samchain/econo-pairs-v1 huggingface dataset:
It therefore benefits households in their capacity as workers, entrepreneurs, investors, borrowers and taxpayers. Similarly, there are several channels through which our policies affect pension systems. Yes, lower rates increase the present value of future liabilities of pension schemes. However, the liability side of pension schemes is only one part of the equation. What happens on the asset side is also important. And our monetary policy has had a beneficial impact on this side of the equation as the value of the investment portfolio has increased. Also, let’s not forget that our monetary policy supports pension systems indirectly by supporting employment growth and thus pension contributions. In any case, it is ultimately up to sound governance structures and longterm strategies to ensure the financial health of pension systems. Equally, monetary policy can have an impact on bank profitability through various channels. Our assessment is that so far these effects tend to largely offset each other in aggregate terms. Low rates might reduce bank profits through the narrowing of net interest margins. Yet, at the same time, by supporting the recovery, accommodative monetary policy reduces delinquencies and defaults, including on mortgages. Improved credit quality coupled with higher lending volumes and an improved market value of assets supports bank profitability. Of course, depending on the strength of their balance sheet, some banks may be more affected than others. Also banks facing structurally high cost-to-income ratios or limited diversification of income sources might have to revamp their business models regardless of the low interest rate environment.

The favorable cyclical juncture at which a number of economies still find themselves is a propitious time for tackling structural reforms aimed at fomenting increase in potential growth. This is especially relevant in the case of advanced economies that have seen a significant decrease in productivity growth in recent years. We should not forget that in the downturn phase of the cycle the introduction of structural reforms is much more costly. The global financial crisis led to a regulatory wave aimed at achieving a more stable international financial system. Much progress has been made in this area, but challenges still remain. At the European level, it is necessary to complete the institutional architecture of the euro area, bringing the Banking Union to fruition and strengthening the fiscal framework. On a global scale, there are multiple challenges: the reinforcement of the regulation of non-banking intermediaries, the emergence of new risks (cybersecurity) and the creation or expansion of global and regional backstops. Finally, the recent tensions in international trade and the recent proliferation of protectionist measures should serve as a reminder for us to defend the benefits of trade liberalisation as a means of strengthening growth in the economy and the reduction of poverty.
Additionally, we are confronting new risks, in the face of international tensions related to Iran’s nuclear situation and its impact on the oil market. These sources of uncertainty are beyond our control. Therefore, our role as policymakers in emerging countries is to preserve flexibility and space for policies that will enable us to respond to and buffer the financial and real effects that those risks pose on our economies. Over the last years we have gained credibility, flexibility and space to implement a macroeconomic and financial policy framework that will help us smooth out the economic cycle. This framework rests on four pillars. First, monetary policy management is based on a flexible inflation-targeting regime, conducted by an autonomous central bank and supported by a floating exchange rate system. Second, a fiscal policy that is accountable and predictable thanks to a structural balance rule. The significant amount of savings accumulated during the run-up of copper prices was a crucial factor in bolstering the resilience of the Chilean economy and in providing a countercyclical fiscal boost. Third, a high degree of commercial and financial integration with the rest of the world. Finally, a sound financial system, with globally integrated, well capitalized, and adequately-regulated banks. These elements allowed us to be less affected by the Great Recession than by previous episodes. In Chile, the effects of the world slowdown of the second half of 2011 and the financial turbulences coming from Europe have so far been limited.

Nonetheless, depending on the outcome of events, there could be contractive effects on emerging economies. Scenarios such as this back slacker monetary policies. On the other hand, the domestic scenario poses challenges in the opposite direction, inasmuch as the behavior of domestic demand may bring inflationary risks. Today, prudent monetary policy management has to be prepared for all kinds of scenarios and to adapt the amount of stimulus applied according to needs established on a case by case basis. In fact, in our latest Monetary Policy Meeting we decided to maintain the Monetary Policy Rate at 5% for a second month in a row. The greater caution in policy decisions that these events pose has been reflected in the fact that private expectations currently incorporate a higher probability of MPR to remain at 5% until the end of the year. With the Board we have conditioned future changes in MPR to the implications that domestic and external macroeconomic conditions may have on inflation perspectives. The Board has also reaffirmed its commitment to conduct monetary policy in a flexible fashion, so that projected inflation remains at 3% within the policy horizon. Without a doubt, the best contribution that central bankers can make to prosperity in our countries is to conduct monetary policy aimed at maintaining low and stable inflation. This is perfectly clear for us at the Central Bank of Chile. As emerging economies we are long-time victims of inflation and are well aware of its devastating effects on our more vulnerable population.
It is no accident that in all major countries the central bank has a significant role in the supervision of banks, even if in some cases others have been given the legal powers to carry out the front-line tasks. Having as supervisors tried their best to limit the likelihood of failure, when faced with it central bankers are uniquely well placed to provide assistance, whether to the institution in trouble, to the market at large, or both. Those who wish to separate banking supervision from central banking must acknowledge that there are certain things that only the central bank can do, and that therefore there needs to be a strong link between the central bank and any new regulator. In Germany, for instance, the Bundesaufsichtsamt is the supervisor of commercial banks. But the Bundesbank has an important role in the day-to-day job of collecting prudential returns, and must be consulted on liquidity and capital requirements, which bear most directly on its role in an emergency. The logic of these arguments might point instead to a ‘Holy Trinity’, rather than a ‘Twin Peaks’ model, based on three agencies, focused respectively on financial services, banking and insurance. That might allow the most sensible match - albeit not complete - of regulation to function and institution. It would also have the advantage of evolving fairly readily out of the present structure.

This flexibility allows us to be tough where appropriate, but to avoid inappropriate requirements - tailoring the requirements to the nature of the bank’s activities. Most fundamentally, perhaps, we can ask questions, and attempt to take advantage of all the information at our disposal to form a judgement of the risks facing depositors and investors, as well as of the quality of a bank’s management. So in addition to enforcing rules and looking for problems, we can help management. We can spread knowledge of best practice: asking banks about the full range of risks they face (including those - like reputational and settlement risk that they would often rather ignore); and pointing out to complex groups the extent to which their managerial and organisational systems have moved away from their legal structure. It is true that, in addition to being less rule-bound than most other supervisors, the Bank is commonly viewed as doing relatively little on-site supervision. Of course, this depends on how you define the term. Accountants are well aware that the Bank does, for example, make extensive use of reports prepared by auditors - who, of course, operate on-site - in order to assess the adequacy of internal controls. In particular, the Bank regularly instructs banks to appoint reporting accountants to report on systems and controls and on the accuracy of prudential returns. The Bank’s supervisors also spend a growing amount of time on-site.
Mark Carney: Winning the economic marathon Speech by Mr Mark Carney, Governor of the Bank of England and Chairman of the Financial Stability Board, at the Commonwealth Games Business Conference, Glasgow, 23 July 2014. *  *  *  Accompanying charts can be found at the end of the speech. It is a pleasure to be in Glasgow for the opening of the 20th Commonwealth Games. For the athletes, the games represent the culmination of years of training. For fans they are a chance to witness great sporting achievements. I remember attending the 1978 games in my hometown of Edmonton and being mesmerised by one of its stars: Scotland’s Allan Wells. At just 26, Wells burst onto the scene, winning silver in the 100 metres, beating the reigning Olympic champion in the process. He spurred Scotland to gold in the 4x100 metres, won the 200 metres outright and set the stage to become the fastest man in the world two years later at the Olympics. The UK economy has also had some sprint success of late and is the current holder of the “fastest growing advanced economy in the world” title. That is welcome after some difficult years, but what really matters is what comes next. The bigger prize is winning the economic marathon by achieving a durable expansion.

The micro-economic evidence discussed earlier suggests these effects are difficult to detect and, to the extent they do exist, might be relatively modest in the contribution they have made to slowing aggregate investment and productivity growth. And if higher markups have, in fact, been the counterpart to a rise of ‘superstar’ firms, benefiting from network economies, that would, in principle, raise productivity growth and r*. A second structural parameter in the IS curve is the interest elasticity of aggregate demand, 𝜎. In the simplest baseline model, this is determined by (the inverse of) the intertemporal elasticity of substitution. In more general settings, with credit constraints, it may depend additionally on the balance sheet characteristics either of borrowers or lenders or both (for example, Kashyap, Stein and Wilcox (1993)). A rise in market power could, in principle at least, affect the balance sheets of borrowers and/or lenders in ways which could influence 𝜎. For borrowers, a rise in market power might raise equilibrium profit rates and market valuations. It may thus reduce companies’ collateral constraints and their reliance on external sources of finance (for example, Bernanke, Gertler and Gilchrist (1999)). For lenders, a rise in market concentration could in principle reduce the speed of pass-through of policy rates to retail deposit and lending rates (Gerali et al (2010)). Each of  24  Equation (9) is specific to the Galí model presented here, but equation (10) is a more general feature of macro-economic models, where r* is a function of the household discount rate and productivity growth.
6  See, e.g., the Swedish Competition Authority 2002a, 2002b and 2000:2. 7  Swedish Competition Authority, in cooperation with the Pensioners’ National Organisation. BIS Review 39/2005  5  this reduction being compensated for in other areas. We can also see how productivity in Sweden has grown stronger than what is usual at this stage of the business cycle. In the current debate there have been claims for some time that the Riksbank is responsible for the fact that employment has not risen faster, by not having lowered the policy rate earlier and by more, which the presently low inflation would have permitted. Like other forecasters, the Riksbank underestimated the effects on inflation of the increasingly strong global competition and productivity growth. It cannot be ruled out that employment could have been somewhat higher today if we had been able to better foresee the developments, but we are talking about small differences and far from the figures that have been mentioned in the debate. It is important to remember that the repo rate is unusually low today, which means that monetary policy is already expansionary and thus not an obstacle to consumption and investment. The main reasons behind the weak employment are rather to be found in supply factors that the Riksbank cannot influence; among other things, the incentives to start businesses and hire staff as well as the willingness of people to accept employment, move and look for new jobs.

As regards producer prices of imported goods, these have dropped since the end of 2002. This partly reflects the more or less continuous strengthening of the krona between 2001 and 2004, which has had an impact on the prices with a slight lag. Moreover, consumer price inflation in the international market was muted during the last economic slowdown. We have also seen a rise in the share of imports from low-cost countries, which has also contributed to the low rate of price increases for consumer goods. The effect of this shift towards cheaper import countries is not fully captured, however, by the method that we so far have used to forecast import prices. This could be one reason why our forecasts have not completely managed to predict the fall in import prices. This is a problem that we are working on at the moment. The distribution sector also important for inflation The prices of consumer goods have fallen more than the aggregate producer prices of imported and domestic goods. That is because consumer goods prices, in a second step, are also affected by what happens in the distribution sector, i.e. the part of the business sector that distributes goods from producers to consumers. It is difficult to find comprehensive data for the distribution sector, but we have seen that unit labour costs in the sector that includes transportation fell in 2004.
  Longer-term work to assess what monetary policy framework is most consistent with the goals of monetary policy and financial stability. New York Fed economists have made many contributions to the theory and measurement in New Keynesian models, focusing on monetary policy at the zero lower bound, and incorporating financial frictions into more standard macro models. 2  Dynamic stochastic general equilibrium (DSGE). BIS central bankers’ speeches  3  Microeconomic and regional policy New York Fed economists also have important opportunities supporting microeconomic and regional policy. These include the survey of consumer expectations, which will launch this month, and the consumer credit panel, which, using raw data supplied by Equifax, allows us to develop insights into consumer indebtedness at the micro-level. These panels give us and the public unique insights into household beliefs and behavior. One example is the work highlighting the growing aggregate student loan debt balance and repayment burden. An important responsibility for each of the Reserve Banks is coverage of economic development in its region. A significant aspect of this work at the New York Fed involves our regional press briefings, business surveys, and white papers. One notable example has been the New York Fed economists’ work in developing a white paper that highlighted some key choices that Puerto Rican policymakers might make to eliminate structural constraints that have impinged on the Island’s economic performance. I’m very pleased by the contributions of our economists in the Bank, whether they sit in the Research Group or elsewhere in the Bank.

Our economists, working with staff in the Markets Group, have published two staff reports detailing a framework for replacing the GSEs and implementing an explicit government guarantee to protect against tail risks in residential real estate. This work has included briefings of congressional staff and congressional testimony.   Triparty repo reform. Working with the other areas of the Bank and Board of Governors staff, economists have helped to design and implement reforms that make the triparty repo market more stable and less prone to “run” risk.   Reference rate reform. New York Fed economists and members of the Markets Group are deeply involved in the FSB’s efforts to reform the reference rate setting process for LIBOR and other reference rates. Monetary policy and macroeconomic policy Economists provide invaluable input to the New York Fed President, who serves as ViceChairman of the FOMC, and to the Markets Group, which is responsible for the operational aspects of monetary policy implementation. This work has many aspects, including:   Independent macroeconomic forecasts. This includes a New York Fed DSGE model and a suite of products to analyze labor market developments.2    The development and implementation of new tools, such as the large-scale asset purchase programs, the payment of interest on excess reserves, and the development and testing of a fixed rate, full allotment reverse repurchase facility. This is done in close concert with economists at the Board of Governors.
12.04.2021  The ECB monetary policy response to the pandemic crisis* 1st Ibero-American Central Bank Conference/Banco de España and IberoAmerican General Secretariat Pablo Hernández de Cos Governor of the Banco de España  *English translation of the original speech in Spanish  Good afternoon, ladies and gentlemen (or good morning to those joining us from the other side of the Atlantic). It is a source of great personal satisfaction to welcome you to this 1st Ibero-American Central Bank Conference. For the Banco de España it is an honour to have jointly organised it with the Ibero-American General Secretariat, and I would first like to thank their SecretaryGeneral, Rebeca Grynspan, for her resolve in bringing this initiative to fruition. On 21 April the stage is set for the 27th Ibero-American Summit of Heads of State and Government, an established forum for dialogue, coordination and cooperation at the highest level between the 22 countries making up the Ibero-American community. Within the framework of the Summit, this meeting today seeks to contribute to the debate relating to the functions proper to central banks. In this connection we will not be starting from scratch, as there is a long-standing tradition of dialogue and cooperation between the Latin American and Caribbean monetary authorities (a somewhat more extensive geographical area than the strictly Ibero-American space), pursued mainly under the auspices of CEMLA (the Center for Latin American Monetary Studies), which will be celebrating 70 years of existence in 2022.

It was the first time we had done so since the introduction of the repo as a monetary policy instrument. At the same time, we undertook a significant reduction in the repo rate used for our transactions. Our aim was to compensate the higher risk premiums through a lower repo rate, and to move the threemonth Libor back into the middle of the target range. The desired reaction ensued within a few days and the three-month Libor stabilised at 2.75%. We thereby neutralised the monetary policy impact of the higher risk premium. As announced a short while ago, we will also be supplying the market with ample liquidity as we approach the end of the year, and will be conducting longer term repo transactions with this in mind. At the operational level, steering the three-month Libor proved to be a challenge, due to the high and fluctuating level of the risk premium. Simultaneously, the benefits of our operational flexibility became very clear. Since we are generally present in the market on a daily basis with short-term repo transactions, we were in a position to adjust liquidity measures to individual market conditions. Over the past few months, we have made consistent use of this flexibility; first, by providing the banking system with generous amounts of seven-day money, gradually lowering the repo rates as we did so, and second, by absorbing liquidity that was no longer required as soon as the call money rate declined.
Typically, what we would like to have is a balance between the two so that the system will have its own stabilizing mechanism when the shocks hit. But in this crisis, apparently the positive feedbacks had been overwhelming. Let me cite a few examples of the positive feedback loops that were in play. BIS Review 130/2009  1  The first, example A, is the originate-to-distribute model, which was prominent at the formative period of the crisis. Here, we see that with the housing sector booming, investment funds were eager to seek entries into the credit business, despite the fact that they had no expertise in evaluating credit risks of mortgage loans, or the complex risk exposures when mortgage loans were packaged, first into CDO, then into commercial papers backed by CDO, and so on. So, with a ready market for securitsation or structured products, banks, who were assured that credit risks would be transferred off their balance sheets, enlarged their lending activities. This is a classic moral hazard problem that helped fuel the already booming housing market. Example B is a positive feedback loop linked to the stress on the SIV. Once subprime mortgages began to default, investors in the junior tranches of cash CDO started losing money. What happened was that not only the ex post rate of defaults increased, but the senior tranches were also hit by a rise in ex ante default correlation, causing losses in the senior cash CDO tranches.

In this loop, we describe what has been termed a liquidity spiral, where an initially liquid bank’s concern about the solvency of its counterparty (or solvencies of its counterparty’s counterparties) or perhaps concern that itself may run into funding difficulty in the future, decided to forgo interbank interests and began to hoard liquidity. When enough institutions embarked on the  BIS Review 130/2009  3  same actions, a general freeze in liquidity ensued, leading to “unnecessary” defaults that further exacerbated doubts in the system. These examples of positive feedback loops were some of the interactions that took place in the amplification stage of the crisis, as market participants responded to specific problems and general distress. But while the feedbacks were important in themselves in setting off deleveraging and losses, it was also the interactions between these feedbacks that contributed hugely to intensifying the problem and multiplied the losses into a larger systemic problem. What we saw was the rapidly worsening crisis that spread beyond financial institutions into money and capital markets. On this aspect of loss intensification, a number of studies have pointed to joint exposures to common risk drivers and network linkages between financial institutions to be the two key propagation channels. Let me elaborate further on this point. First, propagation channel in the form of joint exposures to common risk drivers means that different financial institutions are becoming not so different. In other words, their investment strategies and methods for minimising regulatory capital were beginning to copy one another.