samchain/econo-pairs-v1 huggingface dataset:
A motorcycle mechanic may likewise see the faulty part and conclude that the fault lies in that part. The deductive approach, on the other hand, requires the mechanic to theorise in his mind and come to conclusions based on empirical findings he would make to support his theory. In the previous black crow example, we may theorise that crows are black and then look for black crows in the real world. When we find one black crow, our theory is proved. A motorcycle mechanic becomes a scientist, if he follows the scientific method in the diagnosis of the fault and the subsequent repair of the motorcycle. It involves starting with an open mind. There are no previously made conclusions or prejudgments. The approach is simply classical, that is, guided by underlying principles and not by the immediate appearance. There are several steps which a scientist should follow when he adopts the scientific method. A good motorcycle mechanic would also follow the same steps. The steps involved in a scientific inquiry are as follows. First, the identified problem has to be stated in clear terms. In the case of a motorcycle, the problem may be that the engine does not start. Second, based on the problem, one hypothesis or several hypotheses as required regarding the cause of the problem should be made. The motorcycle engine does not start because there is no fuel in the tank. Or there is a blockage of the tube that distributes fuel to the engine. Or the electrical system may have failed.

How could an individual understand the nature of the real world? There are two approaches suggested for this purpose, namely, classicism or romanticism. Classicism shows the world by means of its underlying form. It proceeds by reason or by laws governing Nature. If a motor car engine is presented to a classicist, he would be interested in finding out its underlying mechanism as determined by mechanical laws governing the working of the engine. A romantic, on the other hand, would simply be interested only on the outer surface of the world. He would look at the world from the point of its immediate appearance. Hence, a romantic would find a motor car engine with wires and cables strewn everywhere in a disorderly manner as a dull appearance. A person with a scientific mind would get himself embroiled in classicism and not in romanticism. This is because romanticism is concerned about emotions – feelings like biases, fears or prejudices which a scientist should avoid when undertaking a scientific inquiry. What is scientific method? Robert M Pirsig, the philosopher-novelist, in his novel titled Zen and the Art of Motorcycle Maintenance, raises a very pertinent question regarding scientists and scientific inquiry. Is a sideway motorcycle mechanic a scientist? The answer depends on how the motorcycle mechanic would apply himself to the problem at hand. According to Pirsig, if a motorcycle mechanic does a lousy job, then he does not qualify himself to be called a scientist. There are many mechanics of this type.
That took the form of explicit guidance to depress expectations of future interest rates; and largescale asset purchases financed by the issuance of reserves – colloquially known as quantitative easing. Let me start with forward guidance, which has particularly attracted academic interest. 1 By holding rates “lower for longer”, the central bank can implement an optimal, yet time-  1  See e.g. Paul Krugman (1998), “It's baaack: Japan's slump and the return of the liquidity trap.” Brookings Papers on Economic Activity, pp.137–205; Gauti Eggertsson and Michael Woodford (2003), “The Zero Bound on Interest Rates and Optimal Monetary Policy.” Brookings Papers on Economic Activity 34.1, pp.139–235; Campbell, J. R., Evans, C. L., Fisher, J. D., & Justiniano, A. (2012), “Macroeconomic Effects of Federal Reserve Forward Guidance.” Brookings Papers on Economic Activity, pp.1–80. BIS central bankers’ speeches  1  inconsistent, path for rates that boosts demand today, by lowering future nominal rates and by raising future inflation. It is time inconsistent because, when the future comes, it will no longer seem appropriate to go through with the promised inflationary episode. Because policy committees cannot tie the hands of their successors, I do not believe such timeinconsistent strategies can be credibly implemented other than over rather short horizons. Of course, all central banks provide guidance regarding the economic outlook and the factors determining policy so as to influence expectations. Several central banks, such as the Reserve Bank of New Zealand and the Swedish Riksbank, go as far as providing forecasts of their own future policy decisions.

While the years before the crisis were characterised by stability in the evolution of the market for goods and services, asset markets were anything but stable. In particular, there was a massive expansion in  4  BIS central bankers’ speeches  credit, particularly within the financial system in many of the advanced economies, accompanied by upward pressure on a range of asset prices, including real estate. There was a boom in asset markets, even if there was no corresponding boom in the real economy. To some people, the relatively low level of interest rates necessary to maintain price stability was instrumental in generating this boom in credit and asset prices by encouraging an aggressive search for yield. While there is some truth in this charge, I think it would be a mistake to conclude that monetary policy was the sole, or even the prime, cause of the crisis. Several factors coincided to form a potent cocktail. There were other factors that depressed the yield on safe assets, including high savings rates in China and a more general demand for US Treasuries as emerging economies accumulated larger stocks of foreign reserves in the wake of the Asia Crisis. Equally important, in my view, was the impact of the Great Moderation itself on risk-taking behaviour, as low volatility encouraged an underestimation of the likelihood and severity of adverse tail risks crystallising. Seen in this light, the Great Moderation sowed the seeds of its own destruction.
While that could be useful in the longer run, I don’t think that is essential to make this resolution tool work. Moreover, operating on the capital structure of a holding company can cut through some of the complexity, since topco debt is structurally subordinated to the debt and other obligations of the bank operating companies it owns. A final thought before moving on to a possible resolution strategy for a different type of SIFI. What I have been describing is not a matter of designing new instruments with terms that automatically trigger a pre-determined write down or conversion into equity, which would essentially be a putative form of “Tier 3” capital. Today’s topic is rather the toolkit the authorities need, in a statutory resolution regime, to maintain order when all such instruments have converted, all other options are exhausted and liquidation beckons. But whether via contractual terms or under resolution, debt can add to a bank’s loss absorbing capacity. The resolution of deposit-funded international commercial banking groups We should not assume a monolithic approach to resolution. It is not a case of one size fits all. What I have described could work for banking groups that issue plenty of debt. It would not work so easily for groups operating commercial banks around the world that are funded pretty well entirely from insured deposits. If they haven’t issued bonds, then there would be no bond holders to bail in.

The Bank of Zambia therefore welcomes this Workshop as it bodes well with our strategic objective of increasing access to financial services to 50% of the population by 2015 from the current level of 37.3%. As I conclude, I want to assure ATI that the proposal for the Bank of Zambia and all Central Banks in the COMESA Region to relax the capital reserve rules, by considering applying a lower risk weight on transactions that banks and financial institutions have insured with ATI is receiving active consideration within the organs of the COMESA Central Bank Governors. Let me commend ATI for coming up with this innovative initiative which seeks to deepen our financial markets. Finally, I challenge all of you this morning, especially participants from commercial banks to explore ways on how you can improve your products and services to better serve the entire Zambian population with the products that ATI will present to you this morning. Distinguished Guests, Ladies and Gentlemen, it is now my pleasure to declare the African Trade Insurance Agency’s workshop for bankers officially opened and I wish you fruitful deliberations. I thank you for your attention. 2  BIS central bankers’ speeches
In any event, my view is that, as we seek to disseminate the benefits of low and stable inflation to as wide an audience as possible, consistency of the existing index and level is an advantage. Critics of the process often argue that the MPC should have a second target; most commonly industrialists argue that this should be an exchange rate target, seeking stability for sterling against our major trading partners. I well understand the difficulties that, in particular, exporters face given the volatile movements in exchange rates; and the frustration is compounded by the difficulty in explaining such movements purely in terms of economic fundamentals. Nevertheless it should be recognised that the recent historical experience of the UK in operating monetary policy geared to exchange rate stability has been that a conflict sooner or later emerges between the exchange rate objective and other policy considerations, so that the exchange rate objective has to be abandoned. The most recent experience was our membership of the Exchange Rate Mechanism between 1990 and 1992. Fundamentally, there is a problem in operating monetary policy so as to achieve two targets which one has primacy? How would the trade-offs be made? My view remains that a single inflation target objective is a better, as well as much clearer, framework for monetary policy. My next point relates to the transparency of our process. In almost all committees I have served on in the past, the process has been one of trying to achieve consensus on the way forward.

There is often considerable uncertainty about what the current situation is - a particular problem relating to Q3 as we try to assess the impact of the petrol price crisis in September. Even the past is uncertain and we regularly receive from the ONS revisions to past data about growth of different parts of the economy. As I look at the data each month, knowing that some of the dials are misreading, I am reminded of the saying: that the intelligent man knows that half the data he is looking at is false; the brilliant man knows which half! More seriously we need to have in our mind a view about which data series are reliable and which are particularly erratic. Happily the RPIX data, our goal, is easily observable. But, by way of example, wages, which are a key piece of data, are much less easy to observe. And as we look at the average earnings data, we need to recognise that, not only is it difficult to measure and calculate, it will also occasionally exhibit “noisy” features that may obscure what is going on in the real economy. Indeed, over the Millennium period, as special Y2K bonuses were being paid, it was very difficult to determine what represented real “news” about the economy, and what was mere “noise”. Sitting at the controls of the aircraft, trying to pilot a sensible middle course between the extremes of unsustainable take-off and hard landing, we need “eyes and ears” on the ground.
Arnór Sighvatsson: Guidelines issued to financial institutions due to non-binding clauses linking loans to the exchange rate Introduction by Mr Arnór Sighvatsson, Deputy Governor of the Central Bank of Iceland, about guidelines issued to financial institutions due to non-binding clauses linking loans to the exchange rate, Reykjavík, 1 July 2010. *  *  *  This morning the Central Bank and the Financial Supervisory Authority issued guidelines to financial undertakings in order to instruct them on how to respond to the Supreme Court judgement on non-binding exchange rate linkage clauses. With these guidelines, the supervisory bodies concerned declare that their unequivocal understanding of the situation resulting from this Supreme Court decision is that, in cases involving loan agreements that have been ruled unlawful, the settlement and repayment of those agreements shall take account of Articles 4 and 18 of the Act on Interest and Price Indexation, no. 38/2001, unless the parties agree otherwise. The guidelines are intended to create stability in financial market transactions and promote a secure and effective financial system. The Financial Supervisory Authority and the Central Bank are required by law to ensure financial system stability, which is a matter of vital public interest. With the issuance of the present guidelines, these institutions are acting in accordance with the legal obligation resting on them.

Access to foreign credit is a prerequisite for export-driven growth. Moreover, deterioration in the banks’ position would adversely affect terms in the domestic credit market. Lending rates could rise and deposit rates could decline, impeding investment and delaying economic recovery. As soon as confidence in the Treasury and the financial system erodes, Iceland’s currency will suffer as well. In that instance, we would not be able to lift the capital controls as planned, after the Third Review of the IMF programme. Furthermore, the financial system would be poorly equipped to tolerate possible instability associated with capital account liberalisation. Finally, it is appropriate to bear in mind that financial undertakings’ scope to meet the needs of other individuals and firms would be drastically reduced. All of these factors show how vital it is to the public interest that the Central Bank and the Financial Supervisory Authority set forth general guidelines so as to maintain stability while matters of legal uncertainty are being settled. Other authorities and the legislature must also assess whether further measures must be adopted in order to remove all doubt. Ensuring stability is in our hands – all of our hands. We hope and expect that all parties will work together to achieve that goal. 2  BIS Review 91/2010
The region in itself provides a lot of important advantages:   labour markets amongst the Asiatic countries and of the EU member countries;    the possibilities of high return profit investments against capital, in real estate and infrastructure are huge and attractive for the developed markets;    the region has a population of higher than 20 million inhabitants sharing pleasant demographic characteristics;    the regional tourism is potentiality indispensable as a product of different climacteric combination to geographical features and various ethnical and cultural traditions. Preliminary results of empiric researches in the Bank of Albania show that the economic possibilities to exploit from regional countries are huge. Our analysis of external trade, based on gravity models, reveal that external trade of Albania with EU partners stays at optimum levels, while trade with the region is under its potentiality.   What does hamper our regional trade to achieve the potentiality?   What do we need to undertake coordinated structural reforms at regional level?   Are we encountering a weakening in coordinating the policies, information sharing, the establishment of institutions, the current legal infrastructure, or lobbing in European structures?   How much possible is the synchronisation of the efforts for more effective and efficient convergence and the integration process?   Which are the main economic and political fields where we may find larger space for the achievement of common regional polices?

So if somebody shorted the market thinking that the adjustment should be deeper, and if the market did fall and he benefited from the short position, we would even congratulate him for having excellent foresight. But we are against market manipulation, specifically the manipulation of our currency market, taking advantage of our passiveness under the discipline of the rule-based currency board arrangements, to produce very high interest rates with a view to sending the stock market into a nosedive and benefiting from a short position in stock index futures. Such manipulation was conducted with no regard to economic fundamentals. This presents serious risks of market dislocation or overshooting, with asset markets ratcheting down every time this double play is staged. This can be highly damaging to the stability of the whole financial system of Hong Kong. It also presents the serious risk of undermining general confidence in our currency. Our aim has been to deter market manipulation, not to jack up the market. The second accusation is that we panicked because the pain of adjustment with a fixed exchange rate, including the interest rate pain arising from capital outflow under the currency board arrangements, had become unbearable. We did not panic. We were trying to prevent the market panic and overshooting that those manipulating our markets were trying to engineer. And Hong Kong is prepared and well equipped to bear the inevitable pain of economic adjustment necessitated by the financial turmoil that originated in this region and is now spreading to the developed markets.
According to the academic literature, when interest rates are close to zero, non-conventional monetary policy may come in three different forms: first, management of agents expectations through a commitment by central banks to keep interest rates low for a long period of time; second, increasing the balance sheet of the central bank; and, third, changing the composition of assets in the balance sheet of the central bank. The FED, the Bank of Japan and the Bank of Canada, have made use of the first kind of instruments aimed at managing expectations. Therefore, they have made announcements about the future path of interest rates to affect the agents’ expectations about long-term rates. However, the non-conventional monetary policies more widely used since 2008 have been of the second and third kind, that is, the ones affecting the size and composition of the central bank’s balance sheet. In the euro area, the ECB changed its liquidity tenders to a fixed-rate system, with unlimited amount. In order to remove uncertainty, it increased their maturity up to three years. It also set up a program to purchase covered bonds and introduced the Securities Market Program and the Outright Market Transactions Program to ensure proper transmission of monetary policy during the shocks of the sovereign debt crisis. The Securities Market Program was not a quantitative easing instrument, since purchases were later sterilized.

It requires instruments that impose tighter standards for individual institutions whose contribution to system-wide risk is larger, the so called Global Systemically Important Financial Institutions (G-SiFis), whose list was last updated by the Financial Stability Board (FSB) in November 2012. The second one, looks at how aggregate risk evolves over time. This requires the use of instruments that contribute to moderate the typical pro-cyclicality of the financial system. I will come to that later on, when commenting on the new Basel III capital framework. Before this, allow me to mention the Spanish experience with the so-called “dynamic” or “statistical provisions” which were introduced in 2000. This can be considered a pioneering case of a macroprudential response. The tool proved to be useful in Spain during the financial crisis in the two dimensions identified earlier: mitigating the build-up of risks – even if to a limited extent – and providing capacity of loss absorption to the banks. But the Spanish experience also showed that “dynamic provisions”, although, in my opinion, well targeted and designed, should have been complemented with other instruments. In order to develop and implement this new policy, the main developed economies have created new authorities in charge of macro-prudential supervision, such as the Financial Stability Oversight Council in the United States or the Bank of England’s Financial Policy Committee.
This was due to higher annual inflation rates for the following subgroups: Clothing and footwear by 11.3%, [9.9%] 4 ; Furniture and household goods 11.5%, [10.1%]; Transport and communications 15.3%, [11.1%]; and other goods and services 14.1%, [12.8%]. These developments reflected pass-through effects of the Kwacha exchange rate depreciation by 4.8% over the 12 month period, coupled with higher transport fares and the upward adjustment of electricity tariffs by an average of 25.6% during the period under review. Non-food inflation contributed 6.3 percentage points to the annual overall inflation outturn. 4  6  The numbers in square brackets are for June 2010. BIS Review 148/2010  Broad money and domestic credit 5 Preliminary estimates indicate that growth in broad money (M3), comprehensively defined to include foreign currency deposits, was 7.2% in the third quarter of 2010 down from 13.3% as at end-June 2010, and was above the 4.0% projected quarterly growth rate. In absolute terms, M3 is estimated to have increased to K17,898.9 billion from K16,698.3 billion in June 2010. The outturn in M3 was largely due to the increase in both NDA and NFA. NFA edged up by 12.2% mainly on account of a 15.7% increase in gross international reserves to US $ million as at end-September 2010. The increase in NDA was mainly due to the expansion in lending to the Government. Excluding foreign currency deposits that increased by 30.2% (June 2010, fell by 5.1%), money supply declined by 2.0% compared to the 22.9% growth recorded during the second quarter of 2010.

This question basically relates to the Year-old discussion of “should the central bank prick bubbles or not?” Today asset price considerations are present in central banking practice in many countries – Norway, eurozone or Japan, to name just a few. Norgesbank speaks openly that when setting interest rates it does not ignore developments in asset and credit markets 17 and its inflation report contains an asset price forecast. The ECB’s president Trichet has in turn acknowledged that the monetary pillar of the ECB “contributes to assessing the extent to which excess creation of liquidity and over-extension of credit can be a driving force behind excessively valued assets […] and might reflect the inflating of an asset price bubble” 18 . Bank of Japan said in its “New Framework for Monetary Policy” that “risk factors include […] generating an asset price bubble” and that “in conducting monetary policy, the Bank needs to do its utmost to prevent the materialisation of such potential risks.” 19 A hot issue in today’s discussion about IT is transparency and communication. More and more economists realise that communication is the primary channel of central bank’s impact on the economy and monetary policy is increasingly becoming an art of managing expectations. Lars Svensson argues that current level of central bank interest rates matters very little for future inflation and economic activity, while Michael Woodford claims even that apart from expectations, little else matters 20 . For this reason inflation targeters put an ever larger weight to effective communication.