samchain/econo-pairs-v1 huggingface dataset:
The previous day had seen disorderly conditions in the US Treasury market and the largest one-day fall in equity prices since the 1987 crash, despite major new policy announcements from the Federal Reserve and ECB. As I ran through my gloomy update, it was clear that further action would be needed – but perhaps not at that stage quite how much more. Monday morning would be no quiet start for Andrew Bailey, the new Governor. In my remarks today, I want to give a bird’s eye’s view of what happened in those extraordinary weeks, and the steps we took – either in concert with others, or using our own balance sheet – to neutralise the sudden pre-lockdown 'dash for cash' – the biggest test of core market functioning and resilience since the Great Financial Crisis (GFC) of 2008-9. Judged solely against that narrow yardstick, central bank actions – unprecedented in scale and speed – were successful in averting a market meltdown. Commercial banks, strengthened by the post-GFC reforms, have continued to lend, supported by a range of public sector schemes. And we learned some surprisingly positive things about operating a financial system remotely – both in terms of market resilience, but also in terms of diversity and inclusion. But this is no time for self-congratulation. The broader aspects of the Covid-19 crisis – medical, social, economic, and personal – remain hugely challenging, and involve a much wider set of actors than central banks alone. Further financial instability cannot be ruled out.

That is the limitation we face and will always face in the banking sector, and that’s why no perfect and once-and-for-all accepted way of achieving the “ideal state of affairs of banks” will probably ever be established. All the more so as the reality makes achieving any ideal less likely in the future than it is now. Look, for instance, at the issue of resolvability of banks. Yes, we in the EU have the BRRD  BIS central bankers’ speeches  1  (Bank Recovery and Resolution Directive) as our European answer to the question of resolvability. Let’s put aside the fact that its practical implementation and the enforcement of its key principles have not always been convincing so far. And we are not sure that these principles (namely bail-in) will be applied in a dynamically consistent way across countries and banks in the future. But still many believe we have made banks more resolvable (and also resilient) since 2008. And I think there are underlying real-time processes that are actually making banks less resolvable now compared to the past. Why? What worries me is that over time many end-users (and also policy-makers) tend to look at standard commercial banks as utilities with all their typical features. One of those features is that the population is becoming more and more incrementally dependent on the services such utilities provide, quite often without the very same population even noticing it. A typical example is electricity.
I also spoke to a group of small business owners, and was struck by how reliant many of them are on insurance for running their businesses. One of them was held liable for another company’s goods damaged in transit, and would have gone bust if it wasn’t for the insurance pay-out. I also remember another case. A middle-aged woman suffered a brain tumour, and became unable to work as a result. Her chief concern was not her own well-being, but a crushing fear that – given her lost income – her son would no longer feel able to go to university, without a bit of financial support from her. It all hung on whether the insurance company would pay out on her term assurance policy. It was a very, very intense moment when this insurance company called her to explain that they would indeed pay out. When you hear the huge relief of people when an insurance company comes through in their hour of greatest need, you realise two things: how important this industry is, and how important it is that insurance companies are safe and sound. But this is not only a life insurance issue. General insurance also serves a very important role, and similarly when things go wrong the consequences can be severe. A string of high-profile failures in the 1960s and 1970s included the failure of Fire, Auto and Marine, which left 400,000 (mostly motor) policyholders uninsured, and an even bigger failure in 1971 when Vehicle & General, with 1.2 million policyholders, collapsed.

I hope you will see from our response to the TSC that we at the PRA – right up to and including the Prudential Regulation Committee – have been putting a lot of effort into this package of reforms, which are needed in order to make Solvency II work better in the UK. But we haven’t done this in a regulatory ivory tower. We have always engaged closely with industry – through our membership on various ABI working groups, our frequent meetings with firms and our close analysis of comments we receive through public consultations. However, we acknowledge that the challenge of Solvency II implementation may have crowded out space to engage with the industry and stakeholders on other strategic issues. We have therefore decided to go further, and with Martin Gilbert’s agreement we are launching an insurance sub-committee of our Practitioner Panel in order to free up more space for discussion focussed on insurance issues. 6  Based on Solvency II data, as at end 2016. 8  All speeches are available online at www.bankofengland.co.uk/speeches  8  It’s important that we get insurance regulation right. At this juncture, that means two things in particular. First, the TSC has rightly highlighted aspects of Solvency II which are not working well. We are taking forward reforms to address those issues at a good pace.
Emerging economies have traditionally been more prone to “booms and busts” and “sudden stops” than more mature economies, and this helps to explain policy awareness when dealing with strong credit growth and currency volatility. Total capital inflows into emerging market economies, and also into Latin America, have strongly rebounded from the fall in late 2008 and 2009, and are expected to continue to grow over the medium term. Driving these developments are a combination of solid economic prospects and sizable interest rate differentials relative to advanced economies. Which of these two factors dominates is hard to say ex-ante but has important implications in terms of economic policy management of the situation. On the one hand, if current capital inflows to emerging markets simply reflect their perceived relative economic strengths going forward, they should be expected to be largely permanent, and therefore, an appreciation of their exchange rates would be taken as granted. Such a choice would provide monetary policies with more degrees of freedom, allowing for a tightening more suited to their cyclical conditions, and for a rebalancing of growth towards domestic demand. However, should short-term interest rate differentials also be playing a role in explaining this new wave of inflows, then the reluctance of emerging market countries to tolerate large appreciations would be understandable, also because the most dynamic components of the inflows – portfolio equity and debt flows – are the most volatile and subject to eventual reversals.

I have no doubt about the parties’ insight into the importance of the inflation target for wage formation in general. However, most agreements expire next year. It has proven during the autumn that the majority of the teacher training places in the sciences and mathematics are vacant. This is not so strange since a person who can successfully study mathematics and physics at university can also become a graduate engineer or industrialist scientist. Initial salaries between a graduate engineer and a science teacher differ by SEK3-4,000. Salaries for a competent engineer have no ceiling while for a teacher the top salary is not much above SEK20,000. Teachers have not been slow to make use of the scarcity of certain categories of teachers to demand 15% more than all other groups over a 5-year period, despite there not being a shortage of all categories of teachers. This has naturally led to protest from the Swedish Trade Union Confederation. 3  BIS Review 126/1999  If this type of imbalance cannot be dealt with by the union organisations and employers without a general scramble for pay increases, the Riksbank will be confronted by the unpleasant task of constraining the economy in order to prevent excessively high wage increases having an impact on inflation. The low inflation policy may therefore be said to be confronted by a test: the labour market is improving with falling unemployment and increasing capacity use otherwise.
This has led our export shares in international markets to stabilise somewhat, following the losses recorded in the two previous years. However, no substantial changes to the gradual deterioration in the pricecompetitiveness indicators seen in recent years are discernible yet. Combined with the buoyancy of final demand, this has meant that purchases abroad have retained strong momentum, whereby import penetration has continued to increase. Despite the better export performance and the slowdown in expenditure, the external deficit has continued to increase both in nominal terms and as a percentage of GDP during the first half of 2006, albeit at lower rates than in the two previous years. The rise in the external deficit reflects, first, the impact of some temporary or one-off factors such as more expensive energy and the cyclical discrepancy between our economy and that of the euro area. We may also include here the import intensity of investment in capital goods, although this component may have a more permanent underpinning. Foreseeably, the recent course of energy prices and the recovery in the euro area will contribute to alleviating the tendency towards deterioration. However, we must not lose sight of losses in competitiveness. Reversing these losses may prove much more complex since that will ultimately depend on the economy’s efficiency and flexibility. The labour market has continued to be governed by the patterns of previous years, with strong job creation that has provided for the incorporation of a growing number of workers into the market and a reduction in the unemployment rate.

Integrating new labour force entrants into the labour market will have to be compatible, moreover, with improved productivity. In this connection, it will be necessary to better incorporate technical progress and innovations into business and general government activity, and to enhance human capital skills. Likewise, prospective demographic developments will pose significant demands in respect of pensions and protection in situations of dependency. This will all call for further policies geared to re-balancing the sources of growth and stepping up the reform agenda in order to dispel the risks that are emerging and to ensure the continuity of the ongoing improvement in well-being in the medium and long-term. 6  BIS Review 117/2006
In Romania, as in most other Central and Eastern European countries, monetary policy interest rates are still above the zero bound and, as such, there has been no need to venture into the uncharted waters of quantitative easing and negative nominal interest rates. Therefore, I will not approach these two already classical unconventional instruments, since Romania’s experience is not illustrative from this perspective. Besides, I am sure that they will be extensively dealt with by other panellists. In this case, you are probably wondering why I am now in front of you. The answer is that, 10 years ago, the National Bank of Romania faced an economic and financial context which could also be labelled as exceptional. It called for the use of unconventional instruments and hence the departure from the prevailing economic precepts of the time and particularly from the rules that defined the modus operandi of an inflation targeter. Some of these tools would later be referred to as “macroprudential instruments”, but back then we referred to them as unorthodox monetary policy measures, the NBR responsibilities including not only monetary policy, but also financial stability, the supervision of credit institutions and the issuance of secondary legislation in the field of banking regulation. Consequently, I have come in front of you today with the hope that at least some of the lessons we learned at the time might prove relevant for this panel’s discussions. BIS central bankers’ speeches  1  My intervention today is structured along 4 lines, namely: 1.

The consumer price growth will slow down together with the exhaustion of the effect of the external factors that played a prominent role in the first half and in the middle of this year; exchange rate dynamics is also expected to normalise. With the stabilisation and subsequent reduction in inflation expectations during 2015, the baseline scenario predicts a gradual easing of the monetary policy. The more pronounced the downward trend in inflation and inflation expectations will be, the more accommodative the monetary policy may become. (Slide 3)  BIS central bankers’ speeches  1  In addition to the baseline scenario, built on fairly optimistic assumptions, we have prepared two more alternative scenarios, number II and III. They are based on more negative assumptions. Scenario II predicts that the mutual sanctions and trade restrictions will remain during the whole period under review. This will lead to a certain increase in the capital outflows coupled with corresponding exchange rate dynamics. It should be noted that the ruble volatility, on the one hand, partially offsets the negative impact of external environment by maintaining the competitiveness of Russian producers and accelerating import substitution, however, on the other hand, it leads to enhanced inflationary pressures. Scenario II also assumes a possible increase in the tax burden. Due to the decision taken by the government on this issue, we plan to finalise this scenario. This scenario forecasts lower GDP growth rates compared with the baseline scenario (you can see it on the slide), and a slower decline in inflation.
Fatos Ibrahimi: Development of small and medium-sized enterprises in Albania Speech by Mr Fatos Ibrahimi, Deputy Governor of the Bank of Albania, at the meeting of launching the "Program on the Development of the Small and Medium-sized Enterprises", Tirana, 20 January 2009. *  *  *  Your Excellency Mr. Ambassador, Honourable Mr. Ministers, Honourable participants, It is a special pleasure for me to attend this event and I avail myself of the opportunity to greet on behalf of the Bank of Albania this joint recent initiative, between the Ministry of Economy and the Italian Collaboration. The financial support of small and medium-sized enterprises has a particular importance for the development of this project and for the release of managing abilities of the economic units. The financing of small enterprises, for the small developing economies, is a worthy opportunity to increase both the employment and the economic activity based on the initiative, ideas and producing capabilities of small groups or of distinguished individuals, who owns the courage and knowledge to generate material goods and to increase the welfare of the society. The small and medium-sized enterprises in Albania, over the transition period, have been growing with quick steps, hence showing up as a distinguished characteristic of the whole Albanian transition, having survived to the domestic economic difficulties as the fall of pyramid schemes or other problems related to the reforms and the process of completing the institutional and legal framework.

2  To help on the supply side the Bank has developed an education outreach strategy with three components: 1. econoME: which includes free lesson plans and supporting materials for teachers to use in their classrooms; 2. Bank Ambassadors: colleagues below the director level at the Bank who volunteer to visit schools across the country to explain the Bank of England’s role; and 3. School visits by senior Bank and policy committee members: to spark young people’s interest in economics and to inspire them to pursue a career in related fields. Let me say a bit more about why we are doing this. 1  May 2017 survey conducted by ING and the Economics Network, available at: https://www.economicsnetwork.ac.uk/research/understandingecon 2 See Haldane, A “Everyday Economics”, Birmingham 2017 2  All speeches are available online at www.bankofengland.co.uk/speeches  2  The first objective is to help young people understand the economy and to make better informed personal financial decisions. The econoME lessons are designed for 11-16 year olds and cover: -  The economic factors that influence personal decisions;  -  How to make informed decisions; and  -  How such decisions collectively influence the economy. An array of econoME resources, designed in close collaboration with teachers and education specialists, support these classes. The materials include lesson plans, presentations, videos, activities and real life case studies. And they can be used by non-specialists with no prior economics training.
So it is reasonable to expect that once a significant minority of firms has offered a return to pay growth that is more normal by historical standards, we can expect the majority to follow. 3. The balance of savings and investment intentions  Let me turn to the balance of savings and investment. Although many believe that the MPC sets interest rates, that is only strictly true for short term rates, and even then only the rates applicable in our monetary and liquidity insurance operations. Long term interest rates are set by the economy, and must ultimately equilibrate the desire to save and the desire to invest. Much of the decline in interest rates over the 30 years prior to the crisis represented large global forces – as evidenced by the tendency of international bond yields to co-move. 4 Demographic effects, for example, saw the proportion of the global population in prime working age increase from 50% to 58%. 5 Those in the workforce tend to save more than those outside it, particularly over a period of increasing life expectancy. The rise of inequality has also had an impact through its tendency to skew income toward those more likely to save. 6 Needless to say, the development of these trends over the coming decades will continue to play an important role in the determination of long term interest rates.

When public sector balance sheets reached their limits, it was the turn of deleveraging at a national level through fiscal consolidation, a process which is likely to continue for some time to come in the UK and euro area. It would be overly pessimistic to have as one’s central case that the headwinds currently affecting the economy will persist for decades to come. Although they will be persistent, they will not be permanent. Indeed there are now nascent signs that some of these headwinds have already begun to ease. For example, against a backdrop of improved confidence in the recovery (Chart 5), firms have slowly but surely been increasing the amount they invest relative to the amount they save (Chart 6). And household saving has also declined from its very elevated precautionary levels. But that is not to say that it is imprudent of financial markets to attach weight to the downside risks – they are real. Indeed, reducing the probability of those risks materialising has been a driving factor in the MPC’s decision to maintain Bank Rate at its historically low level of 0.5% for 6 years, and the committee’s guidance that when Bank Rate does begin to rise, it is expected to do so more gradually than in previous cycles, and is expected to remain below average historical levels for some time to come. 4. Diminished potential output growth  Let me turn next to potential output growth.
Back then, monetary policy was faced with the dual challenge of inflationary pressures from escalating global commodity and food prices, as well as headwinds in global growth from the unstable global financial markets. In this case, despite the upside risks to inflation, monetary policy was maintained given the need to balance against the weakening global growth prospects and its implications on the domestic economy. BNM recognised that the upside risks to inflation originated mainly from supply-driven factors, in which the members opined that monetary policy was not the appropriate tool to alleviate the impact. In this situation, raising rates to achieve a stable inflation at all cost would be against our philosophy and against public interest. During that time, our monetary policy inaction was criticised for being behind the rate-hike curve relative to the actions taken by other regional central banks. But in retrospect, we were attempting to do the right thing based on the prevailing data and our assessment. We would like to think that our departure from the convention stood the test of time, and that we were eventually proven right when Malaysia was able to withstand the crisis. Staying committed to our decisions, however, does not imply inflexibility in our approach. When global conditions deteriorated rapidly, monetary stimulus was swiftly and significantly front-loaded between November 2008 and February 2009, to cushion the domestic economy from adverse spillovers.

We intend to retain the current interest rate level for now and will monitor its effects closely. With respect to setting interest rates and supplying the money market with liquidity, the SNB’s monetary policy decisions have been very bold by international standards. All things considered, the Swiss franc nevertheless remains significantly overvalued. Were Switzerland not to have negative interest rates, and hence have a narrower interest rate differential with other countries, demand for Swiss francs would be even greater and our currency would be even stronger today. We are aware that the current exchange rate situation is extremely difficult for exporters, tourism and industries that are particularly exposed to competition from abroad. While we recognise the scale of the challenges facing the affected companies, it is worth remembering that in the current climate there is, regrettably, no easy solution that would absorb all external disruptions. We must accept these challenging economic conditions for the time being. That said, we are convinced that, under the circumstances, the SNB’s current choice of monetary policy will best serve Switzerland’s overall interests in the long term. Ladies and gentlemen, thank you for your attention. It is now my pleasure to give the floor to Jean-Pierre Danthine, who will present our Financial Stability Report. BIS central bankers’ speeches  3