samchain/econo-pairs-v1 huggingface dataset:
3  Alexander Balinky, Albert Gallatin: Fiscal Theories and Policies (Rudgers University Press, New Jersey NJ, 1958), provides a thorough analysis and critique of Albert Gallatin’s fiscal and financial system against the background of the political and economic conditions which then prevailed, as well as his party affiliation during his time in office. BIS Review 106/2008  1  orphan when he was only nine. He was raised by his relative, Catherine Pictet. 4 At the age of nineteen, Gallatin obtained a university degree in Latin and Greek. His classic education was not the only early influence on his future political convictions. He was deeply affected by the strict Calvinist attitudes to debt and savings that would have prevailed in Geneva at the time. Moreover, he was privy to and would have actively participated in the rich debates about politics and philosophy that took place in his social circles. These debates were inspired by the French Enlightenment and the influence and presence of the likes of Voltaire and Rousseau during those years. 5 Nonetheless, by the time he completed his studies, Gallatin was disenchanted with his prospects in Geneva as either a civil servant, merchant or member of the officer corps. In 1780, without saying a word to his family, he decided to leave for the newly independent United States of America. As he put it, he wanted to “drink in a love for independence in the freest country of the universe”.

2 Albert Gallatin’s efforts to solidify the Hamiltonian structure and to establish fiscal discipline in the early years of the United States are less well known. 3 As you will see, they clearly merit attention. The story of Albert Gallatin provides a wonderful example of how Swiss and American politics and economics have nourished each other for centuries through the exchange of ideas and people. Moreover, Albert Gallatin’s legacy arguably provides some valuable lessons which remain relevant in the present time. Today, I would like to focus on a crucial part of Gallatin’s legacy – his strong adherence to fiscal discipline. But first, let me take you on a brief tour of Gallatin’s fascinating life story. 2. The life and achievements of Albert Gallatin  For the sake of clarity, allow me to divide Albert Gallatin’s life into four distinct periods. 1761-1788: Youth The first period covers Gallatin’s life prior to becoming politically active in the United States. Gallatin was born into a wealthy merchant family in Calvinist Geneva in 1761. He became an  1  Gallatin served 13 years – longer than any other serving Secretary of the Treasury before or since. 2  Ron Chernov, Alexander Hamilton (The Penguin Press, New York NY, 2004), provides the most recent and complete Hamilton biography.
This intertwining of the communication of the European monetary team with the European and national institutions and the full body of the civil societies is currently underestimated. Wim DUISENBERG attends hearings at the European Parliament in Brussels as often as Alan GREENSPAN does on the Hill in Washington. Each national governor explains in his own language (so in total in ten languages), through the lens of twelve different cultures the same message from the  2  BIS Review 11/2001  Eurosystem. To improve its transparency and its communication even further, the Eurosystem decided to publish for the first time in December 2000 Staff Economic Projections for the euro area. In terms of transparency and accountability—namely the duty to explain, justify, whenever possible convince, and in any case, being fully responsible vis-à-vis public opinion for decisions taken- I think that the Eurosystem meets the best practices of the main central banks in the world. I.2. Co-ordination of economic policies A few years ago, it was necessary to convince a great number of skeptical people, in Europe as well as in the rest of the world, that the euro was really to be set up. Many observers pointed to its presumed contradictions and alleged inconsistencies: claiming, for example, that the economic divergences and structural gaps among euro-area countries would be too large to ensure a viable monetary union or that the lack of co-ordination between economic policies would deprive the area of an appropriate policy-mix, and could not be achieved without a political federation.

As a matter of fact, monetary policy alone cannot ensure price stability without the appropriate fiscal discipline at the overall EMU level. Indeed, for my part, I would mention three economic justifications for the Treaty provisions that gave rise to the Stability and Growth Pact: •  First, by co-ordinating the fiscal policies of the Member States of Monetary Union, the pact ensures a good policy mix within the Euro area. This is essential for monetary policy, to counterbalance the fact that Europe does not have a significant federal budget, just as it has no federal government. Close mutual surveillance and co-ordination of fiscal policies are the  BIS Review 11/2001  3  responsibility of the "Euro Group" and of the Ecofin Council. Adherence to the medium-term objective of achieving budgets that are "close to balance or in surplus" means that individual countries must first rely on themselves to withstand possible economic downturns which affect only their own economy, while ensuring a balanced policy mix throughout the euro zone. •  Second, the pact helps to prevent well-managed economies from having to bear an unjustified risk premium by setting up a penalty system for excessive deficits. •  And lastly, the stability and growth pact allows us to disprove the assertion that the euro area has no automatic stabilisers in the event of asymmetric shocks to a member economy.
The significance of having as our own the world’s second most important currency is not lost upon a central banker. For, beyond its proven economic benefits, the euro signifies the virtual elimination of the potential risk of an exchange rate crisis to which the currencies of small, open economies are exposed on a daily basis in a world characterized by the free movement of capital. We have now traded in this vulnerability for the greater security and credibility afforded by a major international currency. The euro has indeed been a success story in many respects. The disciplines of Economic and Monetary Union (EMU) were intended to promote the creation of a macroeconomic environment in which countries could thrive in an increasingly competitive market place. The euro area’s track record in terms of price stability, trade expansion and employment creation suggest that these expectations have been largely fulfilled. The Central Bank of Malta is, therefore, proud to have become a member of the Eurosystem. From an institution charged with the preservation of price stability in Malta and with safeguarding the integrity of our national currency, the Bank now shares responsibility with the other members of the Eurosystem for shaping monetary policy in the best interest of 320 million people in fifteen countries. This is a task which my colleagues at the Bank and I approach with confidence and enthusiasm. From a national perspective, the challenge now is to maximize the benefits of participation in monetary union by making further progress on the path of reform.

But for this to occur, it will be important for market participants to appropriately discriminate across countries, rather than treating EMEs as a single group. The good news is that many EMEs generally appear to be better equipped today to handle the Fed’s prospective exit from its exceptional policy accommodation than they were during past tightening cycles. This reflects the fundamental reforms that EMEs have put in place over the past 15 years, as well as the hard lessons learned from past periods of market stress. Among the positives are: •  The absence of pegged exchange rate regimes that often came undone violently during periods of acute stress;  •  Improved debt service ratios and generally moderate external debt levels;  •  Larger foreign exchange reserve cushions;  •  Clearer and more coherent monetary policy frameworks, supporting what are now generally low to moderate inflation rates;  •  Generally improved fiscal discipline; and  •  Better capitalized banking systems, supported by strengthened regulatory and supervisory frameworks. Of course, progress has not been uniform across EMEs, and more work remains to further strengthen institutional structures in some countries. In particular, vulnerabilities remain in several important EMEs, and some have been hit by the sharp adverse turn in their terms of trade due to the recent fall in global commodity prices. Still, the fundamental improvements I’ve cited leave many EMEs better positioned than in the past to weather those times in the cycle when the external environment becomes more difficult.
This operating framework changed as the financial crisis deepened. By December 2008, the FOMC had lowered its target for the federal funds rate from a point target of 5¼ percent in mid-2007 to a target range of zero to ¼ percent. With the federal funds rate and other shortterm interest rates effectively at the zero lower bound, the FOMC’s operating objective for OMOs was expanded to include adjustments in the size and composition of the Federal Reserve’s securities portfolio. In particular, the FOMC initiated large-scale asset purchases (LSAPs) of agency mortgage-backed securities (MBS), agency debt, and later longer-term Treasury securities, in order to put downward pressure on longer-term interest rates, support mortgage markets, and help make broader financial conditions more accommodative. The expansion of the domestic securities portfolio that resulted from LSAPs vastly increased the supply of reserve balances in the system (Figure 1). 4 Importantly, in October 2008, the Fed was granted authority to pay interest on depository institutions’ reserve balances. 5 In an environment of elevated reserve balances that resulted from the Fed’s asset purchases, the payment of interest on excess reserves (IOER) – currently at a rate of ¼ percent – has kept the overnight federal funds rate within its target range (Figure 2).

In our baseline scenario, we continue to forecast that GDP will gradually regain higher expansion rates, backed by favorable external conditions, the end of the mining investment adjustment, no big macroeconomic mismatches and a clearly expansionary monetary policy stance. This scenario also assumes that fiscal policy will remain on its consolidation path, expressed in the immediate future in the upcoming budget aligned with the Administration’s commitments. All this in a context in which potential growth steadily approaches trend-consistent levels. Accordingly, our projections show no major changes compared to our June estimates. For this year, we foresee that the economy will grow between 1.25% and 1.75% (1% to 1.75% in June). For 2018, we continue to expect growth to pick up, to a range between 2.5% and 3.5%, identical to our June forecast. On the expenditure side, our growth forecast for private consumption is slightly adjusted upward in 2017, considering the rebound of the real wage bill observed so far, the recovery of confidence indicators, the necessary replenishment of durable goods inventories and an appreciation of the real exchange rate. In investment, the downward adjustment of projections for 2017 stems primarily from construction, including the mining, infrastructure and housing components. This latter one because of the high stock of new homes for sale that still persists.
This often results in structural defects in the financial systems that are not conducive to the maintenance of monetary and financial stability; for example, regulatory gaps, low transparency and market concentration. These defects also breed unethical behaviour. Indeed, free and open emerging markets are considered by some as markets that can be rather freely manipulated. They also call them ATMs. But I still believe that financial openness outweighs the risks of financial instability, and that the risks I mentioned just need to be, and can be, managed, simply by being sensible in the development of the financial system, reminding ourselves always that the primary purpose of the financial system is financial intermediation that supports the economy. Although it provides employment for quite a number of people, including us, and profits for a lot of capital, the financial system does not and should not have a life of its own. Gradualism is perhaps a prudent attitude, even if this means taking a little more time or appearing for a time to be not as welcoming as the top players in international finance would like. "Because others have it" is definitely a risky attitude to take in financial development. And as developed markets are going back to basics, a no-frills approach to financial development may not be a bad idea. Financial openness does not mean getting all the top brand names to set up shop in your backyard and importing innovative financial instruments and practices. Indeed, some of those innovative financial instruments may be toxic.

We welcome external users accessing these systems for their payment, clearing and settlement needs, through directly becoming members of these systems, indirectly using the services through corresponding relationships with the existing members, or having them linked up with their own payment, clearing and settlement systems. Some of you may, for example, be wondering how you could use the RMB for trade settlement, something that is being promoted by the Mainland authorities. You can, of course make use of correspondent banks on the Mainland, and therefore pay or receive RMB arising from imports and exports there, where the money stays. But should you wish to pay or receive RMB offshore where there is greater freedom in the mobilisation of the relevant funds, albeit for the time being there is still a dearth of RMB denominated financial instruments, you can do so in Hong Kong. Thank you and I wish this year's SIBOS great success. 4  BIS Review 106/2009
It also sits at the base of a particularly steep waterfall: since any loss in a lending operation would be expected to be met, first by a solvent firm’s own resources, second by the central bank’s collateral haircuts, and only then by its capital. Any loss beyond that implicitly falls to the government, as the ultimate owner of the central bank (Chart 6). Chart 6: The central bank capital waterfall  banking system  Central bank balance sheet  General Government  Probability  Self-insurance  Haircuts Capital  Risk-sharing with the Treasury More severe losses  Central banks across the globe differ in how they divide up this pie. In the UK, the Bank of England operates with a relatively low level of capital, and has few means of rapidly replenishing that capital if it is depleted (Chart 7). As a result it has tended to rely heavily on UK government indemnities for its larger operations, such as the quantitative easing example I gave a few moments ago. The Bank’s measured leverage ratio is 11  All speeches are available online at www.bankofengland.co.uk/speeches  11  just 1%, reflecting the fact that it supports a balance sheet of around £ on less than £ of equity. 12  But the ratio for its non-indemnified balance is materially higher, reflecting the significant role played by indemnities.

However, this central scenario is not free from risks. The international environment has not only deteriorated recently, but it has also become more vulnerable due to the extent of the slowdown of the global economy -in particular, of some emerging economies, as far as they may affect world growth and international tradeand the evolution of commodity prices, in a context where there are doubts about the reaction of markets to the normalization of US monetary policy. On the Spanish domestic political front, it is obvious that the uncertainty regarding the formation of a new government may affect investment and consumption decisions. So far, the impact on the Spanish financial markets has been limited. In any case, I take it for granted that any new government will show respect towards European Union commitments and the general framework of the European Union fiscal governance. Thank you very much for your attention. BIS central bankers’ speeches  5
Commercial banks around the world have begun to find the technology to tackle such challenges profitably. However, there must be rewards to financial innovation and risk management capability that encourage financial institutions to address these segments of the markets profitably since a financial undertaking which looses money over time is not sustainable. The adoption of the New Accord, therefore, must ensure that the financial need of the dual economy is served. Secondly, while the Bank of Thailand can help foster the infrastructure for risk management, we must avoid the problem of taking away the incentive for, and accountability of, the private institutions to manage their own internal database that could be used for their own models in the long run or to manage their own risks. If a regulator oversteps the bound, there may be risk of moral hazard. Much difficulty will go into walking the thin line in overseeing safety of a system and to avoid "approving" the risk model or risk management system. I hope that this seminar will shed light on the experience in other countries. These challenges are complex and difficult in nature, but we must tackle them successfully to ensure that the Thai financial institutions are strong members of the global financial community. The market risk seminar today is a strong indication of this intention to meet the challenges. Back in 1996, the Bank of Thailand had already embarked on the study and preparation for the adoption of the '96 Accord on Market Risk.

See ‘Lambda’, speech by Mark Carney at the London School of Economics, 16 January 2017. 16 Each observation shows the central projection for spare capacity or excess demand at the end of the second year of the forecast period (the 'Year 2' point) on the horizontal axis against the central projection for four-quarter CPI inflation at Year 2 on the vertical axis from successive Inflation Reports. The left-most observation (labelled "Aug. 2016 no stimulus") is a counterfactual version of the August 2016 Inflation Report forecasts with the effect of the MPC's Bank Rate cut, Term Funding Scheme and Asset Purchases removed. See ’Lambda’, speech by Mark Carney at the London School of Economics, 16h January 2017, for further details and discussion. 17 See Table 4.C in the May 2018 Inflation Report, available at www.bankofengland.co.uk/inflation-report/2018/may-2018. 12  All speeches are available online at www.bankofengland.co.uk/speeches  12  Chart 7: Trade-off in successive Inflation Report projections at Year 3 3.0  Inflation (%)  August 2016 2.5  November 2016  February 2017 August 2017  May 2017 November 2017 February 2018  2.0 -1.0  August 2016, no stimulus  -0.5  May 2018  Excess demand (%)  0.5  1.0  0.0  Preferred trade-off if λ=0.1  1.5  Preferred trade-off if λ=1 1.0 A Guidance Stocktake As the UK enters the most critical phase of the Brexit negotiations, it is useful to take stock of forward guidance and its potential role during the upcoming period.
In addition, we have  2  BIS Review 53/2002  adopted 14-day repurchase rate as the policy instrument as well as employed macro econometric model to conduct the forecast. Permit me to elaborate on some of the above mentioned issues with regard to the implementation of inflation targeting framework. The appropriate price index used was consumer price index (CPI) which should be excluding some items that cannot be influenced by monetary policy while still able to retain sufficient price information. Hence we used the core inflation which excludes volatile items of raw food and oil prices. This core inflation has less variation but from historical data, on average, it had been close to the headline inflation in the long run. We can say that targeting the core inflation is effectively the control of long-run inflation such that monetary policy does not have to accommodate supply shocks. In light of this, the target range of 0-3.5 percent was set based on Thailand and our major trading partners' history of inflation. As for the choice of policy rate, the 14-day repurchase rate was selected as the key instrument. With this instrument, the Bank of Thailand is able to manage the appropriate level of liquidity in the market. The advantage of 14-day repurchase rate over other rates of longer maturities is that the trading volume is much higher and thus provides effective policy signaling to the market.

And while the ECB’s (European Central Bank) framework is less focused on quantitative targets, there is little doubt that the ECB’s willingness to expand its balance sheet through lending and through the OMT (Outright Monetary Transactions program) has been a key support to stability. This activism has some observers asking – with some justification in my view – whether central banks are trying to do too much. Concerns are being raised as to whether price stability and financial stability are being put at risk, and about potential spillovers into currency markets. Monetary policy is, after all, a blunt instrument. It supports investment and consumption in the real side of the economy by stimulating financial activity, by lowering borrowing costs and boosting financial wealth. But, as we have learned the hard way, easy monetary and credit conditions are also the stuff out of which credit excesses and bubbles can form So the question many central banks face is whether the benefits of further easing are worth the potential costs: in essence, will we get enough risk-taking on the real side of the economy, before we get too much on the financial side? Of course, this is not a static calculation. Sound structural policy can improve the odds that monetary stimulus feeds through to the real economy. After all, firms’ decisions to invest, hire more workers and expand their operations depend not just on the cost and availability of funds, but also on the opportunities and the uncertainties in the business environment.