samchain/econo-pairs-v1 huggingface dataset:
Moreover, the structure of Hong Kong’s economy is flexible and efficient, encouraged by a small government5 with a strong commitment of public policy towards free markets. This enhances Hong Kong’s resilience in absorbing external shocks and its ability to adjust quickly. The best example is the labour market. Owing to massive relocation of manufacturing processes across the border to the southern part of the Mainland of China, employment in the manufacturing sector had declined by nearly 65 percent from 870,000 in 1986 to 310,000 in September 1997. In most economies, one would have seen a jump in structural unemployment and much politicized demands for government intervention. But not in Hong Kong. In fact, the labour market is so flexible and efficient in relocating workers to the service industries6 that the unemployment rate in Hong Kong has remained low throughout at between 2 and 3 percent. 2 During the past 14 years under the linked exchange rate system, the Hong Kong economy achieved an average annual growth rate of 6.1% in real terms. Inflation rate, measured by Consumer Price Index (A), averaged 7.5% during this period. In the tradable goods sector, inflation was more subdued, with the unit price of exports rising by around 2.2% per annum. The unemployment rate stayed at a low level of 2 to 3% throughout the period.

This may be easier said than done as leveraging can bring transient prosperity and euphoria to everyone. To avoid committing such mistakes and the pains of de-leveraging in the future, we must stay alert and discipline ourselves not to over-spend;  (b)  Beware of wrong signals resulting from market failures, which may induce borrowers to wrongly believe that access to low-cost funds will never be cut off and prosperity and affluence funded by borrowing is legitimate and sustainable;  (c)  Strengthen market regulation to reduce the risk of market failures. Major reforms to be introduced include enhancing the policy functions for maintaining financial stability; implementing appropriate counter-cyclical regulatory measures when necessary; strengthening bank capital and liquidity requirements (Basel III); and increasing the regulation of credit rating agencies. Most of these reforms are still at various stages of implementation and may not be ready remedies for the current debt crisis in the US and Europe;  (d)  Understand and accept that there is no clever or easy way out of the trap of excessive leverage. While innovative financial derivatives may facilitate borrowing and leverage, or even conceal them, no financial engineering can reduce debt and achieve de-leveraging without the required reduction in public spending and the economic and social pains that the de-leveraging process generates. (e)  While the government should step in to help if the financial system or the whole economy gets into trouble, this is feasible only if the government has the fiscal headroom to foot the bill.
Denis Beau: The perils and potential of digital currencies Introductory remarks (virtual) by Mr Denis Beau, First Deputy Governor of the Bank of France, for the panel discussion on "The perils and potential of digital currencies", at the RAID (Regulation, Artificial Intelligence, Internet & Data) Digital 2023 on "Bridging Parallel Lines", 3 May 2023. *** In order to set the scene, let me: Put CBDC and stablecoins discussions and developments into the broader perspective of the transformation underway of financial services and of the financial sector. Highlight the regulatory and supervisory issues they raise from a central banker perspective, from the perspective of an institution in charge of ensuring monetary and financial stability. To do this, I would like to make three points: First, CBDC and stablecoins are the prominent and most publicized output of the 3 major disruptions of finance that digital technologies are bringing about, namely: The arrival of new players, big techs and fintechs, which to date, have been subject to little or no regulation. The emergence of new forms of investment and settlement assets in tokenized form, usually referred to as crypto-assets. Bitcoin is emblematic of a first generation of highly volatile cryptos, whose use remains essentially speculative. The second generation, stablecoins, aims to provide a broader range of services possibly with a global reach, with the support of mechanisms to stabilize their value against sovereign currencies. The emergence of decentralized market infrastructures, based on DLT and blockchains in particular.

6  7  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  7  A related point is that not all reductions in uncertainty are beneficial. In particular, guaranteeing what firms themselves see as the worst case outcome (in the simple model that would mean setting q = λ = 1) is unlikely to improve matters even if it “resolves the uncertainty”. Quite the opposite: it would mean only that projects that have so far been postponed, precisely for fear of such an outcome, would then be cancelled for good. Another set of implications arises from the expected duration of the uncertainty (E[T] = 1/q). It’s helpful in this respect to re-express [2] as follows: E[T] (R – ρ) ≥ λL  [3]  Writing the result this way makes its interpretation that much more intuitive. On the right-hand side is the benefit of waiting until the event is realised, i.e. the (probability-weighted) loss the firm could thereby avoid. On the left-hand side is the cost of waiting, namely the excess return the investment would earn in the meantime. And the longer the wait (the higher the expected duration of the uncertainty E[T]) the greater the foregone income is likely to be. If the firm expects a really long delay before the news comes through (high E[T], low q) it might well decide it just has to get on with things and make the investment anyway.
Determined efforts must be made to streamline bureaucratic procedures, eliminate outdated regulations and generally reduce the cost of engaging in any economic activity. The Better Regulation Unit in the Office of the Prime Minister must meet the expectations its creation has raised. Failure to do so risks compromising all the efforts being undertaken at both the macro and microeconomic levels to create a modern, dynamic economy. At the national level, moreover, we need to understand that the simultaneous pursuit of economic growth and a high degree of social protection can only be achieved by making our product and labour markets more flexible; by investing more in people, refining their skills and helping them into work, while introducing an obligation to take up jobs; and by giving more importance to developing our scientific and technological base. We do not need to look far to see how this can be done. Faced with high labour costs in the late 1990s, German companies started restructuring and downsizing. The government meanwhile introduced social security reforms aimed at making the welfare state less expensive, as well as labour market reforms that created incentives for the jobless to work. An awareness developed that the solution to chronic deficits and unemployment could no longer be to cut public investments. As a result, Germany’s unit labour costs have fallen by 12 per cent since 1999 against those of France.

Michael C Bonello: Pursuing faster growth in a stable macroeconomic environment Speech by Mr Michael C Bonello, Governor of the Central Bank of Malta, at the Annual Dinner of the Institute of Financial Services, St. Julians, 10 November 2005. *  *  *  Prime Minister, Parliamentary Secretary, Excellencies, Ladies & Gentlemen, I should first of all like to thank the President and Council of the Institute of Financial Services for inviting me once again to their annual dinner. Over the past six years I have been able to observe with satisfaction how the Institute has successfully adapted itself to the steady expansion of Malta’s financial services industry, and to the demand this growth has generated for a diversified range of professional expertise. One planned innovation which I consider most appropriate is the Certificate in Mortgage Advice and Practice that is partly based on Maltese law. This annual occasion also affords me a welcome opportunity to share with a distinguished audience of bankers and their corporate guests the Bank’s thinking on a subject of topical interest. In today’s complex global environment several issues spontaneously present themselves as likely candidates for further analysis. For us in Malta, the major policy challenge at this time is to return the economy to a path of higher and sustained growth. The facts speak for themselves.
I have never previously experienced such rapid change, despite this being the third major economic crisis in Sweden that I have been involved in. The Riksbank is tracking indicators and also interviewing more companies than normal in order to get an idea of how the situation is changing from day to day and from week to week. What is beyond a shadow of a doubt, however, is that many in society are struggling right now. My thoughts are obviously with all the country’s fantastic health workers who are on the front line. On a personal level, many are also struggling 1  https://www.riksbank.se/en-gb/press-and-published/notices-and-press-releases/press-releases/2020/ingvesand-breman-at-riksdag-committee-on-finance-the-riksbank-is-prepared-to-act/ 2 https://www.riksbank.se/en-gb/press-and-published/notices-and-press-releases/press-releases/2020/the-riksbanks-business-surveyeverything-has-changed-in-two-weeks/  1 [5]  with uncertainty and anxiety about future developments. Not only about the spread of the virus and concern for the health of loved ones, but also worrying about possible unemployment and losing their life’s work when parts of the economy close down. People suffer in economic crises and when bankruptcies and unemployment increase sharply, there will be psychosocial consequences. Make no mistake. And it takes time for the memories to fade. The underlying causes of a crisis can differ, but regardless of them, there will almost always be problems with credit supply in the economy – the financial lifeblood grinds to a halt. If demand for company products and services falls sharply, revenues decrease. Companies then find it more difficult to pay wages, rents and interest on their loans, for example.

Via the programme, we are offering banks loans of up to SEK 500 billion, on condition that the banks in turn lend the money to Swedish companies. To strengthen the programme and ensure that the money reaches companies, the Riksbank has also made it possible temporarily for more banks and credit institutions to gain access to our money. We are doing this because many small companies around the country are customers at smaller, local banks rather than at the major banks. Something else that often happen in times of crisis is that the demand for safe and liquid assets increases as agents try to dispose of riskier assets. The safest and most liquid asset on the financial markets is central bank money, money created by the central bank. The Riksbank has therefore taken measures to make it easier for banks to gain access to central bank money without having to sell their assets to a great extent. We have eased the requirements regarding the collateral banks can pledge when they borrow from the Riksbank. We have, for example, given banks generous opportunities to use a greater proportion of mortgage bonds and other covered bonds as collateral. More generous collateral requirements also strengthen the programme of corporate lending and simultaneously help to keep the large Swedish mortgage bond market running. We have also cut the lending rate for Riksbank loans overnight to banks from 0.75 to 0.20 per cent.
In this context, we expect internal demand to continue weakening over 2008. Indeed, the most recent economic projections released by the Bank of Spain show reduced GDP growth in 2008 and 2009. At the same time as we face a slowdown in growth, we are seeing sharp increases in headline inflation. These have been driven by large energy and food price rises at the global level. The price boom has affected Spain to a larger extent than some other countries, partly due to the higher relative weight of these items in household expenditure. And the Spanish economy may be more vulnerable than other countries to second-round effects due to the widespread existence of indexation mechanisms. I would like to make a few comments about what economic agents should and should not do to face these challenges. On inflation, the key issue is how firms and workers respond to the recent shocks. I would like to make two points: •  First, firms should not view the shocks as permanent. In other words, they should not consolidate price-rises over the longer term. •  Second, workers should understand that inflation cannot be offset by demanding wage increases that are not justified by productivity developments. This would just keep inflation persistently high, as the 1970s experience painfully showed. BIS Review 70/2008  1  From the perspective of GDP growth, if we are to see a quick return to our potential, we need flexibility in supply and demand responses.

Thus, goods CPIEFE inflation fell to 1.6% in November, that is, 2.1 percentage points less than in July, in a context where the exchange rate has fluctuated—give or take— between 650 and 680 pesos per dollar. Services CPIEFE inflation has declined at a more measured pace, in line with the moderate expansion of capacity gaps and its high content of indexed prices. In any case, it has accumulated a decline of a little over one percentage point in ten months. The low inflation for fresh fruits and vegetables was a surprise because of its atypical behavior compared with the known seasonal patterns (figure 1). Third-quarter activity figures continued to reveal limited strength. During the first three quarters of the year, sectors other than natural resources (i.e. Other GDP) grew slightly less than 2.5% annually, driven by services and trade, while construction and, especially, manufacturing performed rather poorly. Meanwhile, in the first three quarters, domestic demand—excluding inventory change—grew in tandem with Other GDP, driven by private and government consumption. Investment was better than expected, but in annual terms it was negative again, particularly due to the further deterioration of construction and other works (figure 2). The negative annual variation of the Imacec in October was unexpected. Beyond the volatility of month-to-month figures, the result is still strongly influenced by the poor performance of 2 / 19  BIS central bankers' speeches  mining, coupled with the weak performance of some industry lines (figure 3).
That observation may imply bonus payments are a useful cyclical indicator, although interpreting the data is potentially complicated by changes in taxes that shift the incentive to pay bonuses over time. 27  Accounting for the mis-measurement of clothing and footwear prices, which existed until 2010 and biased measured annual CPI inflation downwards by around 0.4 percentage points. See Bank of England (2011), Inflation Report, February, box on page 39. 28  One way to illustrate the impact of import prices is to consider measures of core inflation adjusted for import intensity. These measures suggest that the current rate of core inflation is being dragged down by import prices by around 1 percentage point. That is a sizeable effect, and reflects, in part, changes in the value of sterling. The core measure referred to here is CPI inflation excluding food, energy, education, alcohol, tobacco and VAT, and the measure adjusted for import prices weights each component of the core index by the inverse of its import intensity. BIS central bankers’ speeches  9  Over the past few years, core inflation has been particularly subdued, and it remains less than one per cent. We need to see increases in core inflation to have a reasonable expectation that, in the absence of further shocks, overall CPI inflation will return to 2 per cent within the MPC’s stated objective of two years.

17  The coronation charter of Henry I issued in 1100 (which was also endorsed by Henry II at his own coronation in 1154) is a pertinent example because it was effectively the draft on which Magna Carta was later based, containing several of the clauses now regarded as the most significant. The original text was written in one continuous flow. Its division into clauses is a modern construct. 18  Moreover it came after a lacuna of sixty years during which the House of Plantagenet had issued no similar conciliatory charters and whose actions in the meantime had caused sufficient damage to the relationship between nobility and monarchy as to make an uprising inevitable. BIS central bankers’ speeches  5  Despite the efforts of Coke and others, Charles I’s rejection of all enterprise to constrain his authority led to the English Civil War and to the king’s beheading in 1649. Meanwhile, Coke’s unstoppable Magna Carta redux had been set in motion. In contradiction to their behaviour at home, James and Charles had been busily granting royal charters promising the liberties of Englishmen to the American colonists. Coke himself had been involved in the drafting of the first charter of the Virginia Company in 1606, and similar English liberties were extended in the charters of Massachusetts, Maryland, Connecticut, Rhode Island and Carolina over the next sixty years. Some have argued that references to Magna Carta, however irrelevant its provisions might by then have been, were used as a way of “drumming up” New World settlers.
Another aspect making a big difference is the performance of emerging economies. Latin America, excluding Chile, posted an average annual fall of 4.2% between 1930 and 1932, while Chile, where the crisis compounded with the downfall of the nitrate industry, fell an average of 17.6%. For the three-year period 2009-2011, private forecasts indicate that Latin America will grow by an average of 1.2%, while Chile will grow by 2.1%. These are just projections, not definitive figures, but data released so far this year indicates that the effects of the crisis, although far from negligible, are much milder than they were in the 1930s. This is an encouraging fact. Usually, whenever developed countries go into a recession, its effects are amplified into our region. That has not been the case this time; on the contrary, our region today is outperforming the developed economies. That the current crisis did not turn into a Great Depression proves that lessons have been learned. Economies are much stronger, and also the policies applied have gone in the proper direction of mitigating the tremendous financial shock of last year. For one thing, the task of stabilizing the financial system was assumed decisively, which prevented its collapse. Uncertainties remain, but are more focused and less dramatic than at the end of last year.

This is precisely what we try to do in our financial stability reports, which allow us to gain an overall vision of vulnerabilities, although, once again, it does not provide a final verdict. Finally, new financial realities require new sets of information to examine, or to compile when not available. 9 Crisis management That this is the worst financial crisis since the Great Depression nobody disputes. Moreover, the initial shock on the global economy does not differ much from the one that hit in the 1930s. There are many similarities in the initial conditions and effects of the two (Eichengreen and O’Rourke, 2009; IMF, 2009). Worth noting are the initial fall in manufacturing output and trade, the collapse of stock prices and credit, and the increase in bond spreads. In their origins there was also the same rapid expansion in credit and financial innovation that increased the leverage of financial intermediaries. These remarkable similarities in the first months of this crisis were alarming. However, both differ in the subsequent evolution of the global economy. 10 Between 1930 and 1932, world activity (measured at PPP) dropped by an average of 4.8%. In particular, the U.S. experienced an average annual fall of 9.9%.
Given the extensive consolidation of firms in the financial industry, the information systems of many firms are an accretion of systems, with issues of consistency, comprehensive aggregation of exposures and speed of information retrieval for analysis. For example, most firms in distress find it difficult to answer a crucial question: what market participants are most exposed to me and how will they react to my difficulties? A second impediment is the complexity of unwinding certain books of business, where the business is originated in one location, recorded in another and risk-managed in a third. Derivative transactions are a prime example. The level of complexity related to how and where trades are marketed, booked, funded and risk-managed leads to high levels of connectedness within the firm, particularly as institutions book “back-to-back” intragroup trades to transfer the economics of a transaction to a central portfolio for risk management purposes. The third impediment is the use of intragroup guarantees. Institutions sometimes use parent guarantees to support and cover particular transactions or the entire operations of separately capitalized subsidiaries in foreign countries. Guarantees of this sort allow firms to operate subsidiaries with less capital, but can distort the pricing and economics of the subsidiary’s business activities and make the subsidiary more valuable to the current owner than to a potential buyer. In addition, the default of a guarantor may allow counterparties to terminate contracts and seize collateral even though official sector efforts are attempting to preserve the local operations. The fourth impediment is the need to preserve global payment operations.

But it will need to be accompanied by corresponding moderation of the growth of domestic demand - after the offsetting stimulus of a year ago - if we are to maintain overall stability. That essentially is why interest rates in the UK have had to rise since last autumn. We are now in a position where the economy as a whole is again growing above trend - after a pause a year or so ago - while inflation is running - and has been running for nearly a year - slightly below the Government’s 2½% target. Looking ahead, there is the tantalising prospect of new factors that might help to hold the rate of inflation down, at least in the short term. There is evidence for example, although it is hard to evaluate, of more intensive retail price competition, squeezing retail margins across the board, and that could hold down prices, at least for a time. And this effect could intensify and extend further into the future as a result of the spread of e-commerce. And there is, on the supply-side of the economy, the possibility (though so far sadly not much actual statistical evidence) that the spread of IT will accelerate productivity growth across the economy - as it has in the United States, raising the underlying rate of potential output growth at least for a time.