samchain/econo-pairs-v1 huggingface dataset:
Unfortunately, all that does not mean that the problems caused by the pandemic are behind us. For example, we can see a strong rise in inflation, both domestically and across the globe: demand has recovered as restrictions and lockdowns have been lifted, while supply-side restrictions persist. Companies in many sectors are recording skills shortages, and there are raw material and component supply disruptions. We are monitoring economic developments and the financial situation in the regions on an ongoing basis. At each policy Board meeting, our regional executives report on how the situation in the regions is unfolding and provide us with a broad picture. We note a global rise in prices for many goods (metals, wood, and food), which are pushing up business costs. Prices are increasing in many countries, but regulators view the current surge in inflation as temporary, and are just waiting for the trend to end. There is no way we can afford the same approach. Let me explain why. By historical standards, we are quite new to inflation targeting, the regime we switched to just six years ago. Regrettably, inflation expectations — a very valuable indicator — remain unanchored. What does this mean? Many countries record a temporary surge in inflation, but people and businesses are confident that their central bank will take whatever action necessary, and inflation will return to target. Those central banks have extensive experience in the field of inflation targeting. Therefore, with inflation expectations in their countries steady, they expect inflation to drop again after that surge.

The rapid spread of the pandemic in March 2020 also led to wide, abrupt swings in financial markets. The global composite equity index fell by 20 percent in 22 days. However, markets recovered rapidly, and by the second quarter the GPFG had posted one of its best ever quarterly results. For the year as a whole, the GPFG’s investments posted an overall return of 10.9 percent before management costs. The return was 0.27 percentage point higher than the return on the benchmark index the GPFG’s performance is measured against. The Executive Board is pleased that a solid excess return was achieved in a turbulent year. The positive trend has continued, and the return on the GPFG in the first quarter of 2021 was 4 percent. The GPFG’s performance must be assessed over time. The Executive Board is satisfied that the return over time has also been good. The substantial market fluctuations in 2020 nevertheless serve as a reminder that the return on the GPFG may vary considerably. The GPFG’s equity allocation is the decision that has the greatest impact on the volatility of the fund’s return. The equity allocation is not specifically assessed in this year’s report to the Storting, but the Ministry has proposed a number of changes in the equities selected to be included in the benchmark index. Norges Bank has provided analyses and advice when requested by the Ministry.
See tables 4.4 and 4.5 of Scottish Government (2014), “Government expenditure and revenue, Scotland 2012-3”. 12  Exchange rate effects alone led to an improvement of £ billion to the UK’s net international investment position between 2006 and 2008, estimated in Whittard (2012), “The UK’s External Balance Sheet – The International Investment Position (IIP)”, ONS, March. 13  See Carney (2014), Speech at the 146th Annual Trades Union Congress, Liverpool. 4  BIS central bankers’ speeches  Our remit recognises that the inflation rate may, on occasion, depart from the target and that attempts to keep it at the target may cause undesirable volatility in output. That flexibility and focus meant that the Bank’s Monetary Policy Committee (MPC) could provide additional stimulus through historically low interest rates, large scale asset purchases and monetary policy guidance even when inflation was temporarily above target. Inflation has recently dropped sharply to 0.5% – equalling its lowest rate on record. So next month I will write the first open letter from a Bank of England Governor to a Chancellor explaining why the inflation rate is too low and what we are going to do about it. The why is relatively straightforward. The majority of the weakness is caused by sharp falls in commodity prices, most notably oil, which has suffered its third largest fall in the past half century. Lower energy and food prices are unambiguously positive for the UK. Temporarily low inflation will boost real take-home pay and help household finances.

Since the financial crisis all major advanced economies have been in a debt trap where low growth deepens the burden of debt, prompting the private sector to cut spending further. Persistent economic weakness damages the extent to which economies can recover. Skills and capital atrophy. Workers become discouraged and leave the labour force. Prospects decline and the noose tightens. 1  At market prices. In PPP terms it is third largest after China and the US. BIS central bankers’ speeches  1  As difficult as it has been, some countries, including the US and the UK, are now escaping this trap. Others in the euro area are sinking deeper. This relative performance underscores the importance of policy and institutions, particularly those that share and transfer risks. Building institutions at a time of reform fatigue may not be easy, but it is essential. Before I draw out this crucial point, I would like to quickly review how we got here. 2. Setting the debt trap  Building the debt that now weighs on our economies was the work of a generation. In the decade before the crisis, private financial balances became unsustainable. UK households borrowed 4% of GDP year after year; Irish households at more than twice that rate. Household debt peaked close to 100% of GDP in the UK, and 120% in Ireland. 2 This borrowing was largely for consumption and real estate investment rather than businesses and projects that would generate the earnings necessary to service those obligations.
Thirdly, similar investment strategies employed by hedge funds and other funds could  BIS Review 74/2007  1  lead to momentum trading and herd movements, both in terms of inflows and outflows. Any shocks that trigger a change in these strategies could result in large movements of capital. In any case, whether owing to the changes in risk appetite or not, we must remind ourselves that the current pricing of risk is based on the expectation that strong growth and contained inflation will continue to prevail. Any unexpected deterioration of the macroeconomic environment, however, could trigger a rapid turnaround in sentiment. This leads me to my next point, which I had raised earlier, of whether the increase in capital flows to emerging markets was likely to result in an increase in risks? This seems the likely case. For example, local investors do not usually provide counter-trade to hedge funds but rather take similar positions, hence increasing the overall risks. In addition, investment of hedge funds in a particular country is usually only a small fraction of their whole portfolios, and inflows reversals may take place easily. Individual risk management can also collectively induce systemic risks, and central banks may be required to resolve such problems to avoid adverse impacts from sudden reversal of capital flows. This leads us to the question of whether we are underestimating the inherent risks of these capital flows? Let me explain why this may be the case. First of all, net capital flows are small.

Isabel Schnabel: The European Central Bank’s policy in the COVID19 crisis – a medium-term perspective Remarks by Ms Isabel Schnabel, Member of the Executive Board of the European Central Bank, at an online seminar hosted by the Florence School of Banking & Finance, Frankfurt am Main, 10 June 2020. * * * Accompanying slides of the speech. Over the past few weeks, hopes for a short duration of the COVID-19 pandemic and a quick rebound in economic activity have started to fade. Evidence is increasingly pointing towards a protracted impact of the crisis on both demand and supply conditions in the euro area and beyond. For central banks, this implies a shift in focus from economic “firefighting” – ensuring orderly market functioning and a sufficient provision of liquidity – to dealing with the implications of the crisis on medium-term inflation. My remarks today will focus on these implications. Based on our most recent Eurosystem staff projections, I will first discuss the risk of COVID-19 leaving a deep footprint on growth and inflation in the euro area. Against this background, I will then describe how we designed and calibrated our policy response, and explain why the pandemic emergency purchase programme (PEPP) remains the appropriate tool to address the current challenges of the crisis in the context of our price stability mandate. The medium-term economic impact of the crisis The immediate economic fallout from the COVID-19 pandemic has been substantial. In the first quarter of 2020, euro area GDP declined by 3.6%.
Vittorio Corbo: Farewell speech as Governor of the Central Bank of Chile Speech by Mr Vittorio Corbo, Governor of the Central Bank of Chile, on his departure from the Central Bank of Chile, Santiago, 6 December 2007. *  *  *  Everything comes to an end. Today I complete my term as the Governor of the Central Bank of Chile, a post for which I was appointed on May 1st 2003 by the then President of the Republic, Mr. Ricardo Lagos. I want, first of all, to especially greet José de Gregorio, the new Governor of the Central Bank of Chile, who I am sure will lead this beloved institution through the roads of professionalism, independence and strength it requires for the good of the country and all Chileans. This is a very propitious opportunity to wish him great success in this great task. From the Board and as Vice-Governor, José has been a very relevant factor in the advances and accomplishments that our institution has made in the past several years. In his new position, he will be backed by a first-class Board and staff of high technical and professional level, capable of assuming with rigor and efficiency the Bank’s mission. I also want to acknowledge my fellow Board members who accompanied me during this period. Being it a collegiate entity, nothing would have been achieved without their active cooperation.

In general, banks still provide loans to profitable enterprises. To sum up: The covered bond market provides investors with a broad set of investment opportunities, banks with cheap funding and house buyers with ample credit. At the same time, extensive regulatory measures safeguard the solvency and liquidity of the banking system as a whole. A well-capitalized banking system with stable and liquid funding options is a prerequisite for markets to develop and thrive. That includes the covered bond market. Thank you for your attention. 2/3  BIS central bankers' speeches  3/3  BIS central bankers' speeches
This topic has obvious importance to central bank practice past, present, and future. In addition, the Journal of Money, Credit and Banking (JMCB), the 50th anniversary of which we are recognizing today, played a very important role in shaping how we think about the ZLB. Today I’d like to highlight how this work has influenced my own thinking, as a researcher and policymaker. Before I proceed any further, I should give the usual disclaimer that everything I say today reflects my own views and not necessarily those of the FOMC or anyone else in the Federal Reserve System. The Zero Lower Bound Emerges Although the ZLB was not a new idea by any means, three circumstances—two empirical, one theoretical—came together to reignite interest in this topic by researchers and policymakers in the 1990s.1 The first was the achievement of low inflation in the United States, which, all else equal, implied lower interest rates. The second was Japan’s lengthening period of deflation and near-zero interest rates.2 The third was renewed curiosity about the theory of monetary policy as decision rules for interest rates, following the publication of John Taylor’s “Discretion versus Policy Rules in Practice.”3 Although that paper did not mention the ZLB, it fundamentally transformed how many economists, including one impressionable Stanford grad student, thought about monetary policy. Indeed, the very logic of the Taylor rule—that interest rates systematically move up and down with changes in economic conditions—forced macroeconomists to come to terms with the presence of the ZLB.

John C Williams: The research-policy nexus - ZLB, JMCB and FOMC Remarks by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Conference celebrating the 50th Anniversary of the “Journal of Money, Credit and Banking”, Federal Reserve Bank of New York, New York City, 31 May 2019. * * * As prepared for delivery John Maynard Keynes quipped, “Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.” I wonder whether Keynes would see this as a feature rather than a bug in light of his enduring influence on the profession more than 70 years after his death. The theme of my talk today is that during my quarter century as a researcher and policymaker at the Fed, we have not been overly beholden to defunct economists. Quite the contrary. A quick scan of FOMC memos, briefings, and meeting minutes provides ample evidence that a wide range of economic research—new and old, conventional and outside the box—regularly enters into our debates and influences our decisions. This represents a rich two-way dialogue between researchers and policymakers, with both sides probing for new answers to old questions. I could list a long catalog of examples of the synergistic relationship between research and policymaking at central banks. Instead, I will focus my comments today on one specific topic: the zero lower bound on interest rates, or ZLB for short.
This is unfortunate as macroprudential policy is an important policy area and it is vital that a longterm, sustainable structure is created for it, so that macroprudential analysis is not given lower priority when other tasks require resources, and experiences from the crisis are forgotten. The Stability Council has so far played an insignificant role in practice. Sweden deviates from international and European standards Sweden thus deviates – in several respects – from European standards as regards how its macroprudential policy framework is designed. We have also organised the responsibility for macroprudential policy differently to most of the other countries in Europe. In 13 EU Member States, the responsibility has been given to the central bank, a similar number have given it to a separate council and two countries (Sweden and Finland) have given it to the supervisory authority. 18 In addition, it is worth mentioning that the European Central Bank, the ECB, has received a mandate that basically means that it shares the macroprudential policy responsibility with the national macroprudential authorities in those countries that  15  See ESRB (2011). 16  See ESRB (2011). 17  See ESRB (2011). 18  See ESRB (2014). 8  BIS central bankers’ speeches  participate in the Single Supervisory Mechanism. The ECB has the responsibility for a socalled “top-up” of some of the macroprudential policy measures decided at national level – i.e. to tighten the measures further if the bank feels it is necessary.

A counter-factual monetary policy 1997–2007 I want to ask whether, with the benefit of hindsight, monetary policy should have been set differently during the period of the so-called Great Stability. Should interest rates have been higher during that period in order to mitigate some of the growth of credit, rise in asset prices, and increase in the leverage of the banking system? Many commentators today seem to think that the answer is clearly yes – though I seem to remember that fewer said so at the time – and most of the  21  Another mechanism, working through banks’ leverage, is posited by Adrian and Shin (2011). They show that if banks target a Value-at-Risk constraint, then monetary policy loosening can increase risk taking. The reduction in policy rates boosts asset prices (by lowering discount rates), and also steepens the yield curve which tends to increase banks’ net interest margins. Other things equal, this reduces bank leverage by boosting the net worth of the bank and increasing its ongoing profitability. To hit its target Value-at-Risk the bank expands its balance sheet, purchasing assets and pushing up the price of assets thereby amplifying the effect of the initial monetary policy loosening. 22  There is a further consideration that is even more intriguing. The existence of misperceptions, the “cycle of confidence” and the use of heuristics, and the search for yield, all create direct welfare costs over and above their impact on inflation and output because they distort household behaviour.
Might it be preferable in select cases for a systemic infrastructure to declare a settlement holiday, unpalatable as that may be, or to work with relevant industry associations to declare that select markets are closed? Are the operational challenges of conducting manually activity that is fundamentally dependent upon automation a bridge too far? Do reconciliation challenges that become exponentially more complex as a disruption event extends in duration risk prospects for an orderly return home? Might industry dialogue to agree on the accepted circumstances and corresponding practices for dealing with a settlement holiday in a pre-meditated manner prove to be a superior course? These questions are not easy to answer, but it is very important in the present evolution of industry discourse that they are asked. Provocative Question Number 4: To what extent do measures to address endpoint security risks, such as anomaly detection and assurance regimes, compel a new paradigm for the attribution of liability in the end-to-end payment transaction flow? The reality that endpoint security breaches can undermine confidence in a network even when an operator’s infrastructure has not been violated has spawned a novel body of work, including initiatives to enhance assurance that external endpoints are operating in adherence with an operator’s strict security requirements, and the development of application tools such as anomaly detection to enhance a participant’s management of fraud risk.

The rationale for this decision is that such an objective – feasible, yet ambitious – could act as a catalyst for coherent policy action. At this point in time, Romania is fulfilling three out of the four Maastricht criteria, namely the sustainability of the fiscal position, convergence of long-term interest rates and exchange rate stability (although we are not technically in ERM II). Meeting the price stability criterion is  2  BIS central bankers’ speeches  probably just a matter of months, until the recent low inflation numbers feed into the 12-month average rate used as a reference. But, we are fully aware that we still have a long and difficult road ahead, as several years of relentless efforts are needed in order to ensure a lasting fulfilment of the Maastricht criteria, to make further progress in the catching-up process in the area of real convergence, as well as to push forward the structural reforms required for enhancing the resilience and flexibility of the domestic economy. Closely linked to the euro adoption approach is the decision on participating in the Banking Union, which is supposed to break the negative feedback loop between sovereigns and banks. Euro adoption automatically implies Banking Union membership and therefore, since the changeover target date has already been set, joining the Banking Union is merely a matter of timing: should it occur on the euro adoption date or as soon as possible? In my opinion, there are strong arguments in favour of rapidly joining the Banking Union.
1/4  BIS central bankers' speeches  However, they could also reduce the efficiency of the overall financial system if their roll-out leads to a fragmentation of processes, and their interoperability and coexistence with existing systems are not properly organised, or, on the contrary, if they lead to the creation of monopolies. This latter risk stems from the growing interest of global digital giants in digital payment services. Thanks to their huge user bases and expertise in end-toend technology, Bigtechs have the potential to pose a major competitive threat to European payments’ players, who are less experienced in the digital sphere. They could also increase Europe’s reliance on foreign players for payment services, with all the data privacy and sovereignty challenges that this entails. This double-edged impact of innovation on financial system efficiency notably concerns the tokenisation of financial markets and, in general, the use cases of decentralised finance (DeFI). C) Innovation in the financial sector, especially the emergence of Bigtechs and the development of new settlement assets in the form of crypto-assets, raises new challenges for monetary sovereignty and stability. In particular, if stablecoins were rolled out on a massive scale by BigTechs (Facebook’s Diem project), they could be adopted as private settlement assets on a global scale, thanks to significant network effects.

The industry, through FSBP, can demonstrate much needed business leadership in addressing broader ethical questions that will increasingly confront us as a society and as global citizens. Apart from what ends up in written codes, there is also important value in simply having frank conversations about shared ethical challenges. In the United Kingdom, senior bankers got together to discuss ways to reform organisational culture following the widespread PPI misselling scandals, but some would consider this “too little too late”. We need to bring such discussions forward and actively encourage a process that would allow the industry to get in front of emerging issues around professional conduct and ethics. These include examining issues like how institutions might go about gaining a pulse on culture at various levels within the organisation, and the effects of incentive structures on behaviour. With the digital revolution, there will be an increasing need for the industry to come together to set standards for novel areas of practice. Already now there is much buzz about the use of artificial intelligence and big data in finance. This creates opportunities for innovation, efficiency and growth, but also new risks, challenges and – without a doubt – difficult ethical questions on lines that should be drawn to prevent unfair, systematic, discrimination against specific groups, (for instance as a result of algorithmic programs) the inappropriate use of personal data and excessive volatilities from high-frequency trading.