samchain/econo-pairs-v1 huggingface dataset:
To the extent that this allows skills to be retained and reduces costs of replacing  3  In economists’ jargon, the extent to which potential supply is endogenous. This opens the possibility of there being “multiple equilibria”, something my colleague David Miles has reminded us was a central message of Keynes but that has been lost to much of the latest generation of New Keynesian modelling. See “Monetary Policy and Forward Guidance in the UK”, a speech by David Miles, available at: http://www.bankofengland.co.uk/publications/Documents/speeches/2013/speech681.pdf. 4  David Reifschneider, William L. Wascher, and David W. Wilcox (2013). “Aggregate Supply in the United States: Recent Developments and Implications for the Conduct of Monetary Policy”, Finance and Economics Discussion Series 2013–77. Board of Governors of the Federal Reserve System (U.S.). http://www.federalreserve.gov/pubs/feds/2013/201377/201377abs.html. 5  See Alina Barnett, Maria Barriel, Adrian Chiu and Jeremy Franklin. “The Productivity Puzzle: Firm-Level Perspectives”, Bank of England Working Paper, forthcoming. 4  BIS central bankers’ speeches  particularly skilled employees as the recovery takes hold, the recovery could generate greater supply capacity and real wage growth as it proceeds. It would be unreasonable to expect these positive outcomes to materialise immediately. Weak growth may have meant that companies have missed out on productivity advances that would otherwise have been made through learning by doing. Skills have atrophied through underemployment rather than unemployment. The recovery will therefore need to be sustained for a period before productivity – and real wage – gains can resume in earnest.

There can hardly be any doubt that in the 1950s, price changes would have been less abrupt in Norway if the devaluation had not taken place.” See Odd Aukrust (1965): Tjue års økonomisk politikk i Norge: suksesser og mistak, [Twenty years of economic policy in Norway: successes and mistakes] Articles from Statistics Norway, no. 15. 16  Erlend Loe (1999): L, J. W Cappelens forlag, p. 376. 17  Loe (1999), pp. 397–398. 4  BIS Review 147/2010  against serious missteps, which seems to be particularly important when decisions are made under uncertainty. This notion is part of the justification for the jury system in our courts of law. The French philosopher Marquis de Condorcet’s now well known jury theorem states that the higher the number of the group is, the higher the probability is that the group will make the correct decision by majority vote. 18 Group decision making has been widely accepted, not only by the courts but also by business, public administration and elected governing bodies. In his book The Wisdom of Crowds, James Surowiecki cites a number of examples where large groups outperform individuals or small groups of experts. Contestants on the television game show Who Wants to Be a Millionaire? have various so-called “lifelines”, including telephoning a smart friend or asking the studio audience for help. It has transpired that the studio audience is the contestants’ absolute best bet.
If things go really wrong, the result may be a financial bubble that – just like any bubble – sooner or later bursts, with dramatic consequences. Those with practical experience of financial markets will readily find themselves at home in this new theoretical and empirical analysis. In the 1990s there were a number of bubble-like developments where prices ceased to mirror fundamental values. The one that comes to mind first is perhaps the IT 7  See De Bondt, W.F.M. & Thaler, R. (1985), Does the stock market overreact?, J. of Finance 40, pp. 793–805; also Jegadeesh, N. & Titman, S. (1993), Returns to buying winners and selling loosers: implications for stock market efficiency, ibid. 48, pp. 65–91. 8  Cutler, D. Poterba,J. & Summers, L. (1991), Speculative dynamics, Review of Economic Studies 58, pp. 520–546. 9  See e.g. Tversky, A. & Kahneman, D. (1974), Judgement under uncertainty: heuristics and biases, Science 185, pp. 1124– 1131. 10  Shiller, R. (2000), Irrational Exuberance, Princeton University Press, New Jersey. 11  Janis, I.L. (1982), Groupthink (2nd ed. ), Houghton Mifflin Co., Boston. 12  Babad, E. (1987), Wishful thinking and objectivity among sport fans, Social Behavior: An International J. of Applied Social Psychology 4, pp. 231–240. 4  BIS Review 5/2001  bubble.

The risk profile’s covariation with the return on human capital has to be considered, too; perhaps a 16  8  Merton, R.C. (2000), Finance and the role of financial engineering in the 21st century, unpublished, Harvard University. BIS Review 5/2001  stockbroker, for example, should be wary of exposing even her/his personal financial savings to the stock market. Other risks lie in fluctuations in the price of a home that one either owns or is saving up for, as well as in the financing costs and, not least, the cost of refinancing; even if the mortgage rate is fixed, when the time comes to renew the loan it may be too high. The risks inherent in price fluctuations apply to other capital goods, too. It is also necessary to consider the risks in any saving plan for children’s education or for personal supplementary health insurance and life assurance. Perhaps it would even be advisable to allow for the risks that are covered today by insurance against fire, theft and accidents. Merton’s point is that there is a composite package of risks that is specific to each person and needs to be identified and covered. The management of all these risks calls not only for professional advice in the construction of such a plan but also for tailor-made financial products. The plan can include a variety of financial instruments but these must be easy for the individual household to understand in order to form a picture of and decide about the potential risks.
Second, it remains unclear if structural reform measures can make a bank or banking group safer if a culture of excessive risk-taking is not curtailed and if risk governance frameworks are not strengthened. MAS subscribes to the universal banking model on the premise that it is not the separation between risky and non-risky activities that matters as much as ensuring that risk is well managed wherever it is. •  For domestic banks, MAS does not impose any structural measures. The focus is instead on ensuring that their risk management capabilities are commensurate with the complexity of their activities and that capital and liquidity buffers are healthy. •  For foreign banks that have a significant presence in the retail market, MAS will require local incorporation of their retail operations. The banks can choose to subsidiarise their entire operations within the same legal entity or continue to operate its wholesale banking business under a branch structure. There is no retail ring-fence required. Unintended consequences It is imperative that we press on with the regulatory reform agenda and not succumb to reform fatigue. But even as we do so, we need to be mindful of unintended consequences. Inconsistent implementation of rules The first unintended consequence is the inconsistent application of rules across jurisdictions and across sectors. Inconsistent application of rules across jurisdictions leads to the risk of regulatory arbitrage. Take for example, the new capital rules.

•  First, it raises the quantity of capital that banks must hold. By providing a buffer for banks to absorb losses, capital helps to minimise spillovers to the rest of the system. •  Second, Basel III raises the quality of capital that banks must hold. The crisis has shown that common equity is the most effective capital instrument to absorb losses and write-downs. •  Third, Basel III brings back to banks’ balance sheets many off-balance sheet exposures and applies appropriate capital charges on them. Many banks that had to be rescued in 2008 had capital adequacy ratios well in excess of the minimum requirements then. They got into trouble because they had many risky off-balance sheet exposures they did not hold capital against. Singapore has fully implemented the Basel III capital requirements, two years ahead of the timeline prescribed by the Basel Committee. And by 2015, Singapore-incorporated banks will meet capital requirements which are 2% points higher than the Basel III minimums – in effect a surcharge to reflect their systemic importance in our economy and financial system. There is no global capital standard for the insurance industry. This is a lacuna that needs to be plugged. But the International Association of Insurance Supervisors (“IAIS”) has taken the lead to formulate standards for a risk-based solvency regime for insurers. The EU has built on this to develop detailed capital standards known as Solvency II. Many jurisdictions are reviewing their rules with the intent to align with IAIS standards.
Hence, macroprudential policies need to play a very important role. But what a central bank can or cannot do is and will remain an interesting topic of debate. It now seems beyond all doubt that the “inflation first” approach may become counterproductive in an environment of financial instability, which would rather call for preserving a certain tactical flexibility in conducting the monetary policy. Over the medium and long term, failure to maintain financial stability may only lead to a renewed flare-up in inflation. This reminds me of standard aircraft safety instructions, according to which, in case of cabin depressurization, the parent should put the oxygen mask on his own face and only afterwards tend to the child (who, in most cases, is the parent’s reason to live). While looking at long-term price stability as its fundamental objective, the central bank needs to keep a close eye on financial stability and, I would add, on the overall developments in macroeconomic indicators. Otherwise, disinflationary gains – however spectacular they might seem at a given point in time – would become utterly unsustainable. 6. The adequate level of inflation: “low and stable” vs. “moderate and stable”  The present crisis brought forward for discussion not only the primary objectives of the monetary policy I have already referred to, but also the adequate level of such objectives. Apart from semi-accepting the idea that financial stability must be a monetary policy objective, economists have also called into question the inflation level that must be targeted. Recently, Blanchard et al.

Its supervision focuses on issues such as the financial strength of the whole firm, including the adequacy of its liquidity and the resolution plan for the firm (collaborating with the Special Resolution Unit and home authorities to develop such plans in colleges or Crisis Management Groups as applicable), taking into account the importance of the firm to the PRA’s objective.” “For UK branches of non-EEA firms where the PRA is satisfied that the home regulatory regime is equivalent, and where the PRA has assured itself over resolution plans and the home regulator’s supervisory approach, the PRA relies where possible on the home regulator’s prudential supervision. In these cases, the PRA focuses on collaboration with home regulators (including via supervisory colleges) and on resolution plans. In addition, the PRA takes a close interest in liquidity and ensures that there are senior individuals in the United Kingdom that are clearly responsible for management of both the UK operations and business booked in the United Kingdom. The PRA discusses and agrees with the home regulator the areas in which it will seek to rely on the home regulator’s supervision”. This Approach document concluded that the PRA would in due course publish a fuller statement on our approach to the supervision of overseas firms operating in the UK. To take that forward, over the summer the PRA Board, acting in its new statutory capacity considered our policy further.
Zeti Akhtar Aziz: Outlook and prospects for Asia Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Asia Pacific Bankers Club Conference, Kuala Lumpur, 15 September 2003. *  *  *  Y.Bhg. Datuk Amirsham A. Aziz President of Asia Pacific Bankers Club 2002/2003 Members of the Asia Pacific Bankers Club Ladies and Gentlemen Introduction Powerful forces of change reinforced by global political, economic and financial developments have had pronounced implications on the economic and financial environment we operate in. It has not only dramatically changed our economic and financial landscape but has brought with it new uncertainties, risks and challenges. Despite these developments, the Asian region has demonstrated resilience and continues to emerge as the fastest growing region in the world. The issue before us is - to what extent can Asia continue to prosper in this increasingly more difficult and changed global environment? To what extent can Asia’s previous successes be sustained in these more challenging circumstances? It is my pleasure to be here today on this occasion of the Asian Pacific Bankers Club Conference on “Financial Stability and Challenges”. Let me take this opportunity to also welcome the delegates to Kuala Lumpur. Indeed, high priority has been accorded by the economies in this region towards achieving financial stability. Varying degrees of financial restructuring and reform have been undertaken to strengthen domestic financial systems.

It is clear, in retrospect, that our attempts in the spring of 2013 to provide guidance about the potential timing and pace of tapering confused market participants. Market participants seemed to conflate the prospective tapering of asset purchases with monetary policy tightening, and pulled forward their expectations about the likely timing of liftoff and raised their expected paths for policy rates. Lately, we seem to have done better: the tapering down of the Fed’s asset purchase program went smoothly and market participants now seem to share the assessment embodied in the FOMC’s March Summary of Economic Projections that lift-off is likely to begin sometime later this year. As you know, we’ve taken a number of steps in recent years to increase transparency and improve our communications. This includes regular press conferences by the Fed chair following FOMC meetings; the publishing of growth, inflation and short-term rate forecasts of FOMC participants; and a concerted attempt to lay out the guideposts that the FOMC will look at to assess progress toward our mandate. We also have explained in considerable detail what tools we will use and how we will likely use them to ensure to ensure a smooth lift-off. A second area we have focused on is doing a better job safeguarding financial stability. Simply put, we failed to act both early enough and decisively enough to stem the credit excesses that spawned the financial crisis and the Great Recession.
In particular, network graphics can be used to visualise “node size” – as a measure of the capital-absorptive capacity of emerging markets – the Small Pond; and “link scale” – as a measure of the capital distribution of advanced economies – the Big Fish. As a first cut, we use a dataset developed at the Bank of England on stocks of cross-border capital, spanning 18 advanced and emerging economies (Kubelec and Sa (2010)).1 This enables us to track the growth in, and financial linkages between, countries over time. Chart 4 plots this international network map at five-year intervals from 1980 to 2005. The node size for each country is measured as the absolute sum of its external assets and liabilities, while the width of the links between nodes measures bilateral gross external assets. Both are in (log) dollar terms. Taken over the past quarter-century as a whole, there is significant evidence of both capital market deepening (increased node size) and integration (increased link size). On average, total stocks of external assets have increased seventeen-fold over this period, rising from around $ trillion in 1980 to $ trillion by 2005. Relative to these countries’ GDP, they have risen from 18% in 1980 to over 70% by 2005. This is consistent with a period of intense financial globalisation. Yet, despite this, the balance of global financial power has not altered markedly.

This is something that I and my colleagues will continue to work on explaining over the coming year. At the same time, it should be emphasised that this is a complex task and that it is therefore quite natural that there is a debate on monetary policy. Nor are we Executive Board members always unanimous on which interest rate decision will be the best one in a given situation, despite the fact that we are agreed on the objective of our monetary policy. Credibility demands openness and clarity In order to combine confidence in price stability in the longer term with flexible inflation targeting, it is important that we are open and clear when conducting our monetary policy. This is also a necessary condition for the legitimacy of the Riksbank’s objective, independence and actions. Important elements of this endeavour include publishing the analyses on which interest rate decisions are based in the form of Inflation Reports. In addition, after every monetary policy meeting a press release is published, which gives an account of the reasons behind the decision made. Moreover, when an Inflation Report is published or the repo rate is adjusted, the Riksbank holds a press conference. The Executive Board’s monetary policy discussions are reported in separate minutes of the monetary policy meetings, which are published around two weeks after each meeting. In this way, all those who wish can closely follow our reasoning and a basis for evaluating our assessments and decisions is created.
We are just coming from Basel, the BIS headquarters. Reporting to the press on the Global Economy Meeting, I stressed that we were all very closely “united in purpose”: each of us in our own economy, with their different features and challenges, striving to solidly anchor inflation expectations, preserve stability and consolidate confidence. The globally co-ordinated decision we published this afternoon on US dollar liquidityproviding operations is a clear illustration of our very close cooperation at the global level and of the “unity in purpose” that I was mentioning last Monday. I thank you very much for your attention. 4  BIS central bankers’ speeches

Macroprudential authorities should coordinate their actions in order to mitigate these risks and seek ways to balance the protection of customers' interests and financial institution risks with specific policy objectives, a level-playing field being one of them. The initiatives taken by the European Commission, such as the digital finance package, that captures – among others - the proposal for digital operational resilience act (DORA6), and the revision of the second Payment Services Directive, are steps towards mitigating the identified risks. 3/4  BIS - Central bankers' speeches  The increasing number of Cyber-attacks in Europe indicates that a lot more needs to be done. The growth of the Fintech sector has raised the need for regulators to adjust their role within the perimeter of prudential regulation. Extending the perimeter of bank regulation to all financial service providers could possibly constrain financial innovation. But keeping the new entrants completely out of the perimeter will tilt the playing field in their favour and leave consumers unprotected. A balance must be found to allow the regulatory perimeter to cover all activities that have systemic risk potential, while allowing for innovation. Finally, Data protection is important in order to safeguard confidence in the banking sector. As a result, Cyber security should be further enhanced and prioritised and Cyber-risk incidents need to be included in financial institutions' business continuity and disaster recovery plans and be tested frequently. Given the cross-border activities of Fintech and BigTech, authorities across jurisdictions should cooperate in regulating them. THANK YOU.
All these facets and others covered by the strategic review may be relevant when delivering on our price stability mandate. Indeed, one of this review’s key aspects will be the definition of the ECB’s price stability target. The current inflation target, consisting of inflation rates of below, but close to, 2%, may be reformulated. First, it may be necessary to clarify the specific level of inflation targeted, to make it easier for economic agents to understand. Second, this target could also be made more symmetric, clarifying that the ECB’s response to undershooting would be as firm as its response to overshooting, and its determination to achieve symmetry in inflation outcomes around its target. Likewise, in the current environment of low inflation and interest rates close to their lower bound, the inflation target must take into account the need for a sufficiently high buffer, above zero, granting conventional interest rate policy more room for manoeuvre. 13  See, for example, Bernanke et al. (2019). 14  See Banco de España (2020b) for a description of this announcement and an assessment of its effects on the financial markets. 17  For all the above reasons, I believe it would be desirable to establish an inflation target of 2%, interpreted symmetrically, in the sense that I have just explained.

Jean-Claude Trichet: I expect that the cooperation with the UK authorities, particularly with the Bank of England, and for me personally with its governor, will be extraordinarily close. It’s a job at the level of the EU 27 where you will need a very close cooperation between Mervyn King and all of us, and I expect that this is the way we are all looking at it. 4  BIS Review 115/2010