samchain/econo-pairs-v1 huggingface dataset:
2  BIS Review 94/2009  •  Finally, cyclicality in the real economy can be beneficial to long term growth as it is one mechanism through which "creative destruction" can take place in the productive system. Real and significant damages occur if and when financial imbalances are allowed to build for a long time with two consequences: first asset prices significantly deviate from their fundamental trend, which creates distortions in the allocation of resources; and second, those imbalances unwind suddenly and abruptly, triggering major disruptions in growth and the economic cycle. This is what is happening right now. And this closely resembles the definition of a bubble. This clearly points to one possible mandate for macro prudential supervision that, it were feasible, would be both pragmatic and legitimate: to avoid bubbles. Bubbles are not always triggered within the financial system. They may have roots in productivity shocks, for instance. But cyclical fluctuations cannot develop into a bubble – like process unless some amplification mechanisms are allowed to work fully in an overall permissive financial environment. What role did procyclicality play in the current crisis? During the first phase of the crisis, it was possible to take a "short term view" of procyclicality. It may have looked as if mark to market accounting, together with highly illiquid markets, generated downward spirals in asset prices and created "excessive" losses, with no relation to real underlying economic reality. Such liquidity spirals may have occurred at some critical moments 7 .

If assets market are booming and perceived returns are high, banks will always find the necessary capital, whatever the regulatory requirement. They will be able to both meet those requirements and distribute profits. Conversely, capital dries up during downturns, when it is  4  BIS Review 94/2009  most necessary 9 . There is clearly an asymmetry with strong equity outflows in boom times and no inflows in bad times. It is not clear that Introducing counter cyclical capital requirements will suffice to counteract this very powerful dynamic, especially in bad times. It may be necessary to look at other tools in order to address procyclicality and pre-empt the build up of imbalances. Those tools have to act more directly on individual and collective incentives. This is where accounting may matter most. Economically, it will always remain difficult, when looking at revenues drawn from a financial investment, to distinguish excess return from additional risk taking. But financial reporting may be conceived in such a way that this distinction is prudently introduced. There is no reasonable or practical alternative to fair value accounting for tradable securities. This does not mean, however, that any single valuation gain or loss should instantly be recognized as a profit (or loss) and financially treated as such. There is a possibility to delink valuation from income / profit recognition.
Once translated into default probabilities, Acosta-Smith et al (2017) find that the second effect swamps the first: a one percentage point rise in the leverage ratio raises the odds ratio (on banks being in distress versus safe) through risk-shifting by 1-3.5%. But the reduction in the odds ratio from lower leverage is close to 40-50%. Second, the leverage regime is not a replacement for the risk-weighted capital regime but an addition to it. The capital regime places an automatic upper-bound on the extent to which banks can increase their risk-weighted assets. In other words, the capital ratio regime places constraints on incentives to risk-shift. Conversely, the leverage ratio can serve as an effective constraint on incentives to game or shade risk weights. Risk-taking incentives are, in effect, book-ended by the leverage and capital constraints. From an incentives perspective, if regulatory arbitrage incentives are two-sided, so too should be the constraints needed to straightjacket that behaviour. That is another way of rationalising the “multi-polar” regulatory regime operating internationally. When it comes to calibration, this means leverage and capital ratios need to be jointly determined to prevent incentives skewing in one or other direction. This is the approach in the UK when setting capital and leverage constraints (Bank of England (2015a)). 29  All speeches are available online at www.bankofengland.co.uk/speeches  29  There are other means of constraining adverse incentives.

The time-inconsistency problem that pervades the debate over the balance between rules and discretion in monetary policy (Kydland and Prescott (1977), Barro and Gordon (1983)) is arguably even more acute for prudential policy. This is partly because adverse crisis outcomes are highly non-linear and costly, making it more difficult to pre-commit to avoiding forbearance and bail-out. The low probability of crises may also mean that policymakers are insufficiently tough in tackling financial sector risks when times are good and memories of previous crises distant (Reinhart and Rogoff (2009), Malmendier and Nagel (2011), Gennaioli et al (2015)). This can create political pressures to relax regulations to support shorter-term goals. Public choice theory (Olson (1965)) would also suggest that lobbying pressure is likely to be more acute for regulatory policy than for monetary policy. The private costs of regulation are borne strongly by narrow, but 26  All speeches are available online at www.bankofengland.co.uk/speeches  26  powerful, interest groups in the financial industry. And while higher than target inflation is quickly observable, it may be very difficult to judge in real time that regulation is insufficiently stringent given the difficulties of quantifying the probability of future financial crises. These arguments point to the need for strong institutional frameworks, supported by clear mandates, objectives and instruments, to deliver financial stability policy. Indeed, on conceptual grounds, the need for such a framework appears to be at least as strong, if not stronger, than for monetary policy.
Unlimited: our problem is not so much the debt from the Covid shock, but the pre-Covid debt (already 97% of GDP at the end of 2019) and especially now the post-Covid path. Indeed, Europe and France have faced unforeseen external crises in the past - the 2008 financial crisis, the Covid crisis, and now the war in Ukraine - and more crises will arise in the future. Furthermore, in order to achieve our two future transformations, ecological and digital, our investment needs are massive. The ecological transition alone will require additional investments estimated in Europe at EUR 360 billion at least per year between now and 2030,i of which one-third will be public investments. Europe's digital and innovation lag is also partly due to insufficient funding: in 2019, total public  Page 3 of 9 and private R&D spending was equivalent to 2.1% of EU GDP compared to 3.1% in the United States and 4.6% in South Korea. But even before these risks and needs, according to our projections, French public debt is expected to remain at best almost stable at around 110% of GDP up to 2032, assuming no change in fiscal policy . Clearly, this is insufficient to ensure fiscal sustainability in the long run. A more ambitious target should be set: a return much below 100% of GDP within ten years, and below pre-Covid levels. This should be achieved in particular by limiting the increase in real spending to 0.5% each year, compared with more than 1% over the previous decade.

M R Chatu Mongol Sonakul: National Central Bank and building world peace  Speech by Mr M R Chatu Mongol Sonakul, Governor of the Bank of Thailand, at the 27th International Conference on World Peace “Building a Culture of Peace in the New Millennium”, held in Bangkok on 1 December 2000. *  *  *  Members of the Professors World Peace Academy, Participants of the 27th International Conference on World Peace, Ladies and gentlemen. The history of central banking is normally agreed to have begun around four thousand years ago in the Greece, Roman and other empires up to the middle ages when banks were put up primarily for the purpose of getting finance for governments to wage war. So the first period of central banking cannot very well be said to have been in conformity with the topic I’ve been asked to talk about here today, which is entitled “National Central Bank and Building World Peace”. But in the sixteenth and seventeenth centuries and especially later on when industrialisation began in earnest, there were great needs for finance for the many various industries that sprang up around that time. Commercial banks and great finance houses became common but the limitations of the technology of that period of using precious metals as currency became quickly apparent. Commercial banks began issuing their own paper notes, for the amount of the valuable metals that they had in stock being much more transportable.
To meet commitments like these in the current low interest rate environment, some firms have an incentive to reach for yield by investing in excessively risky assets. Furthermore, with the costs of borrowing at historically low levels, other investors might simply decide that this is a good time to cheaply amplify the risk and return in their portfolios by taking on more leverage. One could reach the conclusion that historically low and stable interest rates pose a threat to financial stability. This creates a seeming paradox for policymakers. On the one hand, the existing large shortfalls in aggregate demand call for highly accommodative monetary policies and historically low interest rates. On the other hand, such policies have the potential to raise the likelihood of financial instability in the future. So, the questions that I’m often asked regarding these matters are as follows: Do the regulators and the Fed have adequate safeguards in place to mitigate this potential financial risk? If not, should the FOMC step away from what we thought was the best monetary policy with respect to our dual mandate? Should we discard our nonconventional tools and raise the fed funds rate in order to reduce the possibility of undesirable financial imbalances in the future? I don’t believe that such monetary policy adjustment is the right approach. I think the inference that persistently low interest rates pose a danger to financial stability is based on a narrow view of the economy.

On the one hand, the transmission of shocks has been speeded up – a generation ago, for example, who would have supposed that devaluation in Thailand would have set off a chain reaction that rippled through financial markets from New York to Tokyo? On the other hand, the absorptive capacity of financial markets has massively increased. This has helped to cushion the impact of major shocks on the wider economy. But it has also facilitated the financing of huge current account imbalances. These have been the number one issue on the IMF’s worry list for the past few years and now constitute a significant source of risk to the world economic outlook. So you might expect the MPC’s policy rate to respond to changes in the world economic outlook, though you might speculate that the relationship could be quite complex. What does recent experience show? Between 2000 and 2004, there was, on the face of it, a very close relationship between fluctuations in world GDP and the policy rate; as all main regions of the world slowed after the stock market crash and the ending of the IT boom, the MPC first cut its policy rate sharply – and then held it down until the world economy had clearly turned the corner in the second half of 2003. But it would be quite wrong to infer that the MPC ignored domestic demand during this period – though the data have now been so heavily revised it is difficult to generalise about past decisions.
The PoC will examine the extent to which DLT based systems can be configured to enable privacy amongst participants, whilst keeping data on a shared ledger: one of the holy grails of DLT design. RegTech: data storage and analysis (4 PoCs)  As central bankers, we have always needed to process, store and analyse data to inform our policy and operational responsibilities. But that need has grown enormously in recent years, reflecting the increased reporting requirements on supervised firms since the financial crisis, greater availability of high frequency and qualitative data from public and private sources, and new policy responsibilities (eg for macro-prudential supervision). Making sense of such large and diverse data sets is not straightforward. But central banks need to do so to discharge their responsibilities, whilst respecting increasingly demanding data protection requirements. Of course regulated firms face a similar challenge marshalling all of these data in the first place – and a sub-branch of FinTech, sometimes known as ‘RegTech’, has grown up to facilitate the associated monitoring, compliance and reporting demands. More recently, that term has expanded to cover the use of similar technology on the regulatory side, and a good number of the Accelerator’s PoCs have been in this space, looking either at data analysis or the more advanced field of machine learning.

As a macroeconomist whose work is grounded in thorough analysis, and a profound knowledge of models and data, he also takes into account the policy implications of the findings of his research. This is an important factor as he is a pioneer who has done groundbreaking work, and his research frequently encourages others. In this respect his work on the global decline in labour’s share of income has prompted a number of papers from academia and different institutions so as to understand this change over time and its implications for income distribution and productivity. Similarly, his work on capital allocation and productivity in Southern Europe has been widely influential. Mr. Karabarbounis, congratulations on my behalf and on that of the Banco de España. 2
4  See the box ”Uncertainty regarding future interest rate movements”, in Inflation Report 2006:1. 4  BIS Review 33/2006  In the second method, the uncertainty interval is instead calculated with the aid of the market’s pricing of interest rate options. The current prices of interest rate options reflect expectations of future interest rates. This method is therefore forward-looking and based on the fact that the redemption price for identical options can vary. This variation reflects the market’s assessment of the uncertainty in the future price of the asset on which the option is based. Since this variation can be observed, it is possible to construct an uncertainty interval around the implied forward rate curve. These uncertainty intervals are largely similar to the uncertainty intervals based on historical deviations (see Figure 5). To summarise, the strategy for monetary policy is being maintained with the new interest rate assumption. We normally try to attain the inflation target within a two-year period and we take the real economy into consideration. However, monetary policy cannot as before be described by the simple rule of thumb that was based on the assumption of a constant repo rate. Instead the forecasts that are based on the assumption that the repo rate will follow implied forward rates are studied and assessed. It is the whole path of inflation and the real economy that is important in monetary policy decisions.

If the forecasts for inflation and the real economy are assessed to show a desirable development, market expectations will provide a reasonable forecast for coming monetary policy decisions. However, it is important to remember that new data are being received all the time, which must be taken into account in our monetary policy. The fact that implied forward rates are being used in our forecasting work should not be regarded as a commitment regarding future monetary policy. There is considerable uncertainty over future macroeconomic developments, and this means that market expectations of the future repo rate path may often be incorrect. This is also illustrated by the considerable uncertainty intervals around the assumed interest rate path (see Figure 4). The current monetary policy situation The principles that I have just discussed apply primarily when we produce and publish complete forecasts in connection with Inflation Reports. At the intervening meetings, we start from the forecast that applied in the previous Inflation Report and study how the information received since then affects both the interest rate assumption and the forecasts. Our next monetary policy meeting on 27 April will involve making this kind of intermediate, more qualitative assessment. The implied forward rates on which the forecast in the Inflation Report published on 23 February was based reflected a 15-day average as per 9 February. On 16 February, an unexpectedly low CPI outcome was published for January.
Despite the weakening of large emerging countries, the French and European economies should continue to benefit from an exceptional combination of three trends: (i) the significant drop in oil and commodity prices (–45% and–31% respectively, in dollar terms, between 1 January 2015 and 14 January 2016); (ii) the downward trend in the exchange rate of the euro against the dollar (–10% over the same period); (iii) and very low interest rates (–80 basis points in bank lending rates since June 2014). The non-standard monetary policy that we have conducted in Europe since June 2014 has done a lot for our economy. We now have reliable and concurrent estimates of its effectiveness: it has boosted growth prospects in the euro area by about 1% for the period 2015 to 2017, and those of inflation by 0.5 percentage point in 2016 and 0.3 percentage point in 2017. All this is a lot... and in this respect our growth performance remains insufficient, lower than what should be achieved thanks to these exceptional economic stimuli, and lower than the European average. b) We must now turn our too moderate economic recovery into strong, sustainable and job-creating growth. This shall notably be achieved by boosting business investment. The problem does not lie with the amount of French investment, since the investment rate of nonfinancial corporations, which stood at 22.9% in 2015, is slightly above its long-term average, i.e. 21.4% since 1980.

European companies therefore need loans that are less secured, but also, for business start-ups and growing businesses, more equity capital. Indeed, equity capital has two advantages: it gives the entrepreneur access to long-term funds while also offering investors strong upside potential to reward the risk incurred. A catching-up economy – like Europe until the 1980s, and many emerging countries today – can finance its growth through debt. An economy at the technological frontier, which carries greater risk, must rely more on equity financing. However, in the euro area, companies’ financing structure remains predominantly based on debt rather than equity. By comparison, the net equity of non-financial corporations represents 123% of GDP in the United States, against 52% in the euro area. This transatlantic divide, which is hardly ever mentioned, is even larger than the gap in rates of debt disintermediation: the well-known figure of 20% of capital market financing in Europe compared with 75% in the United States. b) With regard to debt, France’s situation currently appears on the whole satisfactory. Bank financing remains easily accessible. Indeed, in terms of volume, outstanding bank loans to businesses are rising at a faster pace in France than anywhere else in Europe, posting growth of 4.5% year-on-year at end-November 2015, compared with +2.1% in the United Kingdom, +1.0% in Germany, 0.0% in Italy and an average of +0.9% for the euro area.
[1] Based on the DXY, which is measured by the US dollar against a basket of major currencies.

Even if it were possible, going back to the ECU would present major disadvantages compared to today’s euro: until the euro was introduced, France did not actually participate in decisions on interest rate levels and had to follow German monetary policy; the franc was at the mercy of speculative attacks from the financial markets that drained our currency reserves as we saw in the 1992-1993 period. The euro was introduced to solve these problems. Today, the euro is alive and well. It is the currency of 340 million Europeans, is recognised worldwide and is trusted by the people of France. Almost 70% of French citizens are in favour of the euro because it protects their purchasing power, with prices that increase three times less rapidly than previously; because it makes borrowing easier, with interest rates that are 1.5% to 3% lower; and because it safeguards the value of their savings. Finally, I would like to add that the Eurosystem has not modified its sovereign debt purchase programme in relation to France’s presidential elections. The distribution of monthly purchases between the various countries is based on the ECB’s capital allocation principle. 1/1  BIS central bankers' speeches
Caleb M Fundanga: Developments in the Zambian banking sector Opening remarks by Mr Caleb M Fundanga, Governor of the Bank of Zambia, at the official opening of the Stanbic Bank Zambia Limited, Mulungushi branch, Lusaka, 24 November 2009. *  *  *  •  Members of the Board of Directors, Stanbic Bank Zambia Limited  •  Stanbic Bank Zambia, Managing Director, Mr. Joseph Chikolwa  •  Management and staff of Stanbic Bank Zambia  •  Distinguished Invited Guests  •  Members of the Press  •  Ladies and Gentlemen  Allow me to begin by thanking the Stanbic Bank Zambia Limited Managing Director Mr Joseph Chikolwa for inviting me to this occasion which marks the official opening of the Stanbic Bank Zambia Limited Mulungushi Branch. As the regulatory authority for the banking sector, the Bank of Zambia is pleased to be associated with achievements of institutions that we regulate, particularly where these developments lead to increased access to banking services as well as convenience for the Zambian public. It is also encouraging to see banks expanding their services to areas outside the central business district in order to bring their products and services to their customers’ door step. This is no doubt a strategic move that confirms that there are enormous opportunities here, which the bank can benefit from despite the stiff competition.

In fact, on 10 July, 2009, I was privileged to participate at the “Foundation Stone Laying” ceremony for the multi-billion Stanbic Bank Zambia Limited new Head Office building. I therefore, commend the bank for its relentless effort in trying to modernise its facilities and expand its network. Allow me to conclude by appealing to all banks and other financial institutions to explore ways of enhancing the efficiency in service delivery. By enhancing efficiency, banks will be capable of offering more affordable banking services. This has the potential of drawing a larger number of Zambians to the financial system resulting in an expanded banking clientele for the benefit of both the banks and the economy. This will go a long way in complementing the Government and the Bank of Zambia’s efforts in addressing the various weaknesses in the financial sector as well as to guide efforts for realising the vision of a stable, sound and market based financial system that would support the efficient mobilisation and allocation of resources necessary for economic diversification and sustainable growth. In the recent past, the Government has adopted prudent fiscal policies that enabled the private sector to access more credit from the financial system. In line with this, the yields on Government securities have drastically reduced with the 91 days Treasury bill rate dropping to 7.88% in the latest auction while inflation has also trended downwards to 12.3% in October. Some players have responded positively to these market movements by reducing their lending base rates.