samchain/econo-pairs-v1 huggingface dataset:
Things did not end well for Johan Palmstruch. There were no rules to limit the loans that could be issued by the bank, and Stockholms Banco’s loans far outstripped the value of the copper and silver held by the bank. Confidence in the banknotes began to evaporate, and their value fell. Demand to redeem the banknotes for copper and silver was high, but Stockholms Banco did not have enough metal to meet the demand, and Sweden experienced its first banking crisis. The bank was declared bankrupt and was liquidated. Johan Palmstruch was sentenced to death for irresponsible accounting. The death sentence was subsequently commuted, but Palmstruch had to spend the rest of his life in prison. Nonetheless, the Stockholms Banco crisis left a permanent legacy: in 1668, the authority to conduct banking operations was transferred to a bank that was later to become the Riksbank, under the direct control of the Swedish parliament, Riksdagen.1 The world’s first central bank was born.2  What is money? So what is money exactly? The simple answer is that money is a means of payment. It is also a universally recognised common unit of account. Money has therefore a key role in all financial transactions – it is a practical means of assigning value to goods and services and of settling trades. To perform these functions, money must have a fairly stable value. People will only accept money as payment if they believe it can be used again as a method of payment in the future.

For a review of Norway’s monetary history, see Eitrheim, Ø., J.T. Klovland and L.F. Øksendal (2017). A monetary history of Norway, 1816-2016, Cambridge University Press. 7 Deposit money is also reduced when customers withdraw cash. However, since cash is part of the money  supply, the total money supply in the economy does not change. 8 8/9  BIS central bankers' speeches  8 In isolation, diversification reduces banks’ funding risk. Increased use of wholesale funding may lead to slower  growth in the money supply than in credit. Banks also hold liquidity portfolios containing highly liquid securities that can be sold to compensate for deposit withdrawals. This also reduces banks’ risk. 9 For a more detailed explanation of how money is created by banks, see “Money creation in a modern economy”,  Bank of England Quarterly Bulletin2014/Q1, and Bernhardsen, T., A. Kloster and O. Syrstad (2016) “Alternative virkemidler i pengepolitikken – Den nødvendige monetære økosirk” . Staff Memo12/2016. Norges Bank (Norwegian only). 10 Lehman Brothers was an investment bank and did not accept customer deposits. However, as the bank issued  short-term paper and took part in repurchase agreements, which are included in M3, Lehman Brothers created money. The closure of Lehman Brothers led to investor flight from money market funds, very high money market volatility and higher demand for cash from US bank customers. 9/9  BIS central bankers' speeches
Furthermore, economic agents should not be given any cause to act on the basis of expectations that central banks would insure financial markets against considerable losses. Otherwise, there would be serious moral hazard problems and the public would hold the central banks accountable for specific developments in financial markets such as the performance of the stock market. This might seriously impair the central banks' goal of pursuing price stability, and thus their credibility. Central banks also face considerable problems in terms of identifying financial bubbles. After all, a bubble can only be confidently identified as such once it has burst. 5  J.E. Core, W.R. Guay and D.F. Larcker, “Executive Equity Compensation and Incentives: A Survey”, Federal Reserve Bank of New York, Economic Policy Review, April 2003, pp.27-45. 6  A. Greenspan in his Testimony before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, 16 July 2002; see also A. Greenspan, “Stock Options and Related Matters”, remarks at the 2002 Financial Markets Conference of the Federal Reserve Bank of Atlanta, 3 May 2002. 7  P. Maidment, “In Nothing We Trust”, Forbes Magazine, 7 January 2001; F. Fukuyama, “Trust: The Social Virtues and the Creation of Prosperity”, Free Press, 1995. 8  F. Fukuyama, “Social Capital and Civil Society”, 1 October 1999, paper presented at the IMF Conference on Second Generation Reforms; J. Sobel, “Can We Trust Social Capital?”, Journal of Economic Literature, Vol. XL, March 2002, pp.139-154.

Monetary policy and financial stability The recent worldwide episodes of substantial asset price swings, with their strong links to the emergence of the “new economy”, have intensified the debate among policy-makers regarding the relationship between financial stability and monetary policy. The question arises as to how monetary policy needs to deal with asset price bubbles, which have often been linked to financial stability concerns. As is generally accepted, bubbles are situations in which the prices of various types of assets differ from their fundamental market values. Asset price bubbles originate in the existence of imperfect information in financial markets, leading to the mispricing of assets and, in turn, to the distortion of investment and consumption decisions. Often, asset price bubbles occur in an environment of regime shifts, prompted by major technological innovations, which gave rise to the belief among a broad spectrum of economic agents that a new era had started. In this respect, the impact of the “new economy” on stock prices that we have experienced in recent years has not been that exceptional. However, the importance of asset price bubbles and their potentially distorting impact on economic and financial processes does not mean that central banks should make asset prices an explicit goal for their monetary policies. This idea has been refuted by many, and rightfully so. Asset prices are predominantly driven by real factors such as technological and demographic developments and preferences, which cannot be controlled by monetary policy.
They have no voice and no representation in the work of the G20 or in the institutions which it chooses to set up to further its agenda. This is at variance with the principles of multilateralism and international cooperation that have prevailed since the end of the Second World War. Over time, this could easily weaken not  8  Mervyn King: Speech at the University of Exeter, January 19, 2010. 9  The Financial Stability Board has been established to address vulnerabilities and to develop and implement strong regulatory, supervisory and other policies in the interest of financial stability. It comprises the G20, five other countries and international institutions and standard-setting bodies. 10  International Monetary and Financial Committee – the policy steering committee of the International Monetary Fund. BIS Review 22/2010  5  only the G20 process, but also the IMF as it will be perceived as increasingly guided and controlled by the G20. I referred earlier to a recent speech by the Governor of the Bank of England and I wish to do so again where he states: “Looking further ahead, the legitimacy and leadership of the G20 would be enhanced if it were seen as representing views of other countries too. That could be achieved if the G20 were to metamorphose into a Governing Council for the IMF, and at the same time acquire a procedure for voting on decisions.” Needless to say, I agree with him, as did the Managing Director of the IMF in a recent interview.

According to various estimates, about 5% people at working age have already left Poland. For Estonia, this figure stands at as much as 10%. In the global economy of the 21st century, technological progress and lower transportation costs have allowed for the business processes or their parts to be easily moved between countries (a phenomenon frequently described as business process offshoring). The relative role of crucial factors behind long-term development prospects is thus changing. In the 21st century, the key factor conducive to economic growth will be knowledge – broadly understood as a country’s intellectual capital – and this country’s ability to drive innovation. If businesses in a given country fail to change their product and service profiles to achieve greater value added, they will find themselves pushed out of the market by companies from countries with low manufacturing costs. This applies to a number of markets, products and services only recently considered as subject to the international competition, one glaring example being the off-shoring of services offered by radiologists from the US to India 6 . China has already become the world’s leading exporter of computers and their components or telecommunications equipment 7 . I believe that it is just a matter of less than twenty years for China to achieve a similar position in the automotive industry, mainly because Chinese companies have mastered network-based cooperation.
This divergence in the regional focus becomes even more apparent when Asia is viewed as a whole. This is because Switzerland maintains far closer trade ties with Asia’s industrialised countries than the EU does, particularly with the four Asian tiger economies of Hong Kong,  6  The USD value of goods exports to developing and emerging economies (excluding the tiger economies of Hong Kong, Singapore, South Korea and Taiwan) has grown by an average of 7.5% since 1990, i.e. it has quadrupled. Goods exports to industrialised counties increased by 4.7% annually during the same period, representing an increase by a factor of only 2.5. 7  From 1990 to 2008, the GDP of developing and emerging economies rose by an average of almost 8% (China alone grew by more than 10%). The GDP of the EU15, by contrast, rose by just 1.9% on average (US: 2.7%). 8  The USD value of Swiss goods exports to emerging Asia (excluding the tiger economies) has grown by an average of 9.1% since 1990 (since 2000: 18%). The corresponding growth rates for Germany amounted to 11.4% (since 2000: 17.8%), and for the EU, 9.6% (since 2000: 13.6%). 9  Including intra-EU trade. BIS Review 157/2010  3  Singapore, South Korea and Taiwan. Overall, Switzerland’s share of exports to Asia, including Japan, came to 15% last year – more than twice the EU average. 10 Furthermore, Switzerland is one of the few European countries – alongside Ireland, Sweden and Finland – to run a trade surplus with Asia.

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The algorithms of automatic trading have rules embedded in their code such that quotes are immediately pulled if there is a severe market liquidity event. Moreover, the algorithms often have automatic rules that activate circuit breakers or socalled “kill switches” should the aggregate notional risk on a firm’s book exceed programmed limits. On 15 January, the algorithms acted quickly to pull the so-called “streaming prices” when liquidity in the reference market for these prices dried up. Where this did not happen simultaneously, it resulted in large open positions being accumulated by the banks, quite literally within seconds, as an overwhelming balance of client sell orders were automatically executed. Once pre-determined risk accumulation limits had been breached the algorithms instantaneously shut down. Whilst each algorithm, operating independently, may well have been quite prudently calibrated to protect the bank from building an exposure that exceeded its risk appetite, collectively, the impact on market liquidity was akin, albeit temporarily, to a cascading failure across a power grid. As a consequence, the foreign exchange market reverted to human voice orders as the substitute for automated trading. There were therefore outcomes that appear not to have been expected. So, at the risk of quoting Shakespeare inappropriately, all was well that ended (reasonably) well, but the risk that this would not be the outcome is too great to ignore. In summary, there is good evidence that financial market conditions have evolved in ways that reduce the likelihood of continuous market liquidity in all states.

The fifth area concerns the risk of asset managers offering short-term redemptions to investors against potentially illiquid securities. The proportion of assets held in such structures has increased over the past decade. Given more fragile underlying market liquidity, for the reasons I have described, stressed disposals of assets might be harder to accommodate in an orderly fashion. The international securities regulatory body IOSCO, issued recommendations in 2012 that provide a basis for Common Standards for Money Market Funds (MMFs) across jurisdictions, in particular seeking to ensure that MMFs are not susceptible to the risk of runs (in the way that banks can be). More broadly, work continues on putting into practice appropriate policies and standards to prevent the risk of disorderly sales of assets in the face of investor withdrawals. Potential responses (and at this stage we are looking at options in an open way) are to require funds to hold larger liquid asset buffers to facilitate orderly redemption payments to investors, to apply more stringent leverage limits where appropriate, and to require that the redemption terms offered to investors take sufficient account of the risk that secondary market liquidity in the assets they hold could become impaired. These are possibilities, but at this stage very much not policies for the reason that a lot more work is need to properly assess them. Last, central banks can back-stop market liquidity by acting as market makers of the last resort.
We have a lot of bank supervisors who typically get degrees in public policy or business, and come and work at the Federal Reserve and become bank examiners. We have a lot of people in the Markets Group, which I ran prior to becoming President of the Bank. We monitor the markets. We talk to market participants to understand what’s going on. 4 / 15  BIS central bankers' speeches  We execute monetary policy on behalf of the Federal Reserve System. We have people that are in Operational Risk, who assess risk. We have people who manage custody accounts for foreign and central banks. We have about $ trillion of foreign central bank assets in custody at the New York Fed. We have the largest holdings of gold in the world in the vault of the New York Fed, so someone has to protect that. We have a number of people in the Protection and Law Enforcement Services that make sure that the gold is safe regardless of what one of the Die Hard movies implied, that it could be robbed pretty easily. That’s not the case. When I became the President of the Bank, I actually rented out the Die Hard movie because I wanted to see if it was plausible – the way they stole the gold from the New York Fed, and it turned out that they sort of glossed over that.

Anita Angelovska-Bezoska: Macedonia – current macroeconomic developments, medium term outlook and challenges ahead Speech by Ms Anita Angelovska-Bezoska, Vice-Governor of the National Bank of the Republic of Macedonia, at the Ministerial Dialogue on the Preaccession Economic Programs on EU Candidate Countries, European Commission, Brussels, 9 July 2013. *  *  *  Dear Ministers, Dear representatives of the European Commission, European Central Bank and Eurostat, At the beginning, let me express our gratitude to the European Central Bank, European Commission and Eurostat for their contribution in assessing our Preaccession Economic Program for the period 2013–2015. Within the PEP we already presented the proactive role of the National Bank of the Republic of Macedonia in dealing with the global crisis consequences, by undertaking a mix of conventional and unconventional measures, aimed at maintenance of the price stability, financial stability, as well as stimulating economic activity. I will use this opportunity to point out several issues regarding the current macroeconomic developments, medium term outlook and challenges ahead. The latest available data on Macedonian economy for the first quarter of 2013 indicated a gradual revival of the economy with real annual GDP growth of 2.9%, slightly higher than our expectations, being mainly driven by the investment and net export.
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Sud Ouest: France has taken over the presidency of the G-20 group of leading nations. And, on this occasion, Nicolas Sarkozy would like to pave the way towards a reform of the international monetary system that would reduce the dollar's role. Do you see this as a possibility? BIS central bankers’ speeches  1  Christian Noyer: The aim is not to reduce the role of the dollar. Even though it has already partially lost its sole reserve currency status, the dollar will continue to play a major role in trade. France is approaching this presidency with an open mind, but there is no doubt that the international monetary system is no longer suited to today's world. Designed in the 1940s and reformed in the 1970s, this system bears the hallmark of an era when international trade played a much smaller role, and when emerging countries such as China, India and Brazil were much less significant players in the global economy. This new configuration must be taken into account. Today, we must hold discussions and debates, measure the magnitude of capital flows that could have very destabilising effects on some countries and strive in a united manner to correct the major imbalances that are dampening world growth. 2  BIS central bankers’ speeches
We therefore consider that the high oil price will subdue international growth to some extent in the coming year but will not entail any dramatic adjustment. However, the difficulty in assessing the effects of the high oil price does make this a central element in our picture of risks. Uncertainty still also prevails about the consequences of the saving imbalances in the world and above all the large deficit on the US current account. An adjustment of current-account balances would probably involve a weakening of the US dollar’s real exchange rate, through either lower US inflation relative to the rest of the world or a fall in the dollar. An adjustment of the imbalances would  4/5  also be likely to raise the very long-term interest rates. If these changes were to occur quickly and unexpectedly, there would be a risk of decreased world market growth. The Swedish economy Signals of an economic slowdown last spring were also evident in Sweden but in June we counted on the dip being temporary, with a subsequent renewal of growth. So far, the new statistics since then seem to confirm our assessment. The second-quarter national accounts show that growth strengthened about as much as we had expected. An acceleration seems to have begun in the growth of private consumption, accompanied by a continuation of the last year’s upswing in investment, with a spread from residential construction to the corporate sector in general.

Norman T L Chan: Strengthening risk management of banks in Hong Kong Statement by Mr Norman T L Chan, Chief Executive of the Hong Kong Monetary Authority, to the media, Hong Kong, 19 May 2017. * * * In view of the increasing risk of overheating in the property market, I would like to announce that the Hong Kong Monetary Authority (HKMA) has decided to introduce three new counter-cyclical prudential measures today to strengthen the risk management of banks. 2. The first measure requires those banks using Internal Ratings-Based Approach to  calculate capital charges for credit risk to raise the risk weight floor by 10 percentage points from the existing level of 15% to 25% for new residential mortgage loans. 3. The second measure requires banks to lower the applicable loan-to-value ratio (LTV) cap by 10 percentage points for mortgage loans extended to applicants with one or more pre-existing mortgages. 4. The third measure requires banks to lower the applicable debt servicing ratio (DSR) limits by 10 percentage points for mortgage loans extended to applicants whose income is mainly derived from outside of Hong Kong. 5. These three measures take immediate effect. However, mortgage applications for transactions with provisional sale and purchase agreements signed today or earlier will not be affected. 6. Finally, I would like to remind the public that, for most people, buying a property is not only one of the most important decisions in life, it is also a financial transaction entailing significant leverage through borrowing.
• On the other hand, households with low incomes also suffer if inflation is too low due to low aggregate demand. These households are usually very exposed to the business cycle and, more often than not, face unemployment and lower living standards when there is a trough. So, again, low and 1 [5]  stable inflation is an important contribution from monetary policy. • When looking at effects on equality, there are different channels from monetary policy at play. • These include the exchange rate, effects on stock prices, house prices and the labour market. • Low interest rates increase demand and are often associated with higher share prices and house prices. As shares are typically owned by high income earners, this increases the capital income for those at the upper part of the income distribution 1. House ownership is normally more evenly distributed than shares 2, so higher house prices would have smaller effects on equality. • The labour market channel is sometimes ignored when analysing the monetary policy effects on equality. This effect is not easy to calculate, but it is an important channel. • When attaining an inflation target, this normally goes hand in hand with an economy avoiding too much of booms and busts in the business cycle and less swings in unemployment. Less uncertainty over economic developments and economic policy is good for investment, and hence for growth and labour market outcomes. So, labour market developments are important for income equality.

Gent Sejko: Albania’s banking sector progresses but four key challenges remain Address by Mr Gent Sejko, Governor of the Bank of Albania, to the third AAB Conference on Banks for Sustainable Development, Tirana, 14 May 2019. * * *  Your Excellency Madame Minister1, Dear Chairman of the Albanian Association of Banks, Dear representatives of the banking sector, dear guests, Let me first congratulate the Albanian Association of Banks on its 20th anniversary. The Association, which came into being as token of emancipation in the banking sector, has become now a genuine platform of communication and coordination within the banking industry, and a key player in the economic and financial life of the country. I would also like to congratulate the organisers for this event, which helps the banking sector, regulators and policymakers alike, to identify the challenges lying ahead and explore the best alternatives for addressing them. Dear ladies and gentlemen, The banking system in Albania has made considerable progress over the last two decades. To illustrate my point, I would like to bring to your attention some facts and figures. Over the span of two decades, the portfolio of bank credit has expanded significantly, leaping from 5% to 35% of the country’s GDP. Similarly, the volume of deposits – in other words, the volume of savings of the Albanian public administered by the banking sector – has grown from 45% to 70% of the GDP.