samchain/econo-pairs-v1 huggingface dataset:
Our levers are the hard and soft infrastructure that we control:   Our hard infrastructure, such as access to our balance sheet and access to our Real-Time Gross Settlement (RTGS) system, the heart of the UK payments system.   And our soft infrastructure, such as our rules, regulations and standards. In this spirit, last year at Mansion House I announced that Huw van Steenis would lead a review of the future of the UK financial system, including recommendations for how the Bank could best support innovation while continuing to promote resilience.1 I would like to thank Huw and the Bank of England team, who over the past nine months have met 300 entrepreneurs, investors, consumer groups, charities, business leaders and policymakers across the country and around the world to produce an excellent report. Today, we published Huw’s recommendations and the Bank of England’s response.2 And tonight, I would like to focus on a few of the actions that the Bank will take to enable the new economy; to ensure the resilience of the financial system; and to support the UK’s transition to a carbon-neutral economy. 1  Carney, M (June 2018) ‘New Economy, New Finance, New Bank’ speech given at Mansion House. 2  All speeches are available online at www.bankofengland.co.uk/news/speeches  2  First, to enable the digital economy The very nature of commerce is changing. Last year, one fifth of all sales in the UK were online.3 Next year, it will be one quarter.

It would help avoid lock-in on existing platforms and enable providers of finance to compete for SME lending, helping to broaden the products available to companies and offer more competitive rates, making access to finance quick, easy and cost effective.20 It is not for the Bank of England to build this platform but we can help lay some of groundwork. The messaging standards we are adopting in the new RTGS will also include tagging payments with a unique ID called a Legal Entity Identifier (LEI).21 This will be mandated for financial institutions and as a next step we are considering how to extend this to corporate payments. That could mean that the payment data sent via CHAPS of non-financial firms could be made available for inclusion in a portable credit file. The LEI could  See: Furman, J ‘Unlocking digital competition’ Report of the digital competition expert panel (March 2019). See: https://www.bankofengland.co.uk/research/future-finance. The introduction of Legal Entity Identifiers (LEIs) will enable consistent and accurate identification of legal entities on a global basis. Their introduction was pioneered by the Financial Stability Board (FSB) following the financial crisis as a means of precisely identifying counterparty risks and exposures. The LEI is linked to a publically available database about each registered entity. LEIs are not yet widely used in payments or supply chains. Following a consultation, the Bank is making LEIs mandatory for all payments initiated between financial entities.
In this context, prudential supervisors, working with those responsible for setting accounting standards and capital market regulations, need to systematically examine the interaction among capital, accounting, tax and disclosure requirements to assess their effects on the overall levels of leverage and risk across the financial system. As we change the framework of regulation and oversight, we need to find ways to strengthen market discipline over financial institutions, and to limit the moral hazard that is present in a range of different forms in any regulated financial system. The liquidity tools of central banks and the emergency powers of other public authorities were created in recognition of the fact that individual institutions, including those central to payments and funding mechanisms, cannot protect themselves fully from an abrupt evaporation of access to liquidity or ability to liquidate assets. The existence of these tools and their use in crises, however appropriate, creates moral hazard by encouraging market participants to engage in riskier behavior than they would have in the absence of the central bank’s backstop. To mitigate this effect on risk-taking, strong supervisory authority is required over the consolidated financial entities that are critical to a well-functioning financial system. A more resilient financial system will also require a framework for dealing with the failure of financial institutions. For entities that take deposits, we have a formal resolution framework in place.

Indirect data suggest that aggregate demand has carried forward positive growth rates, but growth remains significantly below the potential of the Albanian economy. Macroeconomic factors determining private consumption and investments, and a prudent fiscal policy sustain the assessment for contained growth of the domestic demand in the first quarter of the year. Moreover, in the absence of complete data and in real terms on developments in the external sector of the economy, assessments suggest that the contribution of foreign demand to economic growth will be lower than in the past year. Fiscal policy was subject to a consolidation nature over the first quarter of 2012, in line with its objectives to keep budget deficit and public debt in check. The contained fiscal approach has been reflected in minimum public expenditure in the first quarter of the year, with an annualised rate of 0.7%. Furthermore, low growth rates of fiscal revenues continued their trend, settling at 1.2% in this quarter. The budget deficit was ALL 11.5 billion, or about 2.5% down compared with the first quarter of a year earlier. Developments in foreign trade over the first two-month period of the year point to contracted trade exchange in annual terms. Value of exports in these two months dipped by 20.5% against the corresponding period of a year earlier, reflecting the moderation of foreign demand and price developments in global markets. On the imports side, their growth rates were significantly decelerated, reaching a nominal annual growth of 1.8% during this period.
The importance of monitoring systemic risks and putting in place an effective response mechanism has indeed been one of the major lessons learnt from the crisis. The cost in terms of the destruction of wealth of being inadequately prepared from a macro-prudential regulation point of view is still today being counted. The contribution of financial stability to sustained economic growth should clearly not be underestimated. The fact that Malta’s financial system has not been directly affected by the global crisis should not, therefore, give rise to complacency. No jurisdiction can be totally immune from systemic shocks, whether of domestic or external origin, or from contagion. Both the MFSA, from their regulatory and supervisory perspective, and the Bank, from a financial stability perspective, are acutely aware of the need to preserve confidence in our financial system. Our co-operation, which is institutionalised through formal arrangements, has to date worked well. Indeed, apart from regular meetings of the Standing Committee envisaged by the Memorandum of Understanding, we also cooperate through the Domestic Standing Group that brings together the Bank, the MFSA and the Ministry of Finance, the Economy and Investment in a forum for crisis management. This mechanism was first tested in 2007 when the financial crisis was about to erupt, and that experience highlighted the importance of coordinated and timely action and of the Ministry as a key player in times of financial instability. Another notable example of coordination between the Bank and the MFSA concerns stress testing.

We strive to keep our markets pro-business and to keep operating costs competitive. Being cost-competitive is not sufficient by itself. We need to make sure that Singapore continues to stay at the confluence of business opportunities. To facilitate business reach into major markets, Singapore has signed a series of Free Trade Agreements with many of our trading partners include the US, India, Japan, Korea, Vietnam as well as beginning free trade discussions with China and the Gulf countries. I am certain these strong ties that Singapore has built can only facilitate Deutsche Bank's business expansions in this part of the world. BIS Review 15/2007  1  Conclusion On that note, let me again extend my heartiest congratulations to Deutsche Bank on its 35th Anniversary in Singapore. We appreciate your commitment to Singapore and hope that Singapore will continue to play an important role in your growth in Asia and the world. Thank you. 2  BIS Review 15/2007
Competing against lower cost producers would require either wages having to fall to the levels of the least-cost producers or some substitution of higher-cost labour with capital. Both effects would have adverse consequences for euro area workers. This is not to say that cost containment is not a necessary condition for competitiveness. Rather it is saying that cost considerations should not be the only element on which we should aim to rebuild our economy in the aftermath of a severe crisis. All this raises many questions for policy makers: what kinds of investments do we need for future growth? What are the implications for workforce skills? How can we increase the degree of entrepreneurship to realise innovative activity? At the same time, policymakers cannot lose sight of the social consequences of such changes. A world where jobs are being created and destroyed with ever greater speed, and where people are expected to move regularly between them, is a world of greater insecurity. So we need also to consider the readiness of our societies to cope with these changes, and ask what type of new social models we will need to adapt to them. And crucially, so as not to lose more time, we need to start today. Conclusion We are experiencing a period a transition. Economically, we haven’t recovered fully from the after-pains of the crisis. Technologically, the jury is still out on whether the IT-driven transformation of work has ended or will continue, and what this means in terms of productivity.

In the public sector, there are no absolute requirements as to profitability and efficiency. Public enterprises do not go bankrupt, and in many cases the authorities cannot allow a public enterprise to discontinue operations. This is a demanding starting point for a shift to more locally determined wages. The possibility of granting local pay increases might, however, increase efficiency if there are binding nominal budget limits for these entities and clear production requirements. When a higher share of wages is determined at the local level and coordination is reduced, it will be even more important to promote flexibility in the labour market and the labour supply. Otherwise, an increasing number of workers may be excluded from working life and unemployment may rise on a permanent basis, while the foundation for production is weakened. Effective labour market programmes, supported by a sound system for education and infrastructure, can facilitate these adjustments. It is also important to assess working environment and labour market legislation with a view to fostering greater flexibility. Hiring costs may be reduced and flexibility enhanced through greater scope for temporary employment and labour contracting. The throughput in universities and colleges can be improved. The financial incentives and entitlement thresholds in our social security system are also of substantial importance to employment. Pensions  In Norway, the employment rate is among the highest in the OECD area. This reflects both high labour force participation and low unemployment.
In today’s markets, there is a large premium on ex ante clarity and certainty, as opposed to ex post negotiation amongst bankers who know and trust each other. The work required is detailed and largely out of the limelight. But getting clarity around things like “close out netting” may make all the difference when the music stops. 11 The official community therefore needs to maintain its encouragement and support for private sector initiatives to standardise and improve documentation. To take just a few examples from what could be a long list, this includes the work of New York’s Global Documentation Steering Group; of various market trade associations; and of London’s Securities Lending and Repo Committee, which helps co-ordinate the work of different parts of the collateral-financing markets. 12  Summary I have travelled from macro to micro. To maintain the two elements of monetary stability – price stability, and financial stability – we need credible and effective institutions. 11  Close-out netting is a process by which, following a default, open transactions between two parties are terminated, each transaction is valued and, together with any outstanding payments, these are reduced to a single net amount owed by one of the parties to the other. Obtaining legal certainty over recognition of netting across different products and, in particular, with different legal entities with a common group is very important.

The FOMC also indicated that it anticipates that these caps will remain in place once they reach their respective maximums. Over time, as the Fed holds fewer securities, the private sector will gradually hold more. At the same time, Fed liabilities held by the private sector, in particular reserve balances, will decline equivalently. Panel 2, which draws on a July 2017 update to the System Open Market Account annual report, illustrates how the caps will evolve in relation to anticipated maturities of Treasuries, on the left hand side, and agency MBS on the right. As can be seen, once the caps are fully phased in, in many months the caps are not expected to be binding, and so there would be no reinvestments 3/7  BIS central bankers' speeches  in those months. However, the caps will be exceeded in months with large Treasury maturities, and we would reinvest the amount above the cap. For agency MBS, a change in conditions could encourage faster MBS repayments than are shown here, producing monthly paydowns larger than the 20 billion cap and thus some reinvestments—an issue I will return to later. Policymakers have indicated that they want the portfolio’s size to decline “in the background,” and that the federal funds rate will be the primary instrument of monetary policy. Balance sheet normalization is expected to continue until the FOMC judges that the Federal Reserve is holding no more securities than necessary to implement monetary policy efficiently and effectively.
Since end-June 2007, international money and credit markets have been marked by volatility, illiquidity and reduced risk-willingness. The problems started in the US housing market, but rapidly spread to other financial market segments. Banks, funds and financial undertakings had to bring back on their books loans from bond markets, they started to question the financial position of counterparties and held on to their money. This led to a marked increase in premiums on interbank loans. When the banks no longer wanted to provide loans to each other, many central banks provided liquidity for an extended term and eased collateral requirements. In periods, Norges Bank has also provided extra liquidity to Norwegian banks. This has reduced swings in the interest rate that banks demand for giving loans to one another. Norwegian banks rely to a large extent on foreign funding. This is why the increase in money market premiums in the US and Europe quickly fed through to Norwegian interest rates even though Norwegian banks are profitable, retain confidence and have limited loss exposures. Banks and investors, both in Norway and internationally, now apply a higher premium and higher prices for providing capital for acquisitions, restructuring and investments, and highly leveraged companies have to pay high risk premiums on loans. It has become more difficult to procure financing. BIS Review 65/1008  11  Household credit growth has eased slightly, but remains high. Corporate credit growth is also high.

Annual variations in inflation are now substantially smaller than they were in the 1970s and 1980s. Over the past ten years, average inflation has been somewhat lower than, although fairly close to, the target of 2.5 per cent. BIS Review 65/1008  1  Inflation measured by the CPI varies from month to month, primarily as a result of wide fluctuations in electricity prices, but also due to other temporary disturbances. The rise in the CPI-ATE shows inflation adjusted for one-time effects of tax changes and excluding energy products. Inflation, measured this way, has risen since summer 2006. One disadvantage of this indicator is that it does not only exclude the temporary effects on electricity prices of, for example, changes in the weather; it also excludes more persistent developments in energy prices. Energy prices have risen more than other prices for a fairly long period, leading to an average year-on-year rise in the CPI over the past 5-10 years that has been close to ½ per cent higher than the rise in the CPI-ATE. Other available measures of underlying inflation also suggest that inflation has moved up. While the year-on-year rise in the CPI-ATE is now 2.4 per cent, other measures of underlying inflation are above 3 per cent. 2  BIS Review 65/2008  Recently, inflation has been somewhat higher than our projections from last year. Inflation was broadly in line with expectations through 2007. In 2006, inflation was considerably lower than projected at the beginning of the year.
Ida Wolden Bache: Norges Bank’s management of the Government Pension Fund Global Introductory statement by Ms Ida Wolden Bache, Governor of Norges Bank (Central Bank of Norway), at the hearing of the Standing Committee on Finance and Economic Affairs of the Storting (Norwegian parliament), 3 May 2022. * * * I would like to thank the Committee for its invitation. Norges Bank manages the GPFG with the objective of achieving the highest possible return over time within the limits of the investment mandate defined by the Ministry of Finance. The objective of the highest possible return is to be achieved within an adequate control and risk management framework, in a responsible and cost-efficient manner with a high degree of transparency. The investment mandate is extensive. Around 70 percent of the over NOK 11 000 billion in the GPFG is invested in equities, which means we are one of the world’s largest shareholders. We a minority shareholder in around 9000 companies in 70 countries. In addition, we have a broad portfolio of fixed income investments. Some of the GPFG is invested in unlisted real estate, and in 2021, we also invested for the first time in unlisted renewable energy infrastructure. The GPFG is managed to track the benchmark index fairly closely, so that the return largely tracks the return on the benchmark index. The benchmark index is defined by the Ministry of Finance and endorsed by the Storting.

However, even though Norges Bank closely tracks the GPFG’s benchmark index, many big and small choices have to be made every day. The Executive Board is satisfied that the return over time has been higher than the return on the benchmark index against which the GPFG’s performance is measured. For 2021, the GPFG’s investments earned an overall return of 14.5 percent before management costs. The return was 0.74 percentage point higher than the return on the benchmark index defined by the Ministry of Finance. Since the turn of the year, the markets have been affected by Russia’s invasion of Ukraine and higher inflation in many countries. The GPFG’s equity and bond investments both fell in value in the first quarter of the year, and the overall return on investments was a negative 4.9 percent. Norges Bank’s investment management helped to dampen that fall somewhat. The return was 0.66 percentage point higher than the benchmark index for the quarter. The white paper The Government Pension Fund 2022 contains a broad review of the Bank’s active management of the GPFG. The Ministry proposes to maintain the size of the Bank’s permitted deviations from the benchmark index, measured as expected tracking error. This is consistent with Norges Bank’s assessment that the tracking error limit is adequate. On several occasions in 2021, the Executive Board provided the Ministry of Finance with advice and assessments regarding the GPFG’s approach to climate risk. This is also a key topic in this year’s white paper.
18  Chen, Q., Goldstein, I., Jiang, W., 2010. Payoff complementarities and financial fragility: Evidence from mutual fund outflows. Journal of Financial Economics 97, 239-262. In addition, Feroli, Kashyap, Shoenholtz and Shin (2014) describe an alternative mechanism creating the same effect based on how investors evaluate performance of funds relative to other funds. Concerns about standing out of the sample and seeing a decrease in assets under managements can drive herding behaviour among funds. 19 Goldstein, Jiang and Ng (2017) show that corporate bond funds experience greater outflows when they have more illiquid assets. One example of this is the behaviour of investors in Pimco’s Total Return Funds in the aftermath of the departure of Bill Gross in 2014. In contrast to the other funds, the most liquid funds, such as Total Return Fund IV, did not see sharp redemptions. 20 See pages 29-31 of the October 2017 Global Financial Stability Report. 14  All speeches are available online at www.bankofengland.co.uk/speeches  14  Conclusion All of this is a far cry from the build-up to the financial crisis when nobody was asking “what could go wrong?” We now have a mandate – a duty in fact – to ask that, so we can guard against the financial system disrupting the wider economy. Our work is broadening out as the financial system evolves; from banks and mortgage lending to market-based corporate finance. Growth of market based finance offers a big opportunity. There can be strength in greater diversity.

Our stress tests show it has the capital strength to keep lending through severe UK and global market adjustments. And finally, are these markets resilient or are they prone to amplifying adjustments? 6  During his speech on April 2012, ‘Some reflections on the crisis and the policy response’, Ben Bernanke proposed that the aggregate decline of house prices had eliminated nearly $ trillion in paper wealth compared to the more than $ trillion eliminated from the fall of stock prices from the dot-com crash. 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  Here we’ll need to change gear and delve into some detail of the financial architecture to spot things that might be what your mission statement calls ‘deficiencies’. In the process, I hope to give you some research interests. Because my short answer is that some new developments have raised questions that we should, and are, exploring by simulating markets under stress. Let’s look at each of these in a bit more detail. 2. Are credit and commercial property markets stretched? First, a word about burden of proof. The macroprudential objective – guard against the financial system disrupting the wider economy – means we are not in the business of forecasting; we are in the business of asking ‘what could go wrong?’ rather than ‘what is most likely to happen?’ It’s in that spirit that we approach asset price risks, where one person’s stretched price might be another’s rational assessment of fundamentals.