samchain/econo-pairs-v1 huggingface dataset:
There is no doubt that even in a pure, selfish, domestic approach in each of the European countries, meeting the fiscal criteria would be welcome for the sake of the economy, for the sake of the appropriate financing of the competitive sector, for the sake of the credibility of the signature of the State, for the sake of the confidence in the currency and therefore for the sake of growth, job creation and the fight against unemployment. All European governments are saying that Maastricht or no Maastricht, they would pursue their sound fiscal policies and strategies. In the case of France, the proof is even easier. For it was in June 1982 that France adopted the 3 % rule, on the basis of a multipartisan consensus and for domestic reasons, ten years before the ratification of the Maastricht Treaty. As regards the monetary side of the coin, shall I also say that we in the Banque de France would pursue exactly the same kind of monetary policy based on low inflation, exchange rate stability, a high level of credibility and confidence, and therefore a low level of long-term interest rates. Implementing what our law says, namely price stability, through exchange rate stability and the monitoring of our domestic monetary aggregates, the French independent central bank would meet spontaneously on pure domestic considerations the three Maastricht criteria that are in our monetary and financial domain, namely a low level of inflation, a low level of long-term market rates and exchange rate stability.

In fact, infrastructure (b) loans tend to be “unique” rather than “common”, and each can have its own risks and corresponding mitigation structures, which would pose challenges to the 2/3  BIS central bankers' speeches  structuring, rating and assessment processes; given such unique nature of infrastructure loans, originating and managing an (c) infrastructure loan portfolio require the asset manager to possess highly specialized skillsets and experience, and the track record of the asset manager is a key assessment criterion of rating agencies as well as prospective investors; the risk appetite of many long-term investors may need to adjust over time. Over the past few years, we have seen an increasing interest among conventional long-term investors like pension funds and insurance companies in infrastructure-related (d) assets, possibly because the conventional fixed income instruments have failed to provide a decent return amidst the long-depressed yield environment. However, the appetite of such investors tended to focus on the small set of prime quality, investment grade-tranche of infrastructure loan assets, whereas many infrastructure loans may fall in the sub-investment grade domain. 8. Ladies and gentlemen, the reputation of financial derivatives was badly damaged during the Global Financial Crisis. The mortgage-backed securities, CDO, CDO2 and CDO3, etc. all got a bad name, for good reasons.
Only a minority of those with mortgages have ever experienced a rise in borrowing costs. Fewer still have significant inflation in their lived experience. Easy money is always an easier decision than tight money. But an asymmetric monetary policy reaction function is a recipe for a Minsky mistake. Having followed the right script on the way in, central banks now need to follow a different script on the way out to avoid putting 30 years of progress at risk. Financial Stability  The Bank has been bedevilled by bouts of financial instability since its inception. After I joined, these continued with the failures of BCCI and Barings. Each met with a ratchet response - more regulation, more regulators. At root, what these failures illustrated was a structural flaw in policy: the Bank was being asked to look in two directions at once, as both regulator of, and promoter of, the City. Both are useful roles. But giving one institution both roles invites failure when, as inevitably happens, the wrong balance is struck. Looked at now, firm failures in the 1980s and 1990s, and the cluster of small banks in the 1970s, were not close to being financial crises of the scale and severity we would recognise today. Certainly, none of them were systemic in their impact, either for the financial system as a whole or the wider economy. Contagion was short-lived and limited. And few losses of job or GDP resulted.

With the arrival of the Monetary Policy Committee (MPC) in 1997, the number of published speeches trebled. And with the advent of the FPC and PRC, Bank publications have kept going through the gears. In 2020, the Bank issued 62 speeches, 56 working papers, over 100 consultation documents, 74 blogs and around 100 statistical releases - in total, around 500 publications. That is around four million words - a genuine revolution in transparency practices. Transparency is necessary for central bank success, but not sufficient. The “twin deficits” of public understanding and public trust need also to be tackled.34 These deficits are closely linked as the public are unlikely to trust something they do not understand. Alongside a greater quantity of communication, tackling these deficits requires a shift in the nature of central bank communications to boost understanding and in the degree of central bank engagement to build trust. Both of those shifts are now underway. On public understanding, in surveys around 60% of the general public believe the Bank of England has a good understanding of the economy. That is the good news. The bad is that the same surveys suggest only around a quarter of the public believe the Bank explains its actions and decisions in ways they understand. Given the transparency revolution that has taken place, how can that be? Which of those four million words are people not understanding? 34  Haldane (2017a). 19  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  19  The answer is most of them.
The agents in the model also have rational expectations, that is, they use the information available in the best possible way when they make their decisions. This type of model is usually referred to in the research literature under the generic term of New Keynesian DSGE models. 7 The methods have been developed in close cooperation between academic researchers and economists at central banks who have exchanged ideas and experiences. The Riksbank has developed its own macro model for the Swedish economy At the Riksbank we have developed a dynamic macro model for the Swedish economy which is known as Ramses. 8 This is a so-called general equilibrium model and belongs to the group of New Keynesian DSGE models. General here means that it tries to explain the whole economy and not merely a particular section of it, such as private consumption or the labour market. The fact that it is an equilibrium model means that it assumes that market mechanisms create a balance between supply and demand in the different markets of the economy. Ramses is currently used to make forecasts, to interpret economic developments and to calculate the effects of monetary policy, for example. Some areas are not yet very well developed in Ramses. This includes, for example, fiscal policy and the credit market. We therefore use partial models that focus on certain individual variables as a complement to Ramses. We also use so-called Bayesian VAR models.

But before the minutes are published it is the majority line that applies when we Executive Board members make speeches outside of the Riksbank. After that we members are each free to describe our personal differences of opinion regarding the interest rate decision. Constant assessment means that we are always prepared for change Let me round off. Today I have talked about the major changes in recent years in the way we produce material used as a base for our interest rate decisions. Some of these have come about because the methods of making forecasts in general have developed, something that also affects other central banks. Other changes have been shaped by the specific conditions that apply in Sweden. The Riksbank’s independent position makes demands on us to be open and clear, what economists usually term transparency. The Riksbank’s decision to begin publishing its own forecasts for the repo rate is a step in the work on increasing transparency and further improving our analysis. 10 The new assumption for the repo rate has led to the Executive Board becoming more involved in the forecasting process. We are constantly evaluating our forecasts to see how successful they are at capturing developments. This also means we are constantly striving to improve our ways of working. If we make any major changes that have significance for our forecasts we will of course let you know.
These involve granting differential voting rights to different classes of shares. This too, in some respects, is back to the future. It has echoes of the restricted or graduated shareholder rights models seen over a century ago. Dual class listings remain common practice in a number of countries today, especially in emerging markets. Interestingly, however, there have also been some signs of dual class shares recently playing a greater role in the US. A number of recent high profile US company IPOs, such as Facebook and Google, have issued dual class stock. 25  See Carney (2014). 26  See also Mayer (2013). 14  BIS central bankers’ speeches  These laws and emerging practices are in their early throes and are not uncontentious, especially among institutional shareholders. Nonetheless, they are symptomatic of a common desire to strengthen long-term investors’ hand in the oversight of companies. If these initiatives grew in prominence, they would begin to address some of the short-term and risk-shifting problems embedded in the current corporate governance model. Corporate governance If alterations to the balance of shareholder rights are increasingly under debate, the same is not true of the rights of creditors and other stakeholders. In principle, the case for recognising explicitly these broader interests seems sound enough. In a recent paper, I considered the risk-shifting problem within companies and various solutions to it (Haldane, Richardson and Willison (forthcoming)). The most effective was simply to alter the objectives of the company to reflect creditor, as well as shareholder, interests.

Instead it is shifted onto other stakeholders in the company, most obviously creditors. There is, in the words of Jensen and Meckling (1976), an incentive for the management of a limited liability company to engage in “risk shifting” from shareholders to debtors, by increasing company-specific risk. The scale of these incentives will depend importantly on how alert creditors are to this risk. If they are wide-awake and price that risk by charging the firm a higher interest rate in anticipation of risk-shifting, this serves as a disciplining device on management. Risk shifting will then be stymied. However, if creditors lack the information or incentives to monitor risk, risk-shifting will be amplified given the cheap costs of borrowing. The upshot, then, will be companies engaging in a sub-optimally high amount of risk-taking from a stakeholder, if not shareholder, perspective. Banks provide an interesting case study of these incentive dynamics in practice and their adverse implications for creditors and the wider economy. They have a particularly simple way of increasing the volatility of their asset returns – increasing leverage. They may also have stronger incentives to do so if their creditors – largely depositors – are de-sensitised to risk when setting their cost of borrowing (Haldane (2012)). If so, this is a recipe for super-charged risk-shifting – and was in the run-up to the crisis. Leverage among global banks rose at real pace in the pre-crisis period, in a quest for everhigher banking returns on equity (Chart 7).
The main driver in this last context, certainly from the point of view of those who use these systems, is the wish to reduce costs. It is often pointed out that there are thirty plus exchanges in Europe and probably at least as many settlement systems – which are linked to a greater, but often to a lesser, degree, which operate under different legal and regulatory regimes and which all incur their own running and development costs. The fragmentation also means that market participants incur indirect costs because it is harder for them to manage their liquidity and collateral efficiently. So the general message, which commands wide support, is that some serious consolidation would be in order. The question however is how to bring this about. I will not go into the technical debate about horizontal versus vertical integration, nor into the distinctions – which are nevertheless important – between trading, clearing and settlement. And there are other, less technical, influences too, including perceptions of national interest. But whatever the reasons it is proving difficult for the markets to make real progress in these areas. In the face of this, there are those who argue for some outside party to intervene and enforce consolidation. The outside party some seem to have in mind is the authorities in one guise or another. I have to say that I have doubts about the wisdom of such an approach.

The Spanish economy Spain, as I said earlier, has been one of the euro area economies that has continued to post high growth rates, compared with the relative slackness of the area as a whole. The new base-year 2000 National Accounts estimates for Spain, released a few weeks ago, indicate that its GDP grew in 2004 at a significantly higher rate than the previous estimate (3.1% against 2.7%), albeit with a more unbalanced composition. Moreover, the growth rate has remained on a mildly accelerating path, which has continued into 2005 Q1, when output stood at 3.3% compared with the same period in 2004. As indicated in the Annual Report, it has not yet been possible to analyse in depth the new National Accounts series, although the first comparisons with previous estimates indicate that both datasets offer a fundamentally similar diagnosis of the economy’s performance. In particular, the higher growth the new figures - available so far from 2000 - show has confirmed the continuity of the long expansionary phase in train since the mid-nineties. The expansion has been the result of the notable momentum of domestic demand combined with high employment-generating capacity and the extension of the supply side of the economy, two mutually reinforcing phenomena over these years which have provided a sound base for growth. Spanish euro area membership lay at the root of the significant expansionary impulses experienced by household and corporate expenditure.
I am pretty confident that our research output will be improved and enhanced in the future. Challenges for macroeconomic research Today and tomorrow you will be talking essentially about macroeconomics. Looking forward, macro policies, monetary, fiscal, and macroprudential policies, are facing a number of challenges that require deep theoretical and empirical analysis. Perhaps, first of all, we need to understand the causes and consequences of the current levels of low inflation in most developed economies, despite the fact that most major central banks have introduced unprecedented monetary measures to support activity and growth. Several explanations, ranging from a “debt supercycle” to a secular stagnation have been proposed. If natural rates at very low or even negative levels are here to stay, central bankers will have to rethink our standard toolbox and to decide which policy measures put in place during the last decade should be maintained. In this respect, I think that the first paper of the conference, which analyzes the effects of negative nominal interest rates, will offer new insights on this important topic. Secondly, we need to improve our understanding of the links between monetary policy, macroprudential policy and financial stability. The financial crisis underlined how an impaired financial system could cause severe economic damage and disrupt the transmission of monetary policy. Moreover, following the financial crisis, many central banks have provided with new macroprudential tools that remain largely untested.

The question of which should be the role of central banks in  3/4  financial crisis prevention or mitigation is still far away from reaching any definite answer. Several papers in this conference will deal with this important issue. Third, we need to have a better understanding of how monetary policy and other macroeconomic policies are transmitted. By now, it is clear that the standard new Keynesian framework, which still shapes our general view of the basic elements of monetary policy, has some relevant shortcomings. For example, recent research has underlined how additional channels related to household and firm heterogeneity may provide a more realistic depiction of how monetary and fiscal policies affects the economy, modifying –or even overturning- some of the prescriptions derived from models with representative agents. This is a line of research linking both empirical and theoretical work that may have consequences for our work as central bankers. Your discussions over the next couple of days will help to improve our understanding of some of these complex issues, ranging from the emergence and consequences of bubbles in asset markets, to the role of individual heterogeneity in the transmission of macro policies and in the aggregate incidence of financial frictions. Conclusion To conclude, I would like to say that both policymakers and academics face new challenges in our understanding of how central banks should act in order to fulfill our mandates and maximize the welfare of the citizens we work for.
The APF is indemnified by the government, and the income from it – whether positive or negative – gets transferred to 14  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  14  (and from) the Treasury. And the matching liability on the APF balance sheet isn’t zero-interest money but interest-bearing reserves. So a rise in the official interest rate directly and immediately increases the cost of the QE fund14. In these simulations the rise in nominal interest rates, in response to the rise in actual and  Chart 10: QE reduces the maturity of the private sector’s claim on the state and with it the fiscal returns to higher inflation  expected inflation, is itself immediate. It’s impossible to “inflate away” zero-maturity reserves – as the “tax base” for surprise inflation, it’s the longer-term conventional debt in the hands of the private sector that counts. So the impact of the extra inflation would be scaled down by the relative size of the QE fund. If 40% of the conventional debt is in the central banks, and funded by interest-bearing reserves, the impact of higher inflation is also reduced by 40% (Chart 10). A permanent increase of 1% point in the rate of inflation would, at its peak, reduce the real value of the public sector’s liabilities by just under 3%, a 3%-point rise by a little over 7%. In the grand scheme of things, and even if there were no increase in the inflation risk premium in response, these are not large numbers15.

In all options, the Bank of Cyprus will need to create an organisation to manage nonperforming loans. The bank is already moving in this direction, and should it remain as a single entity it is likely that there will still be a dedicated focus on managing the workout of troubled loans. Splitting the Bank of Cyprus into a commercial bank and an asset management/development bank would create a legal and management separation. This – as any other option – has a number of merits and challenges. Two institutions would provide specialisation. The asset management/Development Bank could focus on maximising value through the restructuring of the loan book with no immediate time pressures. It could also act as a specialist bank focussed on real estate and development related activities. The remaining commercial bank could focus on serving the domestic economy. However, a split could be operationally disruptive in the immediate term, even if it was beneficial over time. Substantial progress in the restructuring of the banking system has been made. This has not been easy, and market conditions remain fragile. In determining the way forward any solution should look to meet four objectives; Restoration of Confidence – It is essential that any solution furthers the restoration of confidence. Customers must have confidence in the future of the Bank of Cyprus whether it is one bank or two. As confidence is re-established we can further ease and ultimately lift capital controls. Funded Balance Sheet – The Bank of Cyprus’s reliance on emergency support is well known.
Sheku Sambadeen Sesay: Issues relating to Africa in the context of the global financial and economic crisis Statement by Mr Sheku Sambadeen Sesay, Governor of the Bank of Sierra Leone, at the dinner in honour of the delegates for the African Caucus Meeting, hosted by the Bank of Sierra Leone, Freetown, 16 August 2010. *  *  *  Ministers of Finance Governors of central banks Head of delegations Distinguished Ladies and Gentlemen On behalf of the President of the Republic of Sierra Leone, Dr. Ernest Bai Koroma and the Board and Directors of the Bank of Sierra Leone, it is my profound pleasure to extend a warm welcome to all distinguished personalities assembled here this evening. I believe that since your arrival here in Freetown you have had a taste of the typical African hospitality which is very true of the people of Freetown. As you are aware this is my first meeting since my appointment as Governor of the Bank of Sierra Leone in June this year. Our meeting is taking place at a critical period. Our countries are experiencing the effects of the slow down in the world economy triggered by the global financial crisis. As we are all aware this recent challenge far exceeds the capabilities of any single country. These challenges require international coordinations and inter-governmental collaboration which makes it imperative for us to work together.

Governance may be seen as the manner in which power is exercised in the management of a country’s social and economic resources for development. We all know that good governance involves setting adequate policies, programs and regulations, which then have to be translated into legislation. As I often say, sustainable development hinges on the consistency of economic policies – there is no substitute for consistent, sound and stability-oriented economic policies. In this context, institutions are central to the way a country is governed and these are the formal and informal rules in a society. As the Nobel Prize winner Douglas North pointed out “the formal rules are set by the state through laws and regulations, while the informal rules come from the culture, history and experience of each society”. Only in the last 10–15 years most economists have discovered good governance – with its four pillars: transparency, accountability, predictability and participation – as a major determinant of economic growth. Thus, economic governance implies the need to ensure stable, transparent and predictable rules that encourage competition and fair access to public services. It is achieved through a country’s public and private sector institutions and the civil society. Moreover, the recent international crisis has underscored the need for an in-depth reform of economic governance at both European and global levels.