samchain/econo-pairs-v1 huggingface dataset:
Together, these economic forces have contributed to significant job losses in certain sectors, most notably manufacturing. The resulting decline in demand for middle- and lower-skilled workers has resulted in fewer jobs and has depressed wages for many in those industries. Other, less important factors behind the rise in inequality include the decline in private sector labor unions and the falling real value of the minimum wage. At the same time, technological change and globalization have created jobs in areas such as engineering and software development. Demand has been particularly high for knowledge workers, resulting in strong wage growth in certain sectors. All told, the forces of technological change and globalization have contributed to wage inequality by pushing up wages for those toward the top, and stifling wage growth for workers toward the middle and bottom of the wage distribution. As I have said in previous remarks, we need to do a better job of helping those hurt by globalization.2 Monetary policy can help support economic growth, but it is much less powerful in addressing the structural factors that underpin inequality in the labor market. That said, understanding the causes and consequences of economic inequality is important to the Fed. We are working hard at producing research, information, data, and analysis so that we can better understand inequality and participate in an informed debate on how to best address it. One significant initiative within the Federal Reserve System is the creation of the Opportunity and Inclusive Growth Institute at the Minneapolis Fed.

At the risk of going over ground which was already covered yesterday, let me start by briefly reviewing the changing pattern of global imbalances. In doing so, the main point I want to make is that this is quite a complex story, which is consistent with several different – but not mutually exclusive – interpretations. And, hard as it is to understand, the past may not be much help in predicting the future. The steady increase in the US current account deficit since the 1990s and its present unprecedented level – at over 6% GDP – has made it particularly tempting to look for home grown factors which can consistently explain this trend. But the pattern of US saving and investment underlying its current account deficit look very different in the pre and post 2000 periods. The former period was characterised by sustained fiscal consolidation, leading to fiscal surpluses, together with a fast growth in private investment in response to high expected productivity in the US; the latter by an emerging fiscal deficit, in response to tax cuts, and a fall off in business investment. Only the steady downward trend in the household saving ratio – now into negative territory – is common to both periods. This shift in the composition of the pattern of US savings and investment has coincided with a change in the composition of external financing flows into the US.
Philipp Hildebrand: The virtues of flexible financial markets - a central banking perspective Summary of a speech by Mr Philipp Hildebrand, Member of the Governing Board of the Swiss National Bank, at the CFA Institute Annual Conference, Zurich, 22 May 2006. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch)  *  *  *  Summary Rapid technological change and market liberalization have been the driving forces behind the remarkable evolution of global financial markets over the past three decades. The consequences of this development include a geographic rearrangement of global capital markets, a fast pace of product innovation and changes in the nature and composition of financial market participants. The benefits associated with today’s flexible financial markets are manifold. Financial markets have become much more efficient in allocating capital. New products enable a better distribution of risks and the liquefaction of previously illiquid assets. They have also increased market transparency. As a result, modern financial markets facilitated innovation and likely enhanced economic growth. Moreover, they have contributed to make economies more resilient to shocks. These extensive benefits notwithstanding, modern financial market also entails new risks. These risks tend to elicit calls for increasingly far-reaching regulation. While some regulation may indeed be required to guarantee the integrity of financial markets, the threshold for such regulation should be set high.

Likewise, instead of preventing institutions from taking risks, we must encourage them to better identify, monitor, and control the risks they take. Constant vigilance will help institutions to monitor their own status, and pre-empt any deterioration before damage is done, either to the institution or worse to the financial system as a whole. At the same time, MAS must continue to balance its natural inclination to regulate or supervise away what is new and strange and therefore risky, with the need to encourage the financial sector to be more dynamic and innovative. Nowadays when presented with new and ingenious schemes dreamt up by investment bankers, my first reaction is often to ask whether it may be too clever to be sound. Such scepticism on the part of financial supervisors is natural and healthy, but it should not deter innovation or become our dominant mindset. More broadly, because of the emergence of global financial conglomerates and the trend towards increasing risk transfers across financial industries, regulators need a holistic understanding of what and where potential vulnerabilities are, and how exogenous shocks might impact and permeate through the financial system. MAS must therefore enhance its capabilities in integrated supervision and financial surveillance. This is more critical as Singapore becomes more closely integrated into the global economy. 6  BIS Review 62/2002  We are also conducting our monetary policy in an environment of increased market uncertainty. Our exchange rate policy band should certainly be supported by sound fiscal and macroeconomic fundamentals.
An elevated level of reserve balances in the system, in and of itself, need not impede our ability to effectively control the level of short-term interest rates.8 Indeed, there are other central banks, for example Norway, that show that with the right tools and operating framework, it’s possible to maintain rate control despite a large amount of central bank reserves in the system. It appears likely that reserves in the U.S. banking system will be at unprecedented levels when interest rates are eventually raised. As of November 27, reserve balances in the system stood at nearly $ trillion, and the level continues to rise as the Fed’s asset purchases continue. In a recent study using median policy expectations from the Desk’s June 2013 Survey of Primary Dealers as a baseline scenario, staff economists at the Federal Reserve Board estimated that the Fed’s securities portfolio will peak at a level of $ trillion in mid-2014, with the corresponding level of reserve balances topping out at $ trillion at that time.9 The Desk’s most recent survey, from October, would put these numbers even higher, owing to dealers’ expectations for a larger and longer-lasting purchase program than they previously anticipated.10 This changing financial landscape therefore warrants a fresh evaluation of the operating tools we have to achieve the most effective and efficient implementation of monetary policy while operating with or exiting from a very large balance sheet.

They don’t, however, reduce the size of the participating bank’s balance sheet, as they substitute reserve balances with a less liquid instrument. Reverse repos are a type of open market operation in which eligible counterparties place cash at the Federal Reserve in return for securities from the Fed’s portfolio. Technically structured as a sale and repurchase agreement, a reverse repo is economically equivalent to a collateralized investment with the Fed (with the opposite flow of cash from a repo, the traditional liquidity-adding open market operation described earlier). These transactions are arranged as auctions between the New York Fed and the Desk’s traditional primary dealer counterparties, as well as with an expanded set of counterparty types, including money market funds and GSEs, that typically provide large amounts of short-term funding to the financial markets.13 Reverse repos were initially envisioned to be used as a term, fixedquantity tool. However, with the necessary operational infrastructure to support reverse repo  11  Permanent operations such as asset sales would also remain in the Desk’s toolkit and would result in a reduction in the size of the Fed’s securities portfolio and balance sheet. 12  Operational exercises for both mortgage-backed security purchase and sale operations using the Desk’s proprietary trading system, FedTrade, were started on November 21, 2013. 13  The expanded set of counterparties is intended to enhance the capacity of the Desk’s reverse repo operations beyond that provided solely by the primary dealers.
According to the National Federation of Independent Business, the proportion of small businesses that report credit as hard to get has declined to pre-crisis levels.11 This is consistent with the generally easing credit conditions across most loan classes over the last several years reported in the Fed’s Senior Loan Officer Opinion Survey, particularly in commercial and auto loans, but also expanding more recently into other types of household credit.12 This evidence suggests banks continue to provide this core financial service. 4/7  BIS central bankers' speeches  Turning to capital market activities, (Figure 8) plots non-interest revenues from core businesses —trading, investment banking, fiduciary activities, and securities brokerage. While trading revenue has declined, non-interest revenue of other types has generally grown in line with GDP, showing the compositional shift in revenue. The changes reflect the ongoing shift toward activities that generate more stable income streams such as fiduciary and brokerage activities. Looking within the trading business, there is also some evidence that activities are becoming less risky, less opaque, and less complex, e.g., level 3 trading assets have declined as a share of total trading assets over this period and there has been a shift toward central clearing of derivatives even as volumes continue to grow.13 I conclude this section by emphasizing that the supervisory goal is not to allocate credit or to dictate specific aspects of business models, but rather to ensure that firms are resilient so that they can meet the broader policy objectives of the sustainable provisions of financial services and financial stability.

As a central bank, we have to be prepared for all contingencies. And likewise, the financial sector should prepare for the worst: a no-deal Brexit. At the same time, I hope, of course, that Europe and the United Kingdom will find an agreement allowing for a transition period that gives everyone time to prepare for an orderly Brexit. I would like to end with a personal question. The ECB needs a new President next year. Would that be a job for you? No one can “apply” to become the ECB President. It’s in the hands of Heads of States and governments, and that discussion has not started. 3/3  BIS central bankers' speeches
But at others it was questionable, because credit and asset prices were rising rapidly, demand was at a decent level and the labour market was tight. And in some periods it was quite obvious that an inflationary potential was building up, i.e. that hidden inflationary pressures were accumulating which might one day come to light. The NK-DSGE models were unable to cope with such situations, nor could they detect them in time. As long as CPI inflation was low, they failed to recognise that the economy was dangerously overheating and that monetary policy needed to be tightened significantly. Some economists are now able to admit this thanks to the bitter experience of the last two years. They are equally able to admit that monetary policy decision-making should not ignore developments in financial markets and growing financial imbalances. New lending to households and businesses, the conflicting trends in asset markets and the nature of fiscal policy are rightly an important part of the debate on the appropriate setting of interest rates in the present situation of high inflation. Central banks in developed countries, especially in Europe, have lost price stability in the last two years. We now need to assess why this happened and how to prevent it in  4/5  BIS - Central bankers' speeches  the future. One reason is probably an over-reliance on recommendations based on narrow models.

The Great Moderation and the subsequent Global Financial Crisis I joined the Faculty at a time when New Keynesian macroeconomics (NKM) and its approaches, immodestly referred to as "the science of monetary policy", had become the official mantra in the central banks of developed countries and had subsequently been translated into a monetary strategy referred to as inflation targeting (or inflation forecast targeting). It was an era characterised by optimistic expectations about longterm economic developments. Macroeconomists spoke of a "Great Moderation" and predicted that we would see decades of low and stable inflation amid brisk economic growth with no significant cyclical fluctuations. With the benefit of hindsight, these expectations were not fulfilled. The low inflation that took hold globally in the 1990s was largely a product of globalisation, not super-smart monetary policy. In the early 1990s, price stability began to gain ground as central banks' primary objective. However, in Ostrava – and the same was true of other Czech universities at the time – we took a more traditional approach and considered monetary stability, or currency stability, to be the main objective of monetary policy. By this we usually meant a more general state of affairs where inflation is low and stable, the banking sector is healthy and not a source of excessive money supply growth, the currency is reasonably strong and external imbalances are not building up. However, the world's macroeconomists longed for a simpler notion of a target that could be expressed in an exact, numerical, way, preferably with a single number.
However, some of the new players adopted risky business models, growing very quickly, and to do that they attracted deposits with high interest rates. In addition, they did not adequately assess risks in lending, and sometimes lending was directed to related persons. The number of banks increased considerably, and peaked in 1998 at 60 – the highest number of banks that ever operated in Croatia, twice as much as before Croatia's independence and three times the current number. That is when I joined the central bank. Just before the next crisis was about to happen. In the second case, the trigger of the crisis that started in 1999, and lasted for the next two years, was again macroeconomic – the recession caused by drying-up of global capital flows in the aftermath of the Russian and Asian crises and negative spillovers of the military intervention in Kosovo for the tourist industry. However, this time around none of the large banks were affected. It was a crisis of small and medium-sized banks. Mostly the newcomers. Within a very short period of time the central bank submitted proposals for bankruptcy proceedings for a total of 16 banks and five savings banks. In only one case was the rehabilitation of the bank proposed in order to preserve trust in the banking system and safeguard financial stability, all other banks that operated at too high a risk were removed from the market. This time around, however, the fiscal cost was much smaller, around 1 per cent of the GDP.

In every crisis, depositors would typically ask for foreign currency cash, inducing exchange rate pressures and prompting monetary policy tightening in order to counter those pressures. Euro adoption was the only way to get rid of currency mismatches and endow the central bank with the ability to provide euro liquidity in the case of emergency. This eventually took place at the beginning of this year, after a process that was internally started in 2017 and followed a new, more complicated procedure (due to the changed euro area architecture after the crisis). EDP, MIP, BU... The process was successfully completed in the shortest possible time, five years. Before the introduction, however, we also had to deal with public fear of unwarranted price increases, in particular due to the euro introduction taking place during a period of high inflation. Nevertheless, the immediate impact of the changeover on the aggregate price level was in line with the experiences of other Member States, around 0.4 p.p. What were the immediate effects? Credit rating agencies responded promptly to the elimination of currency and liquidity requirements, increasing the sovereign rating by two notches immediately following the formal decision on euro adoption. Also, market participants repriced government bonds, reducing the yields by around 80 bps, with some additional price in effect taking place even before the decision. At the time of the entry, reducing high mandatory reserve requirement from 9% to 1%, and foreign currency liquidity requirement from 17% to 0, substantially increased excess liquidity.
Even though neither the changes nor amounts involved were large, there is little doubt that they had some effect and prompted a new marketing drive by the banks. In a climate of rapidly growing disposable income, house prices began to soar again. The Central Bank has emphasised the need to change the public sector mortgage credit system but has not stated an official view as to how this should be done. Nonetheless, immediate reforms are vital to give monetary policy more leverage over the mortgage loan market. Another important consideration is that whatever mortgage loan arrangements that are developed should provide a solid foundation for the domestic bond market. The Central Bank has been making these points for several years with little result. International agencies have agreed that a review of the role of the HFF is long overdue. Particular mention may be made of the IMF, most recently this summer. The Fund’s reports show that its analysts have striven to make an in-depth study of mortgage credit arrangements in Iceland. In its Article IV Consultation report published in June, the IMF claimed that a higher policy rate than otherwise had been needed as a result of the HFF’s activities. It should be added that one reason for the limited success in keeping the lid on inflation has been an enormous increase in disposable income in 2006 and 2007, driven by both wage rises and tax cuts. These factors and others have fuelled domestic demand and thereby inflationary pressures.

Moreover, the techniques normally used, such as a stay on payments, are ill adapted to banks. To supplement financial supervision and the deposit guarantee with a special insolvency regime, would not be adding an additional safety net to the benefit of depositors. It is quite simply a way of ensuring that the safety net protects those it was intended to protect but no others, and at a reasonable cost to the deposit guarantee system and society as a whole. But it should also be recognised that in situations where there is a threat to the financial system in its entirety, it may be needed to take partly different measures than in an ordinary bank failure. In these situations, the key focus must be on maintaining the vital functions in the interest of society as a whole. Perhaps the idea to have a partly different framework in these situations seems odd to you? After all, we normally expect the same legislative acts to apply regardless of the state of the economy or the situation in the financial system. But the situation is not unique. A similar situation exists in the health sector, where society has set up a framework to deal with our usual flus, broken bones and heart attacks. There  BIS Review 62/2008  5  are doctors and hospitals to deal with our problems. And there may be guidelines on how long sick leaves will be needed for a certain diagnosis.
There are several key benefits of issuing the Islamic Monetary Notes under this structure. It provides Islamic financial institutions an additional instrument to manage liquidity risk on a short-term basis. It is also a financial instrument whose structure has been widely used for retail banking and syndication products in the Middle East. Finally, it provides an opportunity for new investors to invest in Islamic financial papers in the Malaysian market, thus diversifying the investor base. As part of the initiative to be linked to the global Islamic financial markets, this instrument will be promoted to the international financial market. Islamic Derivative Master Agreement (IDMA) Recognising the importance to develop Islamic hedging products for Islamic financial market to mitigate investment risks, Malaysia has introduced the first global Islamic Derivative master agreement to document Islamic derivative transactions. The effort is initiated by Bank Negara Malaysia and driven by the financial industry via the Persatuan Pasaran Kewangan Malaysia. The implementation of the agreement is expected to improve the risk management practices, balance sheet management, increase fund mobilisation efficiency and enhance their investment banking capability of the Islamic banking institutions. With the introduction of IDMA, the rights and obligations of contracting parties are clearly stated, thus creating an environment that is more transparent. As IDMA also incorporates best practices in market conduct, this document serves as an important catalyst for the future linkages between financial markets that offer Islamic financial market instruments.

Investment projects amounting to more than USD160 billion to be financed by the Gulf states in Asia have been announced since 2005 2 . In 2006 alone, mega-deals 3 involving corporate acquisitions and real estate purchases from the Gulf to Asia, are estimated to total more than USD18 billion, including multi-billion dollar IPO purchases in financial institutions in China, large oil refineries and telecom companies. The value of such investments are expected to increase to between USD20-30 billion in 2007. For economic regions with high savings and surpluses such as Asia and the Middle East, the challenge is to recycle part of these surplus funds to productive investments in the region. The supply of savings in Asia and the Middle East is by far higher than in any other part of the world. Savings rates here in Asia are expected to remain in the region of 30-40% of GDP for some years to come. 1  The Gulf Cooperation Council represents Saudi Arabia, UAE, Bahrain, Qatar, Oman and Kuwait  2  "A route to riches on the new Silk Road", Financial Times, 21 Dec 2006  3  Worth more than USD1 billion  BIS Review 31/2007  1  Similarly, savings in the Middle East economies have been rising in the recent decade and is expected to average about 30-35% of GDP in the coming years. In 2006, the current account surpluses as percentage of GDP for Asia and the Middle East were about 5% and 23% respectively 4 .