samchain/econo-pairs-v1 huggingface dataset:
William C Dudley: The US financial system – where we have been, where we are and where we need to go Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Reserve Bank of Australia’s 50th Anniversary Symposium, Sydney, 8 February 2010. *  *  *  Today, my remarks will focus on the U.S. and global financial systems: •  What went wrong to produce the worst financial crisis in the past 70 years? •  Where are we now? •  What should be our top priorities to ensure that this never happens again? As always, my views are my own and do not necessarily reflect those of the Federal Open Market Committee or the Federal Reserve System. With respect to what went wrong, it is important to recognize that the financial crisis occurred for a host of reasons and, thus, there is no single silver bullet to avoid such crises in the future. At the heart of the crisis was a tremendous buildup in leverage, which our regulatory framework failed to prevent. Large amounts of opaque, illiquid, long-term assets were financed by short-term liabilities, and much of this financing occurred in the shadow banking system. When the housing bubble burst, financial asset prices fell and exposed the deep linkages and overall fragility of our system.

Investors would have anticipated that common equity would be replenished automatically if a firm came under stress, and this knowledge might have tempered anxieties about counterparty risk. At a minimum, contingent capital instruments might have enabled common equity buffers at the weaker firms to be replenished earlier and automatically, thereby reducing uncertainty and the risk of failure. On the liquidity front, there are a host of initiatives underway. The Basel Committee on Banking Supervision is working on establishing international standards for liquidity requirements. There are two parts to this. The first is a requirement for a short-term liquidity buffer of sufficient size so that an institution that was shut out of the market for several weeks would still have sufficient liquidity to continue its operations unimpaired. The second is a liquidity standard that limits the degree of permissible maturity transformation – that is, the amount of short-term borrowing allowed to be used in the funding of long-term illiquid assets. Under these standards, a firm’s holdings of illiquid long-term assets would need to be funded mainly by equity or long-term debt. With respect to financial market infrastructures, the Federal Reserve is working with a broad range of private-sector participants, including dealers, clearing banks and tri-party repo investors to dramatically reduce the structural instability of the tri-party repo system. Similarly, over-the-counter (OTC) derivatives clearance activity is being pushed toward central counterparties and exchanges. In addition, the Federal Reserve and others are evaluating how greater transparency with respect to OTC derivatives prices would improve financial stability.
Governance of Financial Globalisation Speech given by Sir Jon Cunliffe, Deputy Governor Financial Stability, Member of the Monetary Policy Committee, Member of the Financial Policy Committee and Member of the Prudential Regulation Committee  German Economic Council Annual Finance Conference, Berlin 11 February 2020  1  All speeches are available online at www.bankofengland.co.uk/news/speeches  Thank you for inviting me to address you today. It is now nearly two weeks since the UK left the European Union. Our status as a non-member of the EU, what is called a ‘third country’, is now quite clear. The future relationship between the UK and the EU, of course, is not yet fixed. It will depend on the outcomes of the negotiation that has now commenced. Those negotiations are for the UK government and the EU authorities and member states. Our job as the Bank of England is to deliver monetary and financial stability within the mandates that are set for us. So I will not – and indeed I could not – talk today about the trade negotiations or hazard guesses about the outcome. But while we are not responsible for trade negotiations and while all decisions about the future relationship are for governments, the governance of the UK’s financial links with the rest of the world, the EU included, is important to us given our responsibility for financial stability in the UK. I want to talk today in part about the governance of financial globalisation, the progress we have made, and the challenges we face.

At this time, although I do not anticipate further efforts by the Federal Reserve to address the potential spillover effects of Europe on the United States, we will continue to monitor the situation closely. Thank you for your invitation to testify today, and I look forward to answering your questions. BIS central bankers’ speeches  3
When borrowers discover that prospects are not as bright as before, they will become more cautious. So, if anything, Norwegian household debt will be reduced, perhaps not in absolute terms, but at least relative to income. The higher the level of initial debt, the greater the risk to the Norwegian economy. A sudden debt correction would then be more likely, potentially resulting in a sharp fall in GDP. When economic conditions deteriorate, good credit becomes bad debt. Households will then deleverage and cut back on consumption, adversely affecting businesses. It will then take time for growth to recover, as we are witnessing in many European countries that continue to struggle following the financial crisis. Norway has a well-equipped toolkit for counteracting crises. There is room for manoeuvre in monetary and fiscal policy. Norwegian authorities have also introduced a number of measures to reduce the vulnerability of the economy to shocks, especially in the wake of the financial crisis in 2008 and 2009. Banks are required to hold more equity and more liquid assets, which strengthens banks’ resilience. Borrowers are also regulated. The regulation on requirements for new residential mortgage loans was first introduced in 2015. The regulation limits the level of debt a household can take on, reducing the number of vulnerable households. Recently, limitations on consumer credit have also been introduced. Together with room for manoeuvre in fiscal policy and a gradual normalisation of the policy rate, we may believe that these measures will be sufficient to avoid a new crisis.

Thanks to the proceeds from oil activities, income and wealth in Norway have risen rapidly over the past 25 years. This chapter of our history is unlikely to repeat itself. It will take some doing for Norway to find a similar source of economic prosperity and growth for the next 25 years. In the recent past, the contributions from the GPFG to government finances have also increased. Now the GPFG is close to its peak, and the contributions from the GPFG are not likely to become much larger than they are today. Even though Norway will continue to be among the world’s wealthy countries, we will likely see an increased resemblance between Norway and its neighbours in future. In 1988, the average bank lending rate was above 16 percent. Lending rates remained in doubledigits until well into the 1990s. Today, residential mortgage rates are at a record low – below 3 percent. We seem to be entering a period of slightly higher interest rates, which may increase interest burdens and curb household borrowing. Regardless of what happens in the years to come, however, interest rates cannot fall as far as in the past 25 years. Those who borrow today must consider whether they are taking on an amount of debt they can live with over time. The rear-view mirror will be poor guidance going forward. Experts and economists like myself have been mistaken before, but there is one thing I am quite sure about: Nothing grows forever. Expectations shift.
This suggests the UK’s lost decade for real pay can, to a significant extent, be accounted for by macro-economic developments: cyclically, the large pool of unemployed that built up immediately after the crisis, generating a drag from the unemployment gap; and structurally, from lower levels of productivity and a lower NAIRU than in the past. With those accounted for, there is far less of a pay puzzle left to explain. The Wage Bargaining Game  A more granular look at the labour market suggests, however, that it is not behaving identically to the past. Tectonic shifts in the labour market - cultural, contractual, technological, organisational – have come thick and fast recently. Because this structural change is slow-moving, it is difficult to detect in monthly pay movements. On a longer fuse, however, empirical evidence suggests these seismic shifts in the jobs market are influencing pay significantly. The Phillips curve plots the relationship between the stock of unemployed and wage growth. Another strand of the labour market literature has looked instead at flows of people into and out of work and the associated 7  process of job-matching between employers and employees. In these models, pay is determined by flows of workers between jobs, and by the relative bargaining strength of employees and employers, as well as by fluctuations in labour demand and supply. 7  For example, Moscarini and Postel-Vinay (2017).

This evidence suggests the pulse of the Phillips curve has quickened as the labour market has tightened. Unlike over much of the past decade, estimated wage equations are now broadly tracking pay (Chart 5). A year ago, the Bank’s forecasts of average weekly earnings growth into mid-2018 was 2.5%. Wage growth in the year to 2018 Q2 was 2.4%. 13  All speeches are available online at www.bankofengland.co.uk/speeches  13  How are these pay developments affecting the monetary policy outlook? Inflation is currently above the Bank’s 2% target. That is entirely due to the effects of past external price shocks, notably sterling’s post-referendum depreciation. As these external effects fade, inflation is projected to be maintained at or slightly above its target by a slow build in domestic cost pressures, underpinned by a rise in wage growth. The rise in wages projected by the Bank is, to coin a phrase, limited and gradual. Private sector pay is assumed to rise from 3% currently to around 3 ¾% three years hence, or around 25 basis points per year. That is below the pace at which wage growth has built over the past few years. Over the same period, unemployment is projected to fall further below its natural rate, though again at a slower pace than over recent years. The path of domestic costs in the economy depends on developments in firms’ productivity, as well as in pay. Weak productivity means even low nominal pay increases can be inflationary.
Some of the adjustments might be a reflection of the unsustainable pre-crisis imbalances, some of them are cyclical, and some might be a result of structural shifts that boost competiveness, enable export to grow and narrow the gaps. Latest available results from the IMF external sector assessment points to a general conclusion that the region’s current account balances are broadly in line with fundamentals (five out of eleven counties have current account in line with fundamentals, four have stronger position, while three 15  show weaker position than what the fundamentals suggest). The vulnerabilities are more visible, when financial and NIIPs are observed, with several countries having moderately weaker positions that indicates necessity for further policy changes, or bold structural reforms to improve the productivity and correct for the imbalances on the external front. Looking into the future, given  the uncertain global environment and the rising trade tensions, external flows and stock imbalances could widen again, although this would depend on the assumed policy responses in different countries. Further disruptions to trade and supply chains are one of the major risks that can affect the external imbalances. Higher tariffs on bilateral trade can come at significant economic cost, not only for the countries involved. These effects are greatly amplified by global supply chains, which transmit spillovers from bilateral tariffs, affecting countries up and down the value chain. Thus now more than ever there is an urgent need for policies that reduce external vulnerabilities, and prevent adverse spillovers. Bibliography  1.

PLATFORM FOR DISCUSSION Speaking note  SPEAKER:  Ana Mitreska, Vice Governor  DATE:  20-22 November, 2019  LOCATION:  Prague, Czech Republic  NATIONAL BANK OF THE REPUBLIC OF NORTH MACEDONIA info@nbrm.mk www.nbrm.mk   GLOBAL IMBALANCES, EXTERNAL SECTOR VULNERABILITY AND CAPITAL FLOWS – SELECTED COUNTRIES OVERVIEW This Speaking note was prepared for the 42nd Meeting of the Governor’s Club of Central Asia, Black Sea and Balkan Countries, 2019  Contributors to the Note: Dijana Janevska Stefanova, Vesna Stojchevska and Danica Unevska Andonova1 Department: Monetary Policy and Research  1 Special thanks to Aneta Krstevska, Chief Economist, and Biljana Davidovska Stojanova, Monetary Policy and Research  Department, for the useful comments. 1  Global imbalances, external sector vulnerability and capital flows – selected countries overview  Overview of the global external imbalances The discussion on the issue of global imbalances and the overall profile of the external sector comes at a very proper moment, given the rollback of the globalisation and rising trade tensions. The recent changes might affect the external imbalances globally, if not directly, then indirectly by affecting macroeconomic fundamentals of the economies. Tariffs can define productivity, output, and employment over the longer term, and thus affect the potential to grow. In the last three decades, the decline of tariffs gave ground to global value chains, enhanced competition, and improved productivity across countries.
Sam Woods: Mutual interests Speech by Mr Sam Woods, Deputy Governor for Prudential Regulation of the Bank of England and Chief Executive of the Prudential Regulation Authority (PRA), at the Building Societies Annual Conference, 05 May 2021. * * *  Introduction It’s very good to be back at the Building Society Association’s Annual Conference. Last time I spoke at the conference we were all in the QEII conference centre and the BSA was celebrating its 150th birthday by listening to a speech from me, which illustrates the powers of endurance the industry possesses. Mike Regnier had also just been announced as the new Chair of the BSA, and celebrated this by peppering me with awkward questions, just like he used to do at the business school in France where I first met him in 1998. As today is his last day I’m worried he is going to ask me even more difficult questions, in which case I think he will find that the Woods household wifi is having a bad day. In the meantime, I will offer a few comments on some of our shared favourite prudential topics. Building a bridge As you all know, over the past year the UK economy has experienced one of the sharpest economic declines in modern history, with parts of the economy fully shut down or restricted for large parts of the year. Our strategy through this period has been simple: to build a bridge to help us all get to the other side of this crisis safely.

Gent Sejko: Albanian economic progress in 2018 and banking industry challenges for 2019 Address by Mr Gent Sejko, Governor of the Bank of Albania, at the year-end function organised by the Albanian Association of Banks, Tirana, 13 December 2018. * * * Honourable AAB Chairman, Your Excellency, Minister of Finance and Economy, Dear senior representatives and colleagues from the banking system in Albania, Ladies and gentlemen, It is a special pleasure for me to participate and address this year-end function organised by the Albanian Association of Banks. In my brief address, I would like to bring to your attention some highlights of 2018, regarding the contribution of the banking sector and the financial system, as well as some milestones set for 2019. Let me first focus on the overall performance of the Albanian economy. The overall performance of the Albanian economy in 2018 was positive. Economic recovery is tangible across all of its dimensions. The pace of growth picked up, employment increased, internal and external balances were strengthened, while the main indicators of the banking sector’s soundness have been improving. It is encouraging to see that the sources of economic growth are both increasing and well diversified. From the aggregate demand perspective, growth in the exports of goods and services and in the domestic consumption and investments continued to underpin economic growth. In the meantime, from a sectorial perspective, economic activity expanded, reflecting a more notable contribution from output in the industry sector and the services sector.
That evaporation appears to have played a key role in propagating stress during the Flash Crash.24  19  “Latency” refers to the time it takes from sending an order to it being executed. 20  Haldane (2011b), Mackenzie (2011). 21  Menkveld (2012). 22  Angel et al (2010). 23  Egginton et al (2012). 24  CFTC-SEC (2010). BIS central bankers’ speeches  5  So too did message traffic congestion. One side-effect was to slow-down price discovery across exchanges. Many traders firms found themselves observing stale prices. As a result, identical stocks traded at different prices across exchanges (Chart 5). In principle, this represented an arbitrage opportunity. In practice, arbitrage relies on costless trading and, at that time, trades could not have been executed at any price. The Flash Crash was short-lived. Some have argued the lessons have been learned. Yet it appears to have been anything but a flash in the pan. In the period since, researchers have identified a large number of “mini-Flash Crashes”, with temporary dislocations in prices in markets as varied as Japanese yen and cocoa futures.25 As with the Flash Crash, there appears to be no convincing explanation for these gyrations. The uncertainties and externalities associated with the race to zero are one candidate explanation. Liquidity mirages and message traffic congestion are nibbling away at the common good of market stability. The competitive quest for individual speed risks a fragile evolutionary equilibrium.

The black line is the difference between the current interest rate path and the path in the previous Report. The “interest rate account” is a technical model-based illustration of how the change in the interest rate forecast from the previous Report can be decomposed by different exogenous shocks to the model. The illustration shows how changes in the assessment of international and domestic economic variables as well as changes in shock processes have affected the interest rate path, and is based on our core forecasting model. Since the “interest rate account” follows from a specific model, the exact decomposition is model-dependent and should thus be interpreted as a model-based illustration rather than a precise description of the Executive Board’s reaction pattern. Notwithstanding this reservation, the “interest rate account” serves several purposes. First, it gives information about the reaction function. Second, it provides a compact summary of the Monetary Policy Report. Third, it is a tool of communicating commitment. Norges Bank aims at influencing expectations in order to stabilize inflation. In this respect, our policy has elements of commitment. The interest rate forecast should reflect economic news and not re-optimisation of monetary policy. With an “interest rate account”, the public is better able to check whether the central bank honours past commitments. Let me turn to the criteria underlying the interest rate forecast and reaction function. Among the few central banks that publish interest rate forecasts, it is common to communicate these in quite general terms.
The magnitude of the task is compounded by the fact that a high proportion of Malta’s exports go to non-euro area countries whose currencies have tended to depreciate against the euro. In this regard, the example of Germany is significant. Despite the appreciation of the euro, the real effective exchange rate based on unit labour costs actually declined by almost 2 per cent in 2000-2008, primarily because wage growth was moderate and was, in any case, accompanied by productivity gains. The resulting strong competitive position enabled Germany to take full advantage of the global rebound, becoming one of the first, and few, countries to register positive growth in the second quarter of this year. There is a clear message implied here, that wage adjustments not accompanied by more efficient production methods result in a gradual erosion of a country’s competitiveness, especially when inflation is driven by internal cost pressures as in Malta today. A priority task, therefore, should be to change market structures and practices that tend to distort prices. A parallel endeavour should be to foster a culture where wage increases reflect higher productivity. The first challenge then is inflation. We cannot compete successfully in export markets if prices rise faster here than abroad. For instance, despite the downward correction in global food commodity prices since mid-2008, prices in Malta have continued to rise. Last year, a similar movement in restaurant prices reinforced the upward inflation trend. This suggests that some markets do not function efficiently.

For a start, each year’s deficit translates into higher debt and debt-servicing burdens, which already stand at 67 per cent and 3.4 per cent of GDP, respectively. 5 Put differently, the 196 million euro in interest due on the debt next year is equivalent to what the Government would spend on medicines  2  Structural Issues Report 2010, which focuses on the impact of the energy markets on the macroeconomy. A detailed report is to be published next year in the form of an ECB Occasional Paper. 3  Weathering the challenges, in Ernst & Young’s 2009 Malta Attractiveness Survey. 4  Paul Krugman, The Age of Diminished Expectations: US Economic Policy in the 1980s, MIT Press, 1992  5  Estimates taken from the Budget speech 2010. 4  BIS Review 154/2009  in three years at today’s prices. To complete this perspective, despite the reduction planned from 2011, the general government deficit in that year is still expected to remain just above the 3 per cent benchmark, and the forecast reduction to 2.9 per cent in 2012 is contingent on seemingly optimistic nominal growth assumptions. What are the options for reducing the deficit? Since any increase in the tax burden, already high at around 40 per cent of GDP, would have a negative impact on competitiveness, expenditure restraint seems to be the only possibility. This option is more complex than it might seem, however, because of the structure of recurrent government spending.