samchain/econo-pairs-v1 huggingface dataset:
It was clear that advances in information and telecommunication technology had a major impact on the financial services industry, generating various financial innovations and new business methods, such as internet banking, electronic money, on-line broking services and electronic trading systems. For the real economy, however, the impact was much harder to assess, not least due to a lack of reliable statistics and interpretation difficulties regarding “new economy”-related developments in productivity. As Nobel Prize Laureate Robert Solow said in 1987: “You can see the computer age 2 everywhere but in the productivity statistics”. The difficulty in interpreting these developments therefore suggested caution on the part of policy-makers. The interaction of the “new economy” with developments in financial markets Let me now turn to the interaction of the “new economy” with financial markets. It has been long debated what role the development of financial markets played in fostering belief in the “new economy”. In most industrialised nations, on the waves of financial liberalisation and globalisation, capital markets have been growing tremendously over the past two decades, both in terms of volume and value of transactions and in the development of new types of securities. For the euro area, the preparations for and the actual introduction of the euro have undoubtedly been an important catalyst, improving the efficiency of the euro area capital markets and, to some extent, reducing existing information asymmetries, for both the equity and debt markets in the euro area. This has certainly been a very positive development which I wholeheartedly support.

It is whether they can convince investors that it is safe to provide them with funding at reasonable spreads over Bank Rate without central bank support. As the Financial Policy Committee (FPC) noted in its recent Review, UK banks are still some way from being able to convince the market in this respect. Regulators, who from 1 April will be in the Bank of England’s new Prudential Regulation Authority, are now working hard to ensure that banks are making adequate provisions for future losses, the likely costs of regulatory penalties and compensation to customers, and stating the riskiness of their assets in a more prudent way. A lesson from past crises, and also from this one, is that it is important to act now rather than hope that problems will go away of their own accord. As the FPC said last December, it is likely that banks will be required either to raise more capital or to restructure their businesses or exposures, and the FPC will review the position in March. There is no single remedy appropriate to all banks. With proper implementation, there is no reason why the two banks with significant state shareholdings could not largely be back in the private sector within a relatively short period. After all, in the United States banks that received state support are already back in private hands. Restoring our banking system to full – and transparent – health is only one of the structural changes that will be necessary to rebalance the economy.
22  All speeches are available online at www.bankofengland.co.uk/news/speeches  22  Chart 15: FPC housing tools more efficient than monetary policy for addressing the same risks  Risks increasing as the GDP-at-risk tail grows larger  1yr ahead median GDP growth 4.0 forecast (%)  2004  If FPC housing tools had been in place  2004 2007  2014  3.5  3.0 2000  2015  2006  2.5 2005  If monetary policy acted to achieve same reduction in GDP-at-risk  1998  2001  2003  2017 2.0 2016 2010 2002  2013 1.5 2018  2008 2019  2011 1999  1.0  0.5  3yr ahead 5th percentile GDP growth estimate (%, cumulative)  2012  0.0 -6.0  -5.0  -4.0  -3.0  -2.0  -1.0  0.0  1.0  2.0  The FPC’s structural and cyclical bank capital requirements The UK’s bank capital framework optimises the FPC’s objective function by balancing the impact of higher capital on GDP-at-risk with the impact of higher capital requirements on the central GDP forecast. 𝑇  min ℒ𝑡 ≡ 𝐸𝑡 {∑ 𝛽 𝑖 [𝑓(𝐺@𝑅𝒕+𝒊 ) − 𝜙𝑦𝑡+𝑖 ]} 𝜌𝑡  𝑖=0  The capital framework includes structural requirements that are not designed to vary systematically over time, and a cyclical requirement that varies with the financial cycle to match the level of resilience with the level of GDP-at-risk.

With these guidelines, the different systems can be monitored consistently, while at the same time keeping the administrative effort of the operators at an acceptable level. Business Continuity Planning (BCP) Different experiences in the recent past – from the 9/11 terrorist attacks in the United States to minor local technical difficulties – suggest that measures to strengthen the operational resistance of the Swiss financial sector must be taken. During the past year and a half, the SNB has headed a sectoral working group in cooperation with the SFBC secretariat. The group consists of representatives from infrastructure providers, financial institutions and the authorities and has conducted an in-depth analysis of the business continuity plans of the major players in the financial markets. The Business Continuity Planning (BCP) project focuses on precautionary measures to prevent the likelihood of disruptions. In addition, measures are taken to help cope as efficiently as possible with disruptions, once they have occurred. In its analysis, the working group focused on the two business processes which were considered to be especially critical for system stability and which must be maintained without fail even in exceptional circumstances. Firstly, the supply of liquidity to the financial system with central bank money by means of repos and, secondly, large-value payment transactions between the commercial banks in Swiss Interbank Clearing (SIC). The analysis began with the following scenario: a severe disruption causing the failure of an important operational centre and incapacitating its staff.
5  Not included in these figures are significant pools of capital held in privately managed accounts run by hedge fund managers as well as capital managed by the proprietary desks of global investment banks. Though typically not formally structured around hedge fund vehicles, these assets closely mirror the investment activities of hedge funds. BIS Review 8/2005  1  Until the second half of the nineties, the hedge fund industry capital base was largely one of high net worth fortunes. Part of the acceleration of inflows throughout the second half of the nineties can be attributed to pension funds, endowments and other institutional investors who have begun to allocate small percentages of their asset base to hedge funds. More recently, funds of funds have become an important source of new inflows to the industry. The largest share of the industry’s total client base continues to be private wealthy individuals either as direct investors or through funds of funds. Industry flows data suggest, however, that assets from institutional investors have recently grown more rapidly than the overall industry asset base. A major factor contributing to the flows of new money into hedge funds has been the high relative rates of return (graph 2). The average return on the CSFB/Tremont hedge fund index over the past 10 years is 11%. Dividing the excess return over cash by the realized return volatility, hedge funds achieved a Sharpe ratio of 0.8.

of Hedge Funds  Assets under Management  Source: HFRI Graph 2 All Hedge Fund Assets Flows and Returns 50'000  50%  40'000  40%  30'000  30%  20'000  20%  10'000  10%  0  0%  -10'000  -10%  -20'000  -20%  -30'000  -30%  -40'000  -40%  -50'000  -50%  Mar-94  Mar-95  Mar-96  Asset Flows (LHS)  Mar-97  Mar-98  Mar-99  Mar-00  MSCI World $ Return (YoY, RHS)  Mar-01  Mar-02  Mar-03  Mar-04  All Hedge Funds Return (YoY,RHS)  Source: CSFB-Tremont  6  BIS Review 8/2005  Graph 3 Crude Oil Price and Futures Contract Volume (NYMEX)  60  300'000  50  250'000  40  200'000  30  150'000  20  100'000  10  50'000  0  0  1996  1997  1998  1999  2000  2001  Non-Commercial Long Contracts (rhs) WTI Crude Oil $ Barrel) (lhs)  2002  2003  2004  2005  Non-Commercial Short Contracts (rhs)  Graph 4 Gold Price and Futures Contract Volume (CMX)  300'000  550  250'000  500  200'000  450  150'000  400  100'000  350  50'000  300  0  250  1996  1997  1998  1999  2000  Non-Commercial Long Contracts (lhs) Gold Spot $ Ounce) (rhs)  BIS Review 8/2005  2001  2002  2003  2004  2005  Non-Commercial Short Contracts (lhs)  7
But for funds investing in corporate bonds and even less liquid assets, it could be. So perhaps it should be no surprise that funds holding corporate bonds see redemptions that are seven times more sensitive to price moves than in equity funds and twice as sensitive as in sovereign bond funds. 20 (slide 14) Fortunately – as many of you know – there are normally other measures in place, from swing pricing and dilution levies to gates and suspensions. But, in a severe market stress it is not at all clear that such measures can be calibrated with the necessary precision or (to echo Jon Cunliffe) “whether their activation would dampen or amplify redemption pressures across the market generally”  Moreover, the impact of greater selling pressure under stress could be magnified by the coincident decline in corporate bond market liquidity more generally. Market-makers have become less active in their market making. Our analysis suggests that, in response to asset sales by high-yield bond funds, the extent to which dealers are willing to see their inventories of corporate bonds increase has shrunk by a factor of about seven. 21 (slide 15)  The flipside is that market prices respond twice as much to asset sales as they did, in order to draw in other buyers in a short timeframe.22  As with derivatives and collateral, we need better diagnostic tools to assess these risks (slide 16). That’s why we’re investing in simulation models to test what it would take for there to be material market impacts.

SME Financing and Business Linkages in Zambia – Focus Financial Services. Further, the programme will include panel discussions on policy recommendations and an interactive session. The discussion panel will, among others, cover policy issues and outline some possible recommendations for action. Chairperson As I conclude, allow me to thank the presenters and panelists for accepting to facilitate our deliberations at this Forum. I urge all delegates to engage fully in these discussions so that we can collectively develop pragmatic solutions to the financing challenges facing Zambian businesses. Thank you for listening. 2  BIS central bankers’ speeches
In the line of this logic, the raising of confidence would bring about its positive effects even on increasing their banking activity, which will be in compliance with their objective to be in the market with as much dignity as possible. In this discussion I will not focus on the technical aspect of cause explanation and process implementation, which I consider as exhausted by discussions made between respective technical staff, but I will focus on what we intend to reach and on the shortest and safest way to complete this process successfully. Also, I would like to clarify that the individuals will continue to participate in the primary market of securities and this market will continue to be organized by the Bank of Albania. What we intend to reach through this process is: 1. The realization of a smooth transition process, at the smallest cost possible, in terms of maintaining the participation of individuals in the primary market. 2. The reduction of the time which is needed for the realization of treasury bill primary market auction. 3. The increasing possibilities to apply into practice the principle “Delivery versus payment” for operations that will be performed in the secondary and retail Treasury bill market. Here I take into account either the facilitating of procedures or the increased safety for using these securities as collateral and for encouraging the interbank and lending market. 4.

For instance, during a press conference in 2015, when asked whether he was dovish like Janet Yellen or hawkish like Paul Volcker, he replied ‘My name is Raghuram Rajan and I do what I do’. Of course, the next day this James Bond-ish remark made headlines in the financial press. When his three-year tenure ended, inflation was near the five percent inflation target, thereby improving conditions for ordinary citizens. Interest paid by the government had been reduced and bonds with maturities up to forty years were being issued for the first time. The value of  Page 3/4  the rupee had stabilised, foreign exchange reserves were at a record high, and India was the world’s fastest growing major economy. The three pillars of society Let me finish by saying a few words about one of Raghu’s latest publications. Next to an impressive list of about 90 peer-reviewed papers on specific economic and financial topics, Raghu has also written four books with a broader perspective. In his book, The Third Pillar: How Markets and the State Leave the Community Behind, which was published this year, Raghu emphasises that society is supported by three pillars: the state, markets and the community. Society can prosper if it achieves the right balance between the three pillars. Raghu argues that today, these pillars are seriously out of balance. While states and markets have expanded their powers, communities have been left powerless in dealing with the consequences of technological change and globalisation. As a result, people turn towards populist politicians.
Conclusion Behavioural biases afflict us all, in every activity from setting concrete to setting interest rates, from stress-testing steel to stress-testing banks. Central banks cannot be immune. Because central banks’ judgements affect society at large and in large ways, it is important there are institutional means of safeguarding against these biases. The Bank of England’s new policy framework is part of the response to that challenge. By design, it contains institutional safeguards against many of the biases most important for UK monetary and financial stability. But it is early days. In developing this framework further, three principles will be important – recognition, research and revision. Because behaviour biases are often unconscious, recognising them is crucial for building robustness. Put differently, denying their existence is proof of their importance! Research can help in identifying and understanding these biases and assessing institutional means of leaning against them. The Bank hopes to make a real behavioural change of its own on the research front in the years ahead. Armed with that research, the Bank should be better-placed to make revisions to policy. Historically, flexing policy frameworks has often been taken as a sign of regime failure. Quite the opposite ought to be the case. If the Bank’s policy machine is to be robust over time, it will need to evolve and flex. If central bank regimes are encased in glass, they are apt to shatter when next hit by a falling Rock. 64  Stockton (2012) also reaches this conclusion.

Debt-to-income ratio in different income groups 2016 Percentage of disposable income 400  400  350  350  300  300  250  250  200  200  150  150  100  100  50  50  0  0  1  2  3  4  5  6  7  8  9  10  Note. The columns show the median in each decile group. Data for July 2016. The high debt ratio in the lowest income group should be interpreted with a certain amount of caution, as this group includes, among others, households with highly varied incomes, for example households with negative income. Source: The Riksbank  In addition to households having different sizes of assets and liabilities that are affected by interest rates to different degrees, there may also be other dimensions that play a role in how the distribution of income and wealth is affected by a period of very expansionary monetary policy. For instance, one can imagine that household that are used to managing their assets and liabilities have better conditions for safeguarding themselves against or benefitting from the effects of monetary policy on interest rates and asset prices. However, the distributional effects of monetary policy do not come solely through changes in nominal interest rates and asset prices. Ultimately, it is the effect when consideration is given to inflation that is important. And the composition of household wealth is also significant in this context.
Abundant Savings in the Euro Area Current account balance (% of GDP)  10,0  10,0  7,5  7,5  5,0  5,0  2,5  2,5  0,0  0,0  -2,5  -2,5  -5,0  -5,0  -7,5  -7,5  -10,0  -10,0 2001  2003 Spain  Source : Eurostat, Banque de France  2005 France  2007 Italy  2009  2011 Germany  2013  2015  Euro area  This is why we need to foster more extensive private risk-sharing in the Eurozone, which requires a more integrated financing and investment framework. As the so-called Fratzscher report on Increasing investment in Germany puts it: “the key to a sustainable recovery in Europe lies in faster growth that must be bolstered first and foremost through a joint investment and modernization campaign “. I will come to this issue. But we also need to achieve better coordination of public policies. To that effect, we need to think through the concrete role of a euro area Finance Minister could play. 4  BIS central bankers’ speeches  II. Why we need a “full coordination” institution in the euro area, embodied by a finance minister  Clearly, monetary policy cannot be a substitute for economic policy coordination or for the lack of reforms. If only for that reason central bankers need to take part in this debate, although taking action will obviously remain a decision for political leaders.

Third, there is room for an intermediate level of integration, as shown in a simple but illustrative matrix:  BIS central bankers’ speeches  5  I would call it “full coordination of national policies”, a presently missing link between integration, as we have for monetary policy decision-making, and rule-based surveillance, as it is currently the case for national fiscal policies in Europe and which is clearly lacking teeth. And I don’t think we are ready for a fully-fledged fiscal union with a common fiscal capacity and the great mutual trust it requires. In addition to the completion of banking union, the needed part of EMU reform is to set up a strong institution to fully coordinate national fiscal and structural policies. It would help to make the euro area more than the sum of its parts. Jean Monnet famously declared that “nothing is possible without men, but nothing lasts without institutions.” The idea of a Finance Minister of the Euro area is not new: Marcel Fratzscher and the DIW for instance recently advocated for “a joint finance minister”, aware that a single currency “requires an economic convergence process and close coordination of economic policy with common rules”3. But let me specify her/his concrete tasks. I see four of them. First, the Minister would be in charge of preparing the euro area-wide collective strategy to fulfill its sustainable growth mandate and collectively agreeing the division of tasks through the setting of individual performance targets for Member States.
Moreover, if it was permanent, then part of the “dividend” from this reduced macroeconomic volatility should be a greater willingness to take on risk. As it happens, the academic literature has so far failed to provide a conclusive answer on the relative contributions of the various explanations 3 . But what matters is how market participants responded to these benign conditions. They are faced with what is, in essence, a complex signal-extraction problem. But whereas many such problems in economics involve learning about first moments of a distribution, this involves making inferences about higher moments. The longer such a period of low volatility lasts, the more reasonable it is to assume that it is permanent. But as tail events are necessarily rarely observed, there is always going to be a danger of underestimating tail risks. Certainly it appears from measures of volatility implied from options prices for US equities (VIX) and treasuries (MOVE) that the perceived risks in financial markets had shrunk to extremely low levels by 2006; see Fig. 5. There are two ways of rationalising this. One possibility is straightforward extrapolation into the future of the benign experience of the preceding few years. An alternative and complementary explanation is excessive faith in the  2  The Great Moderation appears to have started rather earlier, in the mid-1980s, in the United States.

According to recent analysis of the Banque de France, a powerful narrative then emerges by comparing the average contribution of each of these factors between 1999-2007 and 2013-19: In the second period, macroeconomic shocks have turned disinflationary relative to the first decade of the Euro, pushing down inflation despite a partial offset by unconventional monetary policy. Page 4 sur 9  The unexplained or residual part of the inflation decline has averaged about 0.3 percentage points since 2013. Yet this share has been growing, suggesting that we need to pay close attention to its potential causes. Across the euro area in recent years, higher wages have been partly offset by squeezing corporate margins, particularly in market services. Another factor may be the possibility of a downward drift in long-term price expectations that could have followed from the prolonged period of low inflation. Last, but not least, structural changes may have impacted the process of price and wage formation, in the context of increased digitalisation and globalisation of our economies, and diminishing bargaining power of workers. Still, the quantitative weight of these structural factors is less than clear and has not achieved consensus among economists. I.B. The future: the return of inflation? The current debate on a potential return of inflation may be legitimate in the US ii, but not in the Euro area. In the US, the ongoing recovery is much faster than what was observed after previous crises and the output gap is projected to close and become positive in the course of 2021.