samchain/econo-pairs-v1 huggingface dataset:
Not merely were banks’ own reported profits exaggerating the contribution of the financial sector to the economy, so were the national accounts. In the US, the share of gross value added of the financial sector as a share of GDP rose from around 2–3% in the decade after World War II to about 8% in 2008, driven in large part by a rise in the gross operating surplus of financial intermediaries. And in the UK, in the past decade, the measured scale of the financial sector, compared to GDP, has roughly doubled to around 10%. But this exaggerates the contribution of financial services. Banks do not always charge directly for the services they provide. So the value added of the financial sector is measured by official statisticians (using the United Nations System of National Accounts) as the difference between interest receipts and payments of a “reference rate of interest” which attempts to measure the pure cost of borrowing funds. This convention overstates the true value added of the financial sector because it includes the return to risky lending represented by the difference between the hypothetical pure cost of borrowing funds and the return that is earned. But the fact that risk is channelled through an intermediation industry does not mean that the value added from risk-bearing in the economy is solely attributable to the existence of an intermediation sector. If companies financed themselves directly from households, the statisticians would regard the return on risk-bearing as value added created in that industry.

This leads to the limiting case of proposals such as Professor Kotlikoff’s idea to introduce what he calls “limited purpose banking” (Kotlikoff, 2010). That would ensure that each pool of investments made by a bank is turned into a mutual fund with no maturity mismatch. There is no possibility of alchemy. It is an idea worthy of further study. Another avenue of reform is some form of functional separation. The Volcker Rule is one example. Another, more fundamental, example would be to divorce the payment system from risky lending activity – that is to prevent fractional reserve banking (for example, as proposed by Fisher, 1936, Friedman, 1960, Tobin, 1987 and more recently by Kay, 2009). In essence these proposals recognise that if banks undertake risky activities then it is highly dangerous to allow such “gambling” to take place on the same balance sheet as is used to support the payments system, and other crucial parts of the financial infrastructure. And eliminating fractional reserve banking explicitly recognises that the pretence that risk-free deposits can be supported by risky assets is alchemy. If there is a need for genuinely safe  8  BIS Review 140/2010  deposits the only way they can be provided, while ensuring costs and benefits are fully aligned, is to insist such deposits do not coexist with risky assets. The advantage of these types of more fundamental proposals is that no tax or capital requirement needs to be calibrated. And if successfully enforced then they certainly would be robust measures.
Figure 14 Retail sales and new car sales (1) (2) (index, 2003=100) 250  380  225  330  200  280  175  230  150  180  125  130  100  06  07  08  09  Durable goods Non-durable goods  10  11  80  New cars  Labor market (3) 14  (percentage; millions of persons)  3.0  12  2.8  10  2.6  8  2.4  6  2.2  4  03 04 05 06 07 08 09 10 11  2.0  Unemployment rate Employment  (1) Seasonally-adjusted series. (2) Sold during moving quarter. (3) Uses Universidad de Chile's Employment-Unemployment Survey for Greater Santiago. Seasonally-adjusted series. Sources: National Automobile Association of Chile, Central Bank of Chile, National Chamber of Commerce and Universidad de Chile. BIS central bankers’ speeches  13  Figure 15 Inflation indicators (y-o-y change, percent) 12  12  9  9  6  6  3  3  0  0  -3  -3 06  07  CPI  08  CPIX  09  CPIX1  10  11  CPI w/o foodstuffs and energy  Sources: Central Bank of Chile and National Statistics Institute.

José De Gregorio: The world economy, foreign exchange tensions, and recent monetary policy making in Chile Keynote address by Mr José De Gregorio, Governor of the Central Bank of Chile, at the Monetary Club of Universidad Finis Terrae, Santiago, 20 May 2011. *  *  *  Abstract This presentation discusses risks and tensions that have emerged in the global economy due to the ongoing process of world economic recovery and its implications on the Chilean economy. It reviews the decoupling of emerging economies from developed ones in terms of growth, the difficulties endured by developed economies to boost their feeble recovery, Europe’s public debt issues, the high commodity prices and symptoms of overheating in some emerging markets. This scenario has pushed emerging economies’ exchange rates to their lowest levels of the past decade. It stands out that, although an important step to change the composition of world demand, it has created tensions and in some cases has prompted the adoption of policies to mitigate exchange rate adjustments. Capital inflows have added pressure to the exchange rate discussion in some emerging economies and might favor an unhealthy increase in lending and incubate financial fragilities. Chile’s last forex intervention is mentioned. The differences in capital flows between Chile and other countries and episodes of substantial flows into emerging economies are described, emphasizing that large capital outflows from Chile have created a negative net balance.
Criteria 3, 4 and 5 introduce conditions that cannot easily be observed. We have to apply judgement. The criteria contribute to consistency and structure the discussion. The Riksbank also applies judgement when selecting the interest rate path. But Svensson does not discuss possible shortcomings in the macroeconomic model. In Chart 10, he shows how the various interest rate paths, differing by around ½ percentage point in the period to summer, could result in differences in the inflation rate of close to 4 percentage points as early as next autumn. Monetary policy seems to be having a very strong impact. It would be interesting to hear whether he thinks that relying so heavily on such a model in interest rate setting is robust, and how possible errors in the model should be guarded against. We also know from experience that market participants’ perceptions can differ from ours, particularly somewhat further ahead. There can be a variety of reasons for these differences and Svensson discusses a number of them. It would also be useful to study the volatility surrounding publication of key macroeconomic variables. We would prefer to see lower volatility around monetary policy meetings, and that any surprises are postponed to a time closer to the publication of new macroeconomic data. Solberg Johansen (2008) – winner of the Bertil Ohlin prize for best thesis in international economics at the Stockholm School of Economics – examines volatility in the yield curve.

In a turbulent economic situation, we were uncertain whether our model was the right one for the Norwegian economy and wanted to guard against model misspecifications. In an economy where unemployment is around 3 per cent and inflation is on target, setting the interest rate as low as zero was regarded as going too far. A practical approach to model uncertainty is to cross-check using simple monetary policy rules such as the Taylor rule (criterion 5). In addition to the basic Taylor rule, we usually employ a variation of this rule involving external interest rates, and a rule where the output gap is replaced by GDP growth. A mechanical application of the Taylor rule would have resulted in a forecast approximately as indicated by the blue line in the diagram, i.e. considerably higher than the interest rate path that was chosen. A higher interest rate path would also have resulted in more negative output and inflation gaps. Achieving the inflation target would have taken ten years. 2  See Holmsen et al. (2008) for a discussion of the implementation and communication of optimal monetary policy. 2  BIS Review 110/2009  An interval for the interest rate is determined based on the criteria, where optimal policy (with interest rate smoothing) defines the lower boundary and the Taylor rule yields the upper boundary. After an overall assessment, the interest rate forecast indicated by the red line was selected. The interest rate decision, in Norway as elsewhere, is based on discussion by a board.
4  Data related to employment rates for the euro are available to 2007Q3 and 2006 for the United States. 5  Data refer to December 2007. 2  BIS Review 18/2008  to a certain extent, contributed to the disappointing productivity growth. However, this slowdown in labour productivity growth can be largely attributed to a marked deceleration of total factor productivity growth. Indeed, in the euro area and Spain, TFP growth decelerated from 1.4% over the period from 1980 to 1995 to 0.7% and 0.1% respectively between 1995 and 2007. There are many potential factors explaining the decline in total factor productivity growth. Among the most prominent causes are those structural features of the European economies that are undermining incentives, including innovations, to invest in real and human capital and that reduce the flexibility of firms to smoothly and quickly adjust to their new environment. Some empirical evidence has shown that the structural characteristics of the US economy – a more flexible labour market, a higher degree of competition in product markets and lower barriers to entry for new firms – were more conducive to exploiting the opportunities provided by the new technologies.

13  All speeches are available online at www.bankofengland.co.uk/news/speeches  13  Table 2: Statements of Commitment to the FX Global Code by 30 largest asset managers  Firm  Assets Under Management $  SoC on public register, or have otherwise informed the Bank of England  1  Blackrock  6,060    2  Vanguard Asset Management  4,663    3  State Street Global Advisors  2,641    4  Fidelity Investments  2,284    5  BNY Mellon Investment Management  1,808    6  Capital Group  1,715    7  J.P. Morgan Asset Management  1,677    8  PIMCO  1,667    9  Amundi  1,626    10  Prudential Financial  1,323    11  Legal & General Investment Management  1,263    12  Goldman Sachs Asset Management  1,224    13  Wellington Management International  1,026    14  Natixis Investment Managers  947    15  T. Rowe Price  941    16  Nuveen  923    17  Northern Trust Asset Management  913    18  Invesco  890    19  AXA Investment Managers  850    20  DWS (Deutsche Asset Management)  800    21  Affiliated Managers Group  794    22  UBS Asset Management  756    23  Insight Investment  751    24  Sumitomo Mitsui Trust Bank  748    25  Aberdeen Standard Investments  739    26  Legg Mason  733    27  Franklin Templeton Investments  716    28  BNP Paribas Asset Management France  649    29  Mitsubishi UFJ Trust and Banking  611    30  Allianz Global Investors  568    Source: Firm AUM rankings from IPE’s ‘Top 400 Asset Managers 2018’, https://www.ipe.com/Uploads/k/x/x/Top-400-Ranking.pdf.
Mugur Isărescu: The macroeconomic perspective in Romania Welcome speech by Mr Mugur Isărescu, Governor of the National Bank of Romania, at the Romanian-Czech Business Forum, Bucharest, 20 May 2014. *  *  *  Your Excellency, President Zeman, you are most welcome here, at the National Bank of Romania, a place that holds within its walls countless pieces of history, tails of how Romania has grown into a modern state. We are privileged to greet here, today. Distinguished guests, Ladies and gentlemen, Allow me to extend a very warm welcome and thank you all for gracing us with your presence at the Romanian-Czech Business Forum. It is a great pleasure for the National Bank of Romania, and an honor for me and for the members of the board, to host what will be a substantial discussion about the challenges currently facing Europe, in particular the development of economic relations between the Czech Republic and Romania. Here, at the National Bank of Romania, we take pride in having always been a forum for debating, in an open and profound manner, the themes and trends defining our age. A few weeks ago we celebrated the 134-th anniversary of the Romanian National Bank, a central bank ranking 16-th in the world. During the break, after the working sessions, you are kindly invited to visit/walk the outstanding halls of the Old Palace of our national bank.

Svein Gjedrem: The conduct of monetary policy Introductory statement by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at the hearing before the Standing Committee on Finance and Economic Affairs of the Storting (Norwegian parliament), Oslo, 22 May 2008. Please note that the text below may differ slightly from the actual presentation. The statement is based on Norges Bank’s Annual Report for 2007, Monetary Policy Report 1/08 and the Executive Board’s assessments published after the monetary policy meeting on 23 April. *  *  *  I would like to thank the Chairman of the Committee and also thank the Committee for this opportunity to report on monetary policy in connection with the Storting’s deliberations on the Government’s Credit Report. My statement is based on the Bank’s Annual Report, but is also updated based on the Executive Board’s assessments for the period to the previous monetary policy meeting and new information received to date. I also refer to this year’s report from Norges Bank Watch, an independent group of experts that evaluates Norges Bank’s conduct of monetary policy. Monetary policy in Norway is oriented towards maintaining low and stable inflation. The target is annual consumer price inflation of close to 2.5 per cent over time. The inflation target provides employers and employees with an anchor for inflation expectations among businesses and households. Inflation stabilised early in the 1990s after falling from a high level in the previous decade.
Therefore we, the policymakers, have to ask ourselves whether we have consistently checked our progress against what must be the ultimate goal of the transition process. My message here is not only that transition policies should ultimately benefit the people, but that the people have to understand why reforms are necessary and what kind of reforms we should pursue. In short they have to understand what the policymakers are doing. Let me stress that because of the legacy of socialism this goal is even more challenging in transition. Usually people are both averse to risk and have a high discount rate about the future. In socialism those two behavioral patterns seem to be even stronger. People who have spent part of their lives in a socialist system and came out of it only ten years ago, on average tend to be even: a) more risk averse and b) have stronger preferences for the present. a)  In socialism the notion of risk and its consequences were almost unknown. One can think of socialism as a big insurance company. No bankruptcies, no unemployment, no financial markets, no volatility whatsoever, very little choice (both for households and companies) as almost everything was laid down by the central plan. Most risks (which always exist) were taken by society as a whole (socialized) and were not individualized. Or, vice versa, individual decisions rarely affected individual wellbeing.

BIS central bankers’ speeches  3  Conditional inflation forecast of March 2011 and of June 2011 Percentage change in national consumer price index from previous year Inflation Forecast March 2011 (with Libor at 0.25%) Forecast June 2011 (with Libor at 0.25%) % 3 2.5 2 1.5 1 0.5 0 –0.5 2008  2009  2010  2011  2012  2013  2014  Observed inflation June 2011 2008  I nf l at i on  2009  2010 Q2  Q3  Q4  2011  Q1  Q2  Q3  Q4  Q1  Q1  Q2  Q3  Q4  Q1  2.5  2.7  3.0  1.6  0.0 - 0.7 - 1.0 - 0.2 1.1  1.0  0.3  0.3  0.6  Q2  Q3  2008  2009  2010  2.4  - 0.5  0.7  Q4  Conditional inflation forecast of March 2011 with Libor at 0.25% and of June 2011 with Libor at 0.25% 2011  For ecast Mar ch 2011, Li bor at 0.25% For ecast June 2011, Li bor at 0.25%  4  2012  2013  2014  Q1  Q2  Q3  Q4  Q1  Q2  Q3  Q4  Q1  Q2  Q3  Q4  0.4  0.5  1.2  1.0  0.9  1.0  1.1  1.3  1.5  1.8  2.1  2.5  0.5  1.4  1.3  1.0  0.9  1.0  1.2  1.4  1.6  1.8  2.2  Q1  2.6  Q2  Q3  2011  2012  2013  0.8  1.1  2.0  0.9  1.0  1.7  Q4  BIS central bankers’ speeches  BIS central bankers’ speeches  5
The FPC has a remit, too, to strengthen the structural fabric of the financial system, including through improved financial infrastructure. That objective has a place deep in the Bank of England’s heart – from Lancashire cotton mills of the 1930s, to 3i of the post-war years, to CHAPs of the 1980s, to Vickers of the past few years. Supporting and executing these new responsibilities will be a massive task. First and foremost, it will require the Bank to have a rich and diverse set of skills. Historically at least, the Bank has been skills-rich but diversity-poor. But I am pleased to say that, too, has been changing for the better. This year’s graduate intake has close to a 50/50 gender split. One in seven of the intake is drawn from ethnic minorities. Only a fifth come from Oxford or Cambridge. The PRA’s arrival next year will broaden further the diversity of the Bank’s skills and experience – legal, accountancy, banking, insurance. The Bank’s policy committees, meanwhile, bring diversity of experience and expertise to the decision-making table, from academe and the private sector. 13  Bank of England (2012). BIS central bankers’ speeches  7  There has been a transformation, too, in the Bank’s approach to external communications and transparency. Think back twenty years. Then, there were no quarterly Inflation Reports, no six-monthly Financial Stability Reports and certainly no press conferences to accompany both. Twenty years ago, there were no minutes of the deliberations of the Bank’s policy committees (today, the MPC and FPC).

We invite the banking industry and other actors in the financial system to contribute to this initiative, with concrete vision and products, taking into account that you can play a special role in effectively mobilising remittances. Reasserting our institutional support and commitment for this initiative, I am confident that this will be an on-going dialogue to facilitate every undertaking in the aspect of remittances. Thank you for your attention! 2/2  BIS central bankers' speeches
16  All speeches are available online at www.bankofengland.co.uk/speeches  16  Chart 13: May IR central inflation forecast Policy following market rates No change in Bank Rate  Per cent  3.5 3 2.5 2 1.5 1 0.5 0  2013  2015  2017  2019  2021  -0.5  This does not seem a desirable outcome. Inflation persistently above target and a sustained period of excess demand would represent a failure to meet our remit. This is one of the reasons why I signed up to the Committee’s collective judgement that “were the economy to develop broadly in line with the May Inflation Report projections, an ongoing tightening of monetary policy over the forecast period would be appropriate to return inflation sustainably to its target at a conventional horizon”. Despite the backdrop of uncertainty, and despite the unusual things going on in the economy, I am actually reasonably confident about our understanding of what’s going on. Forecasts are never going to be perfectly accurate. But over the last year I think we have got the broad narrative, and our understanding of the key moving parts, about right, with the slowing in GDP growth, the rotation of demand and the overshoot in inflation. 16  Students of the UK labour market – and I have been one for over thirty years – should always  expect surprises. But I feel my knowledge of what’s going on has developed over the last year.

Andréa Maechler will examine the implementation of our monetary policy in more detail later. Inflation forecast  I would now like to address the development of inflation. Inflation has declined somewhat in recent months, and stood at 3.0% in November. This decrease was above all attributable to  Page 1/4  Berne, 15 December 2022 Thomas Jordan  News conference  smaller price increases for oil products. However, inflation is still clearly above the range we equate with price stability, and is likely to remain elevated for the time being. Our new conditional inflation forecast is based on the assumption that the SNB policy rate is 1.0% over the entire forecast horizon (cf. chart 1). Up to the beginning of 2023, the forecast is below that of September owing to the somewhat lower oil price. From mid-2023 onwards, the new forecast is higher and stands at 2.1% at the end of the forecast horizon. That our new forecast is higher over the medium term despite the raising of the SNB policy rate is attributable to stronger inflationary pressure from abroad and the fact that price increases are spreading across the various categories of goods and services in the consumer price index. The new forecast puts average annual inflation at 2.9% for 2022, 2.4% for 2023 and 1.8% for 2024 (cf. table 1). Without today’s SNB policy rate increase, the inflation forecast would be even higher over the medium term. Global economic outlook  I will now move on to the economic outlook.
As a consequence, the proportion of CHAPS payments made by direct members on their own account is set to increase from around 40% in 2007 to approaching 70%, substantively addressing the tiering risks that had previously existed in the wholesale sterling markets. In relation to the retail systems, we have also sought to address latent contagion risks by reforming the arrangements covering member default in two of our largest retail payment schemes (Bacs and Faster Payments). As currently structured, these default arrangements contain a heavy “survivors pay” element, where the other members of the payment scheme assume a portion of a failing member’s payment obligations (either temporarily, a liquidity risk, or permanently, a credit risk). This creates a clear contagion risk. Recently, the schemes have agreed to move to a full “defaulter pays” model, where all obligations are fully collateralised in advance, in cash, segregated in each bank’s account with us. The move from survivors to defaulter pays will take place in the next year or so. Separately, but driven by the same philosophy, we have sought to reduce the operational risks that we ourselves run as the core infrastructure provider within the sterling system. The Bank of England currently runs the UK’s RTGS infrastructure from twin operational sites so we can continue to provide RTGS settlement in the event of a problem at either. While this is a highly resilient arrangement, it would be vulnerable to a catastrophic failure which took out both sites simultaneously.

With the experience gained together, we can deliver positive and significant changes that will improve the welfare of individuals and businesses, not just in these two cities but across Malaysia and in countries that are dependent on remittance flows. Thank you. 4/4  BIS central bankers' speeches