samchain/econo-pairs-v1 huggingface dataset:
Its origin is rooted in the 1957 Treaty of Rome establishing the European Economic Community. At this point Belgium, France, Germany, Italy, Luxembourg and the  1  Schumpeter (1976, p. 83). 2  See IMF (1997). 3  For a historical overview of globalisation and its economic implications, see Williamson (1996), and Obstfeld and Taylor (2005). BIS Review 43/2006  1  Netherlands wished to remove economic barriers among Member States, but wanted to remain within the Bretton Woods system of stable exchange rates. In 1969, when the Bretton Woods system appeared on the verge of collapse, the European leaders of the time were already thinking about creating their own alternative system of stable exchange rates among the European currencies. Three key initiatives leading towards EMU can be highlighted: the Werner Report in 1970, which introduced the concept of the “Snake in the Tunnel” that was later launched before the end of the Bretton Woods system in 1973; the European Monetary System in 1979, involving the introduction of the European Currency Unit; and the Delors Report in 1989, which is reflected in the Maastricht treaty in 1991. The years since 1969 depict a period of repeated attempts to establish a zone of exchange rate stability in (Western) Europe. 4 These initiatives can also be seen in the context of the globalisation process.

5 The overall effects of global financial integration on the stability of the financial sector can be expected to be positive in the long run, because greater liquidity and the adoption of risk-sharing and riskmitigating techniques both strengthen the overall resilience and shock-absorption capacity of the global financial system. Cross-border capital flows not only benefit the recipient economies, but also the countries of origin, as they facilitate international risk-sharing and participation in returns abroad. Trade in goods and services and cross-border capital flows have clearly increased the spillovers of macroeconomic fluctuations globally. 6 However, one should welcome the recent developments in  5  For a comprehensive analysis on the determinants of global portfolio reallocation, see De Santis and Gérard (2006). 6  See Kose et al. (2003) for an assessment of the impact of globalisation on the synchronisation of business cycles.http://www.iza.org/en/webcontent/publications/papers/viewAbstract?dp_id=702. BIS Review 43/2006  3  international financial integration, because they reflect trends towards an efficient allocation of resources and, in this way, support growth and promote welfare in the global economy. How much further will financial globalisation deepen? In order to answer this question, we examine developments in countries’ home bias, i.e. how much investors prefer to invest in domestic assets rather than fully diversifying their portfolio internationally. 7 In a world without transaction and information costs, all countries would hold the same portfolio and would diversify their investment in other countries in proportion to the size of their financial markets.
Without these measures we would probably have faced a financial meltdown. One sign that the crisis is no longer as acute is that what are known as TED spreads have fallen in Sweden, as well as the United States and the euro area. The TED spread is the difference between a three-month interbank rate and a three-month treasury bill rate. The spreads are now back at around the levels prevailing immediately prior to the worsening of the crisis in autumn 2008. But the financial markets are still functioning much less efficiently than normal. It is also still difficult for companies to finance themselves in the capital market. Moreover, the liquidity injection from the central banks does not solve the banks’ capital problems. For this reason it is not surprising that the international discussion is currently aimed more at solvency than liquidity. It would be very much appreciated if many countries could begin to distinguish bad banks from good ones in an effective and transparent manner. In Sweden, too, we have implemented a large number of unconventional measures to safeguard financial stability and mitigate the negative effects of the financial crisis. During the second half of 2008 the Riksbank increased its lending to the banks by more than SEK 450 billion. Almost SEK 200 billion of this was comprised of loans in US dollars. This has largely been financed by means of swap agreements with the Federal Reserve in the United States.

Medium to longer-term inflation expectations remain firmly anchored in line with the Governing Council’s aim of keeping inflation rates below, but close to, 2% over the medium term. Cross-checking the outcome of the economic analysis with that of the monetary analysis confirms the assessment of low inflationary pressure over the medium term, as money and credit growth continues to slow down. Against this background, we expect price stability to be maintained over the medium term, thereby supporting the purchasing power of euro area households. As the transmission of monetary policy works with lags, we expect that our policy action will progressively feed through to the economy. Hence, with all the measures we have taken, monetary policy has been supporting the availability of liquidity and the recovery of the euro  2  BIS Review 136/2009  area economy. Looking ahead, and taking into account the improved conditions in financial markets, not all our liquidity measures will be needed to the same extent as in the past. Accordingly, the Governing Council will make sure that the extraordinary liquidity measures taken are phased out in a timely and gradual fashion and that the liquidity provided is absorbed in order to counter effectively any threat to price stability over the medium to longer term. By so doing, the Governing Council will continue to ensure a firm anchoring of mediumterm inflation expectations. Such anchoring is indispensable to supporting sustainable growth and employment and contributing to financial stability.
Emerging market economies now account for more than half of global GDP and they accounted for more than 95% of world economic growth between 2008Q1 and 2011Q4.4 They are now facing a set of inter-related challenges, including high and growing levels of debt to GDP, slowing economic growth, falls in commodity prices which has hit commodity exporters and a strong US dollar. The healing process How should we read this picture? Is it still slow healing, just slower and hit by more adverse events than we expected? Or, like our friend the frog, has the gradual nature of the drift down in prospects and the fact that the deflationary shock looks so clearly to have been externally generated lulled us into missing some more fundamental shift? Is the water around us much colder than we thought? I think there is still some mileage in the slow healing story to explain the drift down in UK growth and the failure of pay and productivity to recover. One cannot repair quickly the damage to the global economy from the worst international financial crisis for 80 years. Some, but not all, of the effects of the financial bust and deep recession have passed. But some have not. I want to look now at some of these effects and headwinds that may be holding us back. First, there are signs that there may still be some scarring effects in the labour market.

Ladies and Gentlemen, it is also our expectation that the bank will continue to support the SME sector in Zambia, as the SME sector is key to sustainable economic growth and development of the country. You will agree with me that SMEs have the potential to create many productive jobs and contribute significantly to our economy, if well supported. It is our expectation that Absa Group Limited, through Barclays Zambia, will continue with its efforts and strategies that promote financial system stability, support monetary policy, enhance financial inclusion and gender mainstreaming for sustainable development in line with the Bank of Zambia’s strategic objectives. Today, as we commission this site, it is my hope that the facility will be of highest standards and that the new premises will provide an environment for the provision of innovative financial solutions to the public as an endorsement of the Absa Group brand promise “Bringing Possibilities to Life.” Master of Ceremonies, distinguished guests, ladies and gentlemen, with these remarks, please join me in applauding the Board, management, and staff of Barclays Bank Zambia, and Absa Group Limited, for this initiative that will introduce convenience and world class banking services and facilities to its clientele. The timing of this project is also a good indication that the Absa Group is opportunity focused rather than challenges. We hope this will rub on to the other players in our economy as well. Thank you and God bless.
I would like to begin my presentation this evening by sharing with you some of the recent significant developments in our economy: 1. Positive and significant real GDP Growth rates over the last 7 years. 2. Continuous and significant drop in overall annual inflation rate to levels below 10%. As at end 2006, overall annual inflation was 8.2% compared with 15.9% at end 2005. But I must hasten to add here that the impact of increases in petroleum products and anticipated millers upward adjustment of maize prices in line with FRA maize prices pose significant threats to overall inflation. 3. A fall in commercial banks lending interest rates. In line with falling inflation and yield rates on Government securities, the average commercial bank lending rate declined to 27.8% in December 2006 from 33.9% in December 2005. Although the trend is in the right direction, the Bank of Zambia considers the levels of lending rates to be still too high and I urge commercial banks to reduce their lending rates further to stimulate growth. 4. In 2006, the exchange rate recorded depreciation. Against the US dollar, the Kwacha depreciated by 21.1 percent compared to an appreciation of 26.4 percent in 2005.

To all the prize winners for 2006, I extend my sincere and heartfelt congratulations for well deserved awards. Please remember that it is not enough to only enjoy the glory of the moment, but also to take the responsibility to act as mentors to emergent writers. I believe that what the journalist fraternity needs is not individuals who excel alone, but a cadre of responsible reporters that leave an outstanding legacy. Let me also take this opportunity to thank ACCA, the sponsors of this event and prizes for their continuing support to economic, business and financial journalism. In conclusion, allow me to encourage our journalists to compete for international media awards as well. This will be the true barometer of where you stand as Zambian journalists because you will be judged against international best practice which is, in turn, the true barometer in global economy. As your patron, I wish you all the best in this and future endeavors that seek to raise the standards of journalism in the country. I thank you. 2  BIS Review 10/2007
It should also be pointed out that in practice, not all goods and services will be objects for cross-border trading and that competition will not therefore be completely all-inclusive, even when the single market has been implemented. The actual introduction of euro banknotes and coins will not noticeably increase competitive pressure in Sweden, as prices here will continue to be expressed in krona and prices in the euro countries will be expressed in euro. This will probably continue to give some scope in the future for specific pricing adapted to Swedish conditions. I stated earlier that the role of the krona as unit of account and means of payment in Sweden is unlikely to be affected by euro banknotes and coins becoming legal tender in the euro area as of 1 January 2002. The krona is also likely to continue to play an important role as store of value for Swedes, as least uncertainty over real growth in net wealth, i.e. future real purchasing power, will be achieved if households save and borrow in assets and liabilities in their domestic currency, as long as price stability is maintained. Hence, a large part of Swedish households' assets and liabilities are held in krona today. Those Swedes who now choose to build up their future purchasing power by buying euro bonds are probably intending to pay for their future consumption in euro, either by moving to a euro country or because they assume Sweden will adopt the single currency at some point in the future.

Experience suggests that asset price cycles continue to be very substantial In the last two decades market forces have indeed tended to cause misalignments between equilibrium and actual asset prices. Stock markets in particular have experienced this phenomenon. But in foreign exchange markets as well, prices have also a tendency to diverge substantially from their “equilibrium level”, although those divergences have been contained through fruitful G7 co-operation during the last 15 years. In addition, some markets have seen an increase in volatility and frequent volatility peaks. Although cyclical moves should be clearly distinguished from volatility, the latter may in some circumstances exceed what can be considered optimal, making the price determination mechanism less efficient and thus contributing to misalignments. Moreover, as demonstrated by a number of financial crises during the last two decades, contagion among countries and across financial markets has been frequent. As a result, investors have faced asset price fluctuations that might be more synchronised than before. Lastly, the connections between credit, asset price and business cycles have tended to amplify cyclical swings. Credit, in particular, is playing an important role in asset price fluctuations. Observed in particular during the “speculative bubbles” of the 1980s and early 1990s, this trend has persisted. Another example is provided by boom-bust cycles in asset prices which have often been associated with sharp economic contractions. Several factors are in play when financial asset prices experience amplified moves I shall give a few examples.
Therefore, while the focus of my comments will be on the current situation and looking forward to the future, I hope you will allow me also to reflect on some of the things I have learned over the past years. In the first part of my intervention today, I will discuss the current state of the new framework for bank capital adequacy, or Basel II, as well as how supervisors are carrying out work related to Basel II and sound risk management practices. Second, I would like to discuss some of the key lessons that I’ve learned in the development of Basel II, which are factors that I believe will contribute not only to its successful implementation and longevity, but also more generally to financial stability and effective banking supervision. And I will close with some more detailed comments on a lesson we have learned during this process that I think has broader implications for risk management in general – that is, the importance of taking account of the macroeconomic perspective and the effects of the cycle. Basel II update One of Barcelona’s greatest claims to fame is its modernista architecture, exemplified by the work of Antoni Gaudí. The modernistas looked to the past for inspiration, but applied modern tools and techniques to create something new with a focus on intricate details. Of course, the Basel II Framework does not have the beauty of Gaudí’s Sagrada Família, but I nevertheless think that both supervisors and the industry have accomplished something similar.

This group of speculators, despite increasing volatility to a certain extent, cannot remain in the market for long, as they generally lose money. The second group or the good speculator, on the other hand, in line with his/her forecasts, sells when it is a bull market and buys when it is a bear market. Leaving aside the problems of causing volatility, this group contributes to stability in the markets. Within this framework, it is possible to see members of both groups in any market. In an effective market, it is not possible to make a profit continuously guided by bad speculation, nor do the prices formed in the market approach those prices indicated by economic variables. Consequently, speculation does not have much effect on prices created in an effective market; on the contrary, it may make a positive contribution to the markets by increasing liquidity. Hence, speculation is not a threat in derivatives markets, but a guide in activating the spot market by increasing liquidity. Another important point with regards to derivatives markets is that these markets enhance the predictability of spot markets, which form the basis, and help them perform more effectively, by enabling the expectations of economic units in the future to be measured and reflected on prices. As a matter of fact, prices in derivatives markets are actually the prices that are expected in spot markets in the future. 5  Baron D. (1976), “Flexible Exchange Rates, Forward Markets and the Level of Trade”, The American Economic Review, Vol. 66, No. 3, pp.
First of all, was it true? Secondly, if it was, why? And thirdly, if indeed there was an arbitrage opportunity then how could we unlock its value? I remember feelings of frustration. Somehow we couldn’t quite see how to reconcile some of the essential differences, including regulatory and accounting distinctions. To say nothing of the language or jargon used in the two sectors. Well, the rapid growth of the derivatives industry during the late 1980s changed all that! All sorts of new instruments for exploiting arbitrage opportunities like the one I described came into being. The different aspects of risk were unpicked and recombined. Those developments depended partly on new information technology. And, together with securitisation the functional divide was crossed. That evolution provided colossal commercial opportunities and enhanced general economic value. I recall this because it’s a good example of how technical advances, some rocket science and market forces have changed the fortunes and capabilities of two great industries. And today, even though we don’t have full integration we certainly have greatly increased interdependence and linkages. Just take the involvement of the insurance industry in credit risk transfer as an example. And just as with a lot of interdependencies you get network effects with undoubted economic benefits on the one hand, but potential vulnerabilities on the other. Maybe I can start by making a few observations on the vulnerabilities - increased risk to firms or the overall financial system - that were less significant until the interconnections appeared.

To illustrate why some authors have gone as far as calling this “the credit rating crisis” (Benmelech and Dlugosz, 2009) consider that before the crisis more than half of the structured finance securities rated by Moody’s carried an AAA rating and, during the period 2007-2008, the tranches rated by Moody’s that were downgraded was close to thirty six thousand, where nearly one third of downgraded tranches bore the AAA rating. This is a complex issue, especially due to the prevailing incentives in this sector. A recurrent area of criticism on the incentives side is the simultaneous role of advisor and issuers of ratings. But the spectrum of potential conflict areas could be broader, and thus more efforts must be devoted to understanding in detail the operation and linkages of this industry. Final comments The subprime crisis has opened a debate on the risks of financial innovation. It reminds us that higher levels of sophistication do not guarantee the normal operation of the financial system. A reasonable level of regulation, control and monitoring is required. I think we should move forward in innovation processes, as they are positive, but we must move forward with caution. It is important to implement policy changes gradually to provide an adequate level of information and transparency that will ensure an adequate assessment of the risks involved. It is also crucial to review in detail the incentives and potential conflicts of interest arising from the new tools and processes.
There should be a policy and procedure in place to manage the risks. Internal control: The financial institutions should set up preventive, detective and corrective control mechanisms that may be built in the operating procedure or programmed in the system involving new product and service delivery. Contingency plan: The financial institutions should formulate the contingency plan to carry on the business under unexpected events. Staff development: The financial institutions should establish a staff development plan to enhance personnel capabilities to conduct new product and service operations. Last topic of presentation is new challenges for BOT supervision and ways to overcome. 5. New challenges for BOT's IT supervision and ways to overcome  (1)  While the financial industry is moving fast with innovations and new developments, supervision needs to ensure the stability of the financial system. Supervisors need to encourage financial institutions to operate their businesses in a safe and sound manner as new delivery channels or services could exacerbate some of the same risks inherent in traditional banking. However, the prudential regulatory framework has to be congruent to the evolution of the e-banking business. Therefore, we need to strike a balance between the need to maintain the stability of the financial system and to foster developments, competition, and a level playing field. There are ways to overcome this challenge. BIS Review 35/2005  7  -  Regulators need to keep up with the development of the market while being proactive in formulating the regulatory framework.

But, above all, I feel a great responsibility at having inherited the enormous legacy of an institution with the history, functions and position in the Spanish economy of the Banco de España. I wish to begin this new stage thanking those people who have steered my career over the years. I have learnt from all of them and their teachings have been a source of wealth for me. My sincere thanks to all of them. Thanks, of course, to José Luis Malo de Molina, under whose leadership of the Research Department I have pursued most of my career, and, among others, Eloísa Ortega and José María Bonilla. They were most forthcoming with their trust and have, at different times, been a major source of guidance and support for me. Thanks also to Fernando Restoy, above all for being a point of reference in terms of competence and dedication to public service. Thanks especially to José Manuel González Páramo, who oversaw my Ph.D. and took me to Frankfurt. That experience gave me, early on, a first-hand view of the work of the European Central Bank and of the Banco España’s potential as a member of the Eurosystem. Naturally, my greatest gratitude is to Governor Luis María Linde for naming me Director General for Economics, Statistics and Research almost two and a half years ago. That was, unquestionably, the necessary step for taking me to where I am today. 3/5  Thank you, Governor, for your constant support over this period.