samchain/econo-pairs-v1 huggingface dataset:
28  For further details, see the minutes of the June 2018 MPC meeting. See for example the consultation paper, archived at http://webarchive.nationalarchives.gov.uk/20170726163822/http:/www.bankofengland.co.uk/markets/Documents/money/documentation/ consult_bond_purchases.pdf, and the Market Notice archived at http://webarchive.nationalarchives.gov.uk/20170726163816/http:/www.bankofengland.co.uk/markets/Documents/money/documentation/ 061124.pdf. 29  10  All speeches are available online at www.bankofengland.co.uk/speeches  10  But it happened alongside it. And, since it seems likely to persist, it means our balance sheet is also likely to remain materially larger than pre-crisis. 30  Exactly how much larger that means is likely to depend on a range of factors: risk appetites, perceptions of the nature of future liquidity shocks, and developments in regulation. And some of these factors may well vary over time. Understanding the net effect of these factors on aggregate reserve demand is an important question for implementing monetary policy, as well as for our risk management of the balance sheet. Reflecting this, we launched a Discussion Paper in early August which examines the different factors in more detail, and have begun a series of discussions with market participants to help us understand them further, framed around these six questions. 31  We will continue gathering inputs until the end of October – and if  anybody here would like to contribute they would certainly be very welcome – and will provide further information as our thinking develops. Conclusion In conclusion, what do these developments mean overall?

And it used its balance sheet to keep money market rates, which served as an anchor for rates in the wider economy, close to its policy rate. 6  The rest is monetary history. Ten years on, central banks now use a much wider range of tools than just the policy rate in setting monetary policy. Once Bank Rate hit 0.5% in March 2009, which at the time was seen as its effective lower bound, the MPC turned to what were then thought of as unconventional monetary policy tools to stimulate demand and help bring inflation back to target. These tools used our balance sheet in new and different ways. And together they account for a large part of the increase in the size of the Bank’s balance sheet. 5  As part of the MPC’s continuing efforts to make our thinking more transparent, we published our estimate of excess supply (or slack) in the economy for the first time in the May 2018 Inflation Report. 6 The last Bank Rate change to follow this practice was arguably the 50bp cut on October 8th 2008. I say arguably because this cut was itself unconventional: it was coordinated across the major central banks and, due to differing international schedules, actually took place early on a Wednesday afternoon rather than the usual Thursday at noon.
The risk of financial imbalances being built up as a result of over-optimism still remains, but is now assessed to comprise less of a threat to the recovery of the economy than was previously thought. Monetary policy considerations Developments over the past months also indicate that the risks of a profound and prolonged international economic slowdown have declined considerably. There are a number of signs that the lowest point has now been reached. One condition for an upturn in international economic activity is that growth in the US economy picks up. Productivity has continued to develop very positively relative to the economic situation, which is a good sign. The fact that American households' demand for consumption has improved since the autumn also indicates that the lowest point has been reached and a turnaround is on the way. The unease that has existed, and which was accentuated after the terrorist attack on 11 September, over the possibility that rapid and perhaps exaggerated adjustments of financial imbalances in the American households' and companies' balance sheets might cause a deeper decline appears, at least  4  BIS Review 18/2002  so far, to have been quite unfounded. Better functioning financial markets as a result of the changes in economic policy and the improvements in regulatory frameworks and supervision that I mentioned earlier may have contributed to this.

However, there is a risk that the complexity of these instruments will increase the difficulty of seeing to which credit risks companies and banks are actually exposed. 2  BIS Review 18/2002  The complexity of the financial instruments and the fact that they are often found, in various forms, on both the asset side and the liability side of companies' balance sheets as well as "off balance sheet", makes it difficult to detect the financial risks within banks and companies. This is particularly serious as an increasing number of households have their savings in these companies' shares, but nor is it easy for professional analysts and portfolio managers to see. The collapse of the American company Enron can serve as an example of the problems connected with the development of complicated financial instruments. A lack of understanding of the instruments used and a lack of transparency in the company's accounting meant that directly after the collapse there was considerable concern over possible contagion effects. Here I do not mean the evident breach of the regulations in force, where auditors burn documents and senior managers sell shares in the company prior to publishing negative information. Enron raises a number of other, in the long term more fundamental, issues. Today, I shall limit myself to discussing three of these. Firstly, Enron was basically an energy company, which in time came to pursue financial operations on a large scale, but without coming under the supervision to which financial companies are normally subjected.
Willem F Duisenberg: The transformation of the European financial system Welcome speech by Dr Willem F Duisenberg, President of the European Central Bank, at the Second ECB Central Banking Conference, 24-25 October 2002, Frankfurt am Main, 24 October 2002. *  *  *  Ladies and Gentlemen, I am pleased to welcome you to Frankfurt, to the second ECB Central Banking Conference, entitled "The transformation of the European Financial System". This event is the largest and most important open ECB conference and is held every two years. The first ECB Central Banking Conference took place in November 2000. It focused on price stability, which is the ECB's primary objective, and that of many other central banks worldwide. It was a successful event, and I am convinced that this year's conference will be too. Indeed, looking around, I am happy to see that this second conference has evidently aroused much interest and attracted researchers from leading institutions, officials from most of the major central banks, from ministries of finance, various European and international bodies and the media. In view of this year's topic, we also decided to invite representatives from commercial financial institutions and from supervisory authorities. I should like to extend a special welcome to the representatives of the central banks of the countries that are negotiating to join the European Union; these negotiations will hopefully be concluded fairly soon. I should, of course, also like to thank the speakers, discussants, panellists and chairpersons of the sessions.

Our speaker in the third session, Jean-Pierre Danthine, will illustrate the benefits from the discipline that economic theory can impose on our thinking when analysing European equity market integration. He will also present a generalised approach to estimating the importance of country and sector effects in portfolio allocations. One of his discussants, Bruce Carnegie-Brown, will draw on his experience as a market expert to interpret for us recent developments in bond markets. Finally, as already mentioned, the policy panel, which will be the final session of the conference, will discuss the role of central banks in the maintenance of financial stability  2  BIS Review 60/2002  against the background of the transformation of the European financial system. I am particularly pleased to see that we have been able to bring together such highly esteemed policy-makers and academics for this purpose. Ladies and gentlemen, I should like to finish at this point and hand over to our first speaker. I sincerely thank you again for coming here today. I wish you a very interesting and stimulating discussion, and I look forward to hearing about the results of the second ECB Central Banking Conference. BIS Review 60/2002  3
Finally, I shall briefly discuss the current monetary policy situation. The value of low, stable inflation Let me begin by saying a few words about why a low inflation rate is desirable. Most people now agree that a high inflation rate is not good and has a negative effect on the functioning of the economy as a whole. A high, fluctuating inflation rate entails uncertainty for operators in an economy. This uncertainty obstructs decision-making with regard to prices, wages, consumption, production and investment. When inflation is high, nominal wage increases tend to be relatively meaningless, in other words, the amount in the wage packet is worth less because general prices are also increasing. If, for example, we look at real wage increases, which take into account inflation, these were almost non-existent in Sweden during the 1970s and 1980s. This is because the nominal wage increases pushed up prices, which resulted in recurring cost crises. This type of development affects companies’ competitiveness, production, investment and households’ purchasing power. High inflation also leads to arbitrary distribution of income and wealth. For instance, those who saved their money in bank accounts during the 1970s and 1980s, when inflation was high, saw their wealth decline in value, while those who instead borrowed money and bought, for example, property, made a profit as property prices then increased at roughly the same rate as inflation. The conclusion is that low, stable inflation is an important condition for an efficient economy.

I thank you for your attention. 2  BIS Review 19/2010
It is my view that return and profit  3  Source: IMF (2010), “Lessons and Policy Implications from the Global Financial Crisis “, IMF Working Paper No. 10/44. 4  Source: Jean-Claude Trichet, Interview with The Wall Street Journal, January 2010. 4  BIS Review 33/2010  calculations should be made over the medium to long run and properly adjusted for risk and leverage. As an example: When returns-to-equity figures are used to boast about the efficiency of an institution they should be adjusted for leverage if the speaker does not want to be guilty of intellectual fraud. IV. Conclusion  We have lived through several months of intense turbulence in the national and international financial markets. The more violent storms that raged in 2008 and the first part of 2009 receded a little in the second half of 2009. A certain degree of calm has returned but the wind has not died down completely yet. The years ahead will be ones of transformation. A priority for fiscal as well as monetary policy will be a return to normality. Equally important will be to learn the right lessons from these turbulent times and to act firmly to address the shortcomings identified in the financial system.

However, we assessed that this was largely due to temporary factors and that growth would in future be good, see Figure 1. There are several factors that point to a favourable development in the global economy going forward. One factor is the oil price, which has fallen substantially over the past year. This can be expected to have a positive effect on growth in the countries that do not produce oil. For instance, it provides scope for increased consumption in these countries, which could favour global growth. Another factor is that the relatively large fiscal policy restraint in the large developed economies in recent years appears to be over. During 2015 and 2016, the restraints will be  BIS central bankers’ speeches  1  relatively small. Fiscal policy will not therefore have the same restrictive effect on GDP growth in the years ahead as before. A further factor that affects developments in the global economy is the expansionary monetary policy around the world. The policy gives continued support to credit granting and helps to push up inflation expectations, which benefits both consumption and investment. This is particularly true of the euro area, where inflation expectations have now started to rise and lending has begun to show a more positive trend. Many countries also have an unmet need to invest, following the financial crisis, and this can be met as the credit supply improves.
By the time the Fed began tapering the pace of these asset purchases in December of 2013, the Fed’s balance sheet had ballooned from below $ trillion to more than $ trillion in just four years. Today, the Federal Reserve has an unprecedented volume and diversity of assets. Correspondingly, banks hold an unprecedented amount of reserves. Total reserves at depository institutions have skyrocketed from $ billion before the crisis to $ trillion today. The stock of bank reserves awaiting discharge into the economy through our banking system is vast and, troublingly, mostly unused. There is plenty of money available for American businesses to work with. Consider this: In fourth quarter 2007, U.S. GDP was $ trillion; at year-end 2013 it was an estimated $ trillion. Had we continued on the path we were on before the crisis, real GDP would currently be roughly $ trillion in size. That’s a third larger than it was in 2007. Yet the amount of money going unused in the banking system is 60 times greater now than at yearend 2007. It isn’t a lack of liquidity that is keeping businesses from putting people back to work. Money’s cheap and abundant, yet the recovery disappoints The Federal Reserve has created an opportunity for others to act. Money is cheap and plentiful. The objective now is for banks to lend, consumers to borrow, and businesses to invest so jobs are created and economic activity expands. With such aggressive monetary policy, it is surprising that the economic recovery has languished.

We are an integral part of the global economy. And we had particular problems of our own. In our case, in marked contrast to the Eurozone, and despite the dampening effect of an already exaggeratedly strong exchange rate, we were confronted, in the early part of last year, with the prospect of excess demand and accelerating inflation, and policy had been tightened to head that off. But we, like others, were then hit in the autumn by the renewed turmoil in the global economy. That caused a sharper fall in external demand, but it also caused both business and consumer confidence to plummet – so that prospect of moderate overall slowdown we’d been deliberately trying to engineer quite suddenly threatened to turn into an unnecessarily sharp downturn, with the risk that the rate of inflation would fall significantly below the Government’s 2½% inflation target. So we promptly reversed gear – cutting interest rates very sharply – by 2½% to as low as they have been since the mid-1960s. That has helped both business and consumer confidence to recover – from very low levels – and the prospect now is that, after a pretty flat economic performance either side of the year-end, overall demand and output growth will pick up steadily to around trend by the middle of next year. But, despite these interest rate cuts, the pound has actually strengthened – notably against the euro – in part, as I suggested earlier, because of weaker overall demand pressure on the Continent.
For the same reason, this phenomenon can act to mask or offset the effects of high levels of present and expected future government borrowing on interest rates, perhaps contributing to a false sense of reassurance that we can continue to run large structural deficits without risk of crowding out private investment and damaging future growth. BIS Review 18/2006  3  What might this mean for the conduct of monetary policy? To the extent that these forces act to put downward pressure on interest rates and upward pressure on other asset prices, they would contribute to more expansionary financial conditions than would otherwise be the case. And, if all else were equal, which of course is unlikely ever to be the case, monetary policy in the affected countries would have to adjust in response; policy would have to act to offset these effects in order to achieve the same impact on the future path of demand and inflation. To do otherwise would run the risk that monetary policy would be too accommodative, pulling resources from the future in a way that would alter the trajectory for the growth of the capital stock, perhaps amplifying the imbalances, and compromising the price stability. Finally, these aspects of global monetary arrangements and financial conditions have important implications for how we communicate about monetary policy. They strengthen the case for why central banks should be clear about their objectives and credible in their commitment to price stability.

In July, the repo-rate path was lowered substantially, and without this downward revision to the path, the forecast for inflation would have been even lower. 8  See also my speech “Monetary policy and macroprudential policy”, published on 25 January 2013. 4  BIS central bankers’ speeches  In principle, macroprudential policy tools can reduce the risks linked to household indebtedness in two different ways. First, one can increase the resilience of the financial system through, for instance, higher capital levels in the banks. It reduces the risk of a macroeconomic shock, for instance, a sharp fall in Swedish housing prices, developing into a banking crisis if the banks have more capital to absorb loan losses. Second, one can try to directly slow down growth in household indebtedness through, for instance, different types of limits to how much household are allowed to borrow. However, Sweden has long lacked a framework for macroprudential policy, with clear guidelines as to which authority should take action and what tools they should use. I and several of my colleagues have called for such a framework on many occasions. Now we have this framework in place. I now intend to describe the framework, the measures that have been taken and what remains to be done. The allocation of responsibility for the tools and the establishment of a Financial Stability Council The Government announced last autumn that Finansinspektionen would have the main responsibility for decisions on macroprudential policy measures and that a Financial Stability Council would be established.
Exchange rate adjustments in the face of large capital inflows, however, are not without costs. An excessively rapid appreciation of the currency could be disruptive to the real economy, since there often are constraints in the adjustments of the real economy, from labor market frictions to pricing behaviors. Here we have a challenge and need to balance well. In general, we would allow the currency to appreciate to the extent that the movements are broadly consistent with the economic fundamentals and that they would not cause undue disruptions in the real sector. Let me note here that I think the Thai economy, over the years, has become more capable in coping with exchange rate movements. We see more risk protection via financial market instruments on the part of the private sector. Exporters, in particular, have been able to diversify in terms of product lines and market destinations. Nevertheless, from time to time there is still a need to dampen the pressures on the exchange rate, and central banks often resort to exchange rate intervention. While such intervention could help contain excess exchange rate volatility, its focus is at the end of the process. In other word, FX intervention is a “passive” mechanism in dealing with capital inflows. By the time of intervention, capital would have already flowed into the economy. Imbalances could have already built up.

This was due to exchange rate losses on the foreign currency holdings. These had increased substantially in the course of our foreign exchange market interventions, which we carried out in order to counter the deflationary threat identified by us. The loss and the increased risk in our central bank balance sheet is a matter which we take very seriously. The annual loss has provoked critical remarks, in particular as regards our independence and our ostensibly far-reaching powers. It is understandable that people will question the extensive measures we had to take to manage the financial crisis. That is all part of life in a democratic society. I am therefore grateful for this opportunity to present to you, in the next few minutes, my thoughts on the essence, the boundaries and the pitfalls of our independence. I hope I will be able to clarify one or two misunderstandings in the process. The reason why the SNB is independent is not because it happens to suit the members of the Governing Board, which is the body responsible for monetary policy. I can assure you that it would sometimes be easier if we could just accept instructions from a higher body. What actually happens is that we have to bear responsibility ourselves for the monetary policy decisions we take, and we take them – typically – under a veil of uncertainty. The reason why we are independent is so that we can better fulfil our mandate. In other words, our independence is purely a means to a higher end.