samchain/econo-pairs-v1 huggingface dataset:
Upon reflection, this makes sense given that, by definition, old small businesses are not growing. If they had been growing fast, they would no longer be small. A related fact is that the failure rate is quite high for new small businesses. Taken together, this implies that it is important to provide an environment that is conducive to new business formation. The more new businesses that are created, the more that have a chance of surviving and growing into larger, prosperous members of the local economy. On earlier visits in the District, I heard several small business owners voice their concern over their ability to access credit. Based on these conversations, I asked my research staff to investigate the degree to which they could substantiate with data whether Bronx small businesses seem credit-constrained relative to other boroughs or relative to other comparable counties across the country. They first looked at the share of small business loan amounts made in each borough relative to the share of small businesses located in each borough, using data for 2013 (the latest available at the time). If small business credit is equally available, then we would expect to see ratios of approximately one for each borough. What the data show is that the ratio is well below one for the Bronx and Staten Island, with the Bronx being the lowest. This is consistent with what I heard during my last visit.

- Separation of the supervisory function from the monetary policy function: officials shall respect the separation of the ECB’s specific tasks concerning policies relating to prudential supervision from its tasks relating to monetary policy, as well as other tasks. - Public appearances and public statements: officials shall carry out their duties and responsibilities as, and consider themselves in public appearances to be, representatives of a high-level ECB body. - Relations with interest groups: while maintaining the open, transparent and regular dialogue with representative associations and civil society required by the Treaty on European Union, officials shall at all times, and in particular in their interactions with interest groups, observe their independence and professional secrecy obligations, and the basic principles established in the Code of Conduct. - Declaration of Interests: officials shall on an annual basis submit to the Ethics Committee, for assessment and onward submission to the President, a signed Declaration of Interests which shall include information about the member’s previous occupational activity, private activities, official mandates and financial interests, as well as about the gainful occupational activity of their spouse or partner, that may raise conflict of interest concerns. - Conflicts of interest: officials shall avoid any situation which may raise conflict of interest concerns.
These global disinflationary forces are, in large part, the result of shocks to world prices. Oil prices have fallen by over 50% since the middle of last year. By itself, this would be expected to lower temporarily UK CPI inflation by around ¾ percentage points. Beyond oil, agricultural commodity prices have fallen by 25% in the past two years due to good harvests. Global non-fuel export prices, on a UK trade-weighted basis, have fallen 2%. These weak external price pressures go a long way towards explaining the fall in global CPI inflation over the past two years. They also account for around two-thirds of the fall in UK CPI inflation over the same period. If these are one-off shocks to the price level, their impact on annual inflation measures should drop out after a year. Such temporary deviations of inflation from target should be “looked through” in setting monetary policy.2 This is not, however, the whole inflation story. The weakness of global prices is not wholly the result of one-off shifts in global supply. For example, although supply news is likely to have been the biggest driver of the recent fall in oil prices, a weakening outlook for world demand is also likely to have played a material role. Moreover, perhaps between a quarter and a third of the fall in inflation, globally and in the UK, is not explained by weak external prices.

Chart 15: Actual and estimated UK wage growth Actual Estimated  Percent change on a year ealier 8  6  4  2  The first is simply that the lags from lower unemployment to wage growth 0 are a little longer than in the past. That might be the case because job-to-job -2 flows in the labour market have been 2004 2006 2008 2010 2012 2014 low by historical standards, only recently picking up towards pre- Sources: ONS and Bank calculations. Notes: Dashed line shows inrecession levels. If so, we might sample fitted values from an estimated wage equation. expect the recent undershoot in wages to course-correct in the period ahead, as labour market activity picks up. In essence, this is the judgement underpinning the MPC’s central view of wages in the February Inflation Report. Wage growth is projected to rise, reaching 3.4% by end-2015. In effect, wages error-correct. There is some tentative evidence of wage growth picking up over the past few months, although yesterday’s wage data were notably weaker. If this pick-up were to continue, the wage puzzle would have been benign. Indeed, with slack eroding, we might then be concerned that wage pressures could overshoot, posing upside risks to the inflation target.7 But there are other explanations of the wage puzzle which pose downside inflation risks. One is that the Phillips curve has become less steep than in the past. This would mean that a fall in unemployment might have a lower impact on wage pressures than in the past.
First, these institutions should not expect a return to “business as usual.” We are committed to implementing the reforms that will prevent a recurrence of the recent financial crisis. BIS Review 125/2009  7  Second, as most of the current reform agenda of the Financial Stability Board and the Basel Committee relates to the regulatory framework as applied by your home country, we expect that foreign banks’ operations in the United States will fully comply with these structures as they are put in place in their home country as well. Third, we support the continued international banking presence of global banking institutions. National implementation must not jeopardize the economic benefits derived from crossborder banking. We need to be wary about nationalistic approaches to supervision. Fourth, financial firms that operate in our markets should continue to be vigilant in meeting the expectations we have for strong risk management and compliance practices. It wasn’t too long ago that some foreign banking organizations faced supervisory discipline for failing to meet those standards. Given the lessons of the crisis, I would expect that our focus and attention on these areas would only intensify going forward. Fifth, we will be particularly focused on how the new supervisory framework will apply to the U.S. personnel associated with the operations of foreign banks in the United States. In particular, we will have substantial concern if these firms’ compensation practices are contrary to the text or spirit of the international agreements on compensation practices that are in the process of being hammered out.

9  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  9  Chart 4 How the ALF will work19  We’ve come a long way since Eddie George’s speech almost 20 years ago. But one thing that remains more important to us than ever is working with you. The liquidity facility I’ve described here today is in no small part a product of close and committed co-operation between the Bank, industry bodies and the private sector. It’s a real step forward, but it’s only one step. Through continued engagement and focused effort, together we can build a more innovative, diverse and inclusive marketplace: one which really can meet the needs of every part of our society. Thank you  19  In the first instance, (1) the Bank prefunds the ALF with an interest-free loan, which is used (2) to purchase eligible sukuk and (3) any hedges required to insulate the fund from FX risk. Islamic banks then (4) place deposits in the ALF, the principal value of which is (5) guaranteed by the Bank to ensure the facility is HQLA-compliant. In the event the aggregate value of participating bank deposits do not reach the aggregate value of the fund, the Bank will step in as co-depositor for the residual amount.
have probably elicited a permanent increase in the household saving ratio but the future tendency is difficult to foresee. One approach is to compare with countries where the economic framework for households resembles that in Sweden. This suggests that both the household net saving ratio and the ratio of total wealth to disposable income are relatively low in Sweden. It then seems unlikely that in a long-term perspective the saving ratio will fall back to the historically low levels in the 1980s (Diagram 5). Leading indicators point to a continuation of private consumption’s upward tendency in the first quarter of 1997. House prices have shown signs of moving in recent months. A growing money supply and lending to the household sector likewise point to a continued increase in consumption. Retail turnover, above all for consumer durables, strengthened in February and March, as is also evident in the March business tendency survey from the National Institute. In the first four months of this year the number of cars newly registered in the household sector rose in annual terms by around 60 per cent. Households have become more optimistic about their own economy; in April a majority envisaged an improvement 12 months ahead. There is no cause at present to modify the main assessment in the inflation report - that consumption will show a stable but by no means dramatic rise in the coming years.

The central function of the Riksbank is to achieve price stability or at least keep the rate of price increases low and stable. This approach to monetary policy is based on the insight that in the longer run, higher price increases cannot generate growth and employment. Growth stems from other factors, such as technological advances, the way the economy functions, demographic trends, etc. Attempts to stimulate economic growth by accepting higher inflation soon tend to boomerang. This is clear both from our own experience in recent decades and from what has happened in other countries. The players in the economy adapt to the higher inflation; prices, wages and interest rates rise; the end result is normally an economic trend that is weaker instead of stronger. Throughout the western world today, economic policy is less concerned with “stop and go” policies to influence short-run activity and focuses more on creating good and stable long-term conditions for economic growth and employment. In such an approach, the function of monetary policy is to safeguard the value of money. In the past decade support for a policy of this type has also grown markedly in Sweden. This year’s Spring Economic Bill states that “The overriding task for monetary policy is price stability”. In keeping with this and in order to facilitate the implementation of a credible monetary policy, more and more countries are striving to separate monetary policy decisions from day-to-day policy-making.
Responsible openness in the Insurance Sector Speech given by Anna Sweeney, Executive Director, Insurance Supervision  Association of British Insurers Prudential Regulation Webinar 25 May 2021  I would like to thank Alex Stephenson and other colleagues for their help in preparing this speech. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  Thank you for the invitation to speak today, and to all of you for dialling in to this session. I believe technically at this point I could deliver this speech in person, but only to six of you at a time. I believe technically at this point I could deliver this speech in person, but only to six of you at a time – which would take all day and result in quite a long queue. However, I do look forward to attending events in person again and meeting many of you in future. I would like to focus on three issues today that I consider to be of particular importance as we move beyond the UK’s departure from the EU:  1. Our role as a host for international insurance business; 2. Actions we can take to facilitate effective competition in UK insurance sector domestically and internationally in conjunction with high prudential standards; and 3. Our ongoing focus on international standard setting and policymaking, including in relation to climate change. Competiveness and policyholder protection are sometimes portrayed as objectives at odds with each other.

The PRA remains open to all insurers seeking to operate in the UK, and will assess applications against a clear and consistent set of criteria. This includes hosting business on a cross-border basis both from the EU and more broadly provided, among other things, that we are satisfied that the level of “supervisability” of the EU branch and its parent entity is commensurate to the level of potential risk it poses to the PRA’s statutory objectives of safety and soundness and policyholder protection. Where appropriate, branch hosting provides a relatively low cost, low impact route for overseas insurers to operate in the UK. Key considerations of the assessment of “supervisability” is our view of the approach home state regulators take to supervision (which is likely to be made easier when assessing the EU given our rulebooks are broadly identical) and the level of co-operation we can secure from home states, including on the exchange of supervisory information. This latter requirement is as much an objective for us as it is for insurers – our ability to establish and maintain productive relationships with home state regulators will in turn enable lower friction access between insurance markets. We are working hard to build on our existing relationships with European and global regulators, and engagement to date on this has been positive. There are advantages in the branch model for both insurers and regulators, not least that duplication of supervisory activity is reduced.
Monetary policy’s effects on unemployment are minor in relation to those due to structural problems. The current situation in the labour market Let me before I finish briefly comment on how I viewed the current situation in the labour market in connection with the monetary policy meeting in May. A large number of central wage agreements are being renegotiated this year. There are several factors governing how high wage costs can be expected to be in future. One important aspect is to what extent the social partners take into account the labour market situation in their wage bargaining rounds. Another is how well the labour market functions with regard to matching the demand for and supply of labour. The wage bargaining rounds have so far resulted in wage increases that appear to be slightly above what we had estimated in the February Monetary Policy Report. We pointed this out at the monetary policy meeting on 3 May. The labour market situation has strengthened and it is therefore reasonable to assume in future that there will be slightly higher wage increases than we have been used to in recent years. The information that we had access to at our monetary policy meeting in May indicated that resource utilisation in the labour capacity was slightly more strained than we anticipated in the February report. There were signs that the labour shortage in the business sector has continued to increase.

This usually contributes to lower wage and inflationary pressures in the short term. The Riksbank therefore also closely follows resource utilisation in the labour market. In the short term, a central bank can to some extent lower unemployment by increasing demand and inflation with expansionary monetary policy (in the Riksbank's case, by cutting the repo rate). This leads to companies increasing production and taking on more employees. Using the same reasoning, unemployment would therefore rise if inflation was pushed down by tightening monetary policy. It is this relationship that is usually described with the aid of what is known as the short-term Phillips Curve. Some of the criticism aimed at monetary policy in recent years appears to be based on the assumption that there is a clear-cut long-term relationship between inflation and unemployment. However, it is not possible to buy lower unemployment in the longer term by allowing inflation to rise. Sooner or later wage-earners will require compensation for the higher inflation by raising their wage demands. As prices and wages rise, the stimulating effect of monetary policy will wane. Demand will fall again and employment will decline. In the long term, unemployment will return to its long-term equilibrium level. A systematic, expansionary monetary policy would only have the consequence that inflation and inflation expectations would soar. This correlation is usually illustrated with the aid of the so-called long-term Phillips curve. There is currently a broad consensus on this, both in central bank circles and the academic world.
The exchange rate has been relatively stable after the adjustment that took place in the first half of last year, and the króna is currently somewhat stronger than historical measures would warrant, although it should be admitted that determinism is probably not the most suitable approach for assessing currency developments. One reason for uncertainty about the exchange rate is the large current account deficit, as well as the fact that it can easily be driven by factors over which we have no control, given how closely Iceland’s financial sector is now integrated with global financial markets. A central bank with a legislative and regulatory remit to target inflation is of course pleased with such inflation developments, but would prefer them to be built on a more solid foundation. Domestic demand growth has declined, but rather more slowly than the Bank had hoped. The current account deficit is large and will also contract more slowly than the Bank would have desired. Demand remains buoyant in the housing market and there are indications that the rate of credit growth may be on the increase again. For these and other reasons, the Bank will remain on the alert and not ease its monetary stance until even clearer signs emerge that a lasting change has been established. Equity prices have soared in Iceland in recent years.

They responded positively to the Bank’s recommendations, and there was no question that credit growth slowed substantially. However, there are now many indications of a return to the earlier situation, so the Bank must reiterate its words of warning. At the same time as the Central Bank announced its interest rate decision yesterday, it published Monetary Bulletin. This outlines the main assumptions behind the Bank’s decision along with indications about its policy in the near future and the viewpoints it considers important to bear in mind for economic policy. In the current edition, major changes were made to the assumptions behind the baseline forecast, which enhance both the credibility of the forecast and monetary policy transparency. By doing so, the Central Bank of Iceland joined the vanguard of the inflation-targeting central banks. Monetary Bulletin reveals that inflation developments have turned rather more favourable than the Bank’s previous forecast had indicated, and although underlying inflation was somewhat higher in February and March than was hoped, the Bank expects both headline and underlying inflation to decrease rapidly in the next months. By both measures, inflation will be close to target from the middle of 2008. There is no doubt that this outcome is largely thanks to the tight monetary stance, which included raising the policy rate by 3.75 percentage points last year. As usual it should be pointed out – and especially in the current climate – that exchange rate uncertainties can complicate this picture.
The third pillar of the Spanish action plan is the restructuring of the financial sector and its adaptation to an economy less dependent on credit and leverage for growth. Restructuring turns on two essential aspects: the downsizing of the banking sector as a whole, and maintaining a sufficiently large backstop as to ensure the capital that is required, but using only that necessary so as not to overburden public debt, no matter how small the Spanish public debt is. The hard times that characterise a protracted process of economic and financial adjustment are familiar to many Latin American countries, which have experienced sovereign and banking crises over the past decades. But they have avoided it this time. Indeed, Latin America has proved outstandingly resilient at a time of global hardship, as too have many emerging economies – perhaps with the exception of some Eastern European countries. Before the crisis, most Latin American countries had dramatically reduced their vulnerabilities, precisely as a result of the lessons learnt in the previous crisis. Accordingly, there were no severe problems of overborrowing or external imbalances of the sort experienced by industrial countries, and the current adjustment, while significant in size, has been swift. Recovery in Asia and Latin America is proving strong and driven increasingly by domestic demand. All in all, improved fundamentals relative to industrial countries have placed emerging market economies in a much better position to resume high levels of growth.

However, limiting upward exchange rate flexibility may attract more capital inflows, on the expectation of future appreciations, turning thereby into a self-defeating strategy. In summary, choosing the right policy mix has become a challenging task for many emerging market economies, all the more so in the absence of a globally coordinated policy response. Faced with these uncertain times, Latin American economies are applying a mix of policies to attain their multiple objectives and minimise risks. The mix includes, to differing degrees of intensity, monetary policy tightening, foreign exchange interventions and reserve accumulation, macro-prudential policies and, in some cases, capital controls. The use of capital controls has traditionally been controversial, because they distort markets while their effectiveness is not backed by empirical evidence. But we must acknowledge that there has been a shift in opinion in their favour – at least as a last-resort instrument – even among institutions such as the IMF. In turn, this shift probably reflects a change in the perceived balance of benefits and costs associated with financial excesses. Nevertheless, it is important to bear in mind that capital controls can also entail negative externalities for the global economy. While fully convinced of the benefits of financial globalisation, a topic to which we devoted our Seminar in 2006, I am concerned by the risks of financial deglobalisation arising in the wake of the crisis.