samchain/econo-pairs-v1 huggingface dataset:
Many new technology companies were not generating a profit and had to rely instead on paying for wages and equipment by issuing shares. For this to be feasible, stock market valuation needs to be high. In this sense there were incentives for managements to trim reports and statements about their firm’s future profits. At the same time, analysts and investment banks, with potential earnings from launching share issues, lacked incentives to take a critical look at these reports, so inexperienced investors did not get the assistance and support they needed. In order to reduce the risk of financial market imbalances, it is important that we have a well thought-out legislative, regulatory and supervisory infrastructure that functions properly and follows changes in the rest of the world. This is a never-ending task that requires the participation of all concerned. Today, households face what are sometimes very difficult risk-management decisions that were not called for or even possible before. Many people still lack the relevant knowledge for this and it may be asked whether people in general can be expected to have such knowledge in the future. Everyone cannot be a specialist in risk management and financial theory. Therefore, I think banks and other financial institutions should become more consumer-oriented, instead of today’s greater focus on products. The increased exposure of households to the stock market calls for tailor-made plans for the life cycle that take all important risks into account.

At the same time, individual investors, immersed in chat rooms and message boards, are exchanging questionable and often misleading tips. Yet, despite all this available information, investors find it increasingly difficult to profit. … Stock prices skyrocket with little reason, then plummet just as quickly, and people who have turned to investing for their children’s education and their own retirement become frightened. There appears to be no rhyme or reason to the market, only folly.” This is a quote from the preface to a recently published biography about the well-known and long term 1 value oriented investor Warren Buffet. Buffet began his career forty-five years ago with only 100 U.S. dollars and has over the years built himself a multibillion-dollar fortune. I quote the passage to illustrate a view held by some of what was going on in the stock market during the end of the 20th century and the beginning of the 21st. Learn from new theories From experience we know that investors may temporarily pull financial prices away from their trend level. Over-reactions can occur so that excessive euphoria drives prices unduly high, just as undue pessimism can push them down too far. New theoretical and empirical arguments have been put forward against the notion that financial markets are efficient. According to the efficient market hypothesis, it is only changes in fundamental factors, such as profits or dividends, that ought to affect share prices.
And Governor Carstens’ predecessor, Guillermo Ortiz, is an advisory board member of the Dallas Fed’s Globalization and Monetary Policy Institute. The Federal Reserve Bank of Dallas and the Banco de México enjoy a unique and mutually beneficial relationship. As Guillermo and Agustín well know, there is also a personal dimension to the Dallas Fed’s relationship with the Banco de México. I grew up in Mexico City in the 1950s, attending elementary school not far from here. Spanish was my first language in school. To this day, I have many friends in El Norte who say I speak better Spanish than I do English, although that may be due to my Texas accent. Either way, I always proudly tell them, “¡No hablo español; hablo puro mexicano!” This evening, I will do my level best to speak to you in español mexicano rather than in inglés texano. Unprecedented U.S. monetary policy As you surely know, and as I am happy to report, the Federal Open Market Committee (the “FOMC”), charged with crafting U.S. monetary policy, is winding down its extraordinary “quantitative easing” phase. The Great Recession demanded extraordinary policy, and the FOMC responded. Led by Chairman Bernanke, the FOMC met the financial crisis head-on in September 2007 and by the end of 2008 had lowered the federal funds rate to zero from 5.25 percent. Once the full force of the financial crisis hit, after the failure of Lehman Brothers, the federal funds tool proved insufficient.

5  All speeches are available online at www.bankofengland.co.uk/news/speeches  5  But of course innovation won’t be sustained if it’s unsafe or detrimental for financial stability. Clear, transparent regulatory expectations are critical to ensure that uncertain rules of the game don’t hold innovation back. This poses several challenges for regulators – I’m going to focus on the two that are most important for financial stability. We need payments to be secure and reliable. Problem 1 for central banks is that robust and reliable ways to pay are essential to financial stability. Well-functioning and resilient payment chains allow payments to be made on time, with confidence, even in periods of economic uncertainty. Think – receipt of your salary, benefits and pensions, direct debit bill payments ability to tap and ride the tube home or leave the restaurant after a meal. The reliability and resilience of payments is so important to our economy that the UK Financial Policy Committee, tasked with identifying, monitoring and reducing systemic risks, lists avoiding serious interruptions in the provision of payment and settlement services as one of the very purposes of preserving financial stability. If a stablecoin were to significantly replace current systemic payments chains as a way to pay – logic follows that they would pose the same risks to the economy as current payments chains and should be regulated to the same standards. This is relatively straightforward: regulation should be technology neutral: based on the activity conducted and the risks posed, not the technology used or the entity’s legal form.
Investment as a share of output and demand is now lower than the average for the past 20 years, but now appears to be stabilising. It may therefore take some time before the turnaround occurs and investment picks up again. Strong investment growth has contributed to a build-up of overcapacity in US manufacturing. Capacity 1 utilisation in manufacturing is low. Low capacity utilisation also reflects the overinvestment that took place at the end of the expansionary period. The household saving ratio has picked up somewhat since 2000, probably as a result of the decline in the equity market - although it is still low. Similarly, the federal government budget deficit - as a result of expenditure in connection with war combined with substantial tax reductions - will increase. The current account deficit in the last quarter of 2002 was equivalent to 5¼ per cent of GDP. The low saving ratio and the substantial current account deficit has contributed to a depreciation of the US dollar. Conditions in the US today are more conducive to growth than they were six months or a year ago. The low interest rate will support an increase in both consumption and investment. Corporate profits and financial balances have improved. Companies’ liquidity is solid. At the same time, however, it is 2 uncertain how far shortfalls in corporate pension schemes will weaken growth impulses. And with low capacity utilisation, it may take time before investment gains momentum.

The run on the domestic banks stopped, but at its peak, demand for cash tripled and the Central Bank almost ran out of banknotes. International payment flows were seriously affected, however, not least because of the freezing order imposed by the British authorities on Icelandic banks, but also because of a general distrust among foreign counterparties. Why did the Government give a verbal blanket guarantee for domestic deposits only and not for deposits in the banks’ foreign branches? After all, this distinction probably added fuel to the fire of the so-called Icesave dispute about the settlement of deposit guarantees in Landsbanki’s Dutch and British branches. The short answer is that such a guarantee would never have been credible. As a result, it would not have stopped the run on these deposits and, if attempted, might have bankrupted the Government. At the time, the Central Bank of Iceland’s FX reserves amounted to 2½ billion euros, while the foreign currency deposits in Landsbanki’s Dutch and British branches totalled 11½ billion euros and payment of the EU minimum deposit insurance would have required 4½ billion euros. The sovereign was completely closed off from foreign capital markets at that point. Furthermore, in economic terms, given that these deposits were used to a significant degree to finance illiquid assets in these same countries, such a payment, if possible, would have amounted to a net transfer of resources from Iceland to these countries at a time when Iceland was going through its deepest financial and economic crisis in the post-war period!
•  Standard Chartered Bank has had some success with helping food courts, fast food joints, convenience stores and taxi companies accept electronic payments by Dash. •  DBS has just announced a new product called FasTrack, which lets you order and pay for coffee before you even arrive at the counter. It is good that there is a proliferation of innovative e-wallets, payment apps and mobile payment solutions in Singapore. •  But just as man is not an island, neither should payment solutions be limited to themselves. •  For widespread take-up and usage of any digital payments solution, interoperability is critical. •  And this is where FAST comes in. With the common standard provided by FAST, banks can more readily collaborate on innovative payment products that are interoperable, without having to worry about incompatibility. On the payer side, a barrier to adopting digital payments is the hassle involved in on-boarding payees. •  People should be able to pay each other electronically as simply as writing a cheque or handing over some cash. •  It should not matter which bank that I bank with nor should a payee be identifiable only by his bank account number. •  Few of us can readily recall our own bank account numbers, let alone be familiar with those of our friends and family. I am pleased to note that the participating banks are studying a mobile addressing system for FAST.

Banking is a knowledge-intensive, skills-based and relationship-rich industry. In an increasingly complex and a more liberalised environment, the competitiveness of banking institutions will depend critically on the quality of human intellectual capital and the extent to which the industry is able to leverage on these talents. To compete effectively, banking institutions need professionals with the requisite skills and expertise not only at the strategic and management level, but also at the technical and operational level. Successful institutions will be the ones which accord high priority to effective placements, rewards, retention and most importantly, lifelong learning and the continuous enhancement of human capital. Lifelong learning is becoming increasingly important in this knowledge-based economy where knowledge and skills need to be continuously updated and upgraded. At the macro-level, the breadth and depth of skills of the entire financial services workforce will increasingly be the defining factor in determining the success in building a more efficient, effective and dynamic financial sector. The availability of appropriately trained and competent human resources is a critical factor key to support the performance of the industry. In essence, continuous strengthening of intellectual resources and capabilities must be made to create a larger pool of talents and high calibre professionals in the banking and finance industry. Competence and skills development have always been an area of focus, but it will be even more important as we prepare our workforce for a more challenging environment, one that is more competitive and more complex.
This cyclical difference in the short-term interest rate prospect largely explains the pronounced yield differential between the US and the UK and the other countries at the very short end of the curve. Out to 2 years, for example, whereas yields in the US and UK are within ½% either side of 6%, yields in Germany and France are below 3½%, and they are below ½% in Japan. These differences in the short-term interest rate prospects feed through into yield differentials on longer term bonds, and changes in them also help to explain the recent movements in exchange rates. But rather more interesting is the relative slopes of the yield curves further ahead, US and UK yields are only about 1% above present short-term yields, at +/-7%; but they are 3% or more above present short term yields in Germany and France, also at +/-7%; and they are 3% higher than short-term yields even in Japan, at 3¾%. The implication is that, if you abstract from immediate cyclical influences, longer-term economic performance - and particularly performance with respect to inflation - is not expected to be very different between the major countries, though Japan remains an outlier. It is difficult to know what interpretation to put on this observation. The fact that the yield curves in Germany and France are practically identical is consistent at least with EMU going ahead - at least with a narrow membership.

These are all areas in which Singaporeans can excel. (II)  Cross-functional capability  Second, we are seeing greater demand for finance professionals with cross-functional abilities, besides a core competence in a particular business area. This is obviously helpful in small institutions, but is also in demand in large institutions as different financial services are being integrated and packaged together for the customer. Cross-functional knowledge and competence also enables financial professionals to take on larger responsibilities, and to achieve greater resilience in their careers in a fast-changing financial sector landscape. (III)  Regional knowledge and experience  Third, regional knowledge and experience. It is now an essential for a good career in finance, not just nice to have. We must give it far greater emphasis, and encourage and support Singaporeans in building up this capacity. Cross-border solutions and transactions are increasingly the norm in the business. Strong regional knowledge is also necessary in meeting clients’ needs, whether in relationship management, transaction banking, specialised finance or product structuring. It also enables financial institutions to manage  BIS central bankers’ speeches  3  their risks well, and operate effectively in Asia’s still diverse regulatory frameworks and market environments. (IV)  Technological skills and adaptability  Fourth, technological adaptability. I spoke earlier about how technology is changing the business, and changing jobs. It is not a matter of defending ourselves against the onslaught of technology, but taking advantage of it.
European bank shares have since fallen, however, as a result of concern that sovereign debt problems may spread. US sovereign debt problems cause concern The sovereign debt problems in the United States have also caused concern on the financial markets. This rose gradually in July as the prolonged three-way negotiations between the parties in Congress and the President were underway. At the beginning of August, a decision was reached at the last minute to raise the debt ceiling and to implement greater cutbacks. However, these decisions did not succeed in calming the market. Standard & Poor’s lowered the credit rating for the United States on 5 August from the highest level of AAA to the second highest level AA+ with a negative outlook. The other two dominant credit rating agencies, Moody’s and Fitch, retained their AAA ratings. The poor statistics received during the summer regarding the US economy have further increased the financial market turbulence. Sovereign debt problems create uncertainty In my opinion, the public finance problems in the United States have remained fairly unchanged since July. The deficit in US public finances is calculated by the IMF to correspond to around 10 per cent of GDP this year. It should not be so difficult to decide on a long-term programme that will bring down the deficit to a manageable level within a few years in the way Sweden did in the mid-1990s.

However, the national accounts for the United States also contained a review of earlier figures, which shows that the decline in 2009 was greater and the GDP level this year lower than was previously assessed (see Figure 9). The labour market improved in July, but not at a rate that points to a good recovery. CPI inflation in the United States remained high in June and July, 3.6 per cent, which was unchanged from May. Underlying inflation, excluding energy and food, was lower, but rose in both months to a level of 1.8 per cent in July. GDP growth in the euro area was 0.2 per cent in the second quarter of 2011, measured as a seasonally-adjusted quarterly change, which was also slightly lower (0.1 percentage point) than we were expecting in July. Inflation in the euro area fell from 2.7 per cent in June to 2.5 per cent in July, when measured as the HICP. Underlying HICP inflation excluding energy and unprocessed foods also fell in July, to 1.5 per cent. At the monetary policy meeting in July I said that developments in the United States were troublesome. Both monetary policy and fiscal policy must be tightened there in the longer run, which will subdue growth. A strong, self-supporting recovery is therefore needed, a recovery that does not depend on short-term cyclical policy stimulation, to ensure a tangible improvement in the labour market. We cannot see this type of strong growth yet.
Conclusions  In conclusion, if monetary and budget policies appear to be different on the two shores of the Atlantic, and indeed have been in terms of gradualism and activism, the reason does not necessarily lie in differences of conduct on the part of the economic policy authorities, but in differences in the way the economies are structured and in how they function. Let us take a look at the current monetary policy stance in the two economies, where the policy interest rate has been brought to 1% in the US, 350 basis points below the level one year ago, while in the euro area it was reduced to 3.25%, just 75 below the levels of one year ago. Anyone who, in comparing the different stance of monetary policy between the US and the euro area, fails to take into account the differences in economic structure and in the shocks hitting the two economies is making an error of judgment. In particular, the US economy has been hit by a major slump in the real estate market, which in Europe is restricted to only a few countries. The financial crisis, that started on the other side of the Atlantic but it has propagated rapidly on our side, is having a bigger impact on the US banking system’s capability to convey financing to non-financial firms on account of the different financial structure.

This difference may explain why, especially in cyclical slowdown phases, monetary policy action in the euro area tends to be less aggressive than it is in the United States. In the United States, on the other hand, analysis seems to show that demand shocks tend to prevail, which puts pressure on inflation and on economic activity simultaneously. Supply shocks like those related to productivity tend to have a considerable impact on demand if agents expect them to have an impact on permanent income, affecting consumption. For example, the increase in productivity in the second half of the 1990s led to strong growth in consumption in the United States, financed by debt. In this context, the monetary policy reaction can be more decisive, and transmitted through relatively more marked and more frequent official rate adjustments. This is true in phases both of economic growth and of economic slowdown. In conclusion, if Europe’s economy and the US economy suffer shocks of a different nature, it is only natural that the responses should be partly different. Some studies suggest that the role of shocks is the predominant factor in explaining the differences in conduct between the 3 ECB and the Federal Reserve. 2.2. Economic structure: the propagation of shocks  Now let us move on to the possible differences in the two economies’ structures.
As to the source, a possibility would be to create a process of periodic general allocation of SDRs, according to a predetermined schedule. Those SDRs, however, would not be immediately available for use by their beneficiaries. Rather, they would be “frozen” and unblocked only in pre – specified circumstances (Landau, 2009). Criteria for use would not be defined on the basis of individual countries’ situations, but on consideration of the conditions prevailing in the global economy and international capital markets. If properly constructed, such a scheme may provide, for no cost, the kind of insurance that countries are currently seeking by building excess reserves. How would countries access to this new source of liquidity? The traditional approach would allocate contingent liquidity to countries according to their quota shares in the IMF. However, those are very imperfect representations of countries’ liquidity needs especially in times of crisis. Taking inspiration from the contingent capital literature, one could imagine that countries could “buy” the access to contingent liquidity in crisis times by paying, in normal times, a premium to the issuer (the IMF?). This could prove less costly than accumulating excess reserves. Going one step further, and transposing an idea from Caballero and Kurlat (2009), the IMF could issue tradable instruments giving access to contingent liquidity once it  6  BIS Review 120/2010  has been activated. If broadly traded between public entities, the price of such instruments would give a useful indication of underlying systemic tensions in international financial markets.

The companies apparently trusted that the SNB would be able to prevent a sustained decline in the level of prices through its decisive use of unconventional measures. The SNB was able to preserve its monetary policy credibility, even in this difficult environment. The second point relates to the adjustment processes following the sudden upward surges in the value of the Swiss franc. The negative or very low inflation in Switzerland was in fact part of these adjustment processes, since it contributed to reducing the overvaluation of the Swiss franc over time. Thus, the real exchange rate appreciated considerably less than the nominal exchange rate (cf. Chart 3). This helped to cushion the impact of the nominal appreciation on  Page 3/16  the real economy. The economy’s ability to adapt to an environment with low – and in some instances negative – inflation has been better than many expected. The Swiss economy has fared relatively well over the past 15 years. The labour market has remained robust overall, and GDP growth has been good by international comparison (cf. Chart 4). Like most other countries, Switzerland was unable to avoid significant declines in GDP amid the global financial crisis and during the pandemic, but each time our economy quickly returned to a growth trajectory. The SNB was able to ensure price stability in the phase marked by deflationary risks, and thus contributed to a comparatively robust development of the economy.