samchain/econo-pairs-v1 huggingface dataset:
Our experience, as well as that of other countries, shows that a temporary slowdown is often an unavoidable consequence of strict economic management, aimed at controlling over-expansion and holding inflation in check. This is one reason why it is so important to prevent such waves from becoming too high. It is, however, an oversimplification to claim that monetary policy alone makes the decisive difference. Interest rates primarily affect demand in the economy. There are, on the other hand, many other factors which affect both demand and supply in the economy. These include, for instance, fishing quotas, public finances and public investment, foreign investment, e.g. in heavy industry, and the wage policy of the social partners. People who make these decisions control important economic instruments which are beyond the reach of the Central Bank. There are thus many parties involved in managing economic affairs and the Central Bank is far from the only party responsible here. Actions to boost economic growth and reduce unemployment Recently a number of actions have been announced to relax restraint in the economy. The full effect of major interest rate cuts in recent months has yet to be felt. The Central Bank has also announced imminent relaxation of reserve requirements, which will release funds in the banking system and should lead to interest rate decreases there. Each day the Central Bank has puchased foreign currency, in so doing placing some ISK 11 billion in circulation since September, which has certainly slowed the exchange rate rise.

The Central Bank’s tight monetary stance has, on the other hand, brought results, as last November inflation dropped below the target of 2½ %. Old theories reappear Recently there has been extensive discussion concerning the Central Bank of Iceland, its policy and objectives. Now that inflation has been subdued, old theories to the effect that the Central Bank should pursue multiple objectives have once more come to the fore. The Bank is to ensure full employment, it should have specific exchange rate objectives and ensure economic growth. These views reflect considerable over-estimation of the power of the Central Bank and the instruments at its disposal. It is also an oversimplification to focus exclusively on interest rates, as many people do, and expect that further interest rate reduction will solve all the problems. The Central Bank has, over the past two years, cut its rates thirteen times, and the bank’s policy rate is currently 5.3%. While this is naturally a higher rate than in the Euro zone, the problems which have to be grappled with there include long-term economic stagnation and high unemployment, and the future is by no means bright. In Norway, on the other hand, the Central Bank rate is 6%, to take an example of a neighbouring industrialised country. The Central Bank of Iceland’s real policy rate is currently around 2¾% considering future prospects, which is slightly under current estimates of the equilibrium interest rate.
The Bank had some guidelines on the metrics it would tolerate - for example, there was an expectation that about one-third of deposits plus one-fifth of acceptances  10  should be matched by liquid assets. And the  Bank showed willing when it came to enforcing this, though notably only through moral suasion rather than any formal sanction. The Governor would sometimes meet the prospective leader of a bank should there be a change in leadership, and he would expect to be notified of any significant transactions, a fact that Samuel Montagu (whose business is part of HSBC’s private banking arm today) was sharply reminded of in 1957 when he 11  reportedly neglected to update the Governor on a potential M&A deal . Overall though, much of this interaction was based on courtesy rather than any expectation that the Bank’s approval was a pre-requisite or necessary. There was a relationship to be sure but it was all very informal; the terms supervisor and supervised would have sounded out of place. There were no hard and fast requirements and the approach was minimalist in style. 7  For example, through the granting of waivers on the publication of balance sheet data. Originally set up in 1914 to manage difficulties in payments between countries at the start of World War One. 9 Fforde, John.

Roles of the Bank of Thailand in developing the bond market A High-level Domestic Bond Market Development Steering Committee was set up by the Government in January this year. The committee is chaired by the Finance Minister and comprises high-level representatives from both the public and private sectors, including the Bank of Thailand. The aim of the committee is to promote the development of the domestic bond market in five key areas, namely, (1) the primary market (2) the secondary market (3) taxes (4) market infrastructure and (5) market information. As for the Bank of Thailand, we have been tasked with the responsibility to develop an active secondary market. To meet this challenge, the Bank of Thailand has mapped out a multi-year strategy from which our work plan for bond market development this year will focus on six areas. First is the development of the private repo market. The repo market will provide bond market participants with the tools to hedge their bond position, as well as to manage liquidity more effectively. The private repo market will also provide an important link between the money market and the bond market, meaning that liquidity in the secondary bond market can be substantially improved once a well-functioning private repo market is in place. Second, the Bank of Thailand will coordinate with the Thailand Securities Depository to set up a "Bond Lending and Collateral Management Unit" to activate the bond lending business. This again will help facilitate the private repo market and enhance overall market liquidity.
But it illustrates vividly that the interpretation of ex post outcomes depends critically on understanding the ex ante process which generated those outturns. Another example shows that it is not just lay people who find statistical inference difficult. Experts of all kinds do too. The advent of DNA profiling in the 1980s led to the use of match probabilities in criminal cases. The jury is told that the probability of finding a match between the sample taken from the scene of the crime and the DNA of the defendant is, for example, only 1 in 500,000. That is sometimes taken as evidence that the probability of the defendant being innocent is also only 1 in 500,000. Such an inference is incorrect. In a city such as London where there might be about 5 million people who could have committed the crime, around ten people would have DNA that matched the relevant sample. Hence, in the absence of any other evidence, the probability that the defendant is guilty, far from being overwhelming, is only one in 10. Of course, in practice other evidence is usually available. But this incorrect statistical reasoning has swayed enough cases to be given its own name - the prosecutor’s fallacy.11 The cases of Sally Clark and Angela Cannings, both convicted and imprisoned for the alleged murder of their own children, show the desperate consequences of the false use of statistics to create a presumption of guilt to resolve the cause of apparently inexplicable events.

Meeting these challenges has not been straightforward in recent years as the euro area economy was hit by several shocks: financial instability in the aftermath of the stock market  6  BIS Review 113/2007  collapse in 2000, exceptionally high economic and geopolitical uncertainty between 2001 and 2003, just to name a few. -  First of all, we have to identify and account for temporary “special factors” or “distortions” that may affect monetary developments and blur their information content. To some extent it is the aim of the methodology developed at the ECB which allows for periodic adjustments to measured monetary aggregates in order to account for portfolio shifts which impact the demand for money without any incidence on future inflation. This approach has met with great success in the period 2000-2004, allowing the Eurosystem to enter an easing cycle despite a rapid growth of M3. -  Second, and more permanently, it is necessary to disentangle, in monetary and credit evolutions, those which reflect structural and permanent changes from those which simply result from moves in the level of interest rates and the position in the economic cycle. -  Finally, we must be able to assess whether these developments result from money supply shocks, in which case they clearly entail some risks to price stability, or whether they are caused by money demand shocks that may raise the desired level of money balances without necessarily impacting aggregate demand.
Third, the boom was fueled by new financial products, such as collateralized debt obligations that were backed by subprime and Alt-A mortgages. Investors misunderstood how risky these products were and this resulted in lower mortgage rates for non-conforming residential mortgages and lower funding costs for commercial real estate borrowing. In the housing sector, these factors interacted to create a strong reinforcing dynamic. The relaxation of underwriting standards that made it easier to become a homeowner and the low mortgage rates – supported in part by the new financial products – made it easier to speculate in real estate. Moreover, as home prices rose, household net worth increased, making households more willing to consume a greater share of their current income. Not surprisingly, this bout of speculative fever ended badly. Eventually, the supply of houses caught up with and then vastly overshot demand. Easing underwriting standards to support demand could only go on for so long. Prices turned down. At the national level, home prices peaked in late 2005 to early 2006 with commercial real estate prices peaking about one year later (Chart 8). From those peaks, home prices have fallen by about 30 percent on average, with much larger declines in some areas, while commercial real estate prices have fallen by about 40 percent on average. As price declines intensified, the number of serious mortgage delinquencies surged and, in fact, continue to rise (Chart 9).

Christian Noyer: A central banker’s personal perspective on hedge funds Introductory speech by Mr Christian Noyer, Governor of the Bank of France, at Conference on hedge funds, Washington DC, 15 April 2007. *  *  *  Thank you all for coming. It's a pleasure and a privilege to have you all here to day. Special thanks to the IMF and John Lipsky for organizing this event for us and with us. The purpose of our meeting is to present the special issue of our Financial Stability Review on hedge funds. So I want to say a few words on why we embarked on such a project and how we did it. As you noticed, this issue of our Review is mostly based on external contributions. Some authors are with me to day and I also want to thank them. We are very happy that we could assemble such an eminent roster of contributors. Let me say from the outset that we did not intend to reach a conclusion at this stage. The international community is working on this issue, in particular in the framework of the FSF. The main question is: how can we best reconcile keeping the positive inputs of this activity for financial markets functioning and innovation, while keeping the risks that may be generated for financial stability to a minimum. This is why there is a debate on hedge funds, which we think, is legitimate.
Page 6 of 11  The quality of living may not be as well as they are used to, but still might be better than in other countries that do not have that rural sector nor informal social safety net to support them. These factors contributed to our long-standing resiliency and make Thailand, despite all of the problems, is still a good place to do business. The second reason is something that you probably heard many times so I will not go into much detail, is that our business and other infrastructures are acceptable. The logistic-type infrastructure and basic infrastructure - water and electricity- are adequate, and government’s investments in the context of the Eastern Economic Corridor, for example, U-tapao airport, or even some of the railway investments, are being undertaken. Overall, these infrastructures continue to improve. The other infrastructure that we have done a better job recently, is not just on the physical, nor logistics infrastructure but on the digital infrastructure. We have seen that the COVID-19 has actually speeded up some of the underlying trends towards digitalization. For example, we saw our digital payment system called Prompt Pay hit a record high in terms of the number of transactions as a result of the COVID crisis when everybody is shopping and making transactions online. We are also seeing a greater usage of digital technology even in the government support schemes.

Peter Praet: The ECB’s asset purchase programme – the impact so far Speech by Mr Peter Praet, Member of the Executive Board of the European Central Bank, at the Eurofi conference, Luxembourg, 9 September 2015. *  *  *  The ECB’s expanded asset purchase programme has met with our initial expectations. First of all, it has strongly signalled the ECB’s commitment to deliver its medium-term price stability objective, which has in turn been reflected in an upward shift in inflation expectations at all horizons. In keeping with this, any second round effects on inflation from the steep drop in oil prices last year appear to have been forestalled, and the tightening of medium-term real rates we saw towards the end of last year has been reversed (though the path of real rates implied by markets has recently steepened noticeably). More generally, the signalling effect of the APP has been visible in solidifying business and consumer confidence underpinning a broadening economic recovery. The expanded APP, together with our credit easing package launched in summer 2014, has also had a positive impact on both market and bank credit dynamics. The cost of marketbased debt fell to historically low levels in the early part of 2015, and though it has risen in recent months, financing flows have remained robust. This implies a “first order” monetary policy effect from our interventions.
In these circumstances, the firm adoption of measures to overcome the crisis is not only the responsibility of the public authorities – a task to which a strong commitment was shown following the last G20 summit – but also of those responsible for managing and designing the business models of credit institutions. Spanish institutions, which so far have handled the difficulties comparatively better than those of banking systems in other developed countries, have to actively seek solutions to adapt their business model to the new realities of the banking sector both in Spain and internationally. They have to seek out the levers for change which will allow them to strengthen their business model and thus their income statements. Among the available options, that of redesigning their operating cost structure, at this point in time, seems unavoidable. However, this action alone will not be enough to overcome the pressures which affect and will continue to affect their income statements. At times it will be necessary and appropriate to turn to processes which take a step further and help institutions to exploit synergies and economies of scale. Thank you. 6  BIS Review 52/2009

European Central Bank: Press conference - introductory statement Introductory statement by Mr Jean-Claude Trichet, President of the European Central Bank, and Mr Lucas Papademos, Vice-President of the European Central Bank, at the press conference held in Frankfurt, 1 April 2004. *  *  *  Ladies and gentlemen, welcome again to our press conference. Before I proceed, I would like to remind you that I have conveyed the Governing Council’s sincere condolences to Jaime Caruana, Governor of the Banco de España, following the terrorist attacks in Madrid on 11 March 2004. I assured him of the Governing Council’s total solidarity with the Spanish people and the Banco de España. The Vice-President and I will now report on the outcome of today’s meeting of the Governing Council of the ECB. On the basis of our regular economic and monetary analysis, we have not changed our assessment that the current stance of monetary policy remains in line with the maintenance of price stability over the medium term. Accordingly, the key ECB interest rates have been left unchanged. The low level of interest rates also provides ongoing support to the economic recovery in the euro area. We will continue to monitor carefully all developments that could affect our assessment of risks to price stability over the medium term. Let me now provide a more detailed explanation of our decision, turning first to the economic analysis.
Given the diverse nature of the region, it would be highly ambitious and challenging to achieve the necessary preconditions for achieving an integration that is similar to that in Europe. The integration process in Europe was taken forward with the establishment of supranational institutions with mandates to promote common approaches and frameworks across the member states in the union. In contrast, Asia is adopting a more flexible approach. Regional financial integration in Asia has manifested itself mainly in the form of greater regional presence and participation in domestic financial systems. This is taking place with the gradual and sequenced liberalisation of the financial sector and the capital account. Capital  BIS central bankers’ speeches  1  account liberalisation in particular is prompting increased intra-regional investment and portfolio flows which in turn contributes to the deepening of the financial markets. By itself, the liberalisation of the financial sector and the capital account will however, not be sufficient to achieve regional financial integration. Most important, is the development of regional financial markets, the financial infrastructure including the regional payments and settlement systems, harmonising the financial standards and practices including the regulatory and supervisory regime and building the institutional capacity of the domestic financial intermediaries. For the ASEAN region, an agreement has already been reached to allow for different speeds of integration depending on the state of readiness of the respective member countries.

Also, if we were to sell assets in a rising rate environment, we could also experience some capital losses on these sales. In combination, depending on the future trajectory of short and long rates, remittances could even fall to zero for a period.13 There are several important points to make here. First, the potential impact of the purchase program on future Fed remittances was known at the onset of the program – we have no new information here. The outcome depends on how the economy evolves, how we respond, and whether we decide to sell long-dated assets in the portfolio or not. Second, it is important not to put excessive weight on the possibility of a period of zero remittances. Our mandate is economic not fiscal – our job is to return the economy to full employment and price stability. Moreover, in considering the fiscal consequences of our actions, what matters is not what happens to our remittances – that is far too narrow a perspective – but how our actions affect the federal debt-to-GDP ratio over time. This is the metric we should be focusing on in assessing the potential fiscal consequences of our actions. In this respect, it is important to note that the narrow impact of Fed remittances on the federal debt-to-GDP ratio depends on the cumulative amount, not the timing of remittances. Cumulative remittances to date have been hundreds of billions of dollars higher, all else equal, compared to if the Federal Reserve had not expanded its balance sheet.
So it is important that both households and mortgage institutions take account in their estimates of the possibility that interest rates will be higher in the future than at present. That also means that the rate of increase in house prices cannot be expected to remain as high in the long term as it is today. The consequences of this assessment of house price developments differ somewhat depending on which of the Riksbank’s two tasks we are talking about. As regards payment system stability, i.e. financial stability, I do not believe that house prices and household debt pose any threat at present. 2/6  The bulk of lending to households comprises loans secured on housing. A home is part of a household’s wealth and if the value of a home or apartment were to fall, it naturally would mean that the homeowner’s ability to pay would decrease. But the household’s income is not tied to the value of its home, and as long as the household is able to meet its borrowing costs, it does not represent a threat to the banks and the payment system. Both higher incomes and lower interest payments have resulted in a good ability to pay in the household sector at present.

9  7  Janet L. Yellen, “Recent Developments and the Outlook for the Economy,” Remarks at the City Club of Cleveland, July 10, 2015. 8  Paul Krugman, “The Myth of Asia’s Miracle,” Foreign Affairs, Vol. 73, November/December, pp. 62–78, 1994. 9  Enrico Moretti, The New Geography of Jobs, Mariner Books, 2013. 4  BIS central bankers’ speeches  For instance, the reason why Seattle, Washington, became a high-tech industry hub depended to a large extent on the fact that the founders of Microsoft had grown up there and wanted to relocate their company to a place familiar to them. Similar stories can be found for other U.S. high-tech cities. If these cases provide a complete explanation of productivity growth, all we can do is wait and hope for a genius like Bill Gates or Steve Jobs to be born by chance in our country. Fortunately, however, economic literature is much more hopeful in this respect: productivity is largely endogenous. IV. How to raise productivity  In the economic literature, there is a long list of factors that are thought to have a positive impact on productivity growth. I do not intend to go through all of them but, instead, I would like to focus on three things that I think are of particular importance. The first is human capital. Measuring human capital is a difficult task, but one of the simplest indicators often used is the number of school years.