samchain/econo-pairs-v1 huggingface dataset:
Financial stress Prior to 2015, financial stress indicators exhibited a strong co-movement with the dispersion index (Slide 4). However, this relationship has since become less pronounced. The de-coupling of financial stress indicators and the dispersion index is particularly striking during the recent pandemic period. In the spring of 2020, when indicators of financial stress increased dramatically, the dispersion index of overnight money market rates remained at remarkably low levels, mainly owing to the structural shift to largely secured transactions and the high amounts of central bank liquidity outstanding even before the pandemic. The low dispersion across overnight rates during the pandemic stands in contrast to the sharp and persistent rise in term money market and commercial paper rates, which points to measurable tensions in other segments of the market (left-hand side of Slide 5). Commercial paper rates rose quickly as the demand for commercial paper from non-bank financial institutions froze at the height of the pandemic crisis. In March 2020, investment and money market funds faced heavy withdrawals from their investors due to a dash for cash and tried to sell off commercial paper before maturity to build up liquidity buffers. [12] The events of the spring therefore clearly demonstrated the extent to which the liquidity management policies of non-banks can have severe ramifications for broader market functioning and hence also for the transmission of monetary policy.

[5] The expansion of central bank liquidity provision during and after the global financial crisis substituted for impaired markets and thereby further reduced the need of market participants to rely on money markets for their liquidity. Instead, a substantial part of money market transactions in recent years has been driven by the demand for specific types of collateral. [6] Additionally, as a result of changes in the regulatory environment, unsecured money market transactions have become more costly in terms of bank capital and liquidity requirements. [7] This development has reinforced the shift towards secured money market transactions. Another trend is the marked shift in the types of counterparties involved in money market transactions. An increasing share of trades is cleared through central counterparties (CCPs) (right-hand side of Slide 1). CCPs mitigate counterparty risk and reduce the reliance on costly collateral by providing netting services. [8] They have been an integral part of the policy response to the shortcomings uncovered by the global  financial crisis. Beyond the use of CCPs, the share of transactions between banks and non-banks has gradually increased, whereas banks have lower incentives to transact with each other in the current environment of abundant central bank liquidity. These trends likely contributed to the relative resilience of short-term money markets since the onset of the COVID-19 pandemic. Secured transactions, a majority of which are cleared by CCPs, have been much less affected by the tensions in the spring than unsecured trades.
In this new world, phenomena which had traditionally a local or even a national impact may be amplified and become dangerous at the global level: amplification of financial cycles, herd behaviour, global contagion. Analysing the opportunities and the risks, and understanding the functioning of our system with a view to making it as stable as possible is a very exiting, ambitious and urgent task. And, last but not least, union. I can not avoid mentioning the question of completing monetary union with the entry of the United Kingdom. I would like to stress the following points in this regard: let us never forget that the UK is unanimously warmly welcomed in the euro area. It depends only on the decision of the British people and of the British authorities to join in. You know that the Germans and the French on the continent, as well as all other nations on the continent are very warmly hoping for a positive decision by the UK. I thank you for your attention. BIS Review 60/2002  5

Nevertheless, in the spirit of being prepared, and drawing on feedback from previous meetings of this committee 2, staff have developed plans should market rates persistently settle below Bank Rate, to such an extent that the Bank decided it was necessary to intervene in support of monetary control. In such a scenario, the presumption is that the Bank would issue one-week Bank of England bills, draining reserves from the system. That would tend to put upward pressure on market rates, reducing the wedge that had opened up and tightening the link between policy and markets rates. The Bank has a history of issuing these instruments successfully: Bank of England bills were first issued in 2008, to drain excess reserves following the increased size of longterm repo operations. And Bank of England bills also have the advantages of being widely tradable, offering a close substitute to deposits for most participants in the money markets, and of providing additional supply of high quality collateral. I have no particular expectation that the Bank will need to issue Bills in the foreseeable future, but the tool is ready if required. The move to the current floor regime was prompted by the MPC’s policy decisions to cut Bank Rate to the effective lower bound and its subsequent decision to loosen monetary conditions via asset purchases.
In 2016, there were over 500 confirmed cases of measles, five times higher than at the turn of the century. If we turn from public health to economic and financial health, the costs of a lack of public trust and understanding are in many respects quite similar: expert advice and services may not be taken-up, worse alternatives may be sought out and contagious scare stories may be allowed to proliferate. Each of these has societal costs which may be significant. Financial exclusion (people excluded from access to core financial services and advice) remains pervasive in the UK. There are almost 2 million people in the UK without a bank account. 26  In the most deprived parts  (including parts of London, Manchester, Middlesbrough, Liverpool, Bradford, Birmingham and Glasgow), over a third of people do not have access to a bank account. 27  While not all of these problems can be  blamed on a misunderstanding and mistrust of finance, these are still depressing statistics. Many more people suffer the consequences, not of financial exclusion, but financial illiteracy. Studies have identified a range of ways in which this can adversely affect people’s financial health. Financial illiteracy is a key contributor to excessive indebtedness. in the run-up to the sub-prime crisis. 29  28  It is associated with an increased incidence of default, including  And illiteracy causes people to seek out high-cost, non-standard  sources of credit, the financial equivalent of alternative medicine.

Fifty years ago, there were almost half a million suspected cases annually of measles in England and Wales. In the following year, a vaccination for Measles, Mumps and Rubella (MMR) was introduced in the UK. Cases of measles fell dramatically, by the mid-1990s reaching fewer than 10,000 per year. In 1998, a widely-publicised article appeared in The Lancet linking the MMR vaccine to autism and bowel disease. 24  News of these findings spread as contagiously as measles itself. In response, rates of MMR  vaccination, which had peaked at over 90%, fell to 80% by 2004. 25  The scare had socially, as well as  clinically, contagious consequences for public health, causing lower rates of vaccination against un-related diseases. Only recently have rates of MMR vaccination returned to their late-1990s highs. The 1998 MMR study has since been comprehensively discredited and the lead author struck off as a doctor. Yet the costs of this episode are still being felt. Rates of measles infection began rising in the UK from the  21  ING-Economics Network Survey of the Public’s Understanding of Economics (2017). YouGov / Post Crash Economics Society Survey (2015). 23 ING-Economics Network Survey of the Public’s Understanding of Economics (2017). 24 Wakefield et al (1998). The article has since been retracted. 25 Public Health England, The National Archives. 22  5  All speeches are available online at www.bankofengland.co.uk/speeches  5  early 2000s and only recently have cases peaked.
Neither a purely monetary approach nor a purely non-monetary approach to the analysis of risks to price stability is able to deliver the best possible results for monetary policy. In the beginning, we were sometimes criticised for "not having decided" between a strategy clearly based on a purely monetary objective and one based on pure inflation targeting. However, I strongly believe that we have made the right decision, as we have only one primary objective: price stability. We have also decided in favour of a robust strategy in order to achieve our objective. This enables us to use a variety of approaches, involving different analytical frameworks and indicators, which are relevant for our primary objective of price stability in our decision-making process, and to cross-check the results. This approach provides the best possible basis for monetary policy decisions. So far, both pillars have given broadly similar indications with regard to the primary objective of price stability. However, this does not necessarily have to be the case. Let us suppose that both pillars were to point in different directions. Would it really be better if only one of these signals were available? This would undoubtedly make the decision process easier. But, seriously, faced with uncertainty - and that is an essential characteristic of the world we live in - I do believe that it is advantageous to take more than one approach into consideration and not to rely on a single analytical framework. That is basically the rationale for our two-pillar strategy.

One characteristic of the Chilean economy is that changes in costs are regularly passed on to consumer prices. Markets for foodstuff are globally integrated and competitive. In the case of fuels, every week the changes in the international price are passed on to domestic consumers. However, there is a price stabilization fund to smooth out short run fluctuations  BIS Review 39/2008  3  and recently there has been a gasoline tax cut, which ameliorates the large increase in international prices. Finally, the electric power price-setting mechanism is designed to pass changes in upstream marginal costs to retail prices. Electric power rates, affected by a rise in costs, posted an average increase of 23% during 2007 compared with a less than 6% average increase between 2000 and 2006. This context of price flexibility provides the right signals to markets. In the case of Chile, with the increase in the prices of electricity and minerals, several investment projects are in the pipeline, which will propel an expansion of supply. Electricity $ MM; index Dec-98=100) 1200  240  1000  200  800  160  600  120  400  80  200  40  0  0 96  98  00  02  04  06  III  07  Energy investment (2)  III  08 (1)  CPI Electricity  (1) Figures as of February. (2) Includes investment in buildings, engineering, equipments and others.
What is more, the European payment ecosystem has become extremely reliant on non-European players – today the global card schemes, and tomorrow the Bigtechs – with the result that it now has limited control over the management of personal data. In parallel, the rise of crypto-assets and above all of stablecoins means they could potentially try to replace central bank and commercial bank money, even though they offer none of the same guarantees in terms of liquidity, service continuity and neutrality. In light of this situation, Europe needs to develop a payments strategy. I have often pushed for this over the past two years. Recently, we have made decisive progress thanks to the strong involvement of the ECB and the Commission. We now have to put this into action and “deliver” – this is urgent for the next two years. This strategy notably combines three elements: 2/3  BIS central bankers' speeches  1/ European regulation on stablecoins: on 24 September, the European Commission published its MiCA project, which in our view provides a good basis for reconciling innovation with consumer protection and financial stability. 2/ An acceleration on the European central bank digital currency (CBDC), the “digital euro”. We haven’t yet decided on it, but we need to be ready to decide if it becomes necessary, and as soon as it becomes necessary.

First, we appointed a start-up correspondent at the national level [Maurice Oms], and we will soon have start-up correspondents in the regional French Tech capitals. The Banque de France’s innovation laboratory, the Lab, is working with numerous actors in the field. This year, we inaugurated a new site in Singapore, one of the epicentres of the Fintech industry. And recently, Paris was selected alongside Frankfurt to house the European branch of the BIS’s Innovation Hub. At the ACPR, we are doing our utmost to facilitate contact with Fintechs at all stages. First, there is a single point of entry: the Fintech-Innovation Unit. Since 2016, it has met and advised between 100 and 150 project leaders per year, to help them flesh out the initial outline of their project before potentially submitting it for approval. The approval procedure has also been simplified with 1/3  BIS central bankers' speeches  the creation of a digital portal, and we have adapted certain procedures to recent developments: introduction of a streamlined post-Brexit procedure in 2019, and of a simplified procedure for a large number of payment service providers (PSPs) in 2020. On top of this, in our day-to-day supervision, we apply the regulation using a proportional approach. For example, for small establishments, we allow a single individual to hold more than one key positions.
14  The idea of robust control is that when making decisions, one should take into account that the models being used to guide one’s decisions may be wrong. For discussions of robust control and what it might imply about the conduct of macroeconomic policy in various scenarios, see Hansen and Sargent (2008, 2014). BIS central bankers’ speeches  5  How do I think policy should balance these divergent risks? How should these risks affect my views about how to follow the FOMC strategy of pursuing a balanced approach to achieving our policy goals? In my mind, current circumstances and a weighing of alternative risks mean that a balanced policy approach calls for being patient in reducing accommodation – that is, being patient about when we first increase the federal funds rate and being patient about setting the pace of rate increases once we have begun to move. I know from the NABE Economic Policy Survey that many of you disagree with this view. 15 Let me explain how I get there. Proceed cautiously in normalizing policy To say the least, conducting monetary policy at the ZLB has been a difficult experience that we all want to avoid repeating unnecessarily. In the winter of 2009, with the unemployment rate soaring to double digits, the Fed would have very much liked to lower the nominal federal funds rate an additional 300 basis points; but we couldn’t because the rate was already at zero.

8  BIS central bankers’ speeches  To summarize, I am very uncomfortable with calls to raise our policy rate sooner than later. I favor delaying liftoff until I am more certain that we have sufficient momentum in place toward our policy goals. And I think we should plan for our path of policy rate increases to be shallow in order to be sure that the economy’s momentum is sustainable in the presence of less accommodative financial conditions. I look forward to the day when we can return to business-as-usual monetary policy, but that time has not yet arrived. References Aaronson, Daniel, Luojia Hu, Arian Seifoddini and Daniel G. Sullivan, 2014, “Estimating and forecasting trend labor force participation,” Economic Perspectives, Federal Reserve Bank of Chicago, Vol. 38, forthcoming. Aaronson, Daniel, and Andrew Jordan, 2014, “Understanding the relationship between real wage growth and labor market conditions(pdf),” Chicago Fed Letter, Federal Reserve Bank of Chicago, No. 327, October. Aaronson, Daniel, and Daniel G. Sullivan, 2001, “Growth in worker quality(pdf),” Economic Perspectives, Federal Reserve Bank of Chicago, Vol. 25, Fourth Quarter, pp. 53–74. Acemoglu, Daron, and David H. Autor, 2011, “Skills, tasks and technologies: Implications for employment and earnings,” in Handbook of Labor Economics, Orley Ashenfelter and David Card (eds. ), Vol. 4B, Amsterdam: Elsevier / North-Holland, pp. 1043–1171. Autor, David H., 2011, “The unsustainable rise of the disability rolls in the United States: Causes, consequences, and policy options,” National Bureau of Economic Research, working paper, No. 17697, December.
10  BIS central bankers’ speeches  Figure 7  CPI inflation (*) (annual change, percent)  10  CPIEFE inflation (*) (annual change, percent)  10 10  10  8  8  8  8  6  6  6  6  4  4  4  4  2  2  2  2  0  0  0  0  -2  -2  -2  -2  -4  -4  -4  -4  07 08 09 10 11 12 13 14 15 16  07 08 09 10 11 12 13 14 15 16  Dec.'2013 Report  Mar. '2014 Report  (*) Gray area, as from the first quarter of 2014, shows forecast. Sources: Central Bank of Chile and National Statistics Institute (INE). Figure 8 MPR and expectations (percent) 9  9  7  7  8  8  6  6  5  5  4  4  3  3  2  2  1  1  0  0 07  08  09  10  11  MPR  FBS second half March 2014  12  13  EES March 2014  14  15  16  Forward, March 2014 Report  Source: Central Bank of Chile. BIS central bankers’ speeches  11

During the same period, the number of foreign banks with subsidiaries or branches in Turkey increased from four to 20. As of November 1998, 60 banks out of 74 are universally commercial banks and the remaining 14 are development and investment banks. Thirty-six of these banks are commercial banks whose majority shares are privately owned; 20 are foreign banks established in Turkey or having branch offices in Turkey; and 14, as noted above, are development and investment banks. As of November 1998, Turkish banks now operate though their 7,062 local branches. More than 165,000 persons are employed in the banking sector. In addition, the Turkish banking system is aggressively modern, adopting every banking innovation rapidly. Turkish banks, operating in parallel with the process of internationalization and globalization, have gone one step further by starting to invest in foreign financial establishments as well. Turkish banks are now able to form joint ventures with foreign banks to open financial subsidiaries and branches abroad. As of November 1998, Turkish banks had 63 financial subsidiaries in 19 different countries, and 26 branches in 10 different countries. As of November 1998, the size of the consolidated balance sheet of the banking sector was $ billion. According to our peer group classification by ownership, public and private banks both have significant shares in the sector.
The fifteen central banks furthermore agreed not to expand their gold lending and gold forward transactions during this period. While the U.S. and Japan were not part of the joint statement, they declared that they had no intention of changing their “passive” gold policy. Furthermore, the IMF announced that it would abandon its plan to sell some of its gold reserves in the market. These declarations had a big impact on the market for two reasons: First, they removed the uncertainty about the behaviour of the holders of 85% of the world’s official gold reserves. Second, the planned annual total sales (400 tonnes) compared favourably with the sales and increases of gold lending activity of the previous years (700 tonnes). 1  The idea of a Swiss Foundation of Solidarity was suggested to the President of the Swiss Confederation by the then President of the Governing Board of the SNB. 2  BIS Review 31/2005  The Washington joint statement on gold was a coordinated effort aiming at clarifying the intentions of the participants in a market prone to rumours and secrecy. Of the 1,300 tonnes of gold which the Swiss National Bank intended to sell, 1170 tonnes were included in the 2000-tonne total sales quota of the Washington Agreement. In other words, the SNB ended up being the main beneficiary of the agreement. Formally, the initiative for the Washington Agreement did not come from the SNB.

As a result, after having reached record highs during the months preceding the summer, the issuance of ABSs declined sharply. Some asset classes in the structured finance markets have been hit more severely than others (Chart 2). This concerns the most complex instruments such as collateralised debt obligations (CDOs) squared, synthetic CDOs and constant proportion debt obligations (CPDOs). Among the more traditional products, commercial mortgage-backed securities (CMBSs) saw a significant decline in issuance activity. Indeed, in the latter part of 2007, due to lowered demand for structured credit products coupled with an uncertain outlook for commercial property markets, issuance of CMBSs came to a halt. Issuance activity in the euro area during the last quarter of 2007 dropped to € billion from € billion one year earlier. Also, European CMBS issuance activity during the first four months of 2008 was approximately 28% of the level corresponding to the same period of the previous year. In comparison, residential mortgage-backed securities (RMBSs) have dropped only by 15% during the same time period between 2008 and 2007 and the issuance level in March-April this year was actually higher compared with the same period last year. The sharp re-pricing of credit and liquidity risk in ABS secondary markets had an impact also on supply and demand conditions in primary markets. Prices, measured as spreads over Euribor rates, started to increase during the summer 2007 and some of the spreads stand now above 200 basis points above the 3-month Euribor rate (see Chart 3).
14  China  Korea  Japan  Chile  -40  U.S.  -40  Germany  -30  Canada  -30  Eurozone  -20  Colombia  -20  Italy  -10  Mexico  -10  France  0  U. K.  0  Spain  10  Peru  10  Figure 5  Economic activity by sector (annual change, percent)  10  10 Other (*)  0  Manufacturing, financial services, agriculture-forestry  -10  Total  Retail, restaurants & hotels, transportation, and personal services  -20  -10 -20 -30  -30 -40  0  Construction 19 19  19 May  19 Sep.  20 20  20 May  -40  (*) Considers Fishery, Electricity, gas, water, and waste management, Mining, Communications and information services, entrepreneurial services, Housing and real-estate services, and Public administration. Source: Central Bank of Chile. Figure 6  Employment by occupational category (y-o-y difference, thousand persons)  500  500  Salaried, informal  0 -500  0 Other (*)  Salaried, formal  -500 Self-employed  -1.000 -1.500  -1.000 -1.500  Total -2.000  19 19  19 May. 19 Sep.  2020  20 May. -2.000  (*) Includes self-employed workers, employers, household help, and non-remunerated household work. Fuente: Instituto Nacional de Estadísticas.

Figure 12  Real commercial loans and non-mining Imacec (annual change, percent)  20  Commercial loans  15  20 15  10  10  5  5  0  0  -5  -5 Non-mining Imacec  -10  -10  -15  -15  -20  -20  97  01  05  09  Source: Central Bank of Chile. 18  13  17  Figure 13  Commercial loans during recession episodes (1) (2)  (difference with respect to annual change in period 0, percent)  8  8  Covid-19  6  6  4  4  2  2  0  0  -2 -4 -6 -8  -2  Global financial crisis  -4 -6  Asian crisis  0  1  2  3  4  -8  5  (1) Horizontal axis shows months. Period 1 is first month with negative Imacec. (2) Real data based on CPI splicing with 2018 anual base. Source: Central Bank of Chile using data from the Financial Markets Commission and the National Statistics Institute (INE).