samchain/econo-pairs-v1 huggingface dataset:
They are chosen not because they are probable outcomes, but precisely because they are improbable contingencies against which it would be useful to safeguard, consistent with the Hippocratic oath. One adverse scenario is that the economy could stall in its recovery, deflationary forces could set in and monetary policy could be trapped for a protracted period at the zero lower bound. This is not so much secular stagnation as secular deflation. And you do not have to look too hard to find real-world examples. The most widely studied is, of course, the Japanese experience since the bursting of its bubble in the early 1990s. In the quarter-century since, nominal GDP in Japan has barely budged. And while real GDP growth in Japan has averaged 0.7% per year since 1997, this has been offset by a persistent fall in prices of, on average, over 1% per year. Similar deflationary concerns, albeit on a lesser scale, have been voiced recently in the euro-area. So how great are these risks in the UK today? At least to my ear, the mood music is different. From its trough, real GDP in the UK has risen by 7% and nominal GDP by 19%. UK real GDP has risen at or above trend for each of the past four quarters. It is expected to continue  4  Varian (2014), Tuckett et al (2014). 5  For example, the Blue Brain project is setting out to reconstruct the brain piece by piece by building a virtual version in a supercomputer (see http://bluebrain.epfl.ch/page-52063.html).

Bunn, P, Domit, S, Piscitelli, L, Rostom, M, Worrow, N “The financial position of British households: evidence from the 2013 NMG Consulting survey”, Bank of England Quarterly Bulletin 2013Q2. Farmer, D and Hepburn, C (2014) “Less precision, more truth: Uncertainty in climate economics and macroprudential policy”, Institute for New Economic Thinking, forthcoming. Hansen, L and Sargent, T (2010) “Wanting robustness in macroeconomics”, Handbook of Monetary Economics. Met Office (2014) “How accurate are our forecasts?”: http://www.metoffice.gov.uk/aboutus/who/accuracy/forecasts. Stein, J (2014) “Incorporating Financial Stability Considerations into a Monetary Policy Framework”, speech given at the International Research Forum on Monetary Policy, Washington DC. Summers, L (1985) “On economics and finance”, Journal of Finance, 40(3) Tuckett, D, Smith, R and Nyman, R (2014) “Tracking Phantastic Objects: A Computer Algorithmic Investigation of Narrative Evolution in Unstructured Data Sources”, Social Networks. Varian, H (2014) “Big Data: New Tricks for Econometrics”, Journal of Economic Perspectives, 28(2). 8  BIS central bankers’ speeches
To this end, a number of initiatives are currently in progress to help ensure the continued efficiency of the payment and settlement system in the United States. Let me be a bit more specific about some of the planned improvements to the infrastructure of the financial system that we expect to be implemented in a very short time. The first is the CLS Bank project, the Continuous Linked Settlement Bank, which has been under discussion since 1995. The owners of the CLS Bank are in the process of building the Bank’s systems and getting supervisory approval to begin operations in the fall of next year. The purpose of the CLS Bank is to create a privately owned and operated facility for payment-versuspayment settlement of foreign exchange transactions. Today, many foreign exchange transactions carry principal risk - that is, the risk that only one of the two legs of the transaction will be executed. This risk exists because of differences in the operating hours of large-value payment systems around the globe. However, when transactions are settled through the CLS Bank, the two legs of the transaction will be executed simultaneously with finality, thereby eliminating principal risk from the transaction. A second initiative under way to improve the payment and settlement infrastructure has to do with CHIPS, the Clearing House Interbank Payments System. The New York Clearing House, which operates CHIPS, is planning to introduce fundamental changes to its processes for large-value interbank payments that will bring about intraday finality.

William C Dudley: Lessons of the crisis – the implications for regulatory reform Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Partnership for New York City discussion, New York, 20 January 2010. *  *  *  It is a pleasure to have the opportunity to speak here today. I will focus on the important lessons of the recent crisis and how those lessons should inform the regulatory reform effort. As always, what I have to say reflects my own views and not necessarily those of the Federal Open Market Committee or the Federal Reserve System. In my opinion, this crisis demonstrated that a systemic risk oversight framework is needed to foster financial stability. The financial system is simply too complex for siloed regulators to see the entire field of play, to prevent the movement of financial activity to areas where there are regulatory gaps, and, when there are difficulties, to communicate and coordinate all responses in a timely and effective manner. Effective systemic oversight requires two elements. First, the financial system needs to be evaluated in its entirety because, as we have seen, developments in one area can often have devastating consequences elsewhere. In particular, three broad areas of the financial system need to be continuously evaluated: large systemically important financial institutions, payments and settlement systems and the capital markets. The linkages between each must be understood and monitored on a real-time basis.
Other investment flows have also fallen sharply as global banks reduced the size of their balance sheets after dramatic expansion of their crossborder activities during the pre-crisis boom. On the other hand, foreign direct investment (FDI) flows had actually increased slightly relative to the pre-crisis period. The same notion holds for the region as well. Financial flows from the region have been much weaker since the global financial crisis. In particular, other investment inflows have fallen sharply and turn into small outflows due to the process of deleveraging. Foreign direct investment (FDI) inflows also experienced slowdown, however the role of the direct investments in some countries is still strong as they were still going through the "expansion phase" when it comes to this type of flows. Portfolio debt flows have increased, reflecting a combination of factors, but mostly as a result of government borrowing abroad by issuing government bonds. 11  Chart 8 Financial flows and their structure  Source: IMF BOP data. Financial integration in emerging market and developing economies has risen substantially over the past two decades, delivering benefits but also posing new challenges. Guarding against a sudden stop or external crisis requires carefully monitoring of different aspects of flow and stock imbalances. Although it seems that flow imbalances narrowed in the region, for completing the picture it is essential to observe the stock positions, as well.

The magnitude, composition, speed, form of financing and focus of these reconstruction expenditures can have substantial effects on the baseline scenario in terms of output,  BIS Review 61/2010  5  inflation and the performance of financial markets. There are also risks associated with the time that it will take for productive activities to return to normal and for agents to materialize their expenditures. This has a direct incidence on the assessment of the immediate effects of the catastrophe in the first and second quarters. In any case, this risk is partly mitigated when considering that before the earthquake and tsunami, domestic output and demand were already showing a higher velocity than had been forecast. The external scenario shows a better outlook, although some risks persist. The fiscal situation of developed economies – especially in some European countries – is cause for concern because of its effects on the perception of risks and on the financial system, and its possible implications on the path of recovery of global growth. There are also risks associated with the administration of monetary stimulus packages, either if they are withdrawn sooner than necessary – considering that some countries’ financial systems remain weak – or later than advisable. As usual, the persistence of global imbalances entails risks because of both strong capital inflows to emerging economies and significant changes in the evolution of currency parities. The realization of some of these risk scenarios will have direct consequences on the country’s growth and inflation forecasts.
12 We have vacancies only at what’s known as the “section” level (i.e. across a crude division into 18 broad sectors). Chart 18 uses official output data at a “two-digit” level (100 sectors). The DMP allows us to look at variations at the level of individual firms. 11  14  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  14  mismatch rose sharply during the pandemic and, despite the recovery in the first half of this year, remains relatively elevated. One reason for this might be continuing divergence in demand. Chart 18 plots the degree of dispersion in output growth across sectors, this time at a much finer level of disaggregation, over the previous two years. As we know, the pandemic was highly skewed in its effects, hitting some sectors and regions far harder than others. Some even benefited. You can see that in the big jump in the series from the second quarter of last year. And at least up until the first quarter of this year (we don’t have any data since) there was no sign of any sort of correction. Chart 17: Relatively poor correspondence between available jobs and furloughed employees so far  Sources: ONS vacancy and Labour Force Survey data and Bank calculations. Chart 18: Up until 2020Q1 there was still significant sectoral dispersion in output  Sources: ONS and Bank calculations.

Museums and various activities organised in light of promoting national values and raising the public awareness help to better transmit the message embedded in banknotes, and educate the public through the art in banknotes, featuring elements of our national identity. For this particular reason, numismatists take delight in the subtleties of colours and images of the banknotes. In the apparently just pieces of paper, they are able to distinguish and recognise different ages, and the degree of social freedom. 1/2  BIS central bankers' speeches  In addition, banknotes may also depict concerns of a society, of course, when the artist was able to properly read this concern. Hence, the green of US dollar was chosen as a symbol to express the need of the stability in the period of civil war. The 2017 series of Norwegian currency reflects the concern on the return to the human basic needs, which are taken away by digitalisation. In reflection to this concern, the portraits of distinguished people of art and science are replaced with the symbols of natural resources, strongly related with the identity of the Norwegian people, such as the Viking ship, fish or the lighthouse. All these facts show that nothing has threatened the educational and national mission of the banknote. Owing to this reason also, it continues to carry it out by resisting even the virtual forms of the currency. In addition, as a Harvard researcher states, the paper may disappear earlier than the banknote.
2  BIS central bankers’ speeches  When leaning against the wind of the credit cycle, macro-prudential authorities do, like their monetary policy colleagues, still need to find the optimal path. To use the words of the UK Chancellor, their objective is not to ensure “the stability of the graveyard”. How they balance cost and risk, where they set the trade-offs, will depend in large part on how confident they are about the underlying resilience of the system – in other words how well they have done on the first impulse. International governance The second big change I want, therefore, to highlight is the development since the crisis of much stronger international governance. This stems from the creation, at the April 2009 G20 London summit, of the Financial Stability Board (FSB). And, equally important, from the decision at the Summit that the FSB should report directly to the G20 Leaders and Finance Ministers to give it the necessary “clout”. Working with the standard setting organisations like the Basel Committee, the FSB has provided the drive and coordination to reform and develop global standards for bank capital, liquidity, and resolution. If one remembers the best part of a decade that it took to develop and reach agreement on the Basel 2 capital standard, the progress made and international agreement reached over the past 5 years has been extraordinary.

It is a hard truth, but I fear a truth nonetheless, that it will be some time yet before trust between banking and society is established. That societal anger has motivated much of the reform effort that has been the story of the past 5 years. The message to politicians, policy makers, regulators and supervisors has been loud and clear: a repeat of the events of the crisis and recession will not be tolerated. Against that background, I want to look at the key new approaches that define the new landscape from the regulatory perspective. I do not want to list in detail the reforms that have been implemented and that are in prospect. It is an impressive list, especially when one looks at the amount of international agreement that has been reached on new international standards. •  Globally there is already more than $ loss absorbing equity capital in the system and,  •  for the first time, an international standard for the liquidity banks should hold. •  UK banks have £ more capital than before the crisis and their holdings of liquid assets have trebled. •  International standards are in prospect on leverage and on the amount of debt banks must hold that can be “bailed in” if a bank fails. Rather, I want to look at three fundamental changes in approach that have driven and will continue to drive these reforms. – macro-prudential policy, international governance and intensive supervision.
COVID-19 provides a chance to build a greener economy. It is a chance to break the vicious circle of weakening entrepreneurship and the slow diffusion of new and green technologies that have held back productivity growth and prosperity in Europe for too long. And it is a chance to build a deeper and greener financial market that reduces the costs of transitioning towards a low-carbon economy. The ECB will be no bystander on this journey. As climate change poses severe risks to price stability, central banks are required, within their traditional mandates, to strengthen their efforts to support a faster transition towards a more sustainable economy. Thank you. [1] See Le Quéré et al. (2020), “Temporary reduction in daily global CO emissions during the COVID-19 forced confinement”, Nature 2 Climate Change, 18 May 2020. [2] See UN Environment Programme (2019), Emissions Gap Report 2019. For the 2% goal, the respective number would be 2.7%, which is still very large. [3] See Carney, M. (2015), “Breaking the tragedy of the horizon – climate change and financial stability”, speech at Lloyd’s of London, London, 29 September. [4] See Samset et al. (20200), “Delayed emergence of a global temperature response after emission mitigation”, Nature Communications, 11. [5] See Bayer, P. and M. Aklin (2020), “The European Union Emissions Trading System reduced CO emissions despite low prices”, 2 Proceedings of the National Academy of Sciences of the United States of America. [6] See Bravo-Biosca et al. (2016), “What drives the dynamics of business growth?”, Economic Policy, Vol. 31(88), pp.

During this period, we need to find a way to mitigate the risks of “greenwashing” so as to channel funds to where they are most effective. Second, a green taxonomy needs to be complemented by a taxonomy for environmentally harmful activities so that investors can identify transition risks more easily and hence also price risk differentials more effectively. [8] And third, the taxonomy requires granular data for it to be useable. In the absence of corporate-level information, the taxonomy cannot be put into use and many metrics will prove useless. This is clearly visible when looking at environmental ratings for financial products: if available, they are often inconsistent, incomparable and at times unreliable – in many cases reflecting the absence of granular data or the large discretion in the construction of such indicators. Indicators from different sources often display a very low correlation (see figure 8). Figure 8 Financial market pricing of climate risk: correlations of bank environmental scores by Bloomberg and Refinitiv  Source: ECB Financial Stability Review, November 2019 based on Bloomberg, Refinitiv EIKON, S&P Global Market Intelligence and Dealogic. Notes: The Bloomberg and Refinitiv environmental scores give values between 0 and 100, whereby a higher value indicates a better performance in terms of environmental variables. The full unbalanced sample consists of 49 banks and 23 insurers in the EU and the United States.
The outcomes are the same whether their policies are set separately or jointly. To many of you that might seem obvious (less immediately to me, I must confess). And if there’s any reason at all to keep the two functions apart it would rather defeat the purpose simply to give them the same, overarching remit. If the MPC and FPC were both made responsible for inflation control, stabilising demand and financial stability, that’s a merger by default. But the result does provide some intuition as to why you can get closer to the full co-ordination outcome – and in some cases replicate it exactly – by a judicious mapping of the overall objectives across the two committees. If, for example, you thought that some macro-prudential measures had important spillover effects on aggregate demand, then you can get closer to the co-operative outcome simply by supplementing the remit of the macro-prudential authority with the equivalent secondary objective. You ask the FPC to think not just about financial stability but also to take into account the effects of its policies on economic activity. The spillovers are then internalised and, under some circumstances, you can mimic precisely the full coordination regime. As I say, I do not believe these effects are in fact that powerful or, therefore, that the secondary objective will come into play very often. But it’s worth pointing out that the FPC’s remit was expanded in exactly this way when the Committee was put on formal statutory footing in 2012.

Armed with the whole array of price and quantity indicators of 12  The observer updates her distribution over the probability using Bayes’ law. Chart 9 is the mean of that updated distribution as a function of the number of years of data that the agent has observed. 12  All speeches are available online at www.bankofengland.co.uk/speeches  12  risk we – and others – can make informed judgements about the right level of loss-absorbing capital in the banking system and about the appropriateness of more targeted policy tools. And if it takes time to demonstrate decisively a reduction in system-wide risk, there are some policies whose effects are more immediately obvious. In 2014, responding to concerns about growth in riskier mortgages, the FPC introduced limits on the share of banks’ mortgage lending at high (>4.5) loan-to-income ratios. Recently, the committee noted that there’s since been quite a bit of “bunching” in new loans just below this limit. I’m not so sure this is a problem: for my part I see it mainly as clear and timely evidence that the policy has had an impact. The point remains, however, that the FPC’s objective is inevitably less precise, and its success less immediately measurable, than that of the MPC. Recalling the results of the analysis I discussed at the start of the talk, on the appropriate allocation of tasks, this suggests that there might well be a cost if you asked a single body – an “FMPC” – to meet all these objectives at once.
Furthermore, there is a very convincing argument for the extended repo-rate path in that it provides better outcomes for both resource utilisation and CPIF inflation, which can give it just as much credibility as the lower repo-rate path. 4  BIS Review 60/2010  The extended repo-rate path also has the advantage that the monetary policy alternatives can be reduced to the question of when we should begin to increase the repo rate: in July or September or, as I advocate, in December. The monetary policy choice thus boils down to deciding which point in time for the first increase gives the best outcomes for inflation and resource utilisation. That is, which point in time gives a forecast for CPIF inflation that is as close to the target as possible and a level of resource utilisation that is as close to normal as possible. Could the monetary policy decision between alternatives be any simpler, more distinct and more transparent? Given this background I thus decided to advocate the extend repo-rate path rather than the lower repo-rate path as an alternative to the path in the main scenario. The extended repo-rate path stabilises inflation and resource utilisation better than the repo-rate path of the main scenario In my view, various monetary policy alternatives must be discussed and assessed before any monetary policy decision can be clearly justified.

But the crisis has not yet been overcome – which is hardly surprising, since structural reforms are also required if this is to be achieved. It is important to acknowledge the efforts that have already been made in this respect in the affected countries, and as an onlooker one should be cautious when making recommendations. Yet there is broad consensus that additional structural reforms are needed and should be implemented consistently. Such reforms should increase the growth potential of the countries affected and allow them to significantly and sustainably reduce their high level of unemployment and debt. Additional efforts are also required in the banking sector. Consequently, the bank review to be carried out by the ECB is extremely important. Only a healthy banking sector is capable of supplying the economy with sufficient credit. However, risks also exist outside the euro area. The global recovery could be held back by political tension in several regions as well as structural weakness in major emerging economies. A further source of potential turmoil is uncertainty about the future path of monetary policy in the major currency areas. In particular, the divergence in the monetary policy direction could increase. Overall, monetary policy in the advanced economies is likely to remain very expansionary since production capacity is underutilised and inflation is low. But while in the US the Federal Reserve is preparing the ground for a gradual normalisation of monetary policy, the ECB is considering whether it should undertake further monetary policy easing.