samchain/econo-pairs-v1 huggingface dataset:
15  All speeches are available online at www.bankofengland.co.uk/speeches  15  Chart 5: Original Phillips curve  Chart 6: Unemployment and wage growth since 1971  20  35  18  1971-1997 1998-2012  30  2013-2017  16 25  12  Wage growth  Wage growth  14  10 8 6 4  20 15 10 5  2 0  0 0  2 4 Unemployment  3  6  5  7  -5  9  11  13  Unemployment  Sources: Phillips (1958) and Bank calculations  Notes etc  Chart 7: Illustrative impact on Phillips curve of changing equilibrium unemployment (U*)  Chart 8: Illustrative expectations-augmented Phillips curve At lower inflation expectations and/or real wage norms  Higher U*  At higher inflation expectations and/or real wage norms  Phillips curve at lower U*  Phillips curve at higher U*  Wage growth  Wage growth  Higher U* shifts curve by constant amount Higher inflation expectations or real wage norms shift curve by constant amount B A D C Unemployment  Unemployment  16  All speeches are available online at www.bankofengland.co.uk/speeches  16  Chart 9: The policy-maker’s dilemma: level shift or slope?

Government securities are used by central banks as collateral in managing market liquidity and implementing monetary policy through money market operations. Furthermore, given their low risks, they are used by banks and pension funds as investment instruments. These aspects need to be borne in mind when designing prudential treatment of banks’ sovereign exposures. This is particularly true of emerging and developing countries, as their financial markets are shallow and low-risk equivalents to government securities and central bank papers are hard to find. As I have already mentioned at the beginning of my speech, the CNB hosted the BCG workshop on the impacts of Basel III implementation on emerging markets and smaller economies three years ago. The workshop was efficient and successful, resulting in a memo highlighting the effects of the reforms on these economies for the BCBS and supervisors. I am happy that we are meeting here again to discuss regulation of sovereign exposures and other topical issues related to Basel III regulatory reform. I hope that this workshop will reach similar success. Ladies and gentlemen, thank you and I wish you success in your work. 2/2  BIS central bankers' speeches
Although the process of financial integration in the euro area was heavily disrupted in the aftermath of the global financial crisis in 2008 and the sovereign debt crisis in the euro area in 2011, the single currency area has held together. These gains should not be lightly discarded. 1  But the double shock of the financial crisis and the subsequent fiscal crisis has hit EMU hard. The euro area economy is currently in a moderate, gradual recovery that has been under way since the second quarter of 2013. However, in some member states that were hit the hardest by the sovereign debt crisis, output remains considerably below the levels registered in 2008. Unemployment rates diverge considerably across the euro area, ranging from over 20% in Greece to below 4% in Germany. The euro area is facing pressure along four different fault lines. First, there is the tension between euro area member states that are in different cyclical and, in some cases, secular positions and yet face the same nominal interest rate and exchange rate. Second, there is the related tension between monetary policy that is determined at the level of the euro area as a whole and fiscal policy which has remained, in effect, largely national. Third, there are tensions that arise from the fact that the single currency is embedded in an incomplete single market, including only a partial banking union.

Higher wage growth and declining productivity growth are pushing up unit costs. Continued strong competition may prevent this cost increase from feeding fully through to prices. However, it is assumed that competition will curb inflation to a lesser extent in the period ahead and that high capacity utilisation and higher wage growth will gradually push up the rise in prices for domestically produced goods and services. As mentioned, there are probably several reasons why the rise in prices for domestically produced goods and services is picking up somewhat later during this cyclical expansion than the historical relationship between the rise in these prices and capacity utilisation would imply. Moderate wage growth has contributed to low inflation in recent years. The subdued rise in prices for imported, processed intermediate goods has curbed the rise in prices for goods and services. In recent years, competition has increased in many product markets. In many industries, high productivity growth has also had a dampening effect on inflation. Some of these factors may continue to influence inflation in the period ahead, albeit to a lesser extent than earlier. Inflation is projected to near the inflation target of 2.5 per cent as from 2008. At Norges Bank’s Executive Board meeting on 15 March, the key policy rate was raised by 0.25 percentage point to 4.00 per cent.
For governments political stability takes precedence to other objectives. Still Central Banks cannot neglect their own mandates. The upshot is that this expansionary fiscal policy will make the work of monetary tightening that much harder. Confronted with many "unknowns", decision makers turn to history to enlighten the course of action. History teaches its lessons not by means of similarities, but rather through differences. For example, the bout of high inflation sweeping across the (western) world today has led many commentators to draw comparisons to the 1970s. On the surface similarities are glaring, notably in relation to energy supply shocks, and in particular the warning that even a one-offshock to prices could cement a structural high inflation regime. But it is essential to bear in mind that the institutional contexts are very different today compared to half a century ago. When inflation began to pick up in the late 1960s/early 1970s, the socio-economic consensus in the West revolved around the "Keynesian paradigm". In the post-war decades, the state actively steered the economy towards full employment. An accentuated interventionist agenda addressed inflation amid restrictions on capital flows and managed exchange rates. Such policies naturally empowered organised labour: unions' significance in the national economy grew and workers were able to extract increasing real wages and benefited from improved standards of living. A wage-price spiral that transformed a one-off shock to inflation into a structural feature of advanced economies. The word stagflation takes us to those days.

Only ambitious policies will deliver concrete benefits for the people of Europe. This is also what our common history tells us. This year marks the 25th anniversary of the Single Market and of the Maastricht Treaty’s entry into force. Those were bold decisions and we continue to benefit from them today: goods, people, services and capital can move freely and EU legislation ensures that commensurate rights and obligations apply throughout our Union. With the creation of Economic and Monetary Union (EMU) we went further by adopting the single currency. It is in this spirit that I look forward to the coming months and the pivotal discussions we will have on reforming EMU governance. Thank you for your attention. I am at your disposal for questions. 1 www.ecb.europa.eu/press/key/date/2018/html/ecb.sp180205.en.html 2 See “Low inflation in the euro area: Causes and consequences”, ECB Occasional Paper Series, No 181,  January 2017. 3 See “Domestic and global drivers of inflation in the euro area”, ECB Economic Bulletin, Issue 4 /2017. 4 General Court’s judgment in Case T-496/11 United Kingdom of Great Britain and Northern Ireland v European  Central Bank. ECLI: EU:T:2015:133. 4/4  BIS central bankers' speeches
As always, what I have to say reflects my own views and not necessarily those of the Federal Reserve System or the Federal Open Market Committee, also known as the FOMC. I am vice chair of the FOMC – a Federal Reserve committee that meets eight times a year in Washington to set interest rates and make other decisions about monetary policy. The members of this committee all strive to set policy to advance the mandate given to us by Congress to promote the maximum level of employment consistent with price stability. Sometimes we have different views on the specific policy choice on hand, and you should view this as completely appropriate: these are hard questions – particularly at times like this – and we make better decisions as a committee because we don’t all think alike. But we are united in our commitment to our mandate and in our belief that Fed independence is essential  BIS central bankers’ speeches  1  to the public interest, because it allows us to take tough decisions insulated from short-term political pressures. At FOMC meetings, each Committee member presents a current outlook for his or her region and the nation. For these assessments, we consult our researchers and add critical information that we learn from listening to our boards of directors, regional advisory councils and community leaders, such as you and others I’ll meet on this visit.

The University at Albany clearly plays this role in the capital area. Perhaps equally important in terms of promoting local economic growth, colleges and universities can play a key role in creating jobs for skilled workers in local businesses. Colleges and universities conduct research and development that can have “spillover effects” into the local economy. Businesses in the region can take advantage of being close to these innovative activities and facilities to develop new products and technologies. This can also help draw new companies to the region to access university resources. Thus, successful industry–higher education partnerships can provide a quite a boost for a region’s economy. The local nanotech sector provides an excellent example of this type of partnership at work. During my visit to the University’s College of Nanoscale Science and Engineering this afternoon I look forward to seeing the facilities and hearing more about the Center’s plans to lead the way in global nanotech research. More broadly, I understand that our audience today includes several members of the Regional Economic Advisory Council – including the University at Albany’s president, George Philip and Michael Castellana, the co-chair of the Council – who are working to advance such partnerships and the outlook for the region. Going forward, the industry–higher education partnerships taking place here will be increasingly important. I expect the strong foundation already in place will help maintain the economic vitality of the capital region.
This means I can now pay my utilities provider, telephone company, or plumber by simply scanning their QR code using my smart phone and keying in the amount to be transferred. Let me now move on to the second way in which Technology can benefit Finance – strengthening risk management. Risk management and compliance have become major cost drivers in financial institutions since the global financial crisis. Processes have become slower and more cumbersome. The answer does not lie in lowering regulatory requirements or risk management standards. We know from 2008 what that can lead to. Instead, financial institutions should harness technology to make risk management and compliance more efficient and effective. Technology can improve the efficiency of risk management. JP Morgan is using machine learning to review loan contracts. This reduces the review time from 360,000 man-hours to seconds. It also minimises human errors. OCBC Bank in Singapore is using machine learning to monitor customer transactions realtime and across multiple channels. This allows the bank to identify fraudulent fund transfers and take more timely actions to recover the funds. Technology can make risk management less passive and more predictive by harnessing the informational value of data. Ping An Insurance has developed a system that detects whether a banking customer is lying about the reason for borrowing money. It is based on subtle changes in customers’ facial expressions, with the analytical algorithm based on 30,000 videos of real lending cases. According to Ping An, this has helped to reduce credit losses by 60%.

May I take this opportunity to thank our fellow regulators for their support in the setting up of the Academy and in providing guidance on its future work through the Board of Directors, which includes representatives from the Insurance Authority, the Securities and Futures Commission, the Mandatory Provident Fund Schemes Authority alongside the Hong Kong Monetary Authority. 6. Ladies and gentlemen, today the AoF will also confer Fellowship upon 10 distinguished leaders in recognition of their outstanding achievements and contributions to Hong Kong in the field of finance. May I take this opportunity to congratulate the Fellows and to express our deep appreciation of their remarkable achievements and contributions to Hong Kong over the years. 7. Before I conclude, let me express our sincere gratitude to the members of the Experts Group, Preparatory Committee, Exchange Fund Advisory Committee and the Financial Secretary, who is also the Honorary President of the Academy, for their support and 1/2  BIS central bankers' speeches  contributions that have made it possible for us to launch the AoF within a very short period of time. Lastly, the Managing Director of the International Monetary Fund, Ms Christine Lagarde, has asked me to convey her apologies for not being able to officiate at today’s ceremony as planned. Although not being able to join the occasion in person, she will deliver a video message to us later on. Once again, I thank all of you for joining this ceremony today. Thank you for your kind attention. 2/2  BIS central bankers' speeches
All in all, this gives a fairly unfavourable image of monetary policy and what it can achieve. So can’t monetary policy play a more positive role, for instance, by preventing  10  See, for instance, Koo, R. C., “How to Avoid a Third Depression”, Testimony before the Committee on Financial Services, U.S. House of Representatives, July 2010 and Krugman, P. and R. Wells, “The Slump Goes On: Why?”, The New York Review of Books, September 2010. That household consumption plays a key role in the recovery from a financial crisis is a significant result in, for instance, Barrell, R., E. Philip Davies and O. Pomerantz, “Costs of Financial Instability, Household-Sector Balance Sheets and Consumption”, Journal of Financial Stability 2, 2006. Crises tend to be more severe the higher the degree of borrowing is, and there appear to be effects on consumption over and above those stemming from lower disposable incomes and lower net wealth. 11  Amaral, P., “Households’ Balance Sheets and the Recovery”, Economic Trends, Federal Reserve Bank of Cleveland, September 2010. BIS Review 164/2010  5  bubbles and exaggeratedly highrisk lending? Yes, I believe it can, if one acts at an early stage. But at the same time, I believe that the main responsibility, or the first line of defence as one often says, for preventing credit-driven bubbles must be suitably-designed regulation and effective supervision. This is a stance that I believe I share with most people today.

3  The concept of a “risk-taking channel” was introduced by Claudio Borio and Haibin Zhu in “Capital regulation, risk-taking and monetary policy: a missing link in the transmission mechanism?” BIS Working Papers No 268, 2008. This paper also reviews the different mechanisms the risk-taking channel consists of. 4  The banks’ assessment of risk can in turn affect the size of the leverage they allow. Variations in leverage also affect the price of the asset and are an important driving force in what are known as the “leverage cycle”; see  2  BIS Review 164/2010  instance, that they make a more optimistic assessment of the expected default frequency. This channel can be said to function as a form of multiplier in the sense that it reinforces the effects of interest rate changes on the economy. Finally, the central bank’s communication can also contribute to increasing risk taking. This may occur, for instance, if the participants in the economy perceive that the central bank is acting asymmetrically, to the extent that it reacts strongly once a crisis occurs, but remains passive during the period while the risks are building up. Such action may be interpreted as a form of insurance that allows agents to take greater risks than they would otherwise have done, as they rely on the central bank always being prepared to intervene and resolve the situation if things go wrong.
As you may be aware, a literate citizenry is a key prerequisite for a sustainable economic future. It is now my honour and privilege to declare the 2008 ZAMBIA BOOK FAIR officially open. I thank you all for your kind attention. 2  BIS Review 74/2008

It is important to keep in mind that the local banks are still making money so far this year despite the more difficult operating conditions. Equally, you will not be surprised to hear that profits are generally lower than the same period of last year due to a combination of increased funding costs, flat lending volume and increased bad debt provisions. The outlook for the year as a whole is uncertain. If banks can record the same profits as last year, they will be doing very well. Certainly, nobody should have exaggerated expectations about the 1998 outturn. It will be a tough year, but I am confident that the banks can manage their way through it. What kind of strategy are the banks adopting to achieve this? I have already mentioned some of the steps: namely, to build up liquidity and to be more selective and cautious in their lending. Loan review and collection procedures are being stepped up to ensure that banks can identify problem loans at an early stage and take action to safeguard their position. Banks are also being more proactive in their asset and liability management, particularly in terms of their funding strategy and how to price their deposits against the competition. Although banks in Hong Kong are highly efficient in terms of the cost-income ratio, the pressure on revenues means that they need to pay even more attention to costs.
Activist monetary policy would have resulted in instability migrating from the financial to the non-financial sector. In tackling the credit cycle, monetary policy may have, in Irving Fisher’s language, “aggravated rather than neutralised” the business cycle. Econometric evidence tends to support this view. Model-based simulations by the IMF suggest the need for two instruments to tackle efficiently real as well as financial imbalances (IMF (2009)). And the empirical evidence in Bean et al (2010) suggests that monetary policy may be a rather ineffective instrument quantitatively in constraining credit growth. This suggests that assigning monetary policy the task of tackling financial imbalances may be inefficient, perhaps ineffective. Charts 18 and 19 plot credit cycles in the UK and US from 1880, together with the different monetary policy regimes which have operated over this period. Strikingly, credit cycles dynamics appear to be largely invariant to the monetary policy regime – fixed or floating, rules or discretion, lax or tight. This, too, is indicative evidence that monetary policy may not be the most effective tool for moderating credit fluctuations. Third, micro-prudential policy aimed at tackling financial imbalances in individual financial institutions may also be ineffective for dealing with aggregate credit cycles. That is because bankspecific actions will not, by themselves, internalise the spillovers that arise across banks over the credit cycle. At best, this means that micro-prudential actions may be impotent in curbing the credit cycle. At worst, however, it could mean that bank-specific prudential actions are counterproductive.

Making sure the financial system is robust and resilient is probably the most important thing the central bank can do in this respect. I would like to turn now to the issue of how the initial step in normalization is going. The U.S. bond market response to lift-off has been very mild. There has been no bond market “taper tantrum” such as what occurred in 2013 when Chairman Bernanke discussed the possibility of tapering Federal Reserve asset purchases. Normalization is also going very well in the sense that, even with an extraordinarily large balance sheet, the tools we have developed to raise the federal funds rate (and other money market rates) have so far worked well. The federal funds rate is trading close to the middle of the new target range of 25 to 50 basis points and other money market rates have moved up in tandem. Why is this noteworthy? To explain, I’ll first have to provide some background on how monetary policy used to work before the crisis and then compare that regime with how it works now. 4  BIS central bankers’ speeches  Before the financial crisis, banks valued reserves – even though the Federal Reserve paid no interest on them – because the Federal Reserve kept their supply scarce.
The large deficits on the US current account and federal budget are another element that has long been one of the key risk factors in the international outlook. The question is not so much whether this situation is sustainable or not. There are many reasons to expect that the deficits will shrink in the period ahead. A weaker dollar and higher US interest rates are likely to be natural features of such a development. The concern revolves mainly around how big the changes in interest rates and exchange rates might have to be and how quickly they might come about. Domestic demand to take over in Sweden Like abroad, the Swedish economy showed signs of a slowdown around the turn of the year following a high growth rate last year. As regards the Swedish economy, too, our assessment in June – that it was a question of a temporary slowdown – seems to have been correct. Economic growth seems to have increased over the course of the year. Revised statistics have also shown that developments at the beginning of the year were not quite as weak as was first indicated. During the second quarter GDP growth picked up as we forecast in June. One question, of course, is whether we, with the benefit of hindsight, overdid it when we cut the repo rate in June. I don’t think so.

The challenge will be deciding on the best option, not in finding a workable approach. Thank you for your attention. I am happy to take any questions. BIS Review 48/2009  5