samchain/econo-pairs-v1 huggingface dataset:
Velocity A second dimension of the Big Data revolution is its greater frequency and timeliness. Higher-frequency data can give new or timelier insights into trends in financial markets and the economy. It can also sometimes help with thorny identification problems, which otherwise plague both Big Data (as the Google flu example demonstrated) and classic econometric methods (as the DSGE example demonstrated). The crisis revealed that, in situations of stress, some of the world’s largest and deepest financial markets could be drained of liquidity. This resulted in some of these markets seizing up. In response, as one of their first acts, the G20 agreed in 2009 to collect a far greater amount of data on transactions in these markets, to 39  help better understand their dynamics in situations of stress. These data are stored in Trade Repositories. Over recent years, these trade repositories have begun collecting data on a highly granular, trade-by-trade basis. This has meant they have quickly accumulated a large stockpile of data. For example, around 11 million reports are collected in the foreign exchange market each working business day. These provide a rich data source when making sense of high-frequency financial market dynamics and dislocations. One example of such a dislocation came when the Swiss franc was de-pegged in January 2015. This unexpected move caused large shifts in asset prices. The franc exhibited a sharp V-shaped movement in  36  Farrell and Wheat (2015). Ali, Haldane and Nahai-Williamson (2012). 38 For example, Bean (2016). 39 See, for example, FSB (2010).

Traditional surveys of market participants or the general public tend to be biased in their sampling and framed in their responses. As in quantum physics, the act of observing can itself alter behaviour. These realities may call for exploring non-traditional means of revealing people’s preferences and sentiments. To give one recent example, data on music downloads from Spotify has been used, in tandem with semantic search techniques applied to the words of songs, to provide an indicator of people’s sentiment. Intriguingly, the resulting index of sentiment does at least as well in tracking consumer spending as the Michigan survey of consumer confidence. 51  And why stop at music? People’s tastes in books, TV and radio may also offer a window on their soul. So too might their taste in games. Indeed, I am interested in the potential for using gaming techniques, not just to extract data on people’s preferences, but as a means of generating data on preferences and actions. Existing models, empirical and theoretical, often make strong assumptions about agent behaviour. Theoretical models are based on axiomatic assumptions. Empirical models are based on historical  49  Rotemberg (1984), for example, discusses the statistical rejection of rational expectations models for consumption and labour demand. 50 Tuckett and Nyman (2017), Shiller (2017) and Nyman et al (2018). 51 Sabouni (2018). 12  All speeches are available online at www.bankofengland.co.uk/speeches  12  behaviours. These restrictions may, or may not, be borne out in future behaviour.
A jump in import demand for construction materials threatens to rekindle inflationary pressures on global commodities, reversing the current downtrend that began last year. Heightened commodities prices will add to higher input costs for global manufacturers, whose margins are already under pressure from elevated wages. If manufacturers pass on these higher production costs, we could see an increase in goods price inflation. At a time when services inflation is proving stubborn, a resurgence in goods prices will negate the hard-fought gains in the nascent disinflation process. The third uncertainty is fresh shocks to food and energy prices. Lower global food and energy prices have largely facilitated the fall in global headline inflation so far. But the nascent disinflationary trend may be interrupted by a rise in food and energy prices. For instance, in January this year, firm food and energy prices elicited strongerthan-expected inflation outturns. Upside shocks to food and energy prices can emanate from a few sources. Unfavourable weather conditions could dampen agricultural yields. This happened in Asia in January. The fall in OPEC oil output remains a factor underpinning some firmness in oil and gasoline prices. An escalation in geopolitical tensions could contribute to bouts of volatility in commodity prices. So, what does all this mean for financial markets? Financial markets may take a while to adjust to this new regime of higher interest rates, and that adjustment may not be smooth. We witnessed last year how such a disorderly adjustment could unfold, when central banks raised interest rates at an unprecedented pace.

There was already some inflation in spring 2001 and a rapid slide in the exchange rate of the króna until the end of November 2001 caused inflation to increase substantially, from around 4% when inflation targeting was adopted to 9½% in the beginning of 2002. Inflation surged following heavy demand pressure in the economy which was driven by large-scale credit expansion and resulted in an enormous current account deficit, peaking in 2000 at 10% of GDP. For most of the period of overheating the Central Bank did not follow a direct inflation target and the backbone of monetary policy was a fixed exchange rate, with a fluctuation band, i.e. a soft exchange rate peg. Nonetheless, the Central Bank sought to counter inflationary pressures as soon as 1999 and began raising interest rates, which caused the króna to strengthen until spring 2000. Expectations changed then, partly under the impact of the wide current account deficit, and the currency inflow diminished. A downward exchange rate trend then began. The Bank raised its policy interest rate in phases until the end of 2000 when it reached 11.4%, where it remained until spring 2001 when a minor cut was made. The interest rate remained unchanged until late 2001 when the Bank felt it could discern clear signs that inflation was beginning to come down again. By then, the exchange rate of the króna had fallen by almost one-third from its highest point in spring 2000.
Instead of using a telephone, a normal card reader, and a customer’s signature, one leading Internet payments company has devised a secure method of allowing a bank customer to shop on-line with a credit card, by never releasing “in the clear” the customer’s credit card number on the Internet itself. Instead, the company only releases the credit card number and a merchant’s request for payment to the customer’s issuing bank, away from the Internet, after verifying on-line with the customer that the purchase was authentically made. The bank processes the transaction as it would any other credit card purchase; the value added by the company is that the customer’s credit card number is never on-line, a benefit indeed in today’s security-poor Internet. It is not hard to imagine that another step in this direction is for a third-party organization (perhaps even a bank subsidiary) to issue secure, encrypted electronic checks on the Internet on behalf of bank customers, or even unaffiliated parties, wishing to make purchases on-line. Much legal uncertainty remains in the United States about establishing such a process, however. Basic questions remain unanswered. What, exactly, would be an authorized signature on an electronic check? Put another way, what types of entities would be authorized to act as certification authorities on the Internet for such commercial conveniences as electronic purchase orders, electronic negotiable instruments, or their bases, digital signatures? Would these 11  See 12 C.F.R. Part 205.

Being a modern bank, it conducts business principally on the Internet. IIB has a series of quite attractive Internet pages where its products are offered. These pages spell out the products, deposit terms and interest rates, and loan terms and interest rates. All agreements are governed by the law of Atlantis. All deposits are deemed received over IIB’s “counters” in Atlantis, and all loans are paid out of Atlantis. Atlantis has an enjoyable ambiance even exceeding that of Nice and Saint Paul de Vence; therefore, I see no need to leave the island. I do receive and entertain customers when they visit Atlantis. I do place telephone calls to customers who have responded to my Internet page, but I do not make cold calls to customers. Communications with customers over the Internet are state-of-the-art secure. Customers receive account statements over the Internet, issue payment instruments to IIB over the Internet, and request loans over the Internet. All payments to and from accounts are made by wire transfer to IIB’s correspondent account maintained on the books of Atlantis Bank, the only bank chartered under Atlantis law authorized to engage in banking transactions with Atlantis residents. Customers may instruct IIB to make payments for their account. These too are consummated by means of payments out of IIB’s account at Atlantis Bank. Loans are disbursed and paid the same way. The question presented is whether IIB is violating the law of the countries in which its customers are located.
According to research, the productivity rise was mostly due to what we call "total factor productivity", that is improvements that can be attributed neither to capital nor to labor, but to specific organizational, technological and institutional changes that result in productivity rises and GDP growth. In the past few years, the new EU member-states register trends of positive influence also of the labor to the economic growth, while among the SEEU countries this contribution is still mainly negative. 3 Structural and institutional reforms also had key influence on the accelerated productivity growth. Transition indicators of the EBRD that are commonly used for assessment of the reforms indicate that the new member-states have already reached the level of the developed countries in the fields of privatization, price liberalization, trade and foreign exchange systems (although they are still lagging behind with respect to the enterprises restructuring, competition protection, banking reform and liberalization of the interest rates and financial markets and institutions, as well as the overall infrastructure). 4 On the other hand, these indicators clearly point to the fact that the SEEU countries, are significantly lagging behind with the reforms in all these areas, except price liberalization and to a certain extent trade and foreign exchange systems. The process of accelerated income increases, that is the process of real convergence, also initiated the process of nominal convergence.

The Basel Capital framework was flawed: it didn’t provide adequate loss absorbency in going concern; and it failed to consider what would happen in gone concern states of the world. The global framework remains in that position until we can get agreement on, and implementation of, a Total Loss Absorbency framework. This is our single most important objective, at the heart of the global work of the FSB in respect of the largest banks – the globally significant. The huge effort to secure what will be an historic agreement comes to the table in Brisbane next month. I’m not going to  2  BIS central bankers’ speeches  tempt fate; but my fingers are crossed, and I should add that this is the nearest I get to insider trading, as I know the impressive quality of the work that has gone on in the FSB. The second area on which I will comment concerns the insurance industry, namely the introduction of Solvency II. It will happen in 2016. It is a major step forward as a framework for risk assessment. It is not the first time that insurance firms will be using models to assess safety and soundness and policyholder protection. That would be an absurd thing to say for an industry that has modelled from the outset. But, it does represent a step change in the use of models in the prudential process. Very briefly I want to be clear that we will be using these models in an appropriately diagnostic fashion.
At the same time, the growing imbalances in the world economy became and continue to be a source of instability, in addition to spurring protectionist tendencies. It is perhaps time to honor some fundamental principles, such as the one noted in an IMF Pamphlet from 1992: “The philosophy of the Articles of Agreement is based on the superiority of free trade as the organizing principle of international economic interaction.” 4 Lessons from the crisis The joint, massive, and unprecedented policy responses that were put in place as the crisis unfolded surely deserve due credit. As Mr. Subramanian here at the Peterson Institute noted in the Financial Times in late December 2009: 5 “What is striking about the influence of economics is that similar policy responses in the fiscal and monetary areas, and non-responses in relation to competitive devaluations and protectionism, were crafted across the globe. They were evident in emerging-market economies and developing countries as much as in the industrial world; in red-blooded capitalist countries as well as in communist China and still-dirigiste India. If ever there was a Great Consensus, this was it.” A key lesson from the crisis is the need for multilateral cooperation and collective action. It relates to the framework for polices on prevention, resolution, reform and implementation. It also relates to the institutional set-up.

EU regulations due to take effect later this year will require credit rating agencies seeking to operate in Europe to register and be supervised by the proposed European Securities and Markets Authority (ESMA). Concurrently with the significant work to strengthen the resilience of the financial system, important changes are also being considered to improve the regulatory and supervisory framework. Of particular significance is the creation, proposed by the de Larosière Report, of the European Systemic Risk Board (ESRB), which will exercise macro-prudential supervision and monitor systemic concerns, and, at the micro-prudential level, of the European System of Financial Supervisors (ESFS). This consists of a network of national financial supervisors working with the new European Supervisory Authorities, namely the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority. 2  BIS Review 67/2010  Complementary proposals emerged from the G20 London Summit of April 2009, which launched a global plan for recovery and reform and mandated the FSB to ensure the consistent implementation of the G20 road-map. Ongoing work, which is expected to be completed in the coming months, includes an impact assessment of the BCBS capital and liquidity proposals; the development of tools to reduce the probability and impact of failure of systemically important institutions; measures to reduce the potential of OTC derivatives markets to act as channels of contagion; proposals to restart securitisation on a sound basis; and promoting the full national implementation of the FSB Principles and Standards on compensation.
A central rate that is overly weak would therefore provide stimulus to the Swedish economy that could lead to higher inflation than in the other participant countries as well as unemployment at a later stage when the impact of the weaker competitiveness makes itself felt. With an overly strong rate, the risk instead is of lower inflation than in the other countries, initially having a negative impact on growth and employment. This line of reasoning also clearly demonstrates the connection to fiscal policy. A weaker exchange rate requires tighter fiscal policy and vice versa. In practice, it is not possible to base the choice of the central and conversion rate only on model estimates of what is a desirable longterm rate. It is also important to take into account expected developments in the coming years. It is not in the interests of either Sweden or the other involved countries to have problems arise during the period of Swedish participation in ERM2. In this respect, the economic climate is a factor that demands attention. Previous experience also indicates that negotiations of a central rate would be influenced by the rate that has prevailed between the krona and the euro in recent years. Recent market assessments have been in an interval between 8.50 and 9 kronor per euro, as I mentioned earlier. Monetary policy strategy in ERM2 If Sweden were to join monetary union, the responsibility for ensuring a balanced development in our economy would essentially lie with the government and the Riksdag.

To ensure stability as regulations are lifted, leveraging on technology to improve data monitoring systems have enhanced the ability to monitor developments to assess any emerging risks to the system. During this period of strong fundamentals and rising potential for economic expansion, Malaysia has the flexibility to introduce measures not only to support growth but also to improve the quality of the growth and its long term sustainability. This includes significant investment in education and according priority towards achieving socio-economic stability. Overall, a balanced and holistic approach to economic management is aimed to ensure the foundation for a strong economy and its competitive position in the global economy. Thank you.
Being wholly-owned, the incorporation of the Islamic subsidiary will provide an opportunity to the group to enlarge the Islamic banking market to potential institutional investors, both domestic and foreign, who wish to participate in the Islamic financial activities through direct equity participation. The divestment of shares in the Islamic subsidiary allowable up to 49%, is subject to the condition that the Islamic subsidiary will remain as a subsidiary of the commercial bank. This option will provide the banking group with the opportunities to find a strategic partner for the Islamic subsidiary, thus diversifying the range of players available in the Islamic financial market. Indeed, foreign participation in the Islamic subsidiary would enable the group to tap on the regional and international business opportunities. In going forward, the move to issue new licences and accord legal status to the existing Islamic banking operations of the conventional banks is expected to accelerate the positioning of Malaysia as an attractive Islamic financial hub to the international financial community. In this regard, the Islamic financial players of other banking groups that have achieved the critical mass and strength are encouraged to explore the strategic advantage of the incorporation of an Islamic subsidiary, and in elevating the industry to a more dynamic and advanced phase of development including ventures abroad. There is a large business potential to be tapped in an environment of strong and rapid economic and financial development in the country and the region.

Having said this, the workshop you are attending today and tomorrow has the following key objectives: i.  to explain the practical aspects of “Context Establishment” and the “Risk Identification” processes so as to ensure that you fully understand these initial, but critical steps, in the risk management process so as to enable you to assist your respective departments to complete these important stages of the process; and  ii. to remind you of your role and responsibilities, as Risk Liaison Officers, Alternates and Risk Coordinating Officers, in the Risk Management Framework. Ladies and Gentlemen: Allow me to reiterate what I said during the risk sensitization workshops – the success of the Bank of Zambia Risk Management Framework will in a large measure depend on how well this process will be understood and how well its implementation at departmental level will be facilitated by you. As Risk Liaison Officers, Alternates and Risk Coordinating Officers for your respective departments, you will be expected to not only provide leadership and guidance to your respective departments on risk management matters, but you will also be required to play a catalytic role in the whole risk management process. As the proverbial saying goes, the buck for managing the risks in your respective Departments stops at you! The Risk Management Department’s role will remain confined to the coordination and facilitation of the Bank-wide risk management activities. In conclusion, I wish to urge you all to take a keen interest in the deliberations of this workshop.
If financial resilience is to keep pace with the changing system, regulations must serve not just conduct of business and market integrity, they must also be prudent from a macro perspective. The growing non-bank system must be able to serve the wider economy not just in the good times, but also in the bad. See, for example, Xiaoxia Lou and Albert Y. Wang, ‘Flow-Induced Trading Pressure and Corporate Investment’, Journal of Financial and Quantitative Analysis, February 2018. 18 FSB, ‘Policy Recommendations to Address Structural Vulnerabilities from Asset Management Activities’, January 2017. To operationalise some of the FSB recommendations, the IOSCO, the international body of securities regulators, in 2018 issued recommendations and good practices to improve liquidity risk management for investment funds – see ‘IOSCO issues recommendations and good practices to improve liquidity risk management for investment funds’, media release, February 2018. 19 See the FCA’s Business Plan 2019/20 and ‘Consultation on illiquid assets and open‑ended funds and feedback to Discussion Paper DP17/1’, Consultation Paper CP18/27, October 2018. 17  19  All speeches are available online at www.bankofengland.co.uk/news/speeches  19  Conclusion  Macroprudential may no longer be the buzz phrase it was a decade ago. But its objective of promoting a financial system that can serve households and businesses in bad times as well as good remains as important as ever. The avoidable damage caused by the economic tremors of 2008 is a salutary reminder of the costs a fragile financial system can impose on an economy.

This isn’t an issue about a single fund or even about funds invested in a single asset class. Any incentive for investors to be at the front of the queue might be detrimental to the resilience of finance for the real economy. The emerging evidence is that companies whose existing liabilities are subject to selling pressure from funds tend to cut back new issuance and – presumably to protect their cash flow position – cut both investment and employment.17  If these new forms of finance are to give maximum support to long-term economic growth and investment, we need them to be consistent. So, after highlighting this issue in late 2015, the FPC supported the work of the Financial Stability Board (FSB) of the G20, culminating in the FSB’s January 2017 recommendation that market regulators should ensure funds’ redemption terms are consistent with their assets and investment strategy.18 Since then, global market regulators, who are at the coal face of these issues, have been turning this recommendation into new rules. Here in the UK, the FCA is finalising its own rules for funds investing in illiquid assets to strengthen liquidity management. 19  These are global issues. So macroprudential authorities across the world will need to review new global asset management rules. An assessment is needed of whether they will be effective in dampening any restriction to the supply of finance during economic downturns.