samchain/econo-pairs-v1 huggingface dataset:
And it is vital that the insurers fully understand the counterparty credit risk they are running, the quality of the collateral they are taking and how to manage the collateral in the event of default. The more recent developments in markets for Exchange Traded Funds (ETFs) are another example of financial innovation and growth in a previously small market. ETFs are in principle a “good” financial innovation – for example, they offer retail investors a cheaper way of getting exposure to the underlying asset (by cutting out the fund manager) and provide a very liquid asset. Nonetheless, the rapid growth in ETF assets under management – which have increased seven-fold since 2003 (Chart 15) – merit attention, given it has been characterised by increasing complexity, opacity and interconnectedness, and as some practices, if left unchecked, could grow to pose risks to the stability of the financial system.12  10  That could come about not only through the low yields on safe assets, but also through an increase in the correlation amongst safe assets, which might prompt reserves managers to seek new diversification opportunities, some of which might be met through financial engineering. 11  These products are discussed in more detail in the box on pages 168–169 of the 2010 Q3 Quarterly Bulletin. 12  The Bank first discussed ETFs in a box on pages 40–41 of the June 2010 Financial Stability Report.

Something clearly has to give here – investors know – and must remember – that there is no such thing as a free lunch, and that additional return involves additional risk. The  BIS central bankers’ speeches  9  macro-prudential concern is that the reach for yield encourages financial innovation and growth in some parts of the financial system where the risks are not well understood,10 especially if it leads to greater interconnectedness within the banking system. This is one area which is likely to warrant further attention and analysis by the FPC in due course. Financial innovation and the emergence/growth of new products The financial industry is characterised by its tendency to innovate, continuously designing and offering new financial products to its customers. In my view, financial innovation should be seen as a “good thing” in normal circumstances. It can lead to a more efficient allocation of capital and a reduction in the costs of financial intermediation, both of which should help sustain real economic growth. For example, the rapid growth of electronic trade execution in the foreign exchange market has increased the speed and ease with which trades can be conducted. That should ultimately make international trade cheaper, bringing with it the associated benefits. Improvements in technology can, by facilitating wider market access, also lead to improved price discovery and market liquidity. Moreover, innovation can help issuers align the risk characteristics of new products more closely to those that investors demand.
Accordingly, they argued that central banks should actively “lean against the wind” to mitigate these risks,  4  Dowd, Cotter, Humphrey and Woods (2008) calculate that, with a normal distribution, a 25-sigma daily event should occur about once in every 1.31 x 10135 years; to put this in context, the universe is estimated to be just 12-14 billion years old! BIS Review 101/2009  5  even though inflation objectives did not appear to be under threat. Others, including the present and former Chairmen of the Federal Reserve, took the view that diagnosing a misaligned asset price was only possible in retrospect and that only a large increase in policy rates could stop such a boom, which risked creating exactly the shock to the real economy that one wanted to avoid (see Bean, 2003, and the references therein). I shall return to this issue at the end of this lecture. Global imbalances Another feature of potential importance is the counterintuitive pattern of international capital flows. The rapid development and integration into the global market economy of China, India, Brazil and other emerging market economies could have been expected to lead to capital flows from the advanced countries into these economies in order to provide the investment to equip the extra workers being brought on to the global labour market. But instead we saw China exporting capital and the United States and the United Kingdom importing it; see Fig. 7.

253-257. Bernanke, B.S., Gertler, M., Gilchrist, S. (1999), “The financial accelerator in a quantitative business cycle framework”, in J.B. Taylor and M. Woodford (eds.) Handbook of Macroeconomics, pp. 1341-1393. North-Holland. Buiter, W. H., and Panigirtzoglou, N. (1999), “Liquidity traps: How to avoid them and how to escape them”, NBER working paper 7245. Brunner, K. and Meltzer, A. (1972), “Money, debt and economic activity”, Journal of Political Economy, vol. 80, pp. 951-977. Brunnermeier, M. K. (2009), “Deciphering the liquidity and credit crunch 2007-8”, Journal of Economic Perspectives, vol. 23(1), Winter, pp. 77-100. Caballero, R. J., Farhi E. and Gourinchas, P-O (2008), “An equilibrium model of global imbalances and low interest rates”, American Economic Review, vol. 98(1), pp. 358-393. Caballero, R. J., and Krishnamurthy, A. (2008), “Collective risk management in a flight to quality episode”, Journal of Finance, vol. 63(5), pp. 2195-2230. Cecchetti, S., Genberg, H., and Wadhwani, S. (2002), “Asset prices in a flexible inflation targeting framework”, in W. Hunter, G. Kaufman and M. Pomerleano, eds., Asset Price Bubbles: The Implications for Monetary, Regulatory and International Policies. Cambridge, MA: MIT Press, pp.427-444. Chen, N. K. (2001), “Bank net worth, asset prices and economic activity”, Journal of Monetary Economics, vol. 48(2), pp. 415-436. Christiano, L. J., Motto, R. and Rostagno, M. (2008), “Financial factors in business cycles”, mimeo, Northwestern University. Clarida, R., Gali, J. and Gertler, M. (2000), “Monetary policy rules and macroeconomic stability: evidence and some theory”, Quarterly Journal of Economics, vol. 115(1), pages 147-180.
I also implore management to provide support to various sectors of the economy, especially the priority sectors of agriculture, tourism, manufacturing and small-scale mining to effectively contribute to the development of the country. Ladies and Gentlemen, the introduction of the fourteenth bank in the banking sector will obviously come with its own challenges. For us at Bank of Zambia, this entails further strengthening of our supervisory capacity. We welcome this challenge and hope to rise to the  BIS Review 117/2008  1  occasion by providing adequate supervisory infrastructure and an environment conducive to conducting good business. In the past few years, the Bank has embarked on a process of strengthening its supervisory framework through various initiatives. One such initiative is the adoption of an enhanced riskbased approach to supervision (RBS). The enhanced RBS approach will entail more regular interaction with the banks than previously in order to understand and monitor activities and risks on a continuous basis. As part of the adoption of the enhanced RBS, the BoZ has formulated Risk Management Guidelines to banks which will serve as a minimum standard in their design and implementation of risk management frameworks, relative to their size and complexity. Further, in 2006, the Bank issued Corporate Governance Guidelines to all Financial Service Providers. The guidelines set forth a broad framework of fundamental governance principles to guide the actions of directors and managers. This will strengthen governance in institutions and minimize the risk of bank failures as a result of bad governance.

This interest we are witnessing in the financial sector is due to the favourable economic environment that has been created in the last seven years. During this period, the economy has performed relatively well as reflected in the overall macroeconomic stability, which has been underpinned by sustained positive growth rates in the real Gross Domestic Product averaging over 5% in the last five years. I do hope that Access Bank Zambia, will play a special role in taking this growth to an even higher level. In the financial sector, stability has continued to characterize the financial system with all banks being adequately capitalised and non-bank financial institutions performance being satisfactory. I am convinced that this stability, among other factors, will continue to contribute to the attraction of international investors such as Access Bank to invest in Zambia. It is my hope that with new entrants in the banking sector, the provision of financial services to the public will become more competitive both in terms of the variety of services offered, efficiency and pricing. The need for provision of affordable banking services to the majority of our people can not be ever emphasised. Such services will greatly benefit our people and contribute positively to poverty reduction in the country. As Access Bank ventures into full fledged business, I urge the bank’s management to devise strategies that will contribute to Government’s efforts of reducing the cost of borrowing and increasing the level of inclusiveness in the country.
In particular, “following periods when inflation has been running persistently below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time. "6 A second tangible evolution in our approach is that we made explicit that in seeking maximum employment, we are focused on eliminating shortfalls from that goal. We also emphasized the inclusive nature of our maximum employment goal. This means thinking more broadly than the aggregate rate of unemployment and examining the full range of indicators when it comes to assessing shortfalls from maximum employment. Together, these changes position us to deliver on our dual mandate goals in a world of very low r-star and persistently low inflation. What Does This Mean for Policy? My colleagues at the FOMC and I have talked extensively about the nature of these changes and how we drew our conclusions. But, it’s important to apply these decisions to the current situation. The pandemic has presented us with extraordinary and devastating economic circumstances. The good news is that the economy has started to recover and the unemployment rate has come down. About half of the jobs lost during March and April have been regained. Despite these improvements, we are nowhere near where we want to be: the total number of nonfarm jobs is still 10.7 million below February’s level, and the unemployment rate is nearly 8 percent.

John C Williams: The longer-run framework - a look ahead Remarks (via videoconference) by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Hoover Institution Monetary Policy Virtual Series: The Road Ahead for Central Banks, 7 October 2020. * * * It’s great to be back in California participating once again in a Hoover Institution monetary policy event, even if only virtually. These conferences have provided an excellent opportunity for academic experts, policymakers, and practitioners to share research and perspectives on critically important issues. John Taylor is both a friend and a mentor, so it’s a particular pleasure to be sharing this online platform with him today. This summer, the Federal Open Market Committee (FOMC) completed its review of the Fed’s monetary policy framework. This culminated in August with the issuance of a new Statement on Longer-Run Goals and Monetary Policy Strategy.1 The FOMC put this strategy into practice in its September policy statement, explicitly tying its policy actions and intentions to the new framework.2 The new policy framework represents a substantial evolution of the FOMC’s thinking and approach since the Committee published its first framework statement in 2012. Today, I’m going to talk about what these changes mean for policy as the economy recovers from the effects of the pandemic. But what I’m really looking forward to is our conversation around these important issues, so I’ll keep my opening remarks brief.
And, while we are working hard to improve available information, we lack sufficient historical depth to be able to use the past as a guide to estimate future developments. In addition, there is no previous experience of structural changes of this magnitude, which also require a very long-term perspective, and where the presence of non-linearities and irreversible tipping points are likely, conditioning the methodologies to be used. And there is limited research, and accompanying data, that explore how climate risks feed into the financial risks faced by banks. In this context, many supervisory and/or prudential authorities are opting to use stress tests and scenario analysis. 1  As a result, we should accept that efforts to translate climate-related risks into quantifiable financial risks are in their early stages. And we will have to step up our efforts to address these problems and limitations. It’s also crucial that these efforts are coordinated at the global level, given the global dimension of the risks and the potential spillovers that can arise through interconnections between the real and financial sectors. In this regard, in the case of banks, at the Basel Committee on Banking Supervision (BCBS) level we are planning to conduct a “gap analysis” to identify areas in the current Basel Framework where climate-related financial risks may not be adequately addressed or are not captured. This gap analysis will be comprehensive in nature, and will cover regulatory, supervisory and disclosure elements. Building on the analysis, we plan to explore practical solutions to address any identified gaps.

They indicate that Swedish companies can compete in the global marketplace, but their operations are such that they do not require very much labour, at least not in Sweden. Different assessments have been made of how large a percentage of total unemployment is cyclical and in turn how much of this cyclical unemployment can be affected by monetary policy. The serious assessment attempts that I have seen usually end up with only a small fraction, according to some estimates only one or a few tenths of a percentage points, of total unemployment being affected by monetary policy. Those are calculations that are highly uncertain and should be taken with a large pinch of salt. However my point is that it is a gross exaggeration when, in the present debate, the Riksbank’s decision to lower or not lower the interest rate is presented as having momentous consequences for unemployment in Sweden. This kind of claim is not compatible with any serious assessments or forecasts. 2  BIS Review 41/2005  On the whole, the reason for the problems in the labour market is not poor demand – on the contrary, lending is growing at a rapid pace and companies have ample liquidity – but these problems are rather related to structural factors.
In comparison with other countries, this is particularly the case for banks and other service sectors, reducing their production costs. The business sector has been quick to adapt and change, and to make use of new technology that is available in an international market. This is probably due to the 1980s and 1990s’ modernisation of the way the economy functions, which resulted in more efficient markets. In addition, growth in labour productivity reflected a marked fall in sickness absence in 2004. The latest figures nonetheless indicate that productivity growth is falling back. Although we do not have satisfactory current statistics for central government and local government productivity, government agencies have probably also become more efficient. New technology and new organisational structures have certainly provided opportunities to increase efficiency. Wage-earners and enterprises have both fared well. Low import prices have resulted in a slow rise in consumer prices and a solid increase in wage-earners’ real wages. High export prices have contributed to holding down the rise in real wages. Combined with high productivity growth, this has resulted in high corporate earnings and solid growth in employment. It remains to be seen whether the combination of low unemployment and a low wage share is sustainable. This partly depends on whether positive supply-side conditions persist. There is probably symmetry here. First, should Norway’s terms of trade deteriorate, productivity growth slacken and foreign workers return to their home country, the wage share will increase, profits fall and  4  BIS Review 139/2007  unemployment will rise.

Philipp Hildebrand: Swiss monetary policy and financial markets Summary of a speech by Mr Philipp Hildebrand, Member of the Governing Board of the Swiss National Bank, at the Autumn forecast of the Swiss Institute for Business Cycle Research, Zurich, 5 October 2006. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch)  *  *  *  Transparency and communication enhance the impact and the precision of monetary policy. Monetary policy functions through expectations. This means that it is first and foremost expectation management. Central banks strive for transparency regarding their methods and approaches. All in all, the current economic and, in particular, the structural uncertainties are resulting in a greater range of possible economic scenarios and thus also in an increase in the range of expectations regarding our future monetary policy. In other words, being transparent does not automatically mean being predictable. Therefore, the Swiss National Bank (SNB) considers it particularly important to communicate its monetary policy concept to the markets and the public. This allows them to arrive at similar conclusions to those reached by the SNB. BIS Review 92/2006  1
To meet the growth challenge, Thailand needs a steady and sincere effort at the micro-level to put our economy back on a more robust growth path. The reforms must aim for good corporate governance, faster debt restructuring, and the efficient and effective banking sector. Without these actions, the potency of the fiscal and monetary policies will be limited, and whatever gains in output we make will be ephemeral. The bottom line, Ladies and Gentlemen, is that Thailand will stand ready to reap the full advantage of an upcoming global recovery only if the real sector becomes competitive and the financial sector functions smoothly. The Bank of Thailand can contribute to the growth process by conducting a responsible monetary policy to ensure price stability, and by prodding the economy along the path of institutional reforms that have been initiated. With a sound policy framework and institutional reforms in place, a more efficient economic structure will have been built and the entrepreneurial energy of the private sector can be unleashed to ensure greater economic well being. This brings me to the last point I wish to make tonight, that is the need to speed up the structural reforms. I am convinced that the necessary transition toward more robust and durable growth lies in breaking out of the current constraints imposed on the economy post-1997, the most pressing of which is the debt-overhang problem. To go forward we first need to unshackle ourselves. The crawling pace of debt resolution is tying down the economy.

It requires time and effort to consider the issues to be addressed at company AGMs, and not least: We may be confronted with uncomfortable questions. The fund now owns around 1 per cent of the world’s listed companies. This is both a lot and a little. For less than 0.1 per cent of the global population to own 1 per cent of global equities is a lot. But 1 per cent may seem too little to exert ownership influence. Nonetheless, we have chosen to exercise our voting rights. In many companies, ownership is spread across many shareholders, in which case even a 1 per cent interest is a large stake. The fund also has larger holdings – up to 10 per cent – in a number of companies, which gives us the opportunity to steer companies in what we consider to be the right direction. Voting is governed by a few main principles. 30 As a minority shareholder, equal treatment of shareholders and board accountability are two key elements of our long-term management. In addition, as the fund is invested in a wide range of companies with a long investment horizon, our concerns must go beyond the purely business-related. A manufacturing enterprise that emits pollutants and harms neighbouring enterprises may not be of concern to the enterprise itself. But it is of concern to us because we own shares in the enterprises affected by the pollution. Water management and climate change are two of our strategic focus areas.
Mervyn King: Monetary policy developments Speech by Mr Mervyn King, Governor of the Bank of England, at a dinner hosted by the IoD South West and the CBI, Bristol, 22 January 2008. *  *  *  It is four months since Northern Rock came to the Bank of England for support. And the headlines continue to be dominated by its fate. Northern Rock, however, is not the epicentre of the present global banking crisis. That lies in the very substantial losses made by many banks in the main financial centres as a result of the collapse of the US sub-prime mortgage market. Those losses, and the fear of future losses on a wider range of loans, pose a threat to the ability of the banking system to finance continued economic growth – the so-called credit crunch. Concerns about the implications of a credit crunch, not only for the health of the US but for the world economy, lie behind the sharp falls in global equity markets over the past week. So the next year will pose economic challenges for all of us – more so than at any time since the Bank of England was given its independence in 1997. Both industrialised and emerging market economies have been affected by the fall in asset prices but conditions vary across countries. It is striking that the banking crisis originated at the heart of the world’s major financial centres.

These were designed to boost confidence by demonstrating that we were conscious of the risks of a credit crunch. Since those actions, conditions in money markets have eased considerably. The benchmark 3-month interbank lending rate has fallen by around 75 basis points relative to expected policy rates. But conditions are not yet back to normal and remain fragile. Although central banks can and will respond to the consequences of strains in the banking system for their economies, the solution to the underlying problem does not rest with them but with the banks and financial markets themselves. Banks must reveal losses promptly, and, most importantly, raise new capital where necessary. But these developments in financial markets and the banking system have started to affect activity in the economy more widely. Interest rates charged to both households and companies have risen relative to Bank Rate, reversing the relative fall in the year or so before last August. And our own survey of credit conditions last month revealed that lenders intend to tighten conditions further this year. This tightening is unlikely to be short-lived. Tighter conditions will discourage borrowing to finance spending on residential and commercial property, on business investment and on consumption. The impact on property prices is already clearly visible. Commercial property prices have fallen by 12% since the middle of last year. And, after rising sharply earlier in 2007, house prices stagnated in the final quarter.