samchain/econo-pairs-v1 huggingface dataset:
What a relief, one might think, that we consumers don't have to pay for all this. But who is it that has to pay? Because someone ultimately has to bear the costs. It is easy to initially assume that it is the retail trade and the banks that benevolently pay for payments. But it is not that simple. The merchants need to have their costs covered; otherwise they will not be able to run their businesses. And the same applies to the banks. The costs of all payments therefore gradually arise as the markups on the prices of the goods and services we buy. Milk and vegetables may become a little more expensive in the shop and the interest on our deposits at the bank may be a little lower than would otherwise have been the case. It is thus we consumers and bank customers who ultimately pay the costs of all payments. But we do not see them. We are therefore led to believe that they do not exist – or that someone is paying them. Shouldn’t the actual costs be visible? Is this a good system? Normally, we want to be able to see what various goods and services cost. The price helps us decide how much we will buy. We do not have any such price signals regarding the different methods of payment. The real prices are hidden. And this raises the question: If we knew what it actually costs, would we change our method of payment?

In 1999, Romania’s GDP stood at merely EUR 33 billion, while GDP per capita was lower than EUR 1,500. This leap, which led to significant changes including higher consumer standards, will have to be accompanied by similar progress in understanding economic issues, so that the path forward should be as smooth as possible. If we look at the long-term development of the Romanian society, the decade elapsed since the launch of Ziarul Financiar is a significant landmark, which can be compared with the significant upturn after World War I and the achievement of the Grand Union of 1918. At such turning points, the quantitative developments, which are nonetheless important, need to be accompanied by qualitative changes that are related to social philosophy as a whole, as well as to progress in national standards and values. From this perspective, the opinionmakers and the press in general play a major role. Economic newspapers in particular find themselves in a very special position. As a matter of fact, the National Bank of Romania has steadily promoted economic education and has done its best to raise journalists’ level of professionalism when approaching economic issues. Let us remember that Ziarul Financiar was launched ten years ago in the very Marble Hall of the NBR. Numerous occasions have arisen over the years when NBR representatives participated in events organised by Ziarul Financiar and vice versa. There has been a steadfast dialogue benefiting, in my opinion, both Ziarul Financiar journalists and central bank experts.
But let me be very clear about one thing – banks are not saved because they in themselves deserve to be saved. On the contrary, their managers and shareholders have usually played a decisive role in getting the bank into trouble in the first place. Some banks are saved because they are necessary for the real economy to operate. Actually, governments do not save banks, but rather the functions that banks provide to society. But you can never be entirely sure in advance how the financial system (and ultimately the real economy) will be affected by a bank failure. In other words, knowing which banks to save and which ones to let go is complicated. You need to weight the costs of unsettling the financial system in relation to the costs of saving the bank. This is not an easy task. But despite the substantial uncertainty, you can be sure of one thing – whether you let a large bank fail or rescue it, either way you will incur substantial costs and I am not only talking about financial costs but also about social dislocations! BIS Review 50/2010  5  However, deciding to save a bank does not imply being spendthrift. On the contrary, being economically savvy is my third – and perhaps most important – principle of crisis management. So how does that principle manifest itself in practical actions? Thankfully, history offers us a number of both good and bad examples from which several useful lessons can be drawn.

The first lesson is to perform a thorough due diligence to clarify the extent of the problem in the troubled bank. But, in line with my previous principle, ideally you need to do this fast. Once you have a firm grasp of the bank’s difficulties, its time to carefully assess your support options. This assessment will, of course, include direct costs, but indirect consequences for the financial markets and the overall economy should also be taken into account. The second lesson is to opt for the least-cost solution. This may sound obvious, but many examples show that the lesson is not always heeded by decision-makers. In some cases, a least-cost solution means a state guarantee against losses on assets or a funding guarantee. But when that does not suffice, brokering a private solution – such as a takeover from another, sounder bank – is another option. This usually also includes some elements of guarantee in order to sweeten the deal for the acquiring bank. But guarantees may skew the incentive, so you need to tread carefully. Such skewed incentives are, in fact, good examples of the indirect costs you need to weigh in your assessment of alternative solutions. If neither of these solutions is possible, you are simply left with one single option – injecting capital into the bank. Textbooks in economics typically describe the functioning of central banks as lenders of last resort.
Figure 2 GDP and final demand (annual change, percent) 20  20  15  15  10  10  5  5  0  0  -5  -5  -10  -10  -15  -15 04  05  06 GDP  07 08 09 Domestic demand  10  11 12 Final demand  13  Source: Central Bank of Chile. BIS central bankers’ speeches  7  Figure 3 Inflation indicators (annual change, percent) 10  10  8  8  6  6  4  4  2  2  0  0  -2  -2  -4  -4  -6  -6 06  07  08  09  10  11  CPI  12  13  CPIEFE  Source: National Statistics Institute (INE). Figure 4 Real exchange rate (*) (index, 1986=100) 120  120  110  110  100  100  90  90  80  80  70  70  ( )  88 g  90y  92  94  RER  96  98  00  02  1998-2012 average  04  06  08  10  12  1993-2012 average  (*) Includes information up to 27 August. Source: Central Bank of Chile.

Clearly the wage bill cannot be expanded by major pay rises, since this eventually leads to a higher relative cost of labour and, consequently, less job creation, higher unemployment, loss of household confidence and fresh falls in demand, which would mean still lower growth and more unemployment. Therefore, it is crucial to adapt wages to the specific situation of firms, to their activity, productivity gains, profits, etc. The current wage bargaining system does not take into account the large differences in individual firms’ specific situations, so it is not the most suitable one to prevent the bout of weak demand from generating a sharp fall in employment. Further, the predominance of indexation clauses in collective labour agreements is a problem that becomes particularly harmful when, as in the current circumstances, inflation has risen due to an external shock, like oil prices, at a time of cyclical weakness. It is naive to believe that automatic wage adjustment to reflect past consumer price increases provides any protection to household disposable income. On the contrary, these clauses (which have now been done away with in most European countries) lessen the ability of firms to compete and keep creating jobs, generate inflation (which affects those not protected by similar provisions) and, in short, hinder adaptation to the external shock. In general, these characteristics of the Spanish labour market have meant that employment has so far been the economy’s main adjustment variable in periods of crisis, since it is the quantities (i.e.
And from then until last year, we had a central bank that had been deprived of the authority to intervene in the functioning of the financial system. But the Central Bank is not alone on the stage. Sound economic policy is a triumvirate comprising the Central Bank, the Treasury, and the labor market partners, all of which must work together to keep the economy in balance. These three members of the triumvirate must act in concert in order to ensure stable prices, stable purchasing power, and low interest rates for the long term. We can do this just like other countries can. We will do it. And the Central Bank will do its part. Sixty years of Central Bank operations should give us a reliable roadmap to the future. We who work for the reunified Bank are champing at the bit in our excitement to take on the tasks that await us. Now let us watch the video about the design of Iceland’s banknote series, in commemoration of the 40th anniversary of the redenomination of the Icelandic króna. Thank you  5/5  BIS central bankers' speeches

With only one tool, the repo rate, we are trying to attain the inflation target and at the same time attain a balanced development in economic activity. In practice, the repo rate is often adequate as a tool to  BIS central bankers’ speeches  3  give both inflation and economic activity a push in the right direction.1 But in recent years, we have also needed to manage the problem of economic activity being at different levels in different parts of the economy. We cannot use the repo rate to stimulate the corporate sector and limit the build-up of household debt all at the same time. In this situation, it is not evident how monetary policy should manage the balance between inflation, economic activity and the risk of an overly rapid increase in housing prices and household credit. Let me elaborate on my thoughts a little further here. Monetary policy must take financial risks into account The concern over lending to households increasing too rapidly has led to a majority of the members of the Riksbank’s Executive Board voting to hold the repo rate at a higher level than would otherwise have been justified. I have entered reservations against these decisions and advocated a lower repo rate, for reasons I will return to later. Despite my reservations, I share the majority’s concern over the rapid increase in household debt.
The Basel  BIS Review 3/2007  5  Committee has now decided to pay greater attention to give a standard definition for capital, hopefully before the implementation begins in 2008.  International Comparison Many countries have not tackled all these issues associated with Basel II, but there is notable progress; some slowly, some moderately and some at a faster phase. For example, the Development Bank of Singapore (DBS), the largest bank in Singapore and the 5th largest group in Hong Kong with universal banking, providing full range of products and services for consumer, small and medium enterprises, corporate banking, investment banking, fund management, trade finance, cash management, securities and treasuries has taken a keen interest over the last 2-3 years in meeting the Basel capital adequacy requirements and to implement the same in 2008. At present, it has a Tier I capital ratio of 10.1% and a total capital ratio of 14.1%. The main philosophy behind the DBS’s approach is a balanced and enlightened one based on the management of capital. The approach is led by the DBS’s board and senior management and it is embedded within business of a whole group. It is constantly reviewed by supervisors and communicated to the markets. The DBS group has implemented a large-scale Basel II governance structure at several levels which is a success factor.

This is particularly relevant when it comes to similar financial products that can be packaged as an insurance product, a banking product or a securities product as same business can be undertaken by either a bank, investment bank or an insurance company. A key implementation issue is how to delineate the double gearing and how to make available capital to deal with risks of both insurance and securities products. As far as the EU is concerned, the financial conglomerates directive has already been issued and they are expected to comply with them. USA’s umbrella supervisory provisions are included in the Graham Leach – Bliley Act. In Sri Lanka, we still have not come to terms in dealing with a consolidated or a group-wide financial conglomerate. X. Proper definition of capital  How do you identify new capital instruments such as hybrid capital and perpetual debentures? Should it be Tier I or Tier II? One needs to be cautious here as hybrid capital can disappear given its derivative nature. Currently, there is a wide disparity between the Basel II preparation processes in Europe, USA and Asia. The issue of treating hybrid capital is significant as many Asian banks are moving towards synthetic securitization in producing hybrid capital and exposing their portfolios to credit risks, especially when equity participation has been synthetically securitized.
In a seminal paper (Fischer, 2001) this “move towards corner solutions” was viewed as a response to the impossible trinity under free capital movements. At that time Romania still had capital controls in place. But when we completed the capital account liberalization, in September 2006, the issue had become not only academic, but also a practical one. By then Romania had adopted inflation targeting and the problem seemed to have been solved: such a regime seemed incompatible with any type of managed float of the exchange rate. In reality, things proved to be much more complicated. Despite NBR interventions, the exchange rate of the leu witnessed a significant nominal appreciation immediately before and after EU accession (January 2007). In retrospect, I would say that it was more difficult to conduct monetary policy when confronted with massive capital inflows than with the scarcity thereof. When flooded by capital inflows (especially when concentrated in non-tradable sectors), a conflict between price stability and external equilibrium emerges. Interest rate hikes may be needed in order to manage aggregate demand and anchor expectations, but this would entail further capital inflows and an unsustainable nominal appreciation of the exchange rate. BIS central bankers’ speeches  3  This was the dilemma the NBR faced between 2006 and 2008, when the current account deficit exceeded 10 percent of GDP, a level which was clearly unsustainable, despite being largely financed through foreign direct investments. Amid the ongoing international financial crisis, a significant adjustment of the current account deficit became unavoidable.

Situation in the banking sector As our Financial Stability Report published today describes in detail, the situation in the Swiss banking sector deteriorated considerably in 2008. The turbulence in the money and credit markets that had erupted in mid-2007 worsened in 2008, also spilling over to other areas. The two big banks, in particular UBS, were hit hard by these negative developments. As you know, together the two institutions recorded a total loss of some CHF 30 billion in 2008. 1 They took extensive measures to strengthen their resilience. In addition to reducing risky positions, they raised sizeable amounts of private capital. The resilience of UBS was further strengthened by the package of government measures announced by the Federal Council, the SNB and the then Swiss Federal Banking Commission (SFBC, now FINMA or Swiss Financial Market Advisory Authority) in October 2008. Owing to all of these measures, the big banks’ capital situation at the end of 2008 improved slightly compared to the end of 2007, despite the massive losses incurred. However, our assessment is that, overall, risks in the big banks’ books are still material. This is all the more serious since, compared to the end of 2007, the profit potential of the big banks is lower. Banks with a domestic business focus, i.e. cantonal, regional and Raiffeisen banks, present a much more favourable picture. Although the overall profitability of these bank categories declined in 2008, it still remains above the long-term average.
This is a good thing, and we will have the opportunity to return to the debate on these issues at The Open Forum being organised at the Guildhall on November 11th. I know you will be there, as will Tracey and I. Please, will everyone participate, and to find out more consult the Bank of England website. Thank you. 6  BIS central bankers’ speeches

For a more detailed analysis, see Banco de España (2020), “Recent developments in the most important Latin American banking systems for Spanish banks”, Box 2, “Report on the Latin American economy. Second half of 2020”, Analytical Articles, Economic Bulletin, 4/2020. 8 For a stress test analysis of the 61 largest banks in Latin America, see Annex 4 of the IMF’s Regional Economic Outlook (2020), Pandemic Persistence Clouds the Recovery. 9 See A. Werner, A. Ivanova and T. Komatsuzaki (2021), Latin America and Caribbean’s Winding Road to Recovery, IMF blog. 5  First, in addition to the human cost in lives, the effects on poverty and income distribution have been very severe.10 Indeed, during 2019, bouts of political tensions and social unrest in several countries, partly related to this situation, fuelled economic uncertainty; this in a region where numerous elections are due to take place in the coming quarters. A second challenge is that posed by shrinking fiscal space following the increase in government debt in the region during 2020, positioning it as the emerging region with the highest government debt-to-GDP ratio and, where debt refinancing is concerned, leaving it highly vulnerable to changes in investor sentiment. Against this background, monetary policy is supported by the accommodative policies of the main developed economies and by low inflationary pressures.
Paul Tucker: Resolution – a progress report Speech by Mr Paul Tucker, Deputy Governor for Financial Stability at the Bank of England, at the Institute for Law and Finance Conference, Frankfurt, 3 May 2012. All speeches are available online at www.bankofengland.co.uk/publications/speeches. *  *  *  Thank you very much for inviting me to join this important conference. The EU have made a massive contribution to global planning for resolution regimes to address the fundamental problem of Too Big To Fail, inputting very significantly to the G20 Financial Stability Board’s Key Attributes for Resolution Regimes. It comes as no surprise, therefore, that the EU is committed to implementing that International Standard, via a Directive. As Chair of the FSB’s Resolution Steering Group, I thought the most useful thing I could do this morning is to give a brief progress report, and also to air some emerging thoughts on how to operationalise the FSB’s high policy. Preliminaries: what this is about For those who hesitate to grasp the nettle of implementing resolution regimes, I want to stress that the genie is out of the bottle. While myopia gripped the financial markets in the years leading up to the crisis, they are now seized of the risks on bank balance sheets. That will be reflected in the prices of the debt of those who bear that risk. If the risk in banking is not incorporated into the yields of bonds issued by banks themselves, then it will be reflected in higher sovereign borrowing costs.

The remedy would be a negotiated reconstruction of the firm’s capital structure, writing off the equity and partially converting debt claims into new equity. In the US, that goes by the name of Chapter XI. In banking, which is subject to depositor and counterparty runs, there is not time for a process involving negotiations between the different classes of creditors and shareholders under the jurisdiction of the courts. And the public policy priority is the stability of the system, not only the welfare of creditors. An administrative agency needs to make and execute some rapid judgments. That is precisely what so-called bail-in via resolution is about. The essential difference from other resolution tools is, as I have said, that losses are applied ex ante, up front rather than at the end of a process of running down the assets associated with “non-critical” functions. I have been making a simplifying assumption: one legal entity. Now imagine a cross-border group with subsidiaries in many jurisdictions and with a holding company. Under the provisions of the FSB Resolution Standard, recapitalisation through reconstruction of liabilities can also prospectively cut through a number of the long-standing impediments to resolution stemming from conflicts between home and host country insolvency laws; in other words, the cross-border problem. If the bail-in I have described were executed at the level of such a banking group’s holding company, there should in principle be no need to trigger default clauses in subsidiaries around the world that are not themselves affected by the problem causing the group’s losses.
To the extent that participants are responding about the mode of the joint distribution, as opposed to the mode of each marginal distribution, this would not be surprising.45 The striking feature of Slide 10 is the contrast between the steadiness of modal point forecasts and the dramatic changes in density forecasts. Modal forecasts for the policy rate in both year-end 2017 and 2018 barely moved from December to January, and edged slightly down in March. Had we just elicited point forecasts, we would have concluded that survey respondents’ views had not changed very much. In contrast, the pdf-implied mean forecast decreased substantially from December to January, and then increased slightly from January to March. More importantly, density forecasts shifted from being slightly skewed toward higher rates in December to being skewed toward lower rates in January. In fact, density forecasts became bimodal in January, and in March, the “low rate” mode became the dominant one for 2018. I should stress that the change in the density forecasts from December to January occurred following substantial changes in how the survey questions elicited respondents’ probabilityweighted expectations. In December, and in many preceding surveys, both the SPD and SMP asked respondents for the unconditional probabilities that they assigned to various rate outcomes.

In our experimental surveys, we instead administered the follow-up to everyone. We found that if we administered the follow-up question only to those giving responses over 5 percent, then the median long-term expectation would be 4.3 percent instead of 3.7 percent in our test sample. Thus, we have reasons to believe that the 5 percent follow-up question in the Michigan Survey leads to a systematic overestimation of actual average responses. 19  In contrast, for the Survey of Primary Dealers discussed later, we added a question in 2007 that directly elicited uncertainty over CPI inflation from 5 to 10 years ahead. See Potter (2011, 2012). 6  BIS central bankers’ speeches  as food or gasoline.20 In related research, we have shown that respondents tend to express more extreme inflation expectations when they are prompted to think of specific prices in answering the question rather than overall inflation.21 In the SCE, we therefore ask directly for expectations about the rate of inflation or deflation.22 Probabilistic questions on the SCE As I noted earlier, a key feature of our survey is its use of probabilistic questions. Following the current practice in the literature for the elicitation of expectations about continuous variables, we tested questions that elicited density forecasts by asking respondents to assign the percent chance that the value of interest would fall within different pre-specified ranges or “bins.” For instance, for inflation, we ask for the subjective probability distribution over a range of possible future inflation outcomes.