samchain/econo-pairs-v1 huggingface dataset:
But I think that it is also clear that in some severe situations, a different framework will need to be applied. In case of an epidemic disease, such as the avian flu, there may be a need to direct those infected to separate hospitals. And it may be necessary to establish an order of priority for the allocation of the scarce medical resources. One where the guiding principle may be the survival of the society as a whole. It may also be the case that the crisis regulations clash with the normal regulations. For instance, you are normally not entitled to take a sick day if you are actually healthy. Now, even healthy people may be asked to leave their offices to avoid the disease from spreading, while the key employees may be asked to go to work to keep the operations running. When the principles clash, it will be vital for society that the ones needed to contain the epidemic will prevail. And if that special framework is not already in place, the politicians will need to get involved. Clearly, a bank failure cannot be compared to a serious injury or sickness in terms of personal suffering. But it can be an event which will make many people’s lives very difficult. And a systemic banking crisis, like an epidemic, may stall the functioning of our entire economies. It is therefore important to be able to deal with an ordinary bank failure as well as a more serious systemic crisis.

This procedure would simply be too slow, and would not take into account the need to keep the operations running in order to maintain the functioning of the financial system. With creditors insulated against losses by the guarantee, and with the formal insolvency regime assessed to be inappropriate, we needed to find another way to ensure that losses  BIS Review 62/2008  3  for which the shareholders were responsible would not fall on the tax-payers. In order to secure this, we needed to take control of the banks concerned before capital was completely eroded. Needless to say, we found ourselves in a rather poor bargaining position against the shareholders. Fortunately, a Bank Support Act, laying out the principles for the possible actions, could be implemented quite swiftly. A special crisis management authority was also set up. Inspired by the US model, where the authorities can take control of a bank when capital falls below a certain level, this temporary crisis legislation gave the government the right to take over the shares in undercapitalised banks. The Bank Support Act also made it possible to tie conditions to the actual use of the guarantee. Thus, the main rule was that any financial support given directly to a bank would result in a proportional dilution of the original shareholders’ holdings. The Bank Support Act also laid the basis for arranging private takeovers where possible. And, not least, for the orderly winding up of unviable banks.
There is also a supermarket contest to illustrate the importance of spending within your budget, plus a chef to show you how you can cook up a storm without spending a bomb. 6. There are plans to bring these activities to other parts of Singapore, and several community centres are in discussions with MoneySENSE. Important Role of Media 7. The media is still the most effective channel for financial education. In the national financial literacy survey conducted by MoneySENSE, 54% of the respondents said they were interested to learn about financial education through mass media. 8. I am glad the local newspapers have been very supportive in running MoneySENSE articles on a regular basis. The Straits Times, Lianhe Zaobao and Berita Harian have been doing so regularly for more than two years. Other publications like Today and Smart Investor have also begun to run regular MoneySENSE columns. I would like to thank all of you for partnering us in this important effort, and I would like to see this continue. 9. MoneySENSE will soon launch a TV game show requiring participants to make financial decisions such as on whether to purchase certain items, whether to take on more credit, whether to take up insurance and whether to invest in certain financial products. A preview of this new TV game show will be staged at this Roadshow on Sunday. So look out for this sneak preview. BIS Review 30/2006  1  10. These are all good initiatives.

Another important development has been the rapid growth in the provision of Islamic Shariah compliant services to cater to the increasing demand by customers for such services. All Saudi banks offer a range of Islamic products including Murabaha, Mudaraba, Musharaka, Baie Ajel, etc. The significant growth, diversification and profitability of the Saudi banking system has been underpinned by a strong and and advanced regulatory system. Over the past two decades SAMA has introduced many modern supervisory standards compliant with international standards including risk based capital adequacy, liquidity, large exposures, risk management and others. In the past two years alone, SAMA has developed regulations relating to market risk, loan classification and provisioning, controls of consumer lending and updated the requirements for appointment in senior posts of banks. On the corporate governance front there is a heightened awareness in the world with standards emanating from OECD, Basle Committee and others. SAMA has been since the early 1980s inculcating these concepts in the Saudi Banks. In 1981, it issued a guidance document to the Directors of Saudi Banks defining the general framework of their roles and responsibilities. This was followed by regulations on Internal Controls in 1989, Prevention of Fraud (1994), Prevention of Money Laundering (1995) and the Role of the Audit Committee (1996). Furthermore, SAMA has promoted proper accounting standards to be followed by the Saudi banks in order to ensure more transparency in their financial statements. Saudi Arabia was among the first countries in 1992 to adopt the International Financial Reporting Standards by the Banking Industry.
Nor can we rule out that the passthrough of previous rises in world prices to domestic ones, especially for foodstuffs, may continue. Other risks have not changed materially. Incoming news confirm a scenario of very dynamic domestic demand, particularly for consumption, and employment (figure 14). Also wage growth has speeded up and credit is recovering fast. The domestic economy is growing strongly and output gaps are closed. Nonetheless, it is still early to predict an overheating. Actually, the various core inflation measures are still below 3% (figure 15). Output is near full capacity and, mirroring the rest of emerging economies, excess domestic demand is being redirected to imports. The current account still shows a surplus, largely because of good export prices, but also because of steadily increasing volume sales abroad. Furthermore, monetary policy works with a lag, so it is likely that the full effects of the 450-basis-point increase in the MPR since June of last year will not be seen for some time. The information we will be getting in the coming months will give us a better sense of the magnitude of these effects. Overall, the negative implications of these risks materializing led us to speed up the pace of monetary policy normalization in the past few months. Last week we actually raised the MPR by 50 basis points to 5%. Although the median of market expectations was foreseeing a somewhat smaller increase, we acted preventively to hold down the dynamism of domestic demand and the propagation of adverse supply shocks.

BIS central bankers’ speeches  7  Figure 3 Output gaps (*) (percent) 4  4  2  2  0  0  -2  -2  -4  -4  -6  -6 97  99  01  Developed economies  03  05 Emerging Asia  07  09 Latin America  (*) OECD estimates are used for output gaps in developed economies. For the other regions, output gaps are obtained using an HP filter. Sources: Central Bank of Chile based on Bloomberg, Consensus Forecasts, OECD and the respective country’s statistics institute. Figure 4 Current-account balance (billions of dollars) 1.500  1.500  1.000  1.000  500  500  0  0  -500  -500  -1.000  -1.000  -1.500  -1.500 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10  Rest of the world  Oil exporters  Emerging Asia  China  Japan  United States  Eurozone  Source: International Monetary Fund, April 2011's WEO.
Since March, the Bank accelerated the withdrawal of the monetary impulse, with greater intensity than foreseen by analysts’ consensus, bringing the MPR to a level within the normal range. This, coupled with the changed external macroeconomic scenario due to the drop in commodity prices, managed to contain inflation expectations (figure 11). While in mid-year we expected inflation to be around 4% for much of the second half, the data have shown inflation hovering around 3%. The propagation of specific shocks has been similar to the historical average, but lower than that of 2007 and 2008. Today, in Chile and in a large part of the emerging world, inflation forecasts have been lowered and the risk of overheating has lost relevance (figure 12). For the same reason, while in mid-year we foresaw that the MPR would end the year 2011 close to 6%, in recent months we said that there will probably be no more increases, an opinion we have reaffirmed in our latest communiqués and I will come back to shortly. But first let me take a look at what is going on in the developed world. The 2008 crisis is not over yet The crisis of 2008 was not a typical recession because it originated in a financial meltdown, whose effects are deeper and its recovery, slower. This we know first-hand in emerging countries. In Chile we had one in the early 1980s.

José De Gregorio: Chile’s approach to external turbulences and threats Speech by Mr José De Gregorio, Governor of the Central Bank of Chile, at the “Economic and Entrepreneurial Vision 2011–2012”, organized by the Manufacturers Association SOFOFA and Universidad del Desarrollo, Santiago, 19 October 2011. *  *  *  I thank the valuable comments of Luis Álvarez, Luis Óscar Herrera and Enrique Orellana. In the past several years we have endured macroeconomic turbulences of unbelievable magnitude, as well as new challenges. The years 2007 and 2008 saw a sharp increase in inflation, then came the global financial crisis and the recession of 2009, to be topped off by an earthquake and a tsunami in February 2010. Today we can say that we weathered this string of difficulties but we remain on the alert, because the threats from the world economy are far from over. These days, our greatest concern is the state of the developed economies and its ramifications on the emerging world and particularly Chile. In mid-2009, the world economy began to recover from the effects of the international financial crisis. However, such recovery featured two different speeds (figure 1). The emerging economies have grown strongly and have had to deal with risks of inflationary pressures and fast credit growth, while the developed economies have recovered slowly. Since the middle of last year, we have stated in our Monetary Policy and Financial Stability Reports that there are many risks still latent.
18 Since then, migration has increased steadily and at the end of 2017 the percentage of those born abroad was more than 18 per cent. The migration streams can vary substantially from year to year, but the trend has been rising and there has been a particularly substantial increase in recent decades, see Figure 9. Figure 9. Immigration and emigration as a proportion of population, 1900–2018 1.8  1.8 Immigration 1.5  Emigration  1.5  1.2  1.2  0.9  0.9  0.6  0.6  0.3  0.3  0 1900  1915  1930  1945  1960  1975  1990  2005  0  Note. Per cent of the population. To be counted as an emigrant, a person must have the intention of living abroad for at least one year. To be counted as an immigrant, a person must have the intention of staying in Sweden for at least one year. Source: Statistics Sweden  Immigration to Sweden follows an international trend with increasingly large migration streams. Between 2000 and 2017 the total number of migrants in the world increased by around 50 per cent. There are roughly around 260 million migrants at the moment, most of whom are from low-income countries. These migrants move at approximately the same extent to low income countries as to high income countries, see Figure 10a. Migration from high income countries is much less common, but there is a not insignificant amount of migration between high income countries.

In the long run, when inflation is on target and resource utilisation is at its long-term sustainable level, the Taylor rule can be described as follows, 𝑅𝑅𝑡𝑡 = 𝑅𝑅� = 𝒓𝒓∗ + 2,  where 𝑅𝑅� refers to the long-term level of the policy rate and 2 is as before the central bank's inflation target. The long-term policy rate is thus equal to 𝒓𝒓∗ plus the inflation target. If the inflation target is constant, the long-term policy rate, in practice the average policy rate, is determined by 𝒓𝒓∗ . For instance, if 𝒓𝒓∗ declines it means that the policy rate’s long-term (average) level declines at the same pace. We have seen a trend decline in international 𝒓𝒓∗ over a longer period of time, which is an important factor behind the low interest rates in Sweden. I will return to this later. Resource utilisation's long-term sustainable level also plays an important role for monetary policy, but in a slightly different way. The long-term level of the policy rate is namely not affected by 𝒚𝒚∗ , on the other hand, the variations around the long-term level of the policy rate are affected. A simple example can explain why this is the case. Let us assume that resource utilisation is equal to 𝒚𝒚∗ initially and that 𝒚𝒚∗ then rises to a higher level. Resource utilisation is then lower than its long-term level, that is, resource utilisation can be said to be lower than “normal” and we have “an economic downturn”.
Despite the speed with which Bank Rate was cut to 0.5% in late 2008 and early 2009, and the rapid move to quantitative easing, the economy is still looking fragile. During the pre-crisis period, MPC members recognised in a number of speeches the possibility that the upward trends in property prices and in the growth of credit were increasing the risk of a period of economic instability. For example, as long ago as 2003, Charlie Bean suggested: “Action taken today to reduce the build-up of imbalances might pay off in the longer term by reducing the future uncertainty that the policymaker will face as imbalances unwind.” 2 At around the same time I commented, with reference to the rising household debt/income ratio, that this “...may have increased the risk from policy error, or from an adverse shock to the household sector.” 3 And Andrew Large argued: “the key issue  1  World trade monitor, source: Netherlands Bureau for Economic Policy Analysis. 2  Bean (2003). 3  Barker (2003). BIS Review 27/2010  1  for monetary policy is that the more capital gearing or leverage increases, the greater the vulnerability to shocks and the consequent adjustment to consumption behaviour.” 4 One conclusion might be that the depth of the present crisis might have been mitigated if the MPC had taken the view that, in those circumstances, it was preferable to miss the inflation target on the downside in the short-term.

This reflects the systemic impact CCPs can have in situations of extreme stress, by disrupting repo markets or channelling liquidity strains to banks – which are also monetary policy counterparties – thus affecting the circulation of liquidity in payment systems. Ultimately, CCPs may need to rely on central banks as lenders of last resort. Central banks therefore have an important role to play in the regulation of central clearing – a notion which is largely recognised but often misunderstood. In this context, let me say a few words about recent developments in the area of CCP regulation, and in particular the outcome of the legislative process regarding the revision of the supervisory framework for CCPs, the European Market Infrastructure Regulation (EMIR II), and the recommendation to amend Article 22 of the Statute of the ESCB and the ECB. The ECB recommended to EU legislators that its Statute be amended to clarify that the ECB had legal competence over CCPs, which would have allowed it to perform its statutory monetary policy role under EMIR II. We made the case that the ECB needed explicit general competence to monitor and address risks relating to our mandate, including broad discretion to take necessary measures in exceptional situations where the stability of the euro is at stake.
With the large levels of excess reserves in the system, certain institutional aspects of money markets in the United States – including bank-only access to IOR, credit limits imposed by lenders and other impediments to market competition, and the costs of balance sheet expansion – appear to create frictions that have made IOR act more like a magnet that pulls up short-term interest rates than a firm floor beneath them. Thus, in considering how to implement policy normalization, the Federal Reserve evaluated a variety of ways to increase competition for funds among borrowers and thereby improve the control provided by IOR.12 The Federal Reserve initially considered an approach to policy normalization that was based on a combination of term operations and asset sales or redemptions aimed at making reserves sufficiently scarce so that, once the FOMC decided to tighten monetary policy, this tightening could be implemented using IOR within a framework that was otherwise similar to that used before the crisis.13 As part of this approach, the Federal Reserve acquired a new set of reverse  2  BIS central bankers’ speeches  repo counterparties, including money market funds and government-sponsored enterprises, in addition to the primary dealers with which it had traditionally transacted. These new counterparties were major investors of cash in overnight markets and had capacity to facilitate the “draining” of substantial reserve balances, if offered attractive term investments with the Federal Reserve.

Such assessments are further complicated by the fact that there have been a number of important structural changes in the mortgage markets. Without going into detail, weighing the available evidence together, we do not think that residential property in Sweden is significantly overpriced in general. Nor do we believe that households in general are overly indebted. However, this does not preclude the possibility that there are other countries where house prices and household indebtedness have risen to levels beyond what can be fundamentally motivated. Yet, even if we don’t believe that house prices and household indebtedness have been disconnected from their fundamental drivers, there are still reasons for us to be concerned by the rise in property prices and household indebtedness. In the last years, in Sweden as elsewhere, household debt has grown much faster than disposable income. Obviously, this is not sustainable in the long run, as households then ultimately would be unable to service their debts. In the long run it is likely that indebtedness and house prices will increase roughly at the same rate as the nominal growth of the economy. This type of adjustment, to more restrained growth rates, will normally occur smoothly, as households begin to feel that their finances cannot tolerate a higher level of indebtedness. However, if there is an overly sharp correction or “hard landing” if you like, it could lead to weak growth in the economy for a long period of time. In this case, it would also have effects on inflation.
It is not difficult to see that a crisis that reduces output by  BIS Review 140/2010  5  between 5% and 10% for a number of years, and occurs once every fifty years, amounts to an annual cost several multiples of the revenue that will be generated by the UK bank levy (Haldane, 2010). But how can we be certain of correctly establishing what the tax should be when we are trying to internalise costs that occur so infrequently? So although there is a sound case for a levy directed at the size of short-term borrowing, it would be foolish to regard that as the main tool to align costs and benefits of risky balance sheet activity. If setting the appropriate price is hard, then some form of controls on quantities might be a better answer (Weitzman, 1974). For example, limits on leverage have much to commend them. And for a generation, the quantitative control of this type that regulators have embraced was embodied in the capital standards set within the Basel framework. Last month a new concordat on such standards was reached in Basel – the so-called Basel III requirements. The challenge here is to set the requirements in a way that will materially affect the probability of a crisis. Other forms of quantitative intervention include functional separation to reduce the costs of maturity transformation by ring-fencing those activities that we are most concerned to safeguard from disruption. If successful, the costs of any failure of financial institutions would be reduced.

That is what happened in 2007–08. As the IMF have pointed out differences in capital ratios failed to predict which financial institutions would be vulnerable in the crisis (IMF, 2009). Only very much higher levels of capital – levels that would be seen by the industry as wildly excessive most of the time – would prevent such a crisis. Second, the Basel approach calculates the amount of capital required by using a measure of “risk-weighted” assets. Those risk weights are computed from past experience. Yet the circumstances in which capital needs to be available to absorb potential losses are precisely those when earlier judgements about the risk of different assets and their correlation are shown to be wrong. One might well say that a financial crisis occurs when the Basel risk weights turn out to be poor estimates of underlying risk. And that is not because investors, banks or regulators are incompetent. It is because the relevant risks are often impossible to assess in terms of fixed probabilities. Events can take place that we could not have envisaged, let alone to which we could attach probabilities. If only banks were playing in a casino then we probably could calculate appropriate risk weights. Unfortunately, the world is more complicated. So the regulatory framework needs to contain elements that are robust  6  BIS Review 140/2010  with respect to changes in the appropriate risk weights, and that is why the Bank of England advocated a simple leverage ratio as a key backstop to capital requirements.