samchain/econo-pairs-v1 huggingface dataset:
We do not claim to have found the ultimate monetary strategy. But by being transparent about the information on which our monetary policy is based and by being prepared to discuss the policy’s formation, the Riksbank can offer a guided tour of the complex world in which we live and are constantly learning new things. So when we wake up each morning, let us ponder a while on the mistakes we may have made and do not yet understand. However, since the world and its inhabitants do not behave in a mechanical and rigid fashion, one cannot expect monetary policy to be perfect. Monetary policy is not an exact science, perhaps not even a science. Still, by acting systematically and predictably in accordance with a clear intellectual framework, while we may not entirely avoid the risk of making mistakes, it does seem – and that is maybe what matters – that we can avoid making mistakes that are serious. 8  BIS Review 24/2002

The investment climate was further muted by the terrorist attacks of last September, hitting hard other sectors such as air travel, tourism, and insurance. In short, there is considerable uncertainty surrounding the adjustment of investment spending and the dim prospects of corporate earnings. While the worldwide weakness in business investment lies at the very heart of our present problems, at the same time the most recent signals from abroad reveal that new potential risks have emerged. The most recent economic indicators from the United States show that domestic demand is growing less strongly than anticipated. The confidence indices registered a decline for the months June and July. The labor market has recently shown increasing signs of weakness; both in terms of employment and hours worked. These recent developments weigh heavily against household spending, which has been considered the lifeline of the U.S. economy. The fear is that many households are stretched, adding fears to the strength of household consumption and the resilience of the U.S. economy to withstand further shocks. U.S. households on average have low levels of savings and have begun to dip into housing wealth to maintain their consumption habits. While such savings imbalances do not support the crisis  BIS Review 50/2002  3  in investment, the recent signals from the labor market, should they deepen, bring new risks to consumption and the robustness of the U.S. economy. Here in Europe, although the economic picture is slightly different, the economic prospects are not brighter.
Coherence vs agreement I believe I have set out so far a reasoned view that the three Bank policy Committees – the MPC, FPC and PRA have a coherent set of objectives, structures, appropriate policy tools and coordination to ensure that there is not any inherent absolute conflict in the framework. And the strategic changes internally at the Bank announced earlier this year could be seen as being a reinforcement to that structure by maximising the synergies across the Bank, including the PRA. But coherence doesn’t always mean agreement. There will no doubt be disagreements at some point. Indeed, the appointment of independent members to the policy committees is intended to ensure challenge and the absence of “group-think”. Dissenting views on the MPC are not only an established part of the culture but actively encouraged by the Treasury Committee in Parliament. The FPC and PRA Board, in contrast, generally work by consensus, although there are provisions for recording dissent and votes if necessary. But disagreements over judgements between individuals are normal – that’s why we have decision making by committee in the first place. What we have not seen is any reason why the structure should be regarded as internally conflicted. How likely is it that there will be dissent across committees? There are mitigants in place to reduce the chances of that.

BIS central bankers’ speeches  11  The future role of the central bank is taking shape Allow me to conclude by highlighting certain aspects that are important to central banks in terms of creating a framework that continues to safeguard stable prices while at the same time being consistent with sustainable development in the financial system. First, monetary policy should continue to be conducted in the framework of flexible inflation target policy, with price stability as the overriding target. However, the financial crisis has brought to light the importance of monetary policy taking greater account of financial stability. It can be a case of extending the time horizon of the monetary policy analysis, and focusing on price stability over a longer period than just the next few years. Second, financial stability policy requires a new focus, and macroprudential policy is emerging as a new policy area. Macroprudential tools provide better opportunities to strengthen the resilience of banks and other financial institutions to various shocks. They also provide better possibilities of influencing bank lending rates and thus macroprudential policy becomes closely interconnected with monetary policy. Overall, this enables us to work to a greater extent towards achieving a sustainable development in both lending and economic development. Having more tools also facilitates managing the conflicting objectives encountered by central banks, even though there will always be difficult trade-offs. So, there is good reason to give central banks an influential role in macroprudential policy.
Vittorio Corbo: Farewell speech as Governor of the Central Bank of Chile Speech by Mr Vittorio Corbo, Governor of the Central Bank of Chile, on his departure from the Central Bank of Chile, Santiago, 6 December 2007. *  *  *  Everything comes to an end. Today I complete my term as the Governor of the Central Bank of Chile, a post for which I was appointed on May 1st 2003 by the then President of the Republic, Mr. Ricardo Lagos. I want, first of all, to especially greet José de Gregorio, the new Governor of the Central Bank of Chile, who I am sure will lead this beloved institution through the roads of professionalism, independence and strength it requires for the good of the country and all Chileans. This is a very propitious opportunity to wish him great success in this great task. From the Board and as Vice-Governor, José has been a very relevant factor in the advances and accomplishments that our institution has made in the past several years. In his new position, he will be backed by a first-class Board and staff of high technical and professional level, capable of assuming with rigor and efficiency the Bank’s mission. I also want to acknowledge my fellow Board members who accompanied me during this period. Being it a collegiate entity, nothing would have been achieved without their active cooperation.

This campaign succeeded thanks to the support of Jean Claude Trichet, Cristián Noyer, Tim Geithner and especially Jean-Pierre Roth. As a result of this campaign, aside from Chile, countries like Norway, Denmark, Greece, Finland, Israel and New Zealand were able to also integrate the discussion on the global economy. Those meetings gather central bank governors of the main economies of the world, and are a great opportunity to be updated on the evolution of the global economy and strengthen the networks for interaction across central bankers. Internationally, I must also mention the great recognition that has the work of our Central Bank in other central banks and in international forums. Dear Board members, executives and all the staff: I want to tell you all that I am deeply grateful for having had the opportunity to serve my country from this position. It has been a true privilege, especially for the opportunity that provided me to strengthen this institution and in this way to contribute to build the great reputation that this institution has today in the country and elsewhere. Traveling abroad as the Governor of the Central Bank is a great satisfaction because of the way our country is seen and respected. I have been the recipient of frequent praise for our country and for this Central Bank, which is the merit of each and every one of you.
I am going to talk about Texas tonight, this being my annual report on the status of the Texas economy. I will walk you through a series of slides that illustrate the strength of the Texas economy, a series of economic records we have set this year, and to provide a balanced view, some of the growing pains that we are encountering. But first, I want to make a comment on monetary policy. Thinking outside the box It strikes me as timely for the Fed to consider implementing one of the possible options under the “normalization principles” the FOMC articulated in September: allowing our security holdings to run off as the bonds in our massive portfolio mature. 1 Before you jump out of your skin at this “radical” thought, let me ask you to consider the following. The 10-year Treasury note has rallied in price and declined in yield to 2.29 percent. German 10-year bunds, the equivalent market-anchoring European security, are trading to yield 0.74 percent; the Japanese 10-year yields 0.42 percent. The spread between the U.S. and the German sovereign yields is slightly narrower than it was at the end of third quarter 2014, but it remains historically large and attractive for investors. 2 Hold that thought.

Now, if you read page C3 of today’s Wall Street Journal, specifically the article titled “Watchdog Warns of Risks in Markets” about the risks of a repeat of the bond market turmoil of October and concerns about market stability as seen through the eyes of the Office of  1  The FOMC’s “Policy Normalization Principles and Plans” released on Sept. 17 is available at www.federalreserve.gov/newsevents/press/monetary/20140917c.htm. 2  Over the past 15 years, the U.S. long rate has averaged about 40 basis points higher than the German long rate. Since January 2013, the yield spread has widened by 110 basis points to about 1.50 percent. Over the same period, German 10-year inflation expectations have dropped from 1.9 percent to 1.0 percent, or 90 basis points. U.S. 10-year CPI inflation expectations have dropped from 2.3 percent to 2.2 percent – just 10 basis points. So it is worth noting that the drop in German inflation expectations relative to U.S. expectations can account for most of the widening of the yield spread between these two sovereigns. For investors who measure performance in terms of nominal returns or returns against nominal indexes, however, the currently widened spread is relatively attractive. BIS central bankers’ speeches  1  Financial Research (a bureaucracy of some 225 people and growing, created by the DoddFrank law), you would have noted the following sentences: “A reduction in securities that are available to lend against in financial markets – such as Treasury bonds and asset-backed securities – also is fueling...volatility.
Many bank assets are not marketable – or only became so a few years before the crisis. And where prices do exist, using their recent volatility and assuming price changes follow a normal distribution is unlikely to be reliable. Yet that is what most VAR models do (or at least did). We do have long runs of data on total incomes for economies – that is GDP. Since the value of bank assets – most of which are loans – ultimately depends upon the incomes of households and companies, variability in GDP is at least some guide to variability in their true value. Analysing changes in annual GDP for a large sample of countries over long periods reveals two characteristics: changes in annual GDP do not follow a normal distribution (they have much bigger chances of extreme movements) and the chances of big falls are much greater than the chances of big rises (there is clear downwards skew). The table below shows the proportion of occasions when annual GDP fell by various amounts in one year 3 . The sample is for around 40 (mainly developed) countries and in many cases goes back well over 100 years creating a total sample size of annual observations of around 4000. 3  For details see “What should equities and bonds be worth in a risky world”, by David Miles, Vladimir Pillonca and Melanie Baker, Morgan Stanley research paper, September 2005.

Indeed there are at least two situations where the use of capital controls and limits on gearing might not be a very effective means of maintaining financial stability, namely if either: 1.  the link between an institution’s leverage and its robustness to real (or imagined) risks to the value of its assets were very weak.....OR...  2.  there were great sensitivity of the overall cost of funding to changes in equity capital – so that requiring an institution to hold much more capital came at a very high price. If either of these things were true it would strengthen the case for using monetary policy directly to help preserve financial stability. But I think there is strong evidence that neither of these things are very likely. The only reason why a financial firm’s leverage (the ratio of assets to equity capital) would be irrelevant to robustness is if that equity were not truly loss-absorbing or if it was already so large relative to assets that the chances of losses being that great becomes virtually zero. But in fact bank equity capital that is truly loss absorbing has been 10% or less for most banks, and generally a great deal less. That is certainly not so high that chances of losses this big are of negligible probability. Value-at-Risk (VAR) models might have suggested otherwise. But those models have weaknesses that reflect the difficulty of accurately assessing risks. Assessing the probabilities of losses on bank assets is not easy.
In the view of the President Van Rompuy’s Report, a stable EMU needs to be built on four pillars: financial union, fiscal union, economic union and political union. Member States have been able to decide a remarkable sequence of reforms in the past few years and there is now a much clearer vision of what rules and institutions are essential for monetary union to function more effectively. The single currency needs strong common institutions. Strong institutions to supervise and stabilise the financial market; to guide fiscal policies; to coordinate economic policy, guarantee competitiveness and encourage sustainable growth. This is the vision that should guide us in all our endeavours to definitely overcome the European crisis. Thank you for your attention. 6  BIS central bankers’ speeches

Bwalya K E Ng’andu: Workshop on Zambian banknotes Opening remarks by Dr Bwalya K E Ng’andu, Deputy Governor (Operations) of the Bank of Zambia, at the G&D Workshop on Zambian banknotes, Lusaka, 22 November 2011. *  *  *    Mr. Werner Reisch and all resource persons from Giesecke and Devrient GmbH    Acting Director – Banking, Currency and Payment Systems    Ladies and Gentlemen  I wish to welcome you all to this workshop on Zambian banknotes and in particular allow me to welcome Mr. Werner Reisch and his team from Germany. As Bank of Zambia, we appreciate your efforts to organise this workshop and would like to assure you that by the end of the workshop all participants will have been enriched with new information on cash management. I am reliably informed that this workshop will be divided into two sessions, with this session targeting employees from Bank of Zambia and the next session that will take place tomorrow targeting commercial bank employees. Ladies and Gentlemen, As you may be aware G&D is a reputable printing company based in Germany which has been in existence since 1852. The Bank has a long standing business relationship with G&D going as far back as 1996 when the company first installed the ISS 300 money counting machines in our Currency office and subsequently the BDS 400 banknote destruction system in 2000.
But that’s not the only thing going on. Spending on some of these “non-risky” things have actually risen faster than incomes – in some cases faster than they have for many years. So it looks as though consumers  10  Chapter 4 of that Report went through a number of reasons why, at least in the short term, the response of inflation to demand might be smaller than usual under these circumstances. Services prices tend to be “stickier” than average, so a downturn centred on consumer services may be less disinflationary in the first instance. If orders take time to respond, a cut in prices will initially reduce a firm’s profits. When balance sheets and cashflow are under pressure, firms may therefore be more reluctant to make such cuts. 14  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  14  used some of the money they would have spent on riskier activities – going to restaurants and so forth – to buy other things instead. This makes sense. A pound less spent on one thing needn’t mean a pound less in total. Indeed under some (admittedly extreme) conditions you’d expect substitution of this sort to be one-for-one. If people are entirely indifferent between different sorts of consumption – if they’re just as happy with “non-risky” as “risky” stuff – aggregate spending wouldn’t fall at all (for given income). What they saved on one would be spent in its entirety on the other.

Mojmír Hampl: The EU banking industry Speaking points by Mr Mojmír Hampl, Vice Governor of the Czech National Bank, at the European Economic Congress “Section: Banking Industry in the EU”, Katowice, 15 May 2012. *  *  *  “Dzen dobry” – this is unfortunately the only thing I can credibly say in Polish, so the rest will be in my imperfect English. Thanks to the organizers for the invitation and for the opportunity to participate in such a distinguished panel. It is my first time here and I can only hope not the last one after I finish my presentation. Given the time constraints I will focus on a just a couple of quick points to stimulate the debate. My key point is: Let’s not repeat the same mistakes again and again. What I mean is this: Since the onset of the current crisis there has been a constant push for a more pan-European, or “federal-like”, approach to the regulation, supervision and potentially also resolution of the financial industry in the EU. The famous de Larosière report and all its consequences, such as the three new pan-European supervisory agencies, are just direct results of this push and this way of thinking. Some may recall that the Czech authorities were quite reluctant to accept this approach and also the final compromise which brought these agencies into existence, and we believe we had good reasons for this.
It accommodated, if not supported, decisions by its members to calibrate policies designed for a more benign external environment than was realistic and therefore encouraged less self-insurance than was necessary to manage safely. And it was drawn too far into a range of efficiency-improving long-term institutional reforms that necessarily diffused attention from critical vulnerabilities. BIS Review 37/2004  3  To some extent, these criticisms suffer the classic failure of claiming that what seems obvious in hindsight was as clear at the time. Many are unfair in the degree of influence they expect the Fund to be able to exert over a reluctant member - recall the constraints I described at the beginning on the Fund’s powers over its members. And many of the criticisms fail to recognize the difficulty of making definitive judgements about the path of policies consistent with sustainability. Yet elements of this general diagnosis of the Fund’s policy advice to emerging market economies have substantial merit. If the Fund is going to contribute to a process of well-targeted reform, particularly in the more vulnerable countries, it probably needs to raise the bar, to increase the level of ambition of its policy recommendations. Greater policy focus is required on the principal sources of near-term vulnerability, ideally without fully eclipsing longer-term institution building and structural reforms important to raising growth potential. A risk-based framework for determining the hierarchy of policy priorities is important.

•  International reserves have increased substantially, providing a larger cushion against adversity. Among the largest borrowers, half now hold reserves greater than 150 percent of maturing short- and long-term debt; less than one-sixth had such coverage heading into 1997. •  There have been improvements in fiscal performance, with some notable cases of governments achieving and sustaining large primary surpluses. BIS Review 37/2004  1  •  External balances have improved, with current accounts in most of the emerging world in surplus or modest deficit. Only 2 of the 20 largest borrowers now are running deficits in excess of 3 percent. •  Exchange rate regimes are more resilient and less fragile, as a substantial majority of the largest borrowing countries have moved to flexible regimes, and away from the fixed-butadjustable pegs that proved so dangerous in the crises of the last decade. •  Important progress has been made in building credibility for new monetary policy regimes, and inflation is generally moderate. •  Governments have made major investments in recapitalizing and restructuring their troubled financial systems. For example, in Asia, where some of the most severe problems were encountered, governments have spent over $ billion carving out problem loans and bolstering capital. •  Growth rates have improved with the restoration of domestic stability and recovery in external demand. Indeed, aggregate growth currently is running at its highest rate since the onset of the crisis in 1997.
A plan provides the necessary clarity of mind by focusing efforts and uniting people around a common goal. Even a strategy that is half-baked but gets you out of immediate danger is better than waiting for the perfect answer and being annihilated. Part of the plan to end the financial panic had to include reducing uncertainty over objectives. Some fretted that actions to save a crumbling system would encourage reckless behaviour in the future. Ben Bernanke was clear that invoking moral hazard in the middle of the U.S. financial crisis was misguided and dangerous. 20  Using the power of narrative, he challenged the arguments of the ‘moral hazard  fundamentalists’ in his oft cited and simple hypothetical example: do you let the man who smoked in bed die in the burning house to teach him a lesson? Or do you save him, stop the risk of surrounding houses catching fire and then reprimand him for reckless behaviour? 21  4. Humility The final essential leadership quality is humility. Recall what I said about this speech being a target-rich environment? Good leaders combine personal humility, self-knowledge and the ability to learn. That means admitting mistakes, seeking and accepting feedback and sharing the lessons you have learned. When leaders become over confident (or turn to writing books), they stop learning.

At the outset of the global crisis, the average private debt level reached around 96% of GDP (2009), doubling compared to 2000. The post-crisis adjustment was mostly visible in the Baltic countries, where half of the pre-crisis rise was reversed. In the CEE and SEE countries, the adjustment was lesser. According to the latest available data (2017), given the decoupling in the speed of the post-crisis adjustment, private debt level in the different sub-regions started to converge. The average private debt level in 2017 stood at around 82% of GDP, with Baltics hovering at around 90%, SEE at 84%, and in the CEE region, standing at 75% of GDP. 4  Chart 3. Total private debt  Chart 4. Change in private debt to GDP ratios  (in % of GDP)  (in percentage points)  140.0 120.0 100.0 80.0 60.0  CEE  SEE  Baltics  Region  2016  2014  2012  2010  2008  2006  2004  2002  40.0  *Region refers to all the countries in the sample from CEE, SEE and the Baltics. Source: IMF Global debt database. The crisis accentuated the risks of high private sector indebtedness as important source of macro-financial vulnerability. In the CESEE region, some of these risks came to the fore in their banking systems, in the form of significantly rising NPLs during the crisis, following the years of high credit growth.