samchain/econo-pairs-v1 huggingface dataset:
This is confirmed by Phillips curve estimates. As you can see from the right-hand side chart on slide 3, ECB in-house estimates using a variety of slack and inflation expectations measures suggest that core inflation today is well below what historical regularities would suggest. Of course, a number of factors – such as changes in the slope, weak productivity growth or second-round effects of past low inflation – might be at work here. But in the current context this is unlikely to be the whole story. For one, there is considerable uncertainty around the slope of the Phillips curve. As we heard this morning, some estimates show that the curve has flattened in recent years. ECB research, by contrast, found evidence that inflation has become more responsive to slack lately, but with notable heterogeneity across euro area Member States.7 Blanchard, Cerutti and Summers have not found much change at all during the crisis.8 Second, our Phillips curve estimates show that even once we control for past low inflation and weak productivity growth, there is still a considerable part that cannot be explained by the model. These analyses therefore do offer one useful conclusion: that slack may be larger and that structural unemployment may perhaps not have risen by as much as some estimates suggest. This also means that policymakers should be careful in attaching too much weight to notoriously unreliable and hard-to-estimate measures such as the NAIRU.

Other scratches also need early and effective treatment to avoid becoming scars. For example, insofar as investment is being affected by post-crisis legacies, such as the debt overhang in parts of the private and public sector – the famous Fisher-Minsky-Koo channel of debt deflation – history suggests that effective deleveraging nearly always involves a combination of growing out of debt and writing down debt – which is to say, structural policies are also key.15 And action also at the EU level is crucial. Efforts to complete the Single Market, for example, would incentivise more firms to invest and grow as they have a larger market to serve and exploit economies of scale. Progress with the Capital Markets Union (CMU) would likewise help to raise productivity by facilitating capital reallocation. Conclusion So, to conclude, the evidence suggests that hysteresis as it is often understood – meaning rising structural unemployment – has not yet materialised meaningfully in our economy. We see more scratches than we see scars. And unlike “classical” hysteresis, these scratches are currently reducing price pressures, warranting our currently very accommodative monetary policy stance. We can be confident that this stance will have the desired effect. The ongoing broadening of the recovery, together with the gradual disappearance of downside risks, increases the chances that those who want to work more will be able to do so. This, in turn, will create the necessary price and wage pressures for a return of inflation towards levels closer to 2%.
I invite our guest to share his vision on aspects such as economic policies development in Europe, economic and social trends, euro convergence and the reform steps needed. His lecture will provide an excellent occasion for all of us to get a better grasp on what lies ahead for the Union and for the Euro Area. I hope that Prof. Sapir’s lecture will offer each of you a better view of what lies ahead. I am sure he will willingly answer your questions. I invite Professor André Sapir to take the floor and I wish you a rewarding debate. Thank you. 2/2  BIS central bankers' speeches

Dimitar Bogov: Challenges of countries from South-Eastern Europe in the current economic and financial turbulence in the euro area Opening speech by Mr Dimitar Bogov, Governor of the National Bank of the Republic of Macedonia, at the NBRM conference on the occasion of the 20th anniversary of the monetary independence of the Republic of Macedonia, Skopje, 27 April 2012. *  *  *  Dear Deputy Prime Minister, dear ministers, distinguished Governors, Your Excellences, dear guests, colleagues and friends It is an honor to greet you and wish you welcome to this conference, which is a part of the activities for marking the 20th anniversary of the monetary independence of the Republic of Macedonia. The last two decades of monetary independence, the Republic of Macedonia has faced, and in our opinion, successfully addressed many challenges. Our twentieth anniversary takes place in exceptionally turbulent developments of global economy, particularly marked by events triggered by the euro area debt crisis. This means that as the other central banks from the region, we face a new challenge. Taking into account the timing of the conference, its topic came quite spontaneously, and therefore we consider that it will raise interesting discussion of current issues of the central banks of the South-Eastern Europe and beyond.
This growth has been faster than growth in the global stock of bonds outstanding over a similar period, which grew from roughly $ trillion to $ trillion over 2005 – 2012. While funds typically have a number of tools available to them to manage liquidity risk, some investors may not fully appreciate that their ability to redeem, at or close to, current market 6  BIS central bankers’ speeches  prices could be compromised by large simultaneous withdrawals by other investors. In a recent survey, the Bank and Financial Conduct Authority found that, in aggregate funds assumed that, over a one-day horizon, they could liquidate corporate bonds of a value equivalent to 2.9 times average daily US corporate bond trading volume. A great deal of thought internationally and in the UK is now being given to these issues, and to understanding whether or how systemic risk could arise from these channels. To the extent that it can, there will need to be much more work on policy options. A more system wide approach to stress testing could be one promising avenue for development. This would be in line with the Financial Stability Board’s advice last month encouraging the appropriate use of stress testing by funds to assess their ability individually and collectively to meet redemptions under difficult market liquidity conditions. A second avenue worth exploring is better data on funds, including the development of more comprehensive metrics that capture the degree of any mismatch of the liquidity of underlying assets and the liquidity offering.

Market making means the temporary transfer of risk to intermediaries to smooth out imbalances of supply and demand. But market makers have to be able to bear the risks. Pre-crisis, market makers funded their inventory with short-term borrowing and very small amounts of loss absorbing capital. As a result, when exposed to a severe stress, market makers simply disappeared from the scene. So liquidity is a good thing. It does play a key role in the functioning of effective markets. And financial market intermediation and engineering can help ensure the price is as low as possible, consistent ultimately with an asset’s underlying characteristics. But taken too far, these can create the illusion of liquidity rather than liquidity itself and expose the system to risk when the illusion disappears. We should not in particular refer to metrics of the pre-crisis period to see what some “good” level of liquidity looks like. Some markets may indeed not function as smoothly or cheaply as they did in the run up to this crisis. But that may well be the counterpart of less poorly priced liquidity risk in the system. Promoting true liquidity That is not to say that nothing can be done in this area. First, we should ensure that regulatory changes are coherent. Regulators have dealt with the under-pricing of liquidity risk in part by remedying inadequate capital requirements.
François Villeroy de Galhau: Paris 2020 Climate Finance Day Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Paris 2020 Climate Finance Day, Paris, 29 October 2020. * * * Ladies and Gentlemen, It is always a pleasure to be here each year. A lot has happened over the past months as well as in the last hours. Covid provoked an unprecedented fall in French GDP in the first and second quarter and its second wave will trigger another drop in the fourth quarter, though hopefully one that is less severe. A short-term view could argue there is a trade-off between supporting a quick recovery, and fighting climate change. I believe the contrary: reconstruction is an opportunity to accelerate the transition to greener growth. It cannot be a mere restart: due also to climate, we need to be Schumpeterian. The Banque de France and ACPR are as committed as ever and delivered on what we announced last year, in spite of the Covid-19 crisis we “walked our talk” (1). But we have also observed, thanks to our experience, a number of methodological impediments to data and reporting practices. Going forward, we must tackle these issues in order to better assess and disclose climate-related risks (2). ***  1. The Banque de France/ACPR lived up to its promises on climate 1.1.

Many necessary data are still simply missing  To foster data availability within the financial sector, in summer 2020, the NGFS launched an ambitious workstream to identify and map lacking data (financial and non-financial) relevant to climate risk analysis. We actively look forward to the publication of the preliminary results in the course of 2021 (that is: a detailed list of data items that are currently lacking, but which are needed). 2.2. Current disclosures are often hardly comparable However, the available data should also be comparable enough to be processed easily on a large scale, with reliable results. To solve this issue, regulations should be more specific and prescriptive towards climate-related reporting from financial firms as well as corporate firms, including SMEs (with proportionality). This is why we need harmonised and relatively granular reporting standards. France and the EU are at the leading edge and have already implemented targeted disclosure requirements (art. 173 in France / upcoming “Disclosure regulation”– SFDR –, to be implemented next March in Europe). However, this is still not enough, as the data disclosed currently lack homogeneity and comparability: this is a major loophole of the implementation of article 173 in France, for instance. We are not yet able to assess and compare the results of financial institutions in our public reports. 2/3  BIS central bankers' speeches  I strongly believe that the EU should keep its first-mover advantage in climate data standardisation.
I urge banks to put in the necessary efforts. Insofar as we are concerned, I think we have developed, in a limited way, such ability and will, as in the past, share with the banking community our analyses so that banks can continually adjust their operations to meet changing market and regulatory needs. Technology risk The third set of forces arises out of banks’ increasing use of, or rather reliance on, technology. We have seen a spate of fake bank websites and attempted email scams over the past year: indeed, the rate of discovery of such cases relevant to Hong Kong has averaged about 1.4 per month over the past 13 months. It should be pointed out that we have no report of any customer in Hong Kong having been taken in by these attempts at fraud. Nevertheless, the proliferation of fake websites indicates that careful precautions and constant vigilance are necessary. And a further area of technology-related crime - ATM skimming fraud - has had its victims, both in Hong Kong and overseas. Increased security and heightened customer awareness, we believe, have helped defeat this form of crime: there have been no new cases in Hong Kong for seven months. Even so, the elementary, “low-tech” nature of these frauds demonstrates also that there are many dimensions of the banks’ vulnerability to technology. In addition to protection against technology-related crime, the IT framework of banks also requires business continuity planning (or BCP).

In taking these initiatives, the Eurosystem has maintained a clear separation between monetary policy and financial stability operations. This clear separation has ensured that we kept fulfilling our primary mandate to safeguard price stability. My sense is that we have been successful. In the Euro area, at no time during the crisis have inflation expectations significantly deviated from our price stability objective. This was most crucial, when headline inflation stayed in negative territory, the output gap was strongly negative and the risks of deflation about to materialize. II. Financial stability cannot be achieved irrespective of fiscal conditions  11. Recent developments in Europe have proven that disorder in public finances could lead to disorder in financial systems. This did not come as a surprise. Central banks have  2  BIS Review 113/2010  long been concerned with fiscal positions in Euro area countries. Indeed, we, at the Banque de France, as well as many ECB members, have regularly called upon policy makers to pay due attention to debt dynamics. 12. Delay in addressing long-lasting fiscal imbalances is primarily responsible for the situation, but the financial crisis has exacerbated the problems. The first trigger was the mechanism of automatic stabilizers that resulted in rapidly declining fiscal receipts due to the synchronized recession. Secondly the imbalances have been aggravated by greater public spending via unprecedented fiscal stimuli plans and large public financial commitments, in particular via capital injection into the banking sector and debt guarantees schemes.
18.05.2022  Welcoming remarks Pathways to Gender Equality in Central Banks Margarita Delgado Deputy Governor  Dear ladies and gentlemen, I feel very honored to participate in the opening of this conference co-organized with the International Economic Association, Banco de la República and Banco de España. The development of initiatives, such as this one that gives visibility to issues related to gender diversity, are key to finding solutions to the waste of talent that involves not taking this diversity into account, consequently putting economic growth at risk and depriving economies of opportunities to develop. Ensuring diversity and, in particular, gender balance, must be a priority in our organizations and, with this commitment, we work at the Banco de España, where we have made significant progress in recent years. By the end of 2021, 51% of our total staff were females, and it is noteworthy that, in one decade (since 2012), that proportion has increased in nearly 10 percentage points. More than 4 years ago, in April 2018, Banco de España joined Bank Al Maghrib, the central bank of Morocco, to organize the first international meeting between international central banks with the aim of studying and fostering female leadership in central banks.

Also, all the participants would benefit from getting a view from the Academia on the implications for the Economics of the lack of diversity. Gender, of course, is one important aspect of diversity, but this webinar also brings together studies from authors affiliated to institutions all over the world. This geographical diversity would enrich the discussion and expand the menu of possible action points. The conclusions we may reach over the course of these two days will certainly boost the actions to be carried out by our institutions which should be expected to lead by example 1  not only within the financial sector but also, as a public administration, fulfilling our duty to serve public interest. Banco de España has already committed different internal actions. Among others we have created a group of D&I Ambassadors, representing all the business areas together with HR -of which I am proud to be the Sponsor-. This group has the purpose of enhancing diversity and inclusion consciousness and helping to step up specific measures across the organization.
If public investments, which, sooner or later, may still need to be made, can be financed at a historically low cost, this would seem like a good opportunity to implement them. Ultimately, fiscal policy aims to increase the well-being of citizens. The development of deficits and public debt may be the means to achieve this, but it is not obvious from an economic point of view that it should be seen as an end in itself. A comparison with monetary policy can be made here: the target is formulated in terms of the outcome, that is, mainly how well the inflation target has been achieved, rather than the means, that is, the monetary policy tools. I think it would be useful if we were to start thinking more along these lines in fiscal policy as well.14 The conclusion of this reasoning is not that public borrowing is never problematic. For example, if the policy becomes too extensive or if it is not sufficiently explained and followed up, investors may nevertheless begin to fear that the government will not be able to manage its debt and may therefore demand a higher risk compensation for lending. This, in turn, may make the commitments even more difficult to meet – there is a risk that we will find ourselves in a bad equilibrium, expressed in economic terms.

Over recent months, inflation has proved more persistent and become more broad-based than had initially been expected. Consequently, we have witnessed a turnaround in monetary policy at a global level as central banks have begun to tighten their policies. The SNB, too, has tightened its monetary policy and has lifted its policy rate back into positive territory. With the transition to a positive rate environment, the SNB has had to adopt a new approach to implementing its monetary policy in the money market. Our new approach features two elements: reserve tiering, also referred to as tiered remuneration of reserves, and reserve absorption by way of open market operations. 1 This new approach takes into account the structural changes that have occurred in the money market since we were last in a positive rate environment. In particular, under these changed conditions, the new approach allows us to pursue our objective of keeping secured short-term Swiss franc money market rates close to the SNB policy rate. Tonight’s event offers an excellent and timely opportunity to discuss our new approach in detail. After reviewing the rationale for adopting the new implementation approach, we will give you an overview of how the new approach has played out so far. Why did the SNB return to a positive policy rate? Let me start by giving you an overview of why the SNB has tightened its monetary policy. Until recently, consumer price inflation had been both low and relatively stable for roughly three decades.
Moreover, if it was permanent, then part of the “dividend” from this reduced macroeconomic volatility should be a greater willingness to take on risk. As it happens, the academic literature has so far failed to provide a conclusive answer on the relative contributions of the various explanations 3 . But what matters is how market participants responded to these benign conditions. They are faced with what is, in essence, a complex signal-extraction problem. But whereas many such problems in economics involve learning about first moments of a distribution, this involves making inferences about higher moments. The longer such a period of low volatility lasts, the more reasonable it is to assume that it is permanent. But as tail events are necessarily rarely observed, there is always going to be a danger of underestimating tail risks. Certainly it appears from measures of volatility implied from options prices for US equities (VIX) and treasuries (MOVE) that the perceived risks in financial markets had shrunk to extremely low levels by 2006; see Fig. 5. There are two ways of rationalising this. One possibility is straightforward extrapolation into the future of the benign experience of the preceding few years. An alternative and complementary explanation is excessive faith in the  2  The Great Moderation appears to have started rather earlier, in the mid-1980s, in the United States.

That is consistent with an influence of  5  With four lags of each variable on the right-hand side and a full set of time and country fixed effect dummies for sixteen countries over the period 1975-2007, the F-statistic for the exclusion of house prices in the equation for the current account is 8.2, while the F-statistic for the exclusion of the current account in the house price equation is 4.2. 6  BIS Review 101/2009  the imbalances on asset prices. But equally the results could just indicate that both variables are affected by the state of the business cycle. What went wrong? While the macroeconomic environment may have provided fertile ground for the credit/asset price boom to develop, to explain both the extent of the growth in credit and the magnitude of the subsequent crisis one needs to dig down into what was happening inside financial markets. And when one does that, one finds a variety of incentive distortions and information problems that appear to have played a central role. Distorted incentives Banks are vulnerable institutions because they make long-term loans with uncertain returns that are financed predominantly by short-term debt instruments and callable deposits. If creditors think that the borrowers will be unable to repay the loans, then there is every incentive for them to run. That is why banks are required to hold a buffer of capital and reserves large enough to absorb losses in most feasible states of nature.
We were unable to take in the complexity of the financial system and the contagion that this entailed. Although it was extremely difficult to make forecasts, the Riksbank did not stop making them. However, the forecasts were unusually uncertain and we were prepared to revise them significantly, which is what subsequently happened. The forecast for GDP was revised so much that we ended up far outside the uncertainty bands that surrounded the forecast before the crisis (see Figure 1). At a later stage, we also underestimated the strength of the recovery. 4  For a more detailed discussion of the role of assessments in relation to alternative scenarios see the speech “Flexible inflation targeting in theory and practice” that Stefan Ingves held on 12 May 2011. BIS central bankers’ speeches  5  Figure 1 GDP and forecasts for GDP at different times Annual percentage change, seasonally-adjusted data 8  8  6  6  4  4  2  2  0  0 90% 75%  -2  -2  50% Outcome  -4  -4  September 2008 September 2009 September 2010  -6  -6  April 2011  -8  -8 06  07  08  09  10  11  12  13  Note: All forecasts entail a degree of uncertainty but to preserve the graphic profile only uncertainty bands for the September 2008 forecast are shown. Sources: Statistics Sweden and the Riksbank.

In such a situation, it is a case of using all the means at your disposal to ensure that you stay on the road and do not fall into the ditch. What the road looks like 50 meters further ahead is highly uncertain and, in effect, less important. Once you are back relatively safely on the road your speed will be very low and you will be able to look ahead and try to return to more normal driving. In the upturn: patterns had been broken, parallels with previous crises Thanks to resolute action on the part of central banks and other authorities the crisis entered a less acute phase. However, the financial markets were still not functioning effectively and support measures were still needed. But, a total collapse had been avoided and it was possible to see signs of a normalisation on some financial markets. Nevertheless, the situation was highly uncertain. It was also difficult to assess the real economy. Did the major falls in GDP in Sweden and abroad mean that potential GDP had declined? In many countries the households had experienced substantial falls in house prices. To what extent would the need of the households to strengthen their balance sheets mean that consumption would decline and that the ability of monetary policy to stimulate the economy would be weakened?5 It was clear that the economic patterns that prevailed before the financial crisis had largely been broken.