samchain/econo-pairs-v1 huggingface dataset:
However, if unrealistic expectations of the future push up prices on a more lasting basis it can lead to serious problems. …but if they are pushed up by unrealistic expectations and lending… Expectations of the future, “mood” and attitude to risk are very important factors with regard to the prices of most assets. During the course of history investors have from time to time behaved as though prices on a particular market would keep on rising for ever. Exaggeratedly optimistic expectations of the future may entice investors into a particular market, prices will then rise, which will attract even more investors in the belief that prices will go on rising. Unless the spiral is broken reasonably early, a bubble will arise. If exaggerated optimism and a high risk propensity over a long period of time have pushed up prices, there is also a considerable risk that the fall from the inflated price level will be very hard once the mood changes. And this will probably have a negative effect on the rest of the economy. It is probably necessary to be most on our guard regarding what developments can be considered sustainable when things appear to be going well. By this I mean times with a high level of growth in the economy and in household incomes, good investment opportunities and low loan losses in the banks. It has happened more than once that a normal economic upturn inspires excessively optimistic expectations of economic developments and the price of risk thus becomes unreasonably low.

The core of the discussion is that house prices and lending sometimes develop in a way that does not appear sustainable – in a way that entails risks that are difficult to quantify or to even capture in analyses and forecasts. These are risks of events that often have a low probability of occurring, but if they do occur could have very serious consequences for the economy. So what is so special about asset prices rising and why do “bubbles” arise? Rising asset prices are not necessarily a bubble… The prices of many assets, such as houses or shares, rise and fall in cycles. And asset prices can rise substantially without this entailing an over-estimation or a financial bubble. A  BIS Review 70/2010  1  bubble is among other things based on speculation and a strongly over-optimistic view of the future. If, for instance, property prices increase substantially this may actually be justified on the basis of fundamental driving forces and realistic views of the future. Factors such as growth, incomes, construction and housing costs may develop favourably. And if one does not, for instance, build new housing at the same rate as the demand for housing increases, then it is not exactly surprising that the price of the existing housing should rise. Even if prices soar during a brief period, grey reality usually catches up before a bubble has arisen. When this happens prices usually adjust without any great drama and do not have any major effects on the rest of the economy.
Anita Angelovska-Bezoska: Statistics – challenging and fundamental issues for central bankers Speech by Ms Anita Angelovska-Bezoska, Vice-Governor of the National Bank of the Republic of Macedonia, at the joint National Bank of the Republic of Macedonia-ECB seminar on statistics for participants from the region, Skopje, 2–5 October 2013. *  *  *  Dear guests, dear colleagues, On behalf of the NBRM, let me express my warm gratitude to the ECB for co-organizing the event and to all participants for their preparedness to share their experiences, identify the main strengths and weaknesses and pinpoint the main challenges in their own work field. It gives me a great pleasure to welcome you at today’s joint event, which I am sure will provide an excellent platform to discuss statistics, as one of the most challenging and fundamental issues for central bankers and policy makers, in general. By now, we are all aware of the fact that timely, reliable and relevant data are sine qua non for a good policy making. The higher the quality of statistics, the larger the probability for timely and proper decisions. The recent “great recession” has brought to the fore many deficiencies in the fundamentals of the global economy, in the architecture of the global financial system, in the set-up of the policy decision making process, but also in the area of statistics which is one of the main ingredients for a good economic analysis and policy making.

Ardian Fullani: Economic developments during the second semester of 2004 and expectations for year 2005 Statement by Mr Ardian Fullani, Governor of the Bank of Albania, Tirana, 28 January 2005. *  *  *  The second part of 2004 has generated a larger economic activity, marking a certain general impulse, especially after a relatively quiet start of the year. The acceleration of production growth is reflected almost in all the economy sectors, while the major objectives of the economy have been achieved in conformity with the overall programme of the country's economic and financial development. At international level, this semester coincided with an acceleration of the confirmed tendencies in the first part of the year, especially with regard to US dollar performance and oil price rise. The Fed monetary policy has changed the monetary policy tendency, during this period, through some successive increases of the core interest rate, in attempting to prevent the inflationary pressures in the economy. On the other side, the European Central Bank, considering the inflation performance and the strong pressure against the Euro has deemed unreasonable to change the core interest rate, keeping it at the level of 2 percent for almost a year and half. Annual inflation in December resulted 2.2 percent, while the average annual inflation was only 2.9 percent. The maintenance of inflation within the targeted range was mainly attributed to the stable macroeconomic situation, the control of domestic demand of the economy and monetary indicators stability.
This gets to the complexity versus disclosure debate in the search for a better way forward in that arena; and should improve the ability of accounts to reflect changes in the underlying business. All of this is really to say that pillar three needs to be seen in a broader context. In today's 'derivatised' world, the utilisation of derivatives and complex forms of contract, often with modelled valuation bases, is just about omnipresent. This is not a value judgment - it is a fact. I think we have to accept that any set of accounts, however drawn up, is likely to be considerably deficient, taken just as numbers, in terms of outlining the economic realities of risks within the balance sheet. And disclosure itself is arguably inadequate at present in relation to both off- as well as on-balance sheet activity. However much it may be a matter of regret, and despite best intentions, the transparency of today's accounts has become less and the opacity greater than was the case in former days, thereby giving a less than complete or reliable view of overall risks. This is not just a question of SPVs; what is and what is not on the balance sheet; nor even whether historic or fair value accounting techniques are used. The fact that accounting standards setters are only too well aware of this, and grappling with the considerable issues involved, is very much to be applauded. For this is a fundamentally difficult area.

I should say that the costs of implementing Basel II will not fall on banks alone - nor will the challenges. In most jurisdictions, regulators too will both face challenges and need to incur costs in expanding staff numbers, in training and in implementing systems. This will be important for them to handle the new approach. After all, it calls for a significantly greater level of expertise on the part of line supervisors than has the existing Basel Accord. And whilst the UK, and a few other jurisdictions, do have that expertise, we need to remember that we are looking at a global market place. And at a global level I detect a deficit of expertise which will require to be remedied. Pillar three and disclosure I would also like to say a few words on pillar three. Pillar three can, it seems to me, play two roles. First, of course, it can play a role within the Basel II context itself, by mitigating the need for complexity in pillar one. Disclosure about the way organisations actually manage their risks can indeed help a better understanding of their risk profile, compared to a study of complex numbers on their own. For example, understanding how a firm conducts its stress testing, or how valuations might be sensitive to different assumptions, could be of real value. But, second, such disclosure could be of value in the general accounting context itself.
For example, CXA Group, a health technology start-up established in Singapore, is expanding its services to China and is planning to partner Shanghai Zhongheng Insurance Brokers for its China expansion. There is scope for collaboration to enhance our mutual understanding of new business models and assist in negotiating regulatory hurdles for these companies. 16 One important aspect of enhancing the eco-system is the enrichment of the range of financing opportunities for FinTech companies. Venture capital (VC) managers are an essential component of the start-up eco-system, providing capital as well as expertise to start-ups and early growth businesses. China already has the largest concentration of VC funding globally2. Singapore also hopes to create a conducive environment for VCs by simplifying the approval process and regulatory regime for VC managers. At the same time, we hope to expand the range of funding options to cater to the varied needs of companies at different stages of development. Finally, there is also room to deepen information and knowledge exchange between Shanghai and Singapore industry participants. To this end, MAS and the Shanghai Financial 17  Services Office are discussing a customised training programme to encourage mutual exchange between financial sector players. Through such exchanges, industry participants can get a better understanding of each other’s markets and enhance their knowledge of specialized topics. 18 And this marks only the beginning of our long-term relationship.

This is how a historian termed the Bank of England in the early days of its existence. At that time, the Bank basically acted as banker to the state and manager of national debt, thereby contributing to financing wars and imperial expansion. With their roots going back to the Age of Enlightenment, early central banks stood for the economic emancipation, ambition and power of the states that established them. Due to their potency as state banks they gradually assumed functions such as the bankers’ bank, lender of last resort, regulator of financial activity and privileged issuer of money. In the case of Switzerland, the National Bank was founded (in 1907) in order to unify a somewhat chaotic system of banknote issues and to simplify the payment system. All these functions have remained predominant and gained profile over large parts of central bank history. By contrast, monetary policy as it is practised today is a comparatively recent central bank discipline. It became permanently relevant only after World War II, when the gold-linked money standard was abandoned in favour of a US dollar standard. In fact, individual central banks gained control over “their” money supply only when the US dollar pegs were given up in the early 1970s. For a long time, the policy objectives of many central banks oscillated between financing the state and maintaining the (internal and external) value and reputation of the currency.
As regulators, we obviously have a part to play in helping the finance industry adapt. We should strive to reduce uncertainties as much as possible. One source of uncertainty today is the regulatory framework. Nearly ten years after the crisis, our priority must be to stabilise the rules. The main elements of the Basel III package have already been approved in 2010–11 and have largely entered into force. But there are still ongoing discussions regarding the measurement of risk on bank balance sheets. The objective, as you know, is to reduce the unwarranted variability of results between banks and across jurisdictions. And as the German G20 reiterated last week, the completion of reforms must not result in a “significant increase in overall capital requirements”. We have not yet reached an agreement. Thanks to our mobilisation and that of our European partners, we have avoided a bad agreement. For the coming months then, our objective is to reach a good one. Another source of uncertainty is Brexit. With article 50 about to be triggered, we obviously cannot prejudge the outcome of the future negotiations. But it is essential to bear one principle in mind: in the single market, you cannot separate access and rules. In financial services in particular, you can hardly expect to have a European passport if you don’t accept the single market’s rules. Let us be clear: we are saddened by Brexit, and we are not the ones who have decided to have a so-called “clean Brexit".

The drift towards bilateral- and trade-focused international economic policies which bypass existing channels of trade conflict resolution severely undermines global governance of international trade. On their own, EMs have little bargaining power, and engaging in bilateral relationships with large countries could result in trade distortions and uncertainties that lead to inefficient allocation of resources. In addition to the direct impact on trade, this bilateral- and trade-focused thinking could lead to another serious implication, especially from the perspective of macroeconomists who are well-represented in this room: the distortion of macroeconomic policy framework. The global imbalance analysis illustrates this issue nicely. The existing framework that was developed by the IFIs prior to the GFC and was adopted internationally has been pivotal in the way we made policies to address global imbalances in the past. I have talked earlier about how the current framework based on current account balance alone needs to progress with the changing environment, the excess liquidity in the global financial system, and take a broader view that includes capital flows. I am afraid that the current geopolitical environment will not allow us to progress forward in our thinking. Even the existing current-account based framework of global imbalances is being challenged by the bilateral worldview that focuses on bilateral trade. A currency intervention assessment framework that focuses narrowly on current account and bilateral trade balances and disregards other types of fund flows like portfolio flows is an example of thinking that distracts us from macroeconomic reasoning.
The ability to make retail payments reliable is crucial for the effectiveness of the financial system. As discussed earlier, we have come a long way in developing a reliable way of transacting electronically – through solutions such as credit cards, mobile transfers and prepaid balances. Central banks are now carefully monitoring newer developments, particularly digital currencies based on the use of a distributed ledger. Digital currencies have tended to be volatile and subject to speculative hoarding. This raises the potential for runs on the digital currency, triggered for instance by a loss of confidence in the currency itself or a third party provider like an exchange. This risk is likely to be augmented where the digital currency is not backed by an issuer, and where there is no lender of last resort function. If digital currencies are widely used, such a shock could have systemic repercussions. At the same time, some of these concerns may be addressed if the digital currencies used are issued by a central bank. Many policymakers are studying this option. In addition to facilitating payments, cash has been a powerful instrument for central banks to build trust and credibility with the public. The notes issued by central banks provide us with a direct and tangible link to the people – making it a key branding tool. Trust and confidence in the central bank are crucial for us to effectively deliver our mandate.

Encik Abdul Rasheed Ghaffour: Optimal balance of paper and digital, cash and cashless; and next page for physical currency Welcoming address by Mr Encik Abdul Rasheed Ghaffour, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Currency Conference 2017, Kuala Lumpur, 15 May 2017. * * * Mr Richard Haycock, Chairman, Currency Research, Fellow central bankers, Distinguished participants. A very good morning and a warm Selamat Datang to Malaysia. Paper lives on A lot has changed in the past 10 years. In May 2007, there was no such thing as a smartphone. Tablets did not exist, and the human race had not discovered the fast-expanding universe of mobile apps. Back then, we read the news by leafing through the pages of a large newspaper. We listened to music with CDs, and bought or rented DVDs to watch movies. Today, most of these are streamed through internet devices. When e-book sales increased by over 1,000% in the two years leading up to 2010, many questioned the future of the printed book. The bankruptcy of Borders in the United States the following year solidified these fears. Similarly, there has been much hype about the end of cash. This has been sparked by the rising use of e-payments and the recent proliferation of digital currencies in an increasingly virtual world. However, just as physical books continue to enjoy increasing sales, we have seen cash in circulation rise in many countries, quicker than their GDP growth for some.
I very much hope that I can convince you today why this is so. As I shall demonstrate later, the financial significance of Asia is indisputable. Yet, in many parts of Asia, financial intermediation, which is so important to promoting economic growth and development, remains elementary. There is I think an urgent need for Asia to harness its substantial financial resources for promoting growth and development but also for minimising Asia’s vulnerability to financial instability. With financial globalisation, the ability of Asia to get this right has significant implications for global finance. I also hope that I can, at the same time, raise your interest in some of the specific monetary and financial issues that we are tackling, in the region as a whole and in individual economies, with a special emphasis on China, including Hong Kong, where I come from. Asian finance Let me begin with a description of Asian finance, as I see it. There are six characteristics I would like to draw your attention to. The first is the financial significance of Asia. As I mentioned earlier, this is phenomenal. It is easy to appreciate this by pointing to some impressive numbers, such as those relating to the amount of foreign reserves held by Asian economies and the amount of portfolio and foreign direct investments going into, or coming out of, Asia. Indeed, there are seven economies holding foreign reserves in excess of $ billion and all seven of them are in Asia1.

We have taken this step not because banks are weak but because they are in fact strong. Unlike in 2008, the banks are not the weak link in a crisis which this time is of public health; a crisis which is economic, but, at least in terms of its causes, non-financial in nature. This is notably the result of the regulations that we have implemented and reinforced over the last ten years. And it is what now gives us greater leeway to ease certain capital requirements, such as the counter-cyclical buffer, and to push back the entry into force of the Basel III accords by one year to 2023. All these measures should be considered in light of the – often heated – discussions on the degree of financial solidarity in Europe. Arguably, Europe could perhaps do more, but let’s not forget that it is already doing a great deal, thanks to major efforts from the Eurosystem or the easing – agreed quickly and unanimously – of the Stability and Growth Pact, which gives natural priority to national action. If we consider a possible role for the European Solidarity Mechanism (ESM), the amounts involved – around EUR 410 billion – would certainly be significant. However, the support provided by the ECB alone represents EUR 1,050 billion on the markets and up to EUR 3,000 billion in bank liquidity. Furthermore, the Monetary Union allows Italy and Spain to borrow at a far lower interest rate than before the euro.
The rapid, unconventional and coordinated response by central banks at the peak of the crisis undoubtedly averted a collapse of the system, and the vigorous measures to maintain the functioning of financial systems have been largely effective – so far. Nevertheless, the crisis itself, and the very scale of the response, have brought central banks more into the foreground than ever before. As the full implications of what has happened unfold there will undoubtedly be questions about their role and the policies they pursue. The appropriate response to this is for central banks, international organisations, and government authorities to seize the initiative for reform so that financial crisis does not become a crisis of confidence in the system itself. Since, as recent events have resoundingly demonstrated, the financial system is a global system, the reforms must be organised along international lines. The limited achievements in international co-operation following the Asian financial crisis might make us sceptical. But, in fact, the signs are positive. Co-ordination among central banks in crisis management has been effective. Technical blueprints for regulatory reform on an international scale have already been drawn up. And the political will has been demonstrated in the commitment by the world’s largest economies to implement far-reaching reform. One area of progress is the movement towards greater participation by developing economies in international forums and in the process of reform.

 The growth potential should be enhanced also by an increase in capital flows and stock, the absorption of EU funds and a better allocation of resources via investment prioritisation.  Achieving convergence is not enough, as convergence should be sustainable, balanced and equitably distributed.  Real convergence should be pursued not only in terms of income, but also in terms of output structure, by means of the level and composition of budget revenues and expenditures. 3   Good European practices should be used to fight tax evasion and strengthen financial discipline.  In the medium run, a balanced primary budget should be ensured and the MTO (medium-term objective) should be again pursued; public debt should be maintained at sustainable levels and inappropriate incentives leading to over-indebtedness of private sector and households should be avoided.  It is necessary to improve the access to financing. 83% of households have 6% of deposits, whereas 0.3% of households hold 25% of deposits. Housing loans have been accessed by only 1% of very low income earners (the 1st quintile) and by only 4% of relatively high income earners (the 4th quintile). 12% of the highest income earners (the 5th quintile) have accessed housing loans.  A roadmap is necessary for joining the euro area.  The public goods that should be preserved and even strengthened include: the country’s security, financial stability, investors’ confidence. European Union – Romania joint agenda for 2019  Conclusion of Brexit negotiations.