samchain/econo-pairs-v1 huggingface dataset:
Consequently the two instruments are imperfect substitutes in terms of their effects on the economy. We shall illustrate this by comparing the impact on the economy of a variety of shocks when only monetary policy is available with the outcomes when the macro-prudential instrument is also available. In each case, policy is set optimally. We assume a quadratic social loss function, which penalises the variance of inflation, output and the physical capital stock about their efficient frictionless levels. Other than the appearance of physical capital, this objective function is standard. Edge (2003) shows that such a term appears when capital accumulation is incorporated into the sticky-price New Keynesian framework and the objective function is derived from first principles (along with a number of other terms, which for simplicity are omitted here), though, with all investment funded through the banking system, we interpret it as capturing financial stability concerns more broadly. We assume a weight of unity on the variance of inflation and weights of 0.01 on the variances of output gap and the capital gap; that is broadly consistent with extant calibrated models in which the objective function is derived from first principles. Since expectations of future inflation, rates of profit, etc., matter in the model, it is valuable for policymakers to be able to commit to future actions so as to influence those expectations, just as in the canonical New Keynesian framework. In the first set of simulations, we assume a single policy maker who can commit (this simplifies solving the model).

Denis Beau: Building an appropriate climate stress testing framework for capital markets Opening remarks by Mr Denis Beau, First Deputy Governor of the Bank of France, at the Future Europe Sustainable Europe Global Virtual Conference "Europe’s global response - promoting global financial coordination towards our common sustainable future", 6 July 2021. * * * I would like to thank you very much for your kind invitation to present the work the Banque de France and the ACPR, its supervisory arm, conducted on climate stress-testing and to share some of the lessons we have drawn from it. I will focus my remarks on 1/ the objectives to be set to such exercice 2/ the tools to be used. ***** 1- I think it is not a matter of debate between financial institutions and their supervisors that climate change affect financial institutions through the traditional risks categories they face. Sizing the exposure to and impact of climate-related drivers on those traditional risk categories is however difficult, given the specificities of those climate-related risk drivers, which are not necessarily economic in nature, and the multiple layers of uncertainty which affect them. In particular, data on past changes in climate and their financial impact may be a particularly poor guide to future magnitude and dynamic of climate related risks. In addition, financial institutions decision-making horizons are usually too short-term oriented to fully account for the long time horizon of risks associated with climate change, the so-called “tragedy of the horizon".
However, with the normalisation of the external economic environment and opening up of access to the global capital markets for Russian companies, the investment demand will gradually recover. Implementation of large infrastructure financing projects, including energy export project in the framework of co-operation with China, will also contribute to the investment growth. According to our estimates, the decline in fixed capital investment will cease in 2015, and in 2016–2017 the investment growth rate will gradually pick up. The restrictions on the imports of certain food products introduced in August 2014 will be conducive for import substitution. The import growth rates will remain low in 2015. Against the backdrop of low growth in the world economy and in the external demand combined with a decline in energy prices, no significant increase in export growth is expected. The impact of these factors on export and import dynamics will result in a decrease of the current account surplus to $ billion in 2017, whereas the private capital outflow will be gradually reducing. In the baseline scenario, we expect an acceleration of the GDP growth from 0.4% in 2014 (these are our assessments for this year) to 1.0% in 2015, 1.9% in 2016 and 2.3% in 2017. At the same time, the inflation will gradually decrease to 4.5–5.0% in 2015 (I stress again, that these assessments are based on rather optimistic assumptions of the baseline scenario) and to 3.7–4.2% in 2016–2017.

We welcome the policy aimed at ensuring the sustainability of public finance, especially bearing in mind long-term risks which may be caused, firstly, by the demographic situation, secondly, by the escalation of pension system problems, and thirdly, by a possible fall in oil and gas revenues. These long-term risks are already in place, and, therefore, in our opinion, it is very important to maintain a conservative approach to budgeting process over a longer-term horizon. Besides, it is necessary to continue improving the efficiency of budget spending, particularly in terms of investment projects, in order to increase the share of expenditures that have a multiplication effect on the economic growth within the budget structure. It will also indirectly affect the monetary policy and the possibility of its easing. In our opinion, the Bank of Russia contributes to creating conditions for structural changes in the economy by decreasing inflation and keeping it at a consistently low level. Firstly, we need to bring the inflation to a low level, and secondly, we need to keep it there. In 2014, the Bank of Russia is completing the longstanding transition to the inflation targeting regime, and from 2015 it plans to conduct monetary policy within the framework of this regime. Why does the Bank of Russia pursue its previously set goals, in spite of the current difficult situation, high uncertainty of its future development and volatility of financial and foreign exchange markets?
Being poor taxes the mind every bit as much as the wallet. It does not end there. Financial scarcity is also shown by MS to damage decision-making over time. The mind-absorbing effects of making ends meet can lead to an excessive focus on the present at the expense of the future – that is, financial insecurity generates impatience or myopia. This, too, can have damaging implications for life choices. As MS demonstrate, it may lead people to under-invest in education and skills and to over-borrow at high interest rates and short maturities. MS call this a scarcity or myopia trap. It is a trap because it is self-fulfilling. Scarcity generates myopia and myopia is the enemy of human capital accumulation. For individuals, this means that scarcity traps may, over time, create poverty (lack of income) or unemployment (lack of skills) traps. And at the level of the aggregate economy, it means that scarcity traps, by taxing human capital accumulation, may generate lower growth and productivity. Physical capital accumulation, such as research and development, also relies on patient decision-making. It requires a willingness to defer gratification, either on the part of managers of firms (for example, through lower salaries and bonuses) and/or shareholders in those firms (for example, through lower dividends and share buybacks). Unfortunately, the evidence suggests neither have found it easy to do so. Public companies suffer from “short-termism” (Kay (2012)).

Kumhoff, M. and Ranciere, R. (2010), “Inequality, Leverage and Crises”, IMF Working Paper WP/10/268, November. Joyce, R., Muriel, A., Phillips, D. and Sibieta, L. (2010), “Poverty and inequality in the UK: 2010”, IFS Commentary C116. Mayer, C. (2013), “Firm Commitment: why the corporation is failing us and how to restore trust in it”, Oxford University Press. McKinsey Global Institute (2013), “QE and ultra-low interest rates: distributional effects and risks”, Discussion paper, November. Mullainathan, S and Shafir, E (2013), “Scarcity: Why Having Too Little Means So Much”, Times Books. OECD (2014). “Focus on Top Incomes and Taxation in OECD Countries: Was the crisis a game changer?”, May. ONS (2013), “Wealth in Great Britain Wave 3, 2010–2012”, May. Ostry, J. D., Berg, A. and Tsangarides, C. G. (2014), “Redistribution, Inequality, and Growth”, IMF Staff Discussion Note SDN/14/02, February. Oxfam (2014), “A Tale of Two Britains: Inequality in the UK”, March. Philippon, T and Reshef, A (2009), “Wages and Human Capital in the U.S. Financial Industry: 1909–2006”, NBER Working Paper 14644, National Bureau of Economic Research, Inc. Piketty, T. (2014), “Capital in the Twenty-First Century”, Harvard University Press. Rajan, R. G. (2010), “Fault Lines: how hidden fractures still threaten the world economy”, Princeton University Press. Saiki, A. and Frost J. (2014), “How Does Unconventional Monetary Policy Affect Inequality? Evidence from Japan”, DNB Working Paper No. 423, May. Stiglitz, J. E., (2012), “The Price of Inequality”, W.W. Norton and Company. Wolff, E. N. (2012), “The Asset Price Meltdown and the Wealth of the Middle Class”, New York University.
At such a time, it would be possible for established market access channels, via electronic trading platforms or phone links to the trading desks of the main currency trading firms, to be widely used – although there were some bottlenecks immediately after the announcement. By contrast, if we had announced the move at the weekend, for instance, this would have caused uncertainty about the trading conditions when the foreign exchange market opened on Sunday evening (Swiss time). Australia, which normally accounts for only around 1% of daily turnover in Swiss franc forex operations, would have been overwhelmed by the volume of trades during its business hours. You can easily imagine that the turbulence on the Australian market would have been far greater than that observed on the morning of 15 January, with contagion potentially spreading to the entire financial market. We wanted to avoid this. Monetary policy after the minimum exchange rate So what will the minimum exchange rate discontinuation mean for monetary policy in Switzerland? First, let me emphasise that the exit from the minimum exchange rate does not mean that we will simply be a passive observer of the foreign exchange market in future. The SNB will continue to take account of the exchange rate situation in formulating its monetary policy and will intervene in the foreign exchange market as necessary in order to influence monetary conditions. Nonetheless, the end of the minimum exchange rate does mean that interest rate steering will once again take on a more prominent role.

If markets were anticipating such an evolution, spreads between the Swiss franc and euro deposits would progressively shrink, in the same way spreads between German marks and French francs deposits fell in the 1990s during the build-up of the monetary union. Market pressures could then force the SNB to shadow the monetary policy of the European Central Bank. Many observers overlook the fact that, contrary to other countries which have gained an interest rate bonus by joining the European monetary union, as they previously had higher interest rates than Germany, Switzerland would loose its interest rate advantage in joining the monetary union. No tendency of a convergence in interest rates has been observed over the past few years. On the contrary, the interest differential has broadened slightly. For the time being, markets are not expecting any move from Switzerland towards monetary union, and rightly so, I might add. This does not mean that my country will never join the EU. As you probably know, important decisions shaping the relations between the EU and Switzerland have been taken in recent years. A first set of bilateral agreements has already come into effect. It gives us access to the single market and ensures labor mobility. New agreements have now been negotiated with the aim of harmonizing taxation on savings and integrating Switzerland in the Schengen and Dublin frameworks, a further step toward closer cooperation. As you see, without being formally an EU member, Switzerland is increasingly part of the European reality.
However, the fact that the Riksbank clearly indicated that the development of household indebtedness and housing prices were not sustainable in the long term and that monetary policy considered this circumstance may have played an important role in curbing this development. In that case, this is exactly what is meant by leaning against the wind. The housing market today Housing prices have recently started to rise again, which has aroused some attention, not without reason. It is undeniably remarkable that housing prices are rising and that the rate of increase of the banks’ lending to households has started to grow again, at the same time as GDP is very weak and unemployment is rising. However, it seems reasonable to believe that this is because it is inexpensive to borrow money due to the low interest rates prevailing. Rising stock market rates and steadily-growing consumer confidence are certainly also significant. Household borrowing to invest in housing is also an effect we actually hoped to achieve by implementing a low interest rate. It is contributing to supporting demand and employment. Even so, household saving has risen rapidly since 2007, from approximately eight to around 13 per cent of disposable income. Over the short term, I do not consider the development of the housing market to be a problem. Housing prices in Sweden have certainly risen rather rapidly in real terms too, but there are good explanations for this.

This should help to deter future speculative attacks on the Hong Kong dollar. However, we have to acknowledge that the possibility of short term interest rates shocks does exist under the currency board mechanism and the banks therefore need to take this into account in the way in which they run their business and manage their balance sheets. 21. Bearing this in mind, I draw three main supervisory lessons from the regional crisis and its impact on Hong Kong: • First, it is important for banks to maintain a strong balance sheet that can withstand the interest rate fluctuations to which I have referred and maintain the confidence of the public. Banks in Hong Kong score well in this respect but it is not something that can be taken for granted. I think that it is true to say that some banks did expand their loan books too rapidly during the mortgage boom in 1997. As a result, loan to deposit ratios came under some strain. The banks were also exposed to growing interest rate risk because a substantial proportion of their assets are linked to best lending rate while their liabilities are linked to HIBOR. This has been a reminder of the need to maintain sound fundamentals: high capital adequacy and liquidity ratios; prudent loan classification and provisioning; and sound risk management. • A second and related lesson from the region is that banks need to beware of excessive lending to finance overheated asset markets.
So, for example, the holding companies of Goldman Sachs, Morgan Stanley and Merrill Lynch, which is now a subsidiary  2  See, for example, Senior Supervisors Group, “Risk Management Lessons from the Global Banking Crisis of 2008,” October 21, 2009, and “Observations on Risk Management Practices during the Recent Market Turbulence,” March 6, 2008. BIS Review 161/2009  3  of Bank of America, are now under our direct supervision. We are making sure that they have appropriate liquidity buffers and capital. Second, the Federal Reserve is working with a broad range of private sector participants, including dealers, clearing banks, and tri-party repo investors to dramatically reduce the structural instability of the financial system utilities, such as the tri party repo system. Third, the Basel Committee is working on establishing international standards for liquidity requirements. There are two parts to this. The first is a requirement for a short-term liquidity buffer of sufficient size so that an institution that was shut out of the market for several weeks would still have sufficient liquidity to continue its operations unimpaired. The second is a liquidity standard that limits the degree of permissible maturity transformation – that is, the amount of short-term borrowing allowed to be used in the funding of long-term illiquid assets. Under these standards, a firm’s holdings of illiquid long-term assets would need to be funded mainly by equity or long-term debt.

Dengan itu, saya ingin mengambil kesempatan ini untuk mengucapkan terima kasih kepada semua pihak yang terlibat di atas kerjasama dan sumbangan serta komitmen yang diberikan bagi menjayakan Program Pendidikan Pengguna ini. Usaha-usaha sedemikian diharap akan dapat membaiki dan meningkatkan lagi prestasi dan keupayaan industri insurans dan takaful dalam memberikan pengguna produk dan servis bertaraf antarabangsa. 4  BIS Review 38/2003
Main drivers of the improvement in the current account balance will be the recovery in exports and the weaker imports due to real exchange rate. Figure 5. Current Account Balance (CAB) (12-Month Cumulative, % of GDP) 0 -1  CAB/GDP  CAB/GDP (excl. gold)  -2 -3 -3,9 -4 -4,1  -5 -6 -7 -8 -9 -10  1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 2010  2011  2012  2013  2014  2015  2016  Source: CBRT. We think that exports will be one of the main drivers of growth in 2017. The main contribution to exports is expected from the European demand. Turkish exports are highly sensitive to the demand from Europe which constitute more than half of our total exports. Latest projections suggest that EU demand will continue to support Turkish exports in the forthcoming period (Figure 6). Moreover, recently improved relations with our neighbors have also started contributing to the export growth again after a long stagnation period. Recently, there is some slight recovery in exports to our main major trading partners such as Iraq and Russia. The recovery process is expected to continue throughout 2017. Overall, we anticipate a sizeable contribution from exports to growth in 2017. Figure 6.

It is in this group that, for example, many of the decisions were taken so that monetary union could start on time. The budget policies of the Member States have also been monitored here and this will continue under the Stability Pact. Moreover, Ecofin draws up an annual “budget statement”, the Broad Economic Policy Guidelines, containing the principles for economic policy in the EU area. BIS Review 50/1998  -6-  •  Most of the matters on the Ecofin agenda have been prepared by the Monetary Committee, which besides representatives for each of the fifteen Member States (normally an under-secretary of state or a deputy central bank governor) includes representatives for the Commission and, more recently, for the EMI. When monetary union starts, the name of the Monetary Committee will be changed to Economic and Financial Committee but at present it seems that its composition will be unchanged apart from the EMI being replaced by the ECB. Work on monetary union has been a heavy burden for these bodies in recent years. Meetings have been protracted and business has ranged from major issues like the Stability and Growth Pact, the new European exchange rate system (ERM2) and legislation for monetary union to matters such as the design of the European coinage. Some of the structure is now changing with the advent of monetary union but not its basic features. The preparatory work is over, as is a good deal of the work connected with ERM.
During the interval they have an encounter with Global’s friend from the time he was a student. It turns out that he recently got married and his wife used to work with Global on a project several years ago. They decide to go for a drink together. Using their communicators they choose a cosy restaurant next to the theatre and book a table. After the performance they are all in great mood, and recall the beginning of the 21st century with amusement. The waiter discreetly charges Global’s non-contact e-wallet for actually ordered dishes. John can easily accept the payments after he comes back home. Global registers all transaction details in his financial organizer build into the communicator. Thanks to it he can track and analyze his transactions and schedule expenses. He is fully in control of his finances. His personal communicator receives financial operations on an ongoing basis, and confirms or accepts them. Once a weak it receives a financial e-analysis drawing Global’s attention to offers better tailored to his appetite for risk and lifestyle. Small hours. Mr. and Mrs. Global are coming back home. Why have I told you this story? Why does a central banker tell stories about future instead of delivering a 30-minute speech of the success achieved by the National Bank of Poland and its partners in building a safe, efficient and modern payment infrastructure in Poland? The reason for this is that we have to prepare for the future.

Here, everything was well thoughtout, consistent and done so as to fulfil a clear vision of e-government that was supposed to be citizenfriendly and to make their life easier. And Global was not in the wrong. He is still satisfied with his choice. It is worth mentioning that he hesitated over the decision to move. The final straw was an argument at Warsaw district office where Global had gone to in order to obtain some certificate. The certificate was ready, but Global – who had paid the stamp duty by an online transfer – had no proof of  BIS Review 90/2006  1  payment. Without such confirmation the officer would not issue the certificate. The argument reached its climax when the officer shouted out his anger: ‘If only you had paid in cash at the counter here, there would be no problem now!’ Today, in September 2026, John Global recalls this situation with a tint of amusement. How things have changed since that day, and how much easier life is now. Today, administrative issues take him only several minutes monthly, because all these are handled via the Internet, regardless whether located in Asia or Europe. And officers are doing their utmost to provide services to John Global efficiently, as the contract for these services will only be renewed when customers are satisfied with them. Needless to say, customer satisfaction surveys take place via the Internet. As for Global's satisfaction with his metabolism, he can measure it himself.