samchain/econo-pairs-v1 huggingface dataset:
And given the lack of momentum from private and public sectors, U.S. growth will likely remain low for an extended period of time. While economic data releases have pointed time and again to delayed consumption spending and persistently high unemployment, available fiscal and monetary policy space seems to be quite limited. On the fiscal side, further stimulus will be constrained by the promised cuts in federal spending that accompany the recent raise of the U.S. debt ceiling. On the other hand, the Fed’s commitment to maintain the federal funds rate “exceptionally low” at least through mid-2013 should remind us that, in order to be even more accommodative, the Fed might need to rethink and come up with some creative policy actions – probably something that is much more creative than the recent “Operation Twist” that seems to disappoint many market participants. The fact that the U.S. government and the Fed are running out of traditional policy “bullets” leaves one only to wonder what the government and the Fed will do in the face of future shocks. And if they eventually resort to “creative” policy actions, the implications of their policies on the global economy can be quite unpredictable. Across the Atlantic, the Eurozone is also struggling with their sovereign debt crisis, which only deepens and intensifies as time passes. Over the past few months, we have seen some Eurozone member countries that are unwilling to collaborate fully, let alone going the extra mile, to get the problems solved.

The emergence of substantial markets in forward, futures, options swaps and other derivative instruments has significantly altered the conduct of borrowing, investment and risk management activities. The significant economic benefits of financial derivatives include: (i) permitting the unbundling and trading in risks, (ii) the ability to hedge price risks and to synthesise investments with greater efficiency and lower costs, (iii) and an increasing liquidity of and trading in financial assets. I would expect this process of constant innovation to continue in the decade ahead. First, because innovation is a natural feature of modern financial markets. The expansion of the credit derivatives in the last five years illustrates how fast new instruments cans develop and expand. And, second, because markets are still incomplete, in the sense that some risks cannot be efficiently hedged or transferred in the current environment. B  Incomplete markets and intergenerational risks  One interesting example is demographic risk, and more generally, the efficient transfer of risk between different generations. Currently, markets may not be well equipped to deal with intergenerational risk that simultaneously affects different generations living at the same time. Many developed countries are going through a demographic transition, sometimes called the old age crisis. According to the World Bank’s 1994 report for instance, by 2030 there will be 1.4 billion people in the world aged over sixty, versus 500 million in 1990. So, we are experiencing a transition to an economy with many more aged dependents relative to the active workforce.
That is because more than $ trillion of assets are held in funds that promise daily liquidity to investors despite investing in potentially illiquid underlying assets.32 In other words, they are built on the lie that markets always clear. To assess the risks of fire sales and contagion across emerging and credit markets, authorities need to gather and share data on asset management. In this context, the FSB expects that consistent and decisionuseful measures of leverage will be developed to support an effective global risk assessment. I would encourage industry to engage with the upcoming IOSCO consultation on this issue. The FSB is also refining its Systemic Stress Initiative to explore how funds and other non-bank financial institutions might collectively act in ways that amplify shocks.33  30  IMF Article IV Consultation for the People’s Republic of China (2018). See Boston Consulting Group estimate of global AUM in Global Asset Management 2018. 32 See FSB Global Shadow Banking Monitoring Report (2017). 33 The Bank of England is working to better understand such dynamics as well. See Baranova, Y., Coen, J., Lowe, P., Noss, J., and Silvestri, L. “Simulating stress across the financial system: the resilience of corporate bond markets and the role of investment funds”, Bank of England Financial Stability Paper, (2017).

Do they interact in a way that dampens a shock or in a way that intensifies it? To the extent that the system has  BIS Review 83/2009  1  important reinforcing rather than dampening mechanisms, then it may need to be modified. That may require significant re-engineering. Let me give you some examples of reinforcing and dampening mechanisms: Capital. When firms have incentives to continue to pay dividends to show they are strong that is a reinforcing or amplifying mechanism. The paying of the dividends depletes capital, making the firms weaker. In contrast, when firms have incentives (or are forced) to cut dividends quickly to conserve capital, that is a dampening mechanism. Foreign exchange. When the debts of a country held by foreigners are denominated predominantly in the home currency, currency depreciation reduces the net debt burden – the value of foreign assets climbs relative to the asset claims of foreigners. The U.S. operates in a dampening regime in this respect. In contrast, when the debts of the home country are denominated in foreign currency, currency depreciation increases the net debt burden. Some of the Baltic countries are wrestling with this dilemma currently. Some reinforcing mechanisms that we might want to engineer out of the financial system: •  Collateral tied to credit ratings. Credit downgrades lead to increased collateral calls which drains liquidity, leads to forced asset sales, further weakening the firm subject to the collateral calls.
Government bonds were swapped for covered bonds issued by banks and normal lending activity was restored. However, this was not the first time the Government had used swaps to stimulate the real economy. We did so around 200 years ago...  A swap of government bonds for privately issued securities was used already in 1819 when Norway emerged on the scene as a sovereign country after the Napoleonic wars. The 1819bonds were swapped for bills of exchange issued by farmers and merchants in the domestic market. With these bonds as collateral they managed to raise sufficient credit to import seed to secure important supplies to farmers and merchants in this difficult period in Norwegian economic history. This is a historical example of how financial markets underpin economic growth. BIS central bankers’ speeches  1  More generally, financial markets contribute to economic growth in three ways:   They create credit to make it available for real investment.   They allocate credit to the most profitable investment projects.   And they improve risk sharing in the economy. The caveat is that they create the credit volumes that they find privately optimal, and allocate it to the projects that are most profitable to them. Neither the credit volume nor the credit allocation is necessarily socially optimal: this is one basic reason why financial markets are and should be regulated. The next question is: How strictly should they be regulated? When does regulation severely impair the positive effect from financial markets to economic growth?

Let me again make some observations from my home country:  Norway had a severe banking crisis around 1990. Three of the four largest banks failed and the direct capital injections required were alone more than 3½ per cent of GDP. Just to put this figure into perspective, the 106 billion euros the European banks need for recapitalisation now is less than 1 per cent of GDP in the euro area. Ever since the Norwegian banking crisis in the early 1990s, our banking industry has been regulated more strictly than banks in comparable countries.   For instance, bank capital definitions have been tighter and the financial supervisor has been more actively restricting banking activities.   Another example is that packaging loans into complex financial instruments was in practice not permitted until 2007 when new regulations provided for the issuance of covered bonds. The complex instruments central in the creation of the subprime crisis were never introduced, and Norwegian banks did not invest in them. Our GDP growth rates have still been high during the years up to 2008, also outside the petroleum sector. And the downturn we experienced in 2009 was modest in relation to comparable countries. At the early stage of the banking crisis in the1990s, the Norwegian central bank provided a large liquidity loan to a savings bank. It soon became clear that the loan would not be paid  2  BIS central bankers’ speeches  back. A liquidity problem turned into a problem of solvency.
At the individual depositor level, additional safeguards such as a deposit insurance scheme (which we already have in place in Singapore) and local incorporation will provide better protection for depositors from problems emanating from other parts of the banking group. Local incorporation can also bring benefits to a bank, especially where it has a significant retail presence. Liquidity rules under Basel III will require long-term stable sources of funding to comprise a larger share of a bank’s total funding. Competition for deposits is expected to intensify, and banks that can attract stable funding will gain an advantage. Local incorporation can therefore demonstrate a bank’s long-term commitment to depositors and other stakeholders in a world of possibly permanent heightened volatility and uncertainty. Beyond local incorporation, encouraging strong international banks to sink deeper roots in a domestic economy will allow them to play a greater role in contributing to financial resilience. Let me elaborate on this important objective of encouraging strong international banks to sink deeper roots in a national economy. One of the key features of our banking liberalisation has been the Qualifying Full Bank (“QFB”) privileges that have been granted to foreign banks. The number of QFBs has increased from the initial four in 1999 to six in 2001 and eight today. QFBs have also been allowed more places of business from 10 in 1999 to 25 today. MAS will continue to liberalise the domestic banking sector in a progressive and calibrated manner.

The Basel Committee has proposed several reforms to minimise the risk of failure of global systemically important banks (“G-SIBs”), and to minimise the impact if any of them should fail. It is also recognised that some banks are systemically important within their own domestic markets even if they are not internationally active to the same extent as the G-SIBs. The failure of these domestic systemically important banks (“D-SIBs”) can have a major impact on an economy, and indeed unpredictable consequences for a broader region. Bankia for example, is not a G-SIB. The Basel Committee has recommended higher loss absorbency requirements for G-SIBs, and is studying an appropriate regulatory framework for D-SIBs. MAS is very much part of that discussion. However, in order to keep to the spirit and intent of the new measures, sensible judgement will be the key to implementing the new rules. Sensible implementation requires national regulators to take into account the impact of their actions on economic growth and international finance even as they exercise national discretion to address prudential issues in their banking system. There are two risks of a broader nature that we have to keep clearly in focus in international discussions, so that what we do now to strengthen our respective national systems does not lead to new problems and vulnerabilities internationally, further down the road. First, we have to ensure that the cumulation of enhanced capital and other requirements on global banks do not impede them from playing their critical roles in global finance.
To this end, the HKMA will be working with the universities and the other stakeholders to make sure they are aware of the knowledge and skills needed by the banking industry, so that graduates are prepared to thrive in this ‘brave new world of banking’. 31. For more than 50 years, HKIB has played a key role in nurturing talent and professionalism. Your membership is growing at a phenomenal rate. Your rich programme of courses, seminars and special events offers continuing professional development that is directly relevant to the transformations I have described this morning. Today’s conference is one of 4/5  BIS central bankers' speeches  the highlights of the banking year. My colleagues and I look forward to sharing with you, and learning from you as the day progresses. We wish you every success in the year ahead. 1 The Guangdong-Hong Kong-Macao Greater Bay Area. 2 Open Application Programming Interface. 3 Environmental, Social and Governance. 4 Hong Kong Association of Banks. 5/5  BIS central bankers' speeches

We began publishing this rate on April 3 of this year, along with two other repo rates: the Tri-Party General Collateral Rate and the Broad General Collateral Rate. 18 This work complements steps by the Federal Reserve to promote greater transparency in rates in unsecured markets through enhancements to the calculation of the effective federal funds rate (EFFR) and the launching of an entirely new rate, the overnight bank funding rate (OBFR).19 I have long been a proponent of the idea that central banks are well suited to take on this responsibility. Reference rates have strong public good properties, and the private sector faces notable coordination challenges in this area. Central banks have a long history in producing such measures—recognizing that traditionally this has been for purposes related to monetary policy— 3/6  BIS central bankers' speeches  and are trusted independent parties. In my view, central banks also ultimately “own” the financial stability risks that are present when key reference rates are flawed. Better to recognize this responsibility and move proactively to mitigate such risks than to step aside and hope that someone else will take up the mantle of reform. The Federal Reserve has designed these benchmarks to be compliant with IOSCO principles, with regular review by oversight bodies and comprehensive ethics and conflict-of-interest policies for staff.20 Best practice also dictates that administrators periodically review the rates they produce to assess whether changes in the underlying markets require changes in how those rates are administered.
In fact, the disconnection between the physical receipt of funds and the location of the financial institution may have a great impact on disintermediation among recipients. Assuming that receivers can exercise some control over the mode and location of receipt, the geographic proximity of a branch or the ability to pick up a remittance in an  2  BIS Review 16/2006  office (as required by Western Union) can determine an institution’s ability to compete in the remittance market of the Albania, not to mention the possibility of mobilizing savings from these new potential clients. Remittances can be a point entry for many remitters and their families to the formal financial system. Many emigrant families are either not familiarized with banks or have limited access with financial institutions. The Bank of Albania through its public communication strategy is aiming to bring the public closer to banking products and services, including transfers. No matter the small size of remittance amounts. Even those small shares left by recipient families in bank accounts could assist economic development as more funds will be available in banks to provide loan products to private sector. The same concern was initially expressed about public administration salaries. Now, this service is provided by the banking system, and we see the power of pooling small amounts.

The anticipated strengthening in the global recovery will have a supportive effect. Negative interest rates I would now like to turn to negative interest rates. Following the interest rate reductions since the last monetary policy assessment, the reference interest rate is now negative for the first time in the history of the SNB. This situation is new, and has therefore been discussed in detail in the public arena. I would like to emphasise that lowering the interest on sight deposits at the SNB into negative territory is a necessary monetary policy measure. Negative interest makes holding investments in Swiss francs less attractive for Swiss and foreign investors. This creates incentives to reduce inflows to the franc, and reinvest Switzerland’s traditional current account surplus abroad. Negative interest thus contributes to a weakening of the Swiss franc. The interest rate reductions had a rapid effect. As expected, the negative interest rate imposed on banks by the SNB was transmitted to the entire spectrum of money and capital market interest rates. However, low or negative interest rates are not limited to Switzerland. Low interest rates are a global phenomenon and some other countries, especially in the euro area, also have negative rates. Switzerland cannot disassociate itself from such developments. With the interest rate reduction in Switzerland, the interest rate differential to the major currency areas, which had declined to virtually zero in recent years, has now increased again.
The first challenge is what we might think of as data innovation, and the second is data stewardship. With data innovation, the big challenge is to use our imagination and to think hard about what data may be able to say about a particular problem. This includes both novel uses of existing  BIS central bankers’ speeches  1  data as well as the collection of new data. To illustrate what I mean by this, let me describe one effort, among many, here at the New York Fed. Consumer Credit Panel I’ll describe our Consumer Credit Panel, which we created in 2010. At the onset of the financial crisis, it became apparent that our knowledge of the liability side of household balance sheets was inadequate. At that time, the main data sources on consumer debt consisted of loan-level data sets on specific categories of loans, such as mortgages, as well as aggregated data on household sector debt from the Board of Governors’ Flow of Funds statistical release. While providing a useful aggregate overview of household debt, the Flow of Funds release defines the household sector as a residual sector that also includes nonprofit organizations, such as schools, hospitals and churches, as well as hedge funds and private equity funds. Furthermore, the overview it provides is limited to outstanding balances and lacks important information on the origination, repayment, and delinquency status of household debt.

The apparently unending increase in expectations of rising share prices on U.S. stock markets stimulated the capital imports, which continued to such an extent that the dollar rose to high levels against other currencies. Together with large investments in the real capital stock, which led to a capital-deepening process and hence an acceleration of productivity, the dollar's appreciation held back the price impulses that normally accompany growing pressure from wage costs. BIS Review 42/2001  3  It is not yet possible to tell to what extent the U.S. economy will experience a lengthy, more difficult process of adjustment. That is probably the background to how the Federal Reserve has acted in recent years. A series of interest rate hikes during 1999 and 2000 was presumably intended to restrain the euphoria and excessive expansion. When a downturn then became evident, it seemed desirable to try to limit the mood swing by means of the marked interest rate cuts we have seen this year. It is precisely the Federal Reserve's vigorous action that underlies certain analysts' view that the current economic slowdown will be fairly mild and brief. …and the tensions between supply and demand in Sweden Since the previous inflation report, demand in the Swedish economy has slowed down somewhat. This is true in particular for industry. Incoming statistics also indicate a slightly weaker growth in household sector consumption. Employment, on the other hand, remains strong even though more forward indicators of the labour market are signalling slower growth later this year.
In the past three decades, only a handful of countries have managed to achieve that status, and importantly, to sustain their position. In fact, the road to becoming a high-income economy is more difficult today, as countries are confronted with challenges and uncertainties like never before. According to the OECD1, the present landscape has “new rules, new environmental constraints, new technologies and more competition”. We will need to adapt to these changes, while managing other shocks that may come our way. What we don’t want is for the economy to take one step forward, only to be pulled two steps back. Along these lines, allow me to share four points on how Malaysia can more confidently transition towards a high-income economy. An economy centred on innovation My first point is on putting innovation at the centre of our economic development. Malaysia has come a long way. From being a commodities-based economy, we have diversified into high-end manufacturing and modern services. This helped us advance into a middle income economy in the early 70s. Yet, since then, we have struggled to achieve productivity- and innovation-driven growth needed to become a high-income economy. Even today, the deficit in the innovation capability of our economy remains. For instance: Malaysia does not spend enough on R&D. In fact we spend less than half of other frontier economies like Korea, Taiwan and Singapore. Our R&D efforts have focused on generating scientific knowledge, but less on applying that knowledge. This has resulted in low commercialisation of R&D.

The education and training system must be more forward-looking and cater to shifts we anticipate over the next 20 – 50 years. The key is to prepare the next generation with 21st century skills to meet these demands. Malaysia must secure innovation-driven growth in all parts of our economy. But we must set our minds to areas where the payoffs are the greatest. Three areas of opportunity come to mind: First, we must make best use of the resources which we are endowed with, such as to process commodities into chemicals and other derivatives to increase economic complexity. Agriculture productivity can also increase by adopting modern farming. Second, addressing climate change offers opportunities to attract investments and create high-quality jobs. The global economy needs USD23 trillion in green assets to meet the climate goals under the Paris Accord.4 Third, Malaysia is among the best positioned within Southeast Asia to embrace the fourth industrial revolution.5 Malaysia already has one foot through the door in each of these opportunities; we are major producers of petro- and oleo-chemicals, solar panels, as well as E&E components that will power future mobility. We must engage in serious conversations on moonshot strategies to build innovative industries and companies. Only then can we set the foundation for a sustainable, dynamic and competitive Malaysian economy. A society that is more inclusive Economic growth does not necessarily go hand in hand with social progress, particularly if growth only enriches the few. Thus, my second point is on improving social inclusivity.