samchain/econo-pairs-v1 huggingface dataset:
There is also another simple but important reason why people as well as the politicians elected by them would want to continue to spend beyond their means even though they realise that they could not afford to repay the debts in their lifetime. This is what I would like to call the “collective irresponsibility” syndrome. A father or mother will do almost anything to protect their children. Some would be prepared to sacrifice their happiness and even lives for their children. It is only in great desperation, such as the great famine in China depicted in the movie “1942”, that we would witness children being sold by their starving parents. But that was a very extraordinary and tragic situation. We can hardly say that the developed world is now in that desperate situation. There is an interesting point here: when a parent mortgages his child, he is accountable for this brutal and inhumane act. However, when a voter elects politicians who promise continued and unsustainable spending he is just one of many, many voters. The vote is cast in anonymity and the voters have no direct accountability for how they vote and for the consequences of such voting decisions. The voters may also think or hope that, even if the national debts can only be paid back by the next generation, it would be someone else’s children, not their own, who will have to shoulder the burden.

Reforms also are being considered for money market mutual funds, where the inherent run risk in the event that a money market mutual fund “breaks the buck” continues to be a significant vulnerability. Yet a third set of initiatives in the reform agenda seeks to strengthen the clearance and settlement infrastructure for over the counter derivatives. In addition to creating incentives to move derivative transactions into trade repositories and central counterparties, which provide the benefits of risk management mechanisms and encouragement of standardization of  BIS central bankers’ speeches  3  contract terms, the reform efforts extend to improving the international legal framework for derivatives transactions in the event of default and failure or resolution. Regulatory reform can create guardrails for the financial system, but in my view, those reforms are far more effective if accompanied by similar reform efforts in the private sector. Private sector reform can take the form of enhancing internal governance, re-evaluating strategy and business models, and strengthening risk management and internal controls within individual firms. It can also take the form of industry collective action to improve market structure and practice, to invest in financial infrastructure and to recommend best practices. In the U.S., the combination of public sector – and private sector – driven reform has historically played an important role in our financial system and should play a role today.
The problems with subprime loans spread to other parts of the world economy The subprime loans were repackaged into new investment instruments which were later sold to investors in other countries. As it became increasingly evident that these securities were probably substantially overvalued, it came to light that a number of banks had suffered large losses. The uncertainty over which banks had suffered the largest losses made the banks unwilling to lend to one another. The financial crisis escalated when the US government decided in autumn 2008 to allow US investment bank Lehman Brothers to fail. The unease on the global financial markets increased and the financial crisis that had started in the United States developed into a global crisis. The supervision in the financial markets has been insufficient With hindsight, we can observe that many investors took excessive risks. The risk price they had calculated on was too low. It can also be noted that the credit rating agencies gave the new financial products too high ratings because they had not taken sufficient account of the risk that it would not be possible to sell these products in the market. At the same time, the supervision of the financial markets did not give sufficient consideration to the problems that can arise when a house price bubble bursts. The remuneration structure in the private sector has moreover encouraged short-term thinking and substantial risk-taking.

Our challenge, therefore, is to evolve successfully in the face of this shift and it is a philosophy that the HKMA has been actively pursuing in the past few years – exploring new policy headroom, improving our financial infrastructure, promoting Hong Kong’s offshore renminbi business in overseas markets in collaboration with the financial industry, and co-operating with other places, such as London, Paris, Australia, Malaysia and Thailand in developing renminbi business. A competition of soft power among international financial centres 11. As I have emphasised on many occasions, the competition among international financial centres is essentially a battle of soft power. That is not to say hard power is not important. Quite the opposite, the building of hard infrastructure such as airports, transportation system, telecommunications, and efficient offices, is a prerequisite for entering the race. Yet it can only go so far. Funds, especially at the wholesale level, tend to flow to and aggregate in the more efficient and safe financial centres. Therefore, the race ultimately depends on soft power, which is made up of a wide range of qualities and strengths that are difficult to quantify. They include, the most important of all, the rule of law, protection of property rights and intellectual property, the taxation regime, the soundness of financial institutions, the robustness of supervisory frameworks, the competency and integrity of professionals, such as financial practitioners, accountants and lawyers, the free flow of information, the free and convenient movement of people, and a favourable business environment.
One of the main pillars of policy implementations in this respect is to encourage economic units to borrow less and to use more equity capital (in other words to have lower leverage ratios). Recent implementations such as increasing required reserve ratios, the termination of remuneration of required reserves, the sustained fiscal discipline in the public sector as underlined in the  BIS Review 174/2010  1  revised Medium-Term Program, the increase in Resource Utilization Support Fund deductions imposed on consumer loans, the introduction of limitations to loan/value ratio in mortgages, the 12-percent target for banks’ capital adequacy ratios are deterring measures against an excessive rise in indebtedness ratios. Secondly, the extension of maturities regarding the borrowings of economic units is encouraged. Under the aegis of the Undersecretariat of Treasury, studies for extension of maturities in public borrowings are being carried out successfully. An important development is that The Banking Regulation and Supervision Agency has permitted the issuance of Turkish lira bonds so as to extend the maturities of liabilities in the banking sector. Additionally, the Central Bank decreased overnight borrowing by 400 basis points last month enabling short-term swap interest rates to go down when required. Besides, the Central Bank aims to encourage long-term deposits with the new arrangements to be made in required reserves. The third pillar of the policy framework is to encourage borrowing in terms of the Turkish currency and to strengthen the net foreign exchange position.

In addition, we are concerned about a reference to the threshold allowing access to the Resolution Fund being introduced into the calibration of the internal MREL; this makes no sense when resolution is carried out at parent company level. As regards the measures still needed to finalise the Banking Union, completing the resolution framework is, in my opinion, the first priority, even more so than deposit insurance, the third pillar of the Banking Union. Mario Draghi was most insistent on this in his Florence speech of 11 May. i In most large jurisdictions – the United States, the United Kingdom and Japan – the intervention capabilities of resolution funds are not capped because they are backstopped by the fiscal authorities, without being a burden on public finances, since any public outlays are generally reimbursed by the private sector. During the last financial crisis, market and depositor confidence resulting from a credit line backstopped by the US Treasury enabled the Federal Deposit Insurance Corporation (FDIC) to resolve 500 banks without tapping into the resources of the safety net. ii Today, in the event of a severe crisis in the European Banking Union, the resources of the Single Resolution Fund (SRF) could be depleted. This is why a common backstop for the Single Resolution Fund is urgently needed. Let me emphasise that the aim of a common backstop is not to bail out banks or draw on government budgets.
The very accommodative monetary policy that we implemented in response was aimed at helping to heal the labor market and promote price stability. Slowly, the economy began to respond and to recover. In October 2014, the FOMC announced the end of its latest asset purchase program citing that “there has been substantial improvement in the outlook for the labor market since the inception of its current asset purchase program.” In March 2015, the BIS central bankers’ speeches  3  FOMC set out conditions for the decision to begin to normalize monetary policy, stating “The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.” The FOMC judged at its December 2015 meeting that those conditions had been met. The improvement that we have seen in the labor market is very welcome. It took until May 2014 for the labor market to recover the jobs lost in the recession, but now there are 5.3 million jobs beyond the prior cyclical peak. The unemployment rate has declined to 5.0 percent. With this improvement, the number of long-term unemployed has been reduced to 2.2 million. Despite these gains, it is important to emphasize that more needs to be done to improve the labor market.

We will of course work closely with the LIA in this regard. Conclusion 29. Let me conclude with a broad note on talent development for the insurance industry. 30. Over the years, MAS has been working closely with many of you on various manpower development initiatives. The Insurance Talent Development framework jointly developed with the industry in particular, focuses on expanding the talent pipeline for leadership positions. Last year, MAS successfully rolled out the non-life track under the Insurance Management Associate Programme and is now working closely with the Singapore College of Insurance to launch the life track this year. 31. I strongly encourage all of you to continue with your investment in talent development. This should go beyond technical competencies but to include issues of ethics and conduct. 32. To end off, I am sure some of you may have seen the internet discussion around the Chinese New Year on whether this is the Year of the Sheep, the Goat or the Ram. I think many of us have settled for the Goat. As one of my colleagues noted, goats are resilient and intelligent creatures; able to maintain their balance in the most precarious of places but yet, possess a calm and unexcited exterior with a beard that conveys a certain wisdom. So may I wish everyone all these fine qualities of the Goat. 4  BIS central bankers’ speeches
The support for a market economy lost ground after the recessions and financial instability in the interwar period. Economic policy was marked by coordination, control and regulation. At the same time, Norway took part in international organisations. International organisations made an effort to promote economic cooperation and increased integration of international trade and fixed investment. Trade barriers were gradually scaled back and trade picked up already in the 1950s. Capital movements remained strongly regulated, however. Maintenance of a high level of fixed capital formation in inter alia infrastructure and private and public industrial companies was an important part of economic policy after the war. The fixed investment-toGDP ratio stayed at a historically high level until the late 1970s. On the other hand, low or negative real interest rates, combined with credit regulation, contributed to a low return to capital and an inefficient use of resources. Since the late 1970s, the investment ratio has declined in Norway as in many other European countries. India, on the other hand, is in the process of catching up. High investment growth in infrastructure as well as in businesses is probably important to maintain high economic growth in India. The government sector in Norway increased in importance until the beginning of the 1990s. Taxes were raised to support increased use of resources in the public service sector and to support a rising level of transfers between households and industries. The regulatory economic policy in the post-war period was, however, not sustainable.

It is misleading to look upon the cash flow from petroleum activities as income. The appropriate economic perspective is to see the transfer of the cash flow to the Government Pension Fund as a way of transferring capital from one account to another – from petroleum to foreign securities. By doing so, we diversify risk. We must also strive for an equitable distribution of this wealth across generations. The Norwegian authorities have been successful in ensuring that the bulk of petroleum wealth benefits society as a whole. Both the state’s ownership interests through the State’s Direct Financial Interest in petroleum activities (SDFI) and the tax system have contributed. The companies that extract oil earn a reasonable return on their investments and have incentives to invest, but the economic rent has essentially accrued to the general public. Second, the size of the cash flow from petroleum activities also varies. If petroleum revenues were to be used as they accrue, this would lead to wide fluctuations in demand in the Norwegian economy. Third, the use of petroleum revenues has an impact on competitiveness in Norwegian business and industry. A high level and substantial variations in the use of petroleum revenues would have a negative impact on internationally exposed industries. The establishment of the Government Pension Fund and the spending guidelines for petroleum revenues are intended to meet these challenges. The government earns large net cash flows deriving from the oil companies’ sale of petroleum products in foreign markets.
However the distinguishing feature of this recession is that it is centred on the banking system, which is at the heart of the allocation of resources through the economy and of the transmission mechanism for monetary policy. It is no surprise therefore that both in this country and elsewhere interest rates have been supplemented by measures that have directly focussed on banking and financial markets. Credit is a critical lubricant in a modern economy. It can bridge the gap between expenditure and income. It supports investment: allowing households and companies to bring forward the purchase of expensive assets, which would otherwise require an extended period of saving. And it allows spending to be smoothed in the face of unexpected shocks to income. As credit became more scarce, the economy was bound to slow, amplifying the slowdown in the real economy that was already in train. A feedback loop started to gather momentum. 4  BIS Review 5/2009  The more the banks reined in lending, the worse the economic outlook became, and the greater spectre of rising credit losses on the banks’ loan portfolios, encouraging further cuts in lending. Policymakers had to intervene to cut this feedback, to prevent funding markets for banks and industry from freezing up, and to ensure that the banks have the capital, the funds and the confidence to continue lending.

2/3  BIS central bankers' speeches  The second phase of this reform should aim at improving the education and know-how of the labour force, creating a legal, political, administrative and fiscal environment that attracts foreign developments and encourages domestic ones, and increasing the integration of Albania’s economy with the regional and European development infrastructure. Third, the opening of accession negotiations with the EU should be viewed as a primary instrument for the advancement of Albania’s development. The Bank of Albania judges that the fulfilment of the criteria for opening accession negotiations and the rigorous implementation of reforms that this process imposes should be the focus of the entire political spectrum in Albania. Thank you for your attention! 3/3  BIS central bankers' speeches
Since higher exchange rate volatility relative to inflation volatility decrease the hedging benefits of foreign currency assets 11 this monetary policy framework can be said to help the process of “liraization”, a term that was suggested by Dr. Leiderman at the conference on “Inflation Targeting: Performance and Challenges” hold by the Central Bank of Turkey at the beginning of this year. 9  Bahmani-Oskooee, M.; Domaç, I.; “On the Link Between Dollarization and Inflation: Evidence from Turkey”; The Eighth Dubrovnik Conference on Monetary Policy and Currency Substitution in Emerging Markets; Dubrovnik; June 27-29, 2002. 10  Leiderman, L; R. Maino and E. Parrado (2006); “Inflation Targeting in Dollarized Economies”; IMF Working Paper, WP/06/157. 11  Bahmani-Oskooee, M.; Domaç, I.; “On the Link Between Dollarization and Inflation: Evidence from Turkey”; The Eighth Dubrovnik Conference on Monetary Policy and Currency Substitution in Emerging Markets; Dubrovnik; June 27-29, 2002. 4  BIS Review 124/2006  Here, I want to make a point on the floating exchange rates. The floating exchange rate regime has transferred the exchange rate risk to the market and made economic agents to perceive and understand the importance of risk management and using hedging instruments and derivatives market better. In this context, as we have mentioned in several platforms, the opening of the Turkish Derivatives Exchange Market in February 2005 has been an important step. Accordingly, promoting the use of this Market by a wider range and the development of the hedging instruments further are very important for both the financial stability and dedollarization.

I hope you enjoy both the conference and your stay in Istanbul. Thank you very much. 12  Provisional data. 13  Reinhart, C.M; K.S. Rogoff and M.A. Savastano; 2003; “Addicted to Dollars”; NBER Working Paper Series; No:10015. 14  Ize, A. and E. Levy-Yeyati (2005); “Financial Dedollarization: Is it For Real?”; IMF Working Paper; WP/05/187. BIS Review 124/2006  5
If these factors together imply that what is possible to attain is a long-run employment rate of, say, 75 per cent, it would be meaningless to give the central bank the task of promoting an employment rate of 80 per cent. What monetary policy might be able to do in such a situation is to make the employment rate temporarily reach 80 per cent by overheating the economy. But nothing would be gained by this, as the employment rate would soon return to 75 per cent. However, the overheating, in turn, could cause problems that might be difficult to deal with, such as making inflation expectations rise and creating asset market bubbles. Thus, one cannot give the central bank a numerical target for employment that it should strive to attain in the same way as an inflation target.11 It is sometimes claimed that the Federal Reserve is an example of a central bank with an employment target. Although the Federal Reserve Act states that the Federal Reserve shall “promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates”, this does not mean that it in practice works with a numerical target for employment.12  10  However, there is a research literature on so-called fiscal dominance that suggests that the central bank may experience difficulty steering inflation if public debt is too high. See, for instance, Leeper, Eric, M. and Tack Yun (2006), “Monetary-Fiscal Policy Interactions and the Price Level: Background and Beyond”, International Tax and Public Finance 13(4), pp.

But in this particular case it feels as though theory is not being used as a tool to model and structure reality but rather the opposite; that is, that one tries to adapt reality so that it fits the theory. In my world at least this is not the way to proceed if you want to make monetary policy clearer. A lack of clarity on a more general level? There is also a more general criticism that the Riksbank’s communication has not always made it easy to understand exactly why certain decisions have been made and why these decisions have been seen as being better than conceivable alternatives. Here, as I understand it, it is not a question of the critics lacking explanations in terms of any specific loss function, but rather that they feel the Riksbank’s reasoning has not been clear enough on a more general level. This is a criticism that I understand a bit better. Let me try to explain my view on this. The criticism often seems to centre on the debate between the members of the Executive Board in recent years, during the recovery from the global financial crisis. Put briefly, a majority of the Board members have advocated a somewhat higher repo rate than the minority. I would like to stress that it has not been a question of huge differences – it has not been about  20  The economist who has probably gone furthest in his criticism of fine tuning in monetary policy is Milton Friedman.