samchain/econo-pairs-v1 huggingface dataset:
20 Sorting out these unusual risk premia effects is crucial for conducting appropriate monetary policy and for communicating the monetary policy stance to the public and to market participants. 18  John B. Taylor, 1993, “Discretion versus Policy Rules in Practice”, Carnegie Rochester Conference Series on Public Policy 39, December, 195-214. 19  For a discussion of various types of the Taylor rule see Athanasios Orphanides, 2007, “Taylor Rules”, Finance and Economics Discussion Series 18. Federal Reserve Board. 20  Taylor, 1993, p. 198. 6  BIS Review 141/2007  3. Conclusion  Let me conclude by reiterating that much of the central banks' motivation for their involvement in financial stability is rooted in their role as providers of liquidity in general, and of emergency liquidity in particular. At the same time, it has to be recognized that central banks have a very limited arsenal of instruments to deal with crises situations. A change in the level of official target interest rate is in many ways a crude instrument that, in my view, is best deployed with a firm focus on trying to keep the economy where our statutory mandate tells us to keep it. This does not, of course, preclude a change in interest rates in the event of a crisis, but only to the extent that the risks from the crisis to the economy justify a change in policy. The current market turmoil is providing countless lessons to the industry as well as to the official sector.

But we also must keep in mind the implications for the functioning of the global financial system in the near and medium term. This requires consideration of prospects for restoring normal market functioning and access, and the creation of appropriate incentives. •  When difficulties arise, the challenge remains, as always, to encourage and work with countries that are ready and able to implement strong corrective actions and to find financial solutions best suited to both the specific case and the broader functioning of the global financial system. A flexible, case-by-case, managed-market approach, represents the best bet - - and the only realistic option - - for achieving those goals as we face a challenging future. Thank you. BIS Review 61/2002  7
The Riksbank is still prepared to do more to ensure that inflation rises towards the target if this is necessary. The exchange rate is floating – and highly volatile In other words, the exchange rate has considerable significance for inflation trends. The Swedish krona has floated since 1992. There are several factors that affect a floating exchange rate. Differences in rates of inflation in Sweden and abroad and differences in interest rates between Sweden and the rest of the world are two such factors. Net trade in goods and services is another. Differences in economic growth and monetary policy are also significant. It is very difficult to predict how the exchange rate will develop. One reason for this is that different factors have different significance at different points in time. Figure 7 shows how the value of the Swedish krona has developed in relation to an index of international currencies, the KIX. The greater the significance a foreign currency has for Swedish foreign trade, the larger the weight it is given in the index. The curves in the figure can be interpreted as showing what the foreign currency costs in Swedish krona. When the krona weakens, the foreign currency costs more and the curve rises. The KIX index is the exchange rate the Riksbank considers most important. The Swedish krona showed an appreciation trend from 2010 until the first part of 2013. However, there were substantial variations. From the beginning of 2014, the trend has turned, and the krona has weakened.

The other attraction of using the approach taken for the SMCR for future regulation is that it has been the preferred approach adopted by Parliament most recently when not constrained by EU regulation (for the rollout of the SMCR to insurers, which occurred in December 2018). This is an important consideration at a time of heightened debate, in a Brexit context, about so-called “Henry VIIIth” and “Cardinal Wolsey” powers. Although it is uncertain quite what those gentlemen’s views would have been on the output floor in Basel 3.1, my point is that making use of an approach recently chosen by Parliament seems to me to have considerable attractions relative to choosing something completely new and untested. Would it not, though, be easier and better simply to stick with the EU model through which we have recently imported a large volume of rules? This approach is radically different from the approach the UK has taken when left to its own devices. Indeed, the EU model, with a large body of technical rules set out in the equivalent of primary legislation, is quite different from how most of the world does it. For example, the EU and Switzerland were the only two members of the Basel Committee on Banking Standards where Basel 3 was implemented through primary legislation rather than the prudential authority’s rule-making powers – in major economies like the US, Australia and Canada the regulators did the implementation.
Likewise, as I have mentioned on numerous occasions since the onset of the pandemic, the financial vulnerability of some business segments has increased, especially in the activities hit hardest by the crisis and in smaller firms. In the case of households, the increase in the saving rate and the reduction in debt at aggregate level mask the existence of segments that have seen their financial fragility increase. These vulnerabilities could also lead to future rises in default rates. 7  The businesses benefiting from the guarantee programme had a lower equity-to-assets ratio, a higher average cost of debt, a lower level of sales productivity (measured as sales to employees) and shorter bank debt maturities (see Box 2.1, Financial Stability Report, Spring 2021). 8 See Box 2.2, Financial Stability Report, Spring 2021. 8  A second significant aspect is the heterogeneity in the impact of the crisis on the banking sector, stemming from the different starting positions in terms of solvency and balance sheet quality, but also from a heterogeneous exposure to the countries, sectors and firms most affected by the crisis. These differences are reflected in the mixed performance of profitability at banks in 2020. In particular, extraordinary factors aside, the impact of the crisis has widened the dispersion range of profitability among banks. The differences between banks appear to owe less to a differing exposure to the sectors hit hardest by the pandemic,9 which is relatively homogeneous, than to the dispersion in terms of exposure to SMEs.

4  BIS Review 124/2006  Chinese authorities that the central bank should be more open-minded about cooperating with the government institutions in managing huge reserve assets). So, ceteris paribus, this factor will imply balance of risks skewed towards further risk premia compression in emerging markets in situation when US growth slows and expected returns in developed markets drop amid poor growth outlook. The important question is how it will end? Temporary US growth slowdown is unlikely to solve global imbalances issue, it is unlikely that oil-exporting countries will accelerate further their investment in real estate, as the pace is already frantic, lack of reforms in the eurozone indicates that potential output in this part of the world is unlikely to speed up significantly. So standard, consensus prescriptions will not work. The only feasible channel that might work is accelerating the pace of financial sector development, particularly in emerging markets, to produce more financial assets and more collateral. These reforms are easier to implement, because they do not require taking away social benefits and they do not hit any specific groups of interests. So it appears that the discussion should shift away from overvaluation of renminbi, and from implications of pegging gulf currencies to the weakening dollar, towards ways of speeding up necessary financial markets reforms in saving-abundant countries. If these reforms gain speed, we may be able to solve global imbalances problem without much global pain.
The Monetary Policy Report  The evolution of the macroeconomic scenario, in Chile and around the world, continues to be driven by the spread of the Covid-19 and the containment measures needed to protect the health of the population. The information at hand shows that, after a sharp fall at the beginning of the second quarter, in recent months the Chilean economy has shown signs of stabilization, combining an incipient improvement in some sectors and deterioration at the margin in others. This stabilization has responded to the evolution of sanitary restrictions, the adaptation of various sectors to new operating conditions and the boost from economic policies. The economic impact of the pandemic, however, is very significant and recovery will pose major challenges for public policies, institutions, and economic agents. The magnitude of this challenge is especially evident in the high number of people and businesses whose source of income has been disrupted. Reversing the loss of jobs, the fall in household income and the deterioration in consumption, together with responding to the financing needs of businesses, avoiding bankruptcies and enabling them to recover, are the greatest challenges for economic policy at this stage. As I will show later, based on known activity data and short-term perspectives, we estimate that GDP will end 2020 with a fall of between -4.5 and -5.5%, which compares to the -5.5 to -7.5% range estimated in the June MP Report and which implies a significant recovery in the second half of the year.

Annual average dynamics of unit labour costs in the second quarter of 2007 in CEE accounted to 8 per cent and in the group of Baltic and Balkan states the figure was over two times higher. This shows that sooner or later (rather sooner) enterprises will stop cutting their profit margins and will be forced to pass growing operational costs on consumers. 3. Productivity growth. We live in a global knowledge economy, which is driven by innovation – technological, business-process or customer related. The crucial factor to succeed in the global knowledge economy is the country’s ability to develop intellectual capital. Only those who understand the importance of innovations for growth will thrive and prosper in the coming decades. Unfortunately, CEE region lags badly behind the leaders in terms of its current and future ability to generate innovation. One of indicators measuring current ability to innovate is the number of researchers. In the mid-1990s CEE-4 (the Czech Republic, Hungary, Poland and Slovakia) and NIEs regions had similar number of researchers per million people, while two years ago NIEs had almost twice as many persons employed in R&D per million people in comparison with CEE-4. Future knowledge potential of particular country or region can be measured by tertiary enrolment ratio. Tertiary enrolment ratio in the CEE-4 countries improved to 50 percent in 2004, but still remains well below 62 percent in the EU-15 and 82 percent in the United States.
This suggests underlying productivity growth, and with it the rate of growth of the economy’s supply capacity, may have fallen back during the recession. And that is corroborated by business surveys, which suggest that manufacturers are, on average, back to pre-crisis utilisation rates, while the margin of spare capacity has also closed significantly in services firms (see Chart 8). It is, though, unclear why underlying productivity growth should have been quite so weak. To be sure, the collapse in business investment has resulted in a somewhat lower rate of growth  3  Taken from the IMF’s World Economic Outlook, October 2009. BIS central bankers’ speeches  3  of the capital stock, but estimates suggest that can only account for a modest slowing in underlying productivity growth. And while some businesses will certainly have been forced to reduce the scale of their operations or close because of lack of access to credit, corporate bankruptcies have remained at relatively low levels. Overall, there are few objective indicators to suggest a major hit to capacity growth from the crisis and subsequent recession. It is possible that the true fall in output during the recession has been overstated in the official statistics4, but the extent of the mismeasurement would have to be very large to reconcile all the facts. It is all somewhat puzzling! Even if the margin of spare capacity in businesses is no longer all that great, the elevated level of unemployment should have put downward pressure on inflation.

Opening remarks to the Bank of England ‘Independence – 20 years on’ Conference Remarks given by Mark Carney, Governor of the Bank of England  Bank of England ‘Independence – 20 years on’ Conference, Fishmongers’ Hall, London 28 September 2017  1  All speeches are available online at www.bankofengland.co.uk/speeches  Welcome to this conference marking 20 years of independent monetary policy making in the UK. We are here because long and varied experience has shown that price stability is the best contribution monetary policy can make to the public good. High inflation hurts the least well off in society the most. It distorts price signals, inhibits investment, and ultimately damages the economy’s productive capacity. Equally, deflation imperils growth and employment, and, in the extreme, leads to financial ruin and economic collapse. The happy medium is low, stable and predictable inflation. A little inflation greases the wheels of the economy, and it gives monetary policy space to deliver better outcomes for jobs and growth when shocks hit. Recognising the value to society of price stability is one thing, delivering it is quite another. The Bad Old Days Prices were anything but stable during the 1970s and 80s. With the collapse of Bretton Woods in 1971, UK monetary policy lost its nominal anchor. There followed a series of botched experiments, with targets for incomes, monetary aggregates and the exchange rate.
Øystein Olsen: The conduct of monetary policy Introductory statement by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), at the hearing before the Standing Committee on Finance and Economic Affairs of the Storting (Norwegian parliament), Oslo, 21 May 2013. *  *  *  Please note that the text below may differ from the actual presentation. I would like to thank the Chairman of the Committee and thank you for this opportunity to report on the conduct of monetary policy in connection with the Storting’s deliberations on the Government’s Financial Markets Report. My statement here today is based on the Bank’s Annual Report, but also on the Executive Board’s assessments for the period to the most recent monetary policy meeting and new information. When I was here last year, the key policy rate had been reduced by 0.25 percentage point to 1.5 percent in March. The key policy rate has since been kept unchanged. The key policy rate is low because inflation is low and because external interest rates are at very low levels. The year 2012 was characterised by weak growth among Norway’s trading partners and turbulence in financial markets. Uncertainty about global economic developments, particularly in Europe, was high. Key rates in many countries were close to zero, and both the European Central Bank (ECB) and the Federal Reserve announced that key rates would be kept low for a long period. Economic developments in many advanced economies remained weak into 2013.

Within its own remit, each NCB carries out the regular tenders orchestrated by the ECB and grants refinancing within the framework of these periodic auctions of central bank money. The NCBs manage the settlement accounts of credit institutions, hold the standing facilities for overnight credit and deposits, and also monitor minimum reserves. They are in constant contact with the ECB and supply it with all the daily data essential to the conduct of effective monetary policy. •  A rapid integration of the national money markets  It was crucial to enable liquidity to circulate smoothly from one financial centre to another in the euro area so that operators could conduct the necessary arbitrage between the different centres, thus ensuring a single euro interest rate for each maturity. The TARGET system is the key component of this unification. Right from the start of 1999, it enabled credit institutions to effect large-value, crossborder transactions with same-day value all day long, thus allowing the interbank market to function as a single market right away.
Paul Fisher: Regulation and the future of the insurance industry Speech by Mr Paul Fisher, Executive Director for Insurance Supervision of the Bank of England and Deputy Head of the Prudential Regulation Authority (PRA), at the Westminster Business Forum conference, London, 22 January 2015. *  *  *  Introduction Thank you for inviting me to speak to you today. First, I would like to introduce myself. I have been both an academic and a long-term central banker, working across the Bank of England in various roles including as a specialist economist, private secretary (to Eddie George), Head of Foreign Exchange and then Markets Director. I have been on the MPC and the interim FPC. In 2014 I took on the role of Deputy Head of the Prudential Regulation Authority and I attend the PRA Board. Since mid-2014 I have also been covering as Executive Director of Insurance. In taking on this role temporarily, I have promised to maintain a regular and open dialogue with the industry; enable the delivery of Solvency II; and embed insurance supervision as part of the Bank of England. I welcome the opportunity to discuss today’s topics and the role regulation will play. However, I would also like to acknowledge some of the broader challenges facing the insurance industry.

For CCPs the task of assessing an insolvency counterfactual is likely to be harder still – particularly if it must rely upon a forecast of how the rest of the waterfall would have unfolded, the behaviour of the CCP’s participants and the movements of the markets in the days that would have followed if resolution had not taken place. A liquidation counterfactual must also confront the argument that the CCP would have protected itself from insolvency through full tear-up. Given these valuation challenges, I suspect there will need to be careful further consideration given to the formulation and practical application of the NCWO safeguard; we must end up with a safeguard that is sufficiently certain and capable of estimation in advance that both creditors and resolution authorities are able to make sensible decisions before, during and after resolution. With that, let me conclude by summing up some key points: •  CCP resolution is both a necessary and inevitable part of the overall post-crisis reform agenda to end Too Big to Fail. As private, profit-making enterprises CCPs must be allowed to fail, but, given their systemic importance, many will need to be allowed to do so in a manner that maintains the continuity of their critical functions. •  Having a credible resolution regime for Clearing Members is a big step forward in helping to reduce the risk of clearing member default and from that the risk of CCP failure.
The closer these cushions are to levels that reflect potential future exposure across a more adverse set of market conditions, the more resilient markets and institutions will be under conditions of stress, and the less likely the prospect that the behavior by institutions will amplify financial shocks. Stress testing and scenario analysis is an important part of the process of calibrating this relationship between risk and capital and margin. The test of a sufficiently strong process is not simply the realism of the process used to measure potential losses, but the impact that it has on the decisions made by the institution on the size and type of exposures relative to earnings, capital and collateral or margin and the terms on which it extends credit. Let me conclude by noting again that we are in a period of perceived strength in economic fundamentals in the United States and many countries around the world. This strength has helped to induce significant reductions in a range of market-based perceptions of risk. Much of this confidence may prove warranted and durable, but the extent to which it endures will depend in part on the degree to which those running the major financial institutions in the United States use the opportunity presented by this period of relatively high profitability to strengthen their capacity to withstand a less favorable overall macroeconomic and financial environment.

I have mentioned two approaches, that of enhanced counterparty risk management and improved transparency and disclosure, which will hopefully help to address the concerns on excessive leverage and on opaqueness of HLIs. There remains the issue of aggressive trading practices, such as taking extreme measures to manipulate prices and to precipitate herding or panic selling by other market participants. Such practices undermine market stability. I therefore call upon the private sector market participants to review matters and devise a code of conduct to improve the standard of market behaviour and practices. For such a code to be effective, I believe it needs to be market specific and applicable to all market participants in that market. Conclusion Ladies and gentlemen, it has often been said that history, especially financial crisis, tends to repeat itself. In the last ten years alone, we have had the ERM crisis in 1992, the Mexican peso crisis in 1994/95 and the latest Asian crisis in 1997/98. Notwithstanding the disturbingly frequent occurrence of seemingly similar financial crises, I am inclined to believe that even though no two crises are exactly the same, if people do not learn from past mistakes, the market will continue to repeat its punishment. The only difference between the major financial crises in recent years is that the punishment is getting more and more severe, if not violent. I have cited three major challenges to learn from the mistakes in the last financial crises. First, domestic structural reforms. Secondly, monitoring and surveillance of capital flows.