norwegian manufacturing. Activity is expected to increase in service industries and the construction sector in the near term. Capacity utilisation in the Norwegian economy now appears to be close to a normal level. In manufacturing, capacity utilisation is close to its historical average. According to Norges Bank’s regional network, about 40 per cent of companies will have some or considerable difficulty in increasing production. Even though growth in the Norwegian economy has been high for a long period, substantial pressures have not yet emerged in the labour market. The rise in the number of employed in the first half of the year was fairly modest in relation to output growth. This may be due to lagged effects of the sharp fall in sickness absence through 2004. In many companies, the large increase in available person-hours was probably not fully utilised immediately. A considerable share of output growth may be the result of improved utilisation of company workforces. According to the quarterly national accounts, employment rose by 0.5 per cent from the first half of last year to the same period this year. Measured by the  1/7  Labour Force Survey (LFS), the number of employed rose by 12 000 from May to June and by a further 2 000 from June to July. The use of foreign labour has increased in the year that has passed since the enlargement of the EU.

Svein Gjedrem: Monetary policy and aspects of economic developments Speech by Mr Svein Gjedrem, Governor of the Central Bank of Norway, Ålesund, 12 October 2005. Please note that the text below may differ slightly from the actual presentation. The speech is based on the assessments presented at the Central Bank of Norway’s press conference following the Executive Board’s monetary policy meeting on 21 September, Inflation Report 2/05 and on previous speeches. The  Charts in pdf format can be found on the Central Bank of Norway’s website. *  *  *  Monetary policy in Norway is oriented towards low and stable inflation. This is also the most important contribution monetary policy can make to sound economic developments in the long term. Low and stable inflation provides the economy with a nominal anchor. This contributes to predictability for those taking decisions about saving and investment today, although the result depends on how the economy develops in the future. In addition, we will seek to prevent unduly wide fluctuations in output and employment in the short and medium term. In the long term, output in an economy is determined by the supply of labour, capital and technology. Monetary policy influences the economy with long and variable lags. This means we must look ahead when setting interest rates.