samchain/econo-pairs-v1 huggingface dataset:
But I’ll bet you that those who constantly enumerate our deficiencies and are given to habitual Texas-bashing would give their right – or should I say, left – arms to have Texas’ record of robust long-term job creation instead of the anemic employment growth of other megastates such as California and New York. Or even the job formation record of many other countries! The following chart shows that over the past two decades, the rate of employment growth in Texas has exceeded that of the euro zone and its two anchors, Germany and France, as well as that of two natural-resource-intensive countries with populations comparable to Texas’, Canada and Australia. 4  BIS central bankers’ speeches  Now, is all this just prototypical Texas brag, or are there lessons the nation can learn from the success that is enjoyed here? Texans are hardly given to modesty, but I believe there are some undeniable lessons being imparted here. One lesson I draw from comparative state data is that monetary policy is a necessary but insufficient tonic for economic recovery. The Fed has made money cheap and abundant for the entire country. The citizens of Texas and the Eleventh Federal Reserve District operate under the same monetary policy as do our fellow Americans. We have the same mortgage rates and pay the same rates of interest on commercial and consumer loans, and our businesses borrow at the same interest rates as their brethren elsewhere in the country.

I should be injecting some levity into the event, though it is hard to do so when one talks about our feckless fiscal authorities. But there are witty people who have found a way to do so. Take a look at this parody of Congress that my staff found on YouTube: www.youtube.com/watch?v=Li0no7O9zmE. There you have the prevailing modus operandi of our fiscal authorities: pass the bill rather than the American dream to our children. What a sad tale! You asked me to talk about the economy. In a nutshell, my answer is this: Monetary policy provides the fuel for the economic engine that is the United States. We have filled the gas tank and then some. And yet businesses will not use that fuel to a degree necessary to realize our job-creating potential and create a better world for the successor generation of Americans until Congress, working with the executive branch, does the responsible thing and pulls together a tax, spending and regulatory program that will induce businesses to step on the accelerator and engage the transmission mechanism of job creation so they and the consumers they create through employment can drive our economy forward. 7  “Q&A: German Finance Minister Takes On Critics,” by Marcus Walker, William Boston and Andreas Kissler, Wall Street Journal, Jan. 29, 2012. BIS central bankers’ speeches  7
The structural dimension addresses the concentration of risk and interlinking The structural (or cross-sectional dimension) relates to how the concentration of risk and the links between different parts of the financial system at any given time affect the risk of a crisis hitting the system as whole. I have already discussed the links between financial institutions and the contagion risks these entail. Existing and newly-invented tools have been proposed and applied to deal with these structural risks. The former include stricter capital adequacy requirements and limits on activities and exposures. The newly-invented tools include plans to manage banks in crisis (so-called recovery and resolution plans), liquidity requirements and special capital adequacy requirements for institutions that are deemed to be systemically important. Work is underway within the framework of the Basel Committee to identify globally systemically important banks which will be subject to stricter capital adequacy requirements. The Swedish authorities’ demand for a higher level of capital adequacy in our major Swedish banks is of course an example of the same thinking. The cyclical dimension addresses risk management over time The cyclical dimension (also referred to as the dynamic dimension or the time dimension) relates to how risks in the system as a whole can develop over time. The crisis and the period preceding it clearly illustrate the tendencies towards exaggerated cyclical behaviour that often characterise the financial markets. The demand for loans usually increases during periods of strong growth, and the perception of risk often appears to weaken.

Through intensive meetings with industry and users, we co-created the SGQR code. While it is based on the EMVCo’s multi-tenanted QR specifications, Singapore is the first and only jurisdiction in the world to develop a set of arrangements by the industry for the industry such that all QR schemes can reside on a single QR code, instead of each scheme deploying its own code with its own scheme only. With SGQR, making a QR payment will be a breeze for the customer as he just looks for a single QR for any scheme the merchant accepts, rather than having to hunt for the right QR sticker for a particular scheme. For mobile or small merchants, SGQR allows easy acceptance of epayments via a single, streamlined and low-cost sticker. Businesses are also exploring QR payments in bills as the customer can quickly pay his bills through his mobile, while the customer details embedded in the QR in turn enhances business processes. 18. Third, Interoperability Powers. With UPOS and SGQR, MAS has been very fortunate in being able to work with willing industry partners. But in future, just as innovative solutions may grow over time, the number of interoperability issues may multiply, and MAS may need the regulatory powers to effectively address the issue of interoperability with many more parties. Hence, in the consultation on the PSB, MAS has proposed innovative powers to require interoperability among payment institutions. Today, we have existing powers to require payment platforms to open access to participants.
This is all clearly beneficial for growth, so we may conclude: the more quality social capital there is the higher growth will be. In this lecture I will not elaborate the concept of social capital any further. My intentions are to focus narrowly on the issue where I think my comparative advantage may be, namely central banking, and its role in promoting social capital. It is not very common to associate central banks with the development of social capital, but I would argue that by forcefully pursuing its functions the central bank is increasing social capital especially in transition economies. Central banks are usually associated with two main functions: macroeconomic stability or more precisely price stability which today is considered the principal mandate of a central bank and financial stability, which is usually narrowed down to banking system stability. Not all transition central banks are responsible for banking supervision, but most are. First let me explore the idea of increasing social capital by pursuing price stability. Today, most transition economies have managed to have relatively modest inflation after the initial outburst of inflation and even hyperinflation. But it is worth remembering that inflation is always a constant threat, it is never dead, only tamed. Central banks must continuously send a credible message that complacency will not set in and that price stability is their main long-term objective. People must always be reminded that inflation is a tax.

The second crisis occurred in banks founded after changes in the economic system that were not able to remain viable, because of either weak management and/or increased competition in the market as the transition period progressed. Croatia followed that pattern. The first banking crisis, the crisis of the old banks, as they were called, started with the beginning of the transition process (and even before it), and is even now ending with the sale of the rehabilitated state banks to foreign strategic investors. The costs of this crisis, brought about by the legacy of the past and as is too often forgotten, by the enormous consequences of the war, can be estimated at about 23% of GDP. These high costs are typical of countries caught up in a war, like Kuwait and Israel in parts of their histories. During the first half of 1998 the second banking crisis became visible in Croatia. The then government made a decision to rehabilitate two banks which represented about 7% of the total banks’ balance sheet. Bank rehabilitations are payed out of the budget. The Croatian National Bank required that bankruptcy proceedings be started in nine banks and four savings banks, while it withdrew the operating permit from one branch of a foreign bank, one bank and six savings banks. This has imposed high budgetary costs for the payment of insured savings deposits in banks in which bankruptcy proceedings have been started. The total costs of the second banking crisis could be estimated at about 4% of GDP.
One could also conceive, in principle, of a housing market that involved much less of it. Suppose that, instead of putting deposits in mortgage-issuing banks, we all had equity investments in companies that owned residential housing – and that, instead of owning the houses ourselves, we were simply tenants of these corporate landlords. That would be a “model” with no mortgage debt at all. But it’s not immediately clear it would make net wealth any higher, housing any cheaper or, for that matter, the macro-economy more stable.8 Returning to the real world, regulators would rightly be concerned if mortgage debt started growing rapidly again, especially if it was accompanied by other signs of loosening credit supply and greater risk-taking. It was in response to early signs of this sort that the FPC decided in 2014 to cap the share of new mortgages banks were allowed to issue at high multiples of a borrower’s income. However, the fact that the level of UK mortgage gearing is higher than it was a generation ago, or that it’s lower than in the Netherlands, is of less significance. And the aim of the 2014 measures was not to reduce 8 In fact we know that under certain conditions, originally set out by Modigliani and Miller (1958), it would make no difference to anything – this is just an extension of their famous result concerning corporate finance (which I also mention below).

Had this happened, the króna would probably have plunged in the meantime and not recovered before prices and wages had adjusted. But the problem was not restricted to non-residents. Residents, including Iceland’s pension funds, allocate substantial funds that must be invested on a continuous basis. With the economy paralysed and the Treasury’s ability to fund a large deficit over the next few years uncertain, domestic institutional investors also became reluctant to invest in domestic assets. Under these conditions, central government financing would have been extremely challenging, which would have undermined exchange rate stability still further. The third reason for the capital controls was the shaky balance sheets of the newly established financial institutions and the other financial firms that survived the onslaught, however briefly. Their balance sheets were fraught with uncertainty and potentially unstable. BIS Review 138/2010  1  A considerable share of their deposits could prove unstable as well. The balance sheets of households and businesses were likewise in a state of disarray. In the absence of exchange rate stability, it would be extremely difficult to restructure the finances of Iceland’s households, corporations, and banks. Prerequisites for capital account liberalisation The foregoing discussion should make it clear that the capital controls will not be lifted in full until confidence has been restored to the extent that their removal will not cause prolonged instability.
Chart 8: Unemployment fell faster than expected given GDP growth during 2014–5  4-quarter change in unemployment (pp)  4  Whole sample  2014-15  3 2 1 0 -1  2015Q3  -2  2014Q3  -3 -10  -5  0 5 GDP growth (oya, per cent)  10  Source: ONS and Bank calculations. Sample is 1972Q3 to 2015Q3. 12  Sceptics have questioned the importance of slack for overall price pressures, not least given the “missing disinflation” experienced in many advanced economies, including the UK, over the crisis. Various explanations have been put forward for this, including recently by Simon Gilchrist and co-authors (2015), who study the implications of financially fragile corporate balance sheets for pricing dynamics. The UK’s openness, moreover, complicates the identification of the price Phillips Curve because of the role played by imported costs. Nonetheless, when these are accounted for, and with careful shock identification, a price Phillips Curve can be found. See e.g. Burgess et al (2013), Greenslade, Millard and Peacock (2008), and Groen and Mumtaz (2008). For further discussion see Carney (2015b). 13  Recent Bank research has found a significant role for the long-term unemployment rate in wage determination in the United Kingdom, in contrast to the view that the long-term unemployed put little downward pressure on wage growth. See Speigner (2014).

Although my role has changed since then, my belief in the fundamental importance of this issue remains the same. Indeed, my conviction has been reinforced by the Banque de France’s own commitment to supporting VSEs, both at a central level and through its local presence in France’s regions. One of the main advantages of this nationwide network is that it makes it easier to listen to and support local businesses, the majority of which are clearly VSEs. Through its local branch network, the Banque de France is responsible for dealing with credit mediation applications. It provides valuable insight for economic and social actors by publishing statistics on VSEs, and is the only central bank in the Eurosystem to publish data in this level of detail. In addition, the Banque de France conducts studies into VSE finances and their positioning in the French economic landscape. Clearly, this symposium is not just a one-off event reflecting a passing interest in a subject that’s currently in the spotlight. In fact, it is part of an ongoing and enduring initiative, and will provide additional impetus to the work already being undertaken at the Bank. I shall come back to this in a few minutes. *** First of all, let me underline the importance of VSEs for growth and employment, and for the strength of our regional economic fabric.
It is assumed that the central bank wants - if it had been possible - output and price stability. The welfare loss will thus be smaller the further into the chart we are. The lines in the chart (indifference curves) thus show different combinations of inflation variability and output variability that result in the same welfare loss. BIS Review 49/2002  3  Lars Svensson, who is a prominent contributor to theoretical research in the area of monetary policy, has recommended that the central bank should explicitly define a loss function. He proposes an expression where the squared deviation between inflation and the inflation target and the squared deviation between actual and potential output be weighted together to provide a measure of the loss in each period. The total loss is then found by discounting future losses. Up to now, no central bank has gone as far as Svensson recommends. However, the horizon that is chosen for monetary policy will implicitly provide some indication of the central bank’s loss function. If the horizon is very short, inflation will be quickly brought back to the target, with greater fluctuations in output as a result. This indicates that the central bank puts considerable weight on avoiding variations in inflation and little weight on stabilising the real economy. Similarly, if the horizon is long, it will indicate that the central bank also puts greater weight on avoiding variations in output and employment. 4  BIS Review 49/2002  The chart illustrates the optimal combinations of inflation and output variability.

Tongurai Limpiti: Innovation and growth – finding the right balance Speech by Ms Tongurai Limpiti, Deputy Governor of the Bank of Thailand, at the 3rd Thailand Financial Services Summit 2014 “Driving Growth through Innovation”, organized by IDC Financial Insights, Bangkok, 9 October 2014. *  *  *  Good morning. It is a pleasure to be with you today and I would like to thank the IDC Financial Insights for inviting me to deliver a keynote address today. The topic I cover today is “Innovation and Growth: Finding the Right Balance”, which is currently an interesting issue that we have to carefully watch. What do we see when we think about innovation and growth? We see that the financial sector nowadays is highly competitive due to the number of players and the approach of regional economic integration. We see that digital economy is becoming a reality; thus, IT investment is one of the keys to success as it enables financial institutions to broaden business market and strengthen their internal operation. As a central banker, we encourage all financial institutions to improve their operational efficiency and capacity through innovation and IT investments in order to be strong domestically and to be able to compete internationally. Increasing operational efficiency has been a focus of Thailand’s Financial Sector Blueprint I and II and IT infrastructure development will play a crucial role in the next phase of Financial Blueprint. Regulators will have to be prepared for such a change in order to ensure sustainability and economic growth. 1.
BIS Review 16/2003  1  It's made life pretty difficult, too, I have to say for those of us involved in macro-economic management! Macro-economic policy - that's to say monetary policy and overall fiscal policy taken together operates, directly, on the demand side of the economy, aiming essentially to keep aggregate - external and domestic - demand growing broadly in line with the underlying supply-side capacity of the economy to meet that demand. Stable, low, inflation is in fact essentially a measure of how far we are successful in that. There has been very little, quite frankly, that either we at the Bank, through monetary policy, or the Chancellor could do to influence the international environment. The problems originated abroad and we could not avoid their effects. What we could do - and what we have tried to do - was to seek to offset those effects, and compensate for the external weakness, by stimulating domestic demand here in the UK. Given weak business confidence, that meant essentially, in the case of monetary policy, encouraging the growth of consumer demand - by cutting interest rates to their lowest level in 40 years. In the event we managed - just about - to avoid recession over the winter of 2001/2002 but we did so but at the cost of growing imbalances within the economy between domestic and external demand on the one hand and, domestically, between consumption and investment on the other.

On that view, and given the recent moderate decline in sterling's effective exchange rate, it is reasonable to look forward to a gradual improvement - and I emphasise gradual improvement - in the external environment which would clearly be very helpful from a UK perspective. I don't deny that there are downside risks to this scenario. The Eurozone has for example recently put back its projected expansion until later this year. And financial markets, and both business and consumer sentiment, have recently been severely affected by uncertainty over Iraq - though financial markets, certainly, now that the war has started, have factored in its rapid conclusion. I hope they prove to be right - for more than purely economic reasons. Notwithstanding these risks, I still think that the most likely outcome is that we will see a gradual pickup in the pace of global recovery over the next year or two - which is the view shared by the Monetary Policy Committee in our February Inflation Report and by most other economic commentators. On that basis we would also expect to see a gradual recovery in domestic business investment as we go through this year and into next. And, while fiscal prudence is clearly important for the stability and efficiency of the economy over the medium term, the Chancellor's projected increase in public spending is in my view positively welcome in the immediate situation confronting us.
Beverly Hirtle: The past and future of supervisory stress testing design Remarks by Ms Beverly Hirtle, Executive Vice President and Director of Research of the Federal Reserve Bank of New York, at the 2018 Federal Reserve Stress Testing Research Conference, Federal Reserve Bank of Boston, Boston, 9 October 2018. * * * Good afternoon. It is a real pleasure for me to be here today at the fifth annual conference on stress testing research. As many of you know, I spent a considerable portion of my career working on stress testing issues, starting with the Supervisory Capital Assessment Program (SCAP) in 2009, through the initial implementation of the Comprehensive Capital Analysis and Review (CCAR) and the Dodd-Frank Act (DFAST) stress testing programs, as well as my personal research agenda on the impact of stress testing. And even now, though my responsibilities have changed, I remain actively engaged in debates and discussion as the CCAR and DFAST programs evolve, and as the details of stress test modeling and design evolve with those programs. In fact, I want to make this evolution the focus of my remarks today. I will begin by briefly reviewing how stress testing emerged as a key supervisory policy tool, and talk about how the original goals of the SCAP, CCAR and DFAST stress tests affected modeling and design choices. I’ll then talk about some of the consequences of those choices – in particular, what is missing or not well-captured in the current approach.

In reviewing the design choices, it’s also helpful to distinguish between choices about what the SCAP, CCAR and DFAST stress tests were designed to capture and how the models measure key elements of the stress test calculations. The first and most significant design choice involved what the tests would measure: the SCAP and subsequent U.S. supervisory stress tests measure the impact of the stress scenario on regulatory capital ratios. Other choices were possible, of course. The tests could have focused on modeling the market value of assets or equity (similar to the Capital Shortfall approach developed by Acharya et al. 5 , or attempted to measure the value or cost of debt, or the impact on credit ratings. But regulatory capital ratios were a natural choice, allowing the output of the stress testing exercise to map into the broader regulatory capital regime while addressing the slow adjustment of those ratios during downturns. The focus on regulatory capital ratios resulted in a cascade of additional design choices. To begin, since regulatory capital ratios are based on accounting definitions of earnings and capital, estimating net income and its flow through to regulatory capital became the focus of the stress test calculations. This stands in contrast to approaches that concentrate solely on projecting losses, which were the focus of much of the public discussion prior to the release of the SCAP results. In practical terms, the net income approach involves recognizing that banks will have non-credit-related expenses and earn revenues even during periods of stress.