samchain/econo-pairs-v1 huggingface dataset:
Therefore, promoting “evidence-based policies”, as with the signing of this agreement, amounts to both a technical argument in favour of effectiveness and a political statement in favour of democratic oversight of political power by citizens and their representatives. In order for these evaluations to be carried our properly, they need to be conducted by independent researchers and institutions, who must have the appropriate high-quality and sufficiently detailed data. Under this agreement, an independent and rigorous evaluation will be launched of a specific public policy: the pilot projects for developing inclusion itineraries for beneficiaries of the Minimum Income Scheme. To this end, the rigour, independence and technical excellence of CEMFI’s researchers are paired with quality data provided by the government and its stated desire to design its policies on the basis of empirical evidence. This alone should be reason for satisfaction. I hope that the results of this evaluation will help improve the future design of this public policy and that this exercise will contribute to establishing a culture of evidence-based policies that will benefit all citizens. I believe that this kind of initiative can be particularly useful for Spanish society at a time when these policies, including the roll-out of the projects financed with NGEU funds, need to have the capacity to address the structural transformations facing our economy, such as those arising from the fight against climate change, the reduction of inequalities, the improvement of productivity, digitalisation and population ageing.

Pablo Hernández de Cos: Evidence-based policies - from theory to practice Address by Mr Pablo Hernández de Cos, Governor of the Bank of Spain and Chair of the Basel Committee on Banking Supervision, at the presentation of the collaboration agreement between the Center for Monetary and Financial Studies (CEMFI) and the Ministry of Inclusion, Social Security and Migration, Madrid, 18 January 2022. * * * Minister of Inclusion, Social Security and Migration, General Secretary of Inclusion and Social Welfare Objectives and Policies, director of CEMFI, ladies and gentlemen, good morning. Allow me to begin this short address by saying how pleased I am with the signing of this collaboration agreement between CEMFI and the Ministry of Inclusion, Social Security and Migration. In recent months I have had the opportunity to publicly emphasise the importance of the evaluation of public policies and of incorporating the results of these evaluations into decisionmaking by public authorities,1 in the belief that, in a democratic society, evaluations should play a political as well as a technical role. In the political sphere, evaluating the design and effects of public policies should foster transparency regarding policy-makers’ actions and their outcomes. This facilitates accountability and democratic oversight by Parliament and citizens. It also fulfils a technical function, strengthening the decision-making process by providing it with valuable information to enhance its effectiveness and efficiency.
Elisabeta Gjoni: Innovation in the banking sector Speech by Ms Elisabeta Gjoni, First Deputy Governor of the Bank of Albania, at the conference on “Innovation in the banking sector”, Tirana, 14 May 2015. *  *  *  Good morning and welcome at the Bank of Albania to discuss about innovation in the banking sector. The Ministry of Innovation and the Bank of Albania, under the auspices of the Minister for Innovation and Public Administration, Ms Milena Harito, and the Governor of the Bank of Albania, Mr Gent Sejko, in collaboration with the Albanian Association of Banks, organise this activity jointly in a common approach to work together and discuss ideas among the main stakeholders of innovation in financial services. Honourable Minister Harito, Honourable Chairman of the Albanian Association of Banks, Your excellencies ambassadors, representatives of banks and businesses, and of the Albanian private sector, dear colleagues, I take this opportunity to thank you, on behalf of the Bank of Albania for your commitment and collaboration for this activity. We are living in a new phase of banking that is frequently qualified as a silent revolution in the way we do things, and the way we live, which poses challenges to any developing or influencing stakeholder. People use technology for the new ways of communication it offers: to create social groups, purchase online and why not, to use banking and financial services.

My concern is that we could over-engineer the financial system, building in complexity in response to potential risks that might, or might not, manifest themselves in the future. The complexity might not gain us much in terms of greater financial stability, either because the problem that ultimately manifested itself was different than we planned for, or because people found a way around the constraint that we had imposed on the system. There are also the challenges of appropriate calibration and timing. How much restraint should the rule exert as home prices rise or aggregate credit growth picks up? Without historical experience and with an underdeveloped macroprudential framework, getting the calibration right is a difficult issue at this point. Also, how quickly should the tool be unwound once it has done its work? The tool needs to work in a countercyclical way, but turning points are difficult to anticipate and which makes it challenging to get the leads and lags right. We have a very complex financial system in the United States. I think we need to do much more work in developing a coherent macroprudential framework before we start contemplating putting a number of countercyclical measures in place. Such a framework needs to take into consideration how it interacts with other policies, such as microprudential policies – to ensure the safety and soundness of individual institutions and monetary policy – designed to help ensure a stable macroeconomy. When are these policies substitutes? When are they complements? How will they interact?
Its non-energy portfolios were liquidated smoothly; prime brokers largely released the resulting ‘excess collateral’ in a timely manner; and other parts of the hedge fund industry provided a pool of capital to take on the risk in the natural gas contracts. I would not want to play that down but, inevitably, some caution may be warranted too. Amaranth’s ability to build up highly  20  Synthetic financing, via eg Total Return Swaps, does not show on bank/dealer balance sheets beyond any net mark-tomarket derivative exposure. 21  In really adverse states of the world, collateral values would not cover all of the bank/dealer’s exposure, and the net asset value of the hedge fund would have fallen too. 22  ‘Private equity: a discussion of risk and regulatory engagement’, Financial Services Authority Discussion Paper No. 06/6, November 2006. BIS Review 2/2007  7  concentrated positions in centrally cleared markets was a reminder of some earlier lessons, dating back to the 1987 stock market crash23, about the detection of large trader positions. More generally, this year’s Counterparty Risk Management Group Report, produced by a group of leading practitioners, identified a range of issues for the industry to tackle. Macro and financial market uncertainty As will have been apparent, the issues I have been discussing are not really separable. There are, to be clear, a lot of reasons for confidence in monetary and financial stability being sustained. Monetary regimes are much improved. Banks are generally regarded as well capitalised.

Possible explanations: risk premia Another vantage point can be gained from decomposing changes in the level of the equity market into changes in (estimates of) the risk-free rate, projected earnings growth, and the equity risk premium8. For both the FTSE100 and the S&P, this suggests that the decline in real rates has been an important driver of the rise in the equity market since the early 1990s, but that the market is not materially more sensitive to changes in real rates now than it was on average over the past 15-20 years (Chart 2). This may be because, as part of better monetary policy regimes, risk-free real rates have been slightly less  5  See Woodford, M., 2003, ‘Interest and Prices: Foundations of a Theory of Monetary Policy’, Princeton University Press, Chapter 7; Tucker P M W (2006), ‘Reflections on operating inflation targeting’, speech at the Chicago Graduate School of Business, May 2005, Bank of England Quarterly Bulletin Summer 2006, page 217. 6  Rogoff, K. (2006), 'Impact of Globalization on Monetary Policy, paper prepared for a symposium on 'The New Economic Geography: Effects and Policy Implications', Jackson Hole Wyoming August 2006. 7  As for the volatility in individual-firm equity returns, some extreme episodes aside (for example, the 1987 Crash), the firmspecific component inevitably dominates. For the UK market, the common component seems to have fallen slightly, on average, since 1992. The idiosyncratic component rose during the second half of the 1990s, but then fell back.
Across the world, the prices of all kinds of assets have risen - not just of government bonds, but also of equities, houses and other real estate, commodities and gold and other precious metals. Moreover, risk premia have become unusually compressed and the expansion of money and credit may have encouraged investors to take on more risk than hitherto without demanding a higher return. It is questionable whether such behaviour can persist. At some point the ratio of asset prices to the prices of goods and services will revert to more normal levels. That could come about in one of two ways: either the prices of goods and services rise to “catch up” with asset prices as the increased money leads to higher inflation, or asset prices fall back as markets reassess the appropriate levels of risk premia. In neither case would it be easy to keep inflation close to the 2% target. I do not pretend to know whether the signpost of low levels of long-term interest rates is primarily related to underlying preferences for saving and investment, or to the global growth of money and a possible under-pricing of risk, or, in all probability, to some combination of the two. Nor, since we do not know the causes of low long-term rates, can we be sure for how long they will persist.

Despite this long-standing perception among some market participants that primary dealer status represents an endorsement by the New York Fed of a financial institution’s creditworthiness or ability to provide efficient execution of large transactions, we have repeatedly stressed the importance of other market participants’ engaging in their own assessment of potential counterparties’ capabilities. Recent history provides several reminders that the primary dealer designation provides no guarantee against credit risk or other counterparty risks. While the New York Fed certainly performs its own due diligence, we do so in pursuit of our unique business objectives, which may differ from those of private agents. Market participants should therefore be  7  Since July 2013, the Desk has conducted pilot programs with seven smaller firms outside of the primary dealer system in order to explore how to conduct open market operations in Treasury and mortgage markets with firms that are considerably smaller than existing primary dealers. The Treasury Operations Counterparty (TOC) and Mortgage Operations Counterparty (MOC) pilot programs have provided valuable insight into the appropriate size and operational capacity of open market operation counterparties. BIS central bankers’ speeches  3  engaging in the appropriate level of due diligence required by their fiduciary responsibilities in the context of their specific business requirements. Such independent assessments are in our collective interest because they foster market discipline and a safer, more secure financial system.
It is the drive to making the difference to the economic well being of our citizens. Fiercely knowing this responsibility and accountability is the very source of the intense energy necessary to preform the function of central banking. Knowing the high costs that destabilising developments can have on the people and businesses and its potential damage to the nation is a major prompt of the perseverance to press on, to survive and to succeed. Often we need to just confront the realities and produce a solution when it seems hopeless. Courage is also needed to stay the course. Knowing the stakes are high, knowing that you are being counted upon spurs the unwavering determination. From my experience as a lifelong career central banker, such extreme conditions that test us to the limit have become increasingly frequent. While there have been many great successes that have been achieved, there have also been those moments that have been most trying  BIS central bankers’ speeches  1  and devastating. During such times, developments set you back to a much worse situation than your original position. Those times have arisen from external shocks that are beyond our control, from ambitious agendas that have been met with violent resistance and domestic stress brought on by actions that are in conflict with the Bank’s mandate or from political tensions.

Another aspect that needs to be mentioned is being paranoid about the worst that could happen. This is sometimes referred to as productive paranoia. Central bankers need to excel as risk managers – knowing what could go wrong and prepare for the worst that is yet to come. In part it involves building the buffers to prepare for the unexpected events before they happen. When I am asked the question about how we are going to manage ‘the lift off’ – the normalisation of interest rate by the Federal Reserve in the United States – my response is that it is not what we will do now but what we have done before it happens that will see us through this period. It is not only the buffers that have been built but also the capability that has been developed that will better allow us to intermediate and thus absorb the shock. This will enable us to withstand the volatile financial flows that are already occurring in anticipation of this eventuality. Sometimes there are also Black Swan events. These are defined as those developments that have a low probability of happening and that is difficult to predict and anticipate. Being paranoid and building the resilience against such shocks will contain its damaging effects. Therefore continuous rigour needs to be applied all the time, during the good times and the challenging times. Vigilance, detecting developments that could signal danger, early recognition of risks are all important.
BIS central bankers’ speeches  5  liquidity to meet their obligations: the CCP would simply perform a write-down of its outgoing payment obligations to clearing members with “in the money” positions. To the extent that this tool would hit members which are not liquidity- constrained, it is more reliable and the systemic impact could be less. So although it could lead to unequal loss allocation among clearing members and create ex ante uncertainty on the burden sharing of the cost of default,15 it could also mitigate pro-cyclicality concerns to a certain extent. Another series of measures to be considered by authorities are the voluntary or forced allocation of open positions among clearing members. These measures would help CCPs reestablish a matched book following a participant default. In my view, if authorities choose to promote these tools, we should take care to encourage voluntary measures to the extent possible. Indeed, forced allocations could lead to effects which are difficult to control, for example by requiring participants to take on positions which are not closely related to their clearing activities, and for which they cannot adequately measure risks, particularly in volatile market conditions. A last-resort option could be a partial or complete tear-up of open positions, but this could cause significant disruption to the products and markets where contracts are terminated, and therefore should be avoided to the extent practicable. A solution which seems to be supported by parts of the industry would be to dedicate an additional tranche of the CCP’s capital for recovery needs.

Furthermore, because the U.S. labor force participation rate for prime age workers is low compared to many advanced economies, the labor market could conceivably improve even further before encountering significant resource constraints. That said, the Federal Reserve should not overstay its welcome. It is important to get monetary policy back to a neutral setting before the labor market becomes so tight that wages and prices begin to rise at a pace inconsistent with the FOMC’s 2 percent inflation objective. Our mandate from Congress is maximum sustainable employment and price stability—not simply a high level of employment at one point of the business cycle. With respect to how far the FOMC should go in removing monetary policy accommodation, two major issues stand out. First, what represents a neutral monetary policy setting? Second, under what circumstances would it be appropriate to move beyond neutral to a restrictive setting? Unfortunately, we do not also observe the neutral real (i.e., adjusted for inflation) short-term interest rate, or r*. There is a wide range of estimates at any time, and they evolve as the economic environment changes. For example, all else equal, continued buoyant financial conditions amid recent and anticipated future rate hikes imply that r* may be higher than previously estimated. A shift to a more stimulative fiscal policy could also imply a somewhat higher r*, at least temporarily. One’s view of the neutral rate may also be influenced by one’s assessment of the longer-term economic environment.
As Adam Posen said: “People cannot observe nominal GDP when they go to the store”.16 Of course they cannot observe inflation either, but they nevertheless often have an idea of how prices are developing and can base their expectations on that. The product of real GDP and the GDP deflator will reasonably be somewhat more abstract to relate to. I think that this also sows doubt regarding the possibility to get a target for nominal GDP to really work as a nominal anchor in the way that the inflation target undoubtedly has. It may also be worth bearing in mind that the global financial crisis entailed a shock of a size and dimension that has rarely been seen. Rather than interpreting the slow recovery as a failure for monetary policy, perhaps one should see it as a situation where the shock was so powerful that it would have been difficult for monetary policy to manage it in a different and better way, regardless of what forms the policy had been conducted under and what it had  14  See, for example, Goodhart, Baker and Ashworth (2013), Gerlach (2013) and Posen (2013) for a more detailed description of the arguments against introducing a target for nominal GDP. 15  See also, for example, Bean (2013) and Posen (2013). 16  Posen (2013), p. 62.

The successful management of the so-called IT bubble at the beginning of the 2000s was regarded as an example of financial crises not needing to be particularly troublesome. What is clear today, but was not clear as recently as six years ago, is that this picture was far too optimistic. But then the crisis came along and turned most things upside down. Reassessment of the financial markets One obvious lesson from the crisis was that the financial markets were not functioning as well and as efficiently as we had believed. Instead of contributing to growth and stability in the economy through efficient risk spreading and credit allocation, they became a cause of  1  2  See for example Taylor (1998) and Bernanke (2004). BIS central bankers’ speeches  macroeconomic fluctuations. It became clear that the models on which policy decisions were based needed to be adjusted so that the financial markets no longer played the obscure role they had played prior to this. In recent years, there has been a dramatic increase in research on what are usually referred to as “financial frictions”, that is, mechanisms through which the financial system affects fluctuations in the economy (see Figure 1).2 One might wonder why this interest in the role of the financial markets did not arise earlier. The crisis that we in Sweden and some other countries suffered in the early 1990s also revolved to a great extent around credit booms and property market crashes.
Projections indicate that in the short term the Chilean economy will continue to expand somewhat below trend for still some quarters. However, labor market conditions and a faster recovery in inventories, among other factors, could result in a faster recovery of the economy that would bring it closer to its trend. In the Financial Stability Report we are presenting today, the same risk scenarios coming from abroad that I have just identified are examined, this time from the perspective of their impact on our domestic economy’s financial stability. We conclude that of the three risk scenarios described, the episode of volatility originating in the monetary stimulus withdrawal is the most likely to occur. However, a deepening of the Eurozone crisis or a sharp deceleration of a systemic emerging economy would have stronger effects on the Chilean financial system. Especially because, as I have noted, the withdrawal of the monetary stimulus in the United States will come about when the U.S. economy’s improved growth is already confirmed. The banking industry’s capital levels are adequate to remain solvent before a significant deterioration of economic growth and financial conditions. Stress tests show that the banks’ current capital levels allow them to absorb potential losses generated by a macroeconomic  4  BIS central bankers’ speeches  risk scenario that combines a GDP contraction – like that of the subprime crisis – higher financial costs for the short and long term, and a sharp depreciation of the exchange rate.

The inflation level is currently affected by the actual ruble depreciation and the imposed import restrictions but, according to our estimates, these factors will contribute to inflation increase only till late 2015 Q1, afterwards, the inflation will start declining. By late 2015, inflation will fall to 8%. Inflation is forecast to slow down to the target of 4% by late 2017. These dynamics are largely connected with the increased inflation expectations. In this regard, the Bank of Russia intends to conduct its monetary policy to prevent further aggravation of inflation and inflation expectations. As I have mentioned, under the baseline forecast the current account surplus will amount to $ billion in 2015 which is below the possible capital outflow we estimate to reach up to $ billion next year. Next year the volume of external debt payments will also approximate to $ billion, of which banking sector debt payments will amount to $ billion, including interest payments. Non-financial sector debt payments are estimated to be $ billion, including interest payments. We have made special calculations based on the reporting data received from banks and the survey of 40 largest companies. According to our estimates based on these data, more than 10% of these payments refer to intergroup transactions. Another 20% can be refunded in the international markets. At least 15% can be redeemed through the partial use of cushion of liquid foreign exchange assets accumulated by banks and state-owned companies.