samchain/econo-pairs-v1 huggingface dataset:
The probability that the cumulative real return over a period of 15 years will be negative would also increase somewhat, although not markedly. I have included this comment because these kinds of assessment are central to the choice of investment strategy for a fund such as the Petroleum Fund. Long-term plan The Petroleum Fund is a very long-term savings plan. The notion of a fund arose in the early 1980s, and the Fund was adopted in 1990 before the government had received any positive net cash flow from petroleum activities. Up to 1995, government investments in petroleum activities were so large that all the revenues were used for investment and to cover budget deficits during the recession around 1990. Now we have ten years of a rapidly expanding Fund behind us. Ahead of us, we still have at least 50 years, and perhaps more, where the Petroleum Fund or the Pension Fund will, I hope and believe, be an important part of the Norwegian economy. Every year,  10  The calculations are based on the market assumptions that formed the basis of our most recent review of the investment strategy for the Petroleum Fund. 7/8  the Storting will have to decide the scale of petroleum revenue spending over the central government budget. There is a long time ahead before the savings plan has been carried through. 8/8

It is because the main objective of the monetary policy is to maintain price stability in the economy, which is considered to be the main prerequisite for acceleration of the economic activity and for accomplishing sustainable economic growth. Hence, the adequate measurement of inflation, which is an issue that has been interesting for the central banks for years, and which is even more important when inflation rates are low, is so challenging and crucial for the central banks, i.e. for the monetary policy decisions. Non-expert public listens to the information about the inflation indicators. It neither wants nor it is able to go into the numerous statistical problems when measuring inflation. However, it senses the possible discrepancies between the officially announced indicators and the real ones since that public confronts its nominal and real purchasing power on a daily basis. On the basis of that confrontation and daily market-based check-up of the official statistical information, confidence or lack of confidence in the authorized institutions is created, influencing positively or negatively the behavior of all market participants. The authorized institutions are responsible for making precise the differences between the nominal and the real aggregates, for selection of more precise statistical methods and techniques for measuring inflation, simultaneously as transparent and as understandable as possible for all market participants.
Our knowledge is neither complete nor constant. At the other end of the spectrum, rational optimising behaviour can, in principle, generate a policy reaction function which takes into account uncertainty about the economy and the process of learning about economic relationships. Such a reaction function would describe how a central bank would respond to any conceivable shock in the future, and explain how estimates of parameter values and the weights attached to particular models would be updated. But even in very simple examples the cleverest economists find the solution of those decision problems almost impossibly complicated. Fully rational optimising behaviour is unreasonably demanding. In the words of Gerd Gigerenzer (2001), optimisation is for “Laplacean demons” not human beings – a reference to an imaginary being that “…could condense into a single formula the movement of the greatest bodies of the universe and that of the lightest atom…”10 Both approaches, for very different reasons, end up with a monetary policy rule. The simple rule is not credible because we do know some things and we can learn from the past. The complicated rule is not feasible because it places unrealistic demands on our ability to process information. Given the lack of further guidance from economists as to how to make decisions, central banks have often retreated to the position that setting interest rates requires the exercise of unfettered discretion. But this has problems of its own.

One approach to this challenge would be for the Bank to return to basics and improve the three channels of financial intermediation, namely, banking, equity and debt, through a number of measures. First, the Bank could increase investment in the financial infrastructure in Asia. Just as physical infrastructure, such as airports and highways, facilitates the movement of people and goods, financial infrastructure, such as the payment and settlement systems for the banking and securities sectors, facilitates the safe and efficient movement of money. The importance of a robust payment and settlement system in this region is underscored by the events of 11 September. Secondly, the Bank could expand the technical assistance programme to assist economies in restructuring the banking sector. Small and medium-sized enterprises employ the most workers in Asia and they are mostly dependent on bank financing. The banking sector in Asia, devastated by the Asian financial crisis, has not fully recovered. Banks understandably are adopting a very conservative lending strategy towards companies with a lower credit rating, such as Small and Medium-sized Enterprises. The Bank’s assistance in speeding up the banking sector reform would help SMEs to get back on their own feet, thereby reducing unemployment and poverty. Thirdly, the Bank could expand assistance in building up the institutional capacity of individual economies to improve corporate governance in the private sector. Emphasis should also be made to improve the auditing, disclosure and transparency standards of publicly-listed companies.
Financial sector debt in  advanced economies  advanced economies Per cent of GDP 400  Japan UK Mature markets  US Euro area Per cent of GDP 250  350  230 210  300  190 170 150  250  130 Excluding financial sector debt  110  200  90  Including financial sector debt  70  150 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017  Source: IIF Global Debt Monitor. 50  Source: IIF Global Debt Monitor. Moreover, debt in emerging markets grew much faster than GDP between 2011 and 2016. Chinese debt-to-GDP ratios have risen particularly sharply and are now very high. Whilst the growth rate of the aggregated global debt stock has moderated more recently, the level remains high by historical standards – as one might expect in a low for long world. While this may not in itself cause or presage a correction, it could well amplify one, making the global economy more vulnerable to adverse macro-economic shocks26. 26 Research suggests that it is the growth rate of debt rather than its actual level that is the leading indicator of financial  crises. Bank of England work based on 130 downturns in 26 advanced economies since the 1970s suggests that a rapid build up of debt is the best early warning indicator of a recession. See for example Bridges et al (2017), Carney (2019b) and Schularick and Taylor (2012).

20 Current UK household debt is twice the 2002 level in aggregate but debt servicing cost is half so the debt  service ratio is unchanged 21 For example, micro data studies from the UK, US, Denmark and Norway have all found statistically significant correlations between higher levels of household debt and the size of consumption cuts in a shock. For example Andersen et al (2016), Kovacs et al (2018), Dynan and Edelberg (2013) and Fagereng and Halvorsen (2016). 10  All speeches are available online at www.bankofengland.co.uk/news/speeches  10  One might expect to see similar effects in the corporate sector. And indeed, Bank staff estimate that the share of corporate debt owed by highly leveraged companies has now pretty much grown back to pre-crisis levels. 22  This is a risk because we know that more leveraged firms cut back on investment and employment by more in a downturn.23 All else equal therefore – and crucially, absent policy – a low for long world is likely to be one with a less resilient and riskier financial system and a more leveraged real economy that, as a consequence, is more vulnerable to macro-economic shocks. Financial stability challenges of low for long: the risk of more severe downturns And this brings me to the third challenge of low for longer for financial stability – the risk that in such an environment, economic downturns will on average be more severe.
Monetary policy decision  I come now to our monetary policy decision. We have decided to tighten our monetary policy further and to raise the SNB policy rate by 0.5 percentage points to 1.5%. In doing so, we are countering the renewed increase in inflationary pressure. It cannot be ruled out that additional rises in the SNB policy rate will be necessary to ensure price stability over the medium term. Page 2/6  Zurich, 23 March 2023 Thomas Jordan, Martin Schlegel and Andréa M. Maechler  News conference  To provide appropriate monetary conditions, we also remain willing to be active in the foreign exchange market as necessary. For some quarters now, the focus has been on selling foreign currency. The SNB policy rate change applies from tomorrow, 24 March 2023. Banks’ sight deposits held at the SNB will be remunerated at the SNB policy rate of 1.5% up to a certain threshold. Sight deposits above this threshold will be remunerated at an interest rate of 1.0%, and thus still at a discount of 0.5 percentage points relative to the SNB policy rate. Inflation forecast  I would now like to address the current development of inflation. Inflation has risen again since the beginning of the year, and stood at 3.4% in February. It is therefore still clearly above the range the SNB equates with price stability. The latest rise in inflation is principally due to higher prices for electricity, tourism services and food. However, price increases are now also broad-based.

For some quarters now, we have indicated that in order to ensure appropriate monetary conditions, we would consider selling foreign currency in addition to policy rate increases. In the fourth quarter of 2022, we sold foreign currency worth around CHF 27 billion. Foreign currency sales, together with the increase in the SNB policy rate, contribute to the tightening of monetary policy. They help to dampen imported inflation. We will also sell foreign currency in the future if this is appropriate from the monetary policy perspective. However, the development of inflation and thus the outlook for monetary policy are currently highly uncertain; therefore, we conversely also remain willing to buy foreign currency if necessary, i.e. if there were to be excessive appreciation pressure on the Swiss franc. Ladies and gentlemen, I now hand over to Martin Schlegel. Liquidity assistance loans  Ladies and gentlemen, allow me to explain how the SNB is providing liquidity to Credit Suisse and UBS. The liquidity is being granted on three levels. First, both banks have unrestricted access to the SNB’s already long-established facilities. The banks can obtain liquidity against high-quality securities under the liquidity-shortage financing facility (LSFF). This serves to bridge unexpected liquidity bottlenecks in the short term. Furthermore, the SNB provides emergency liquidity assistance (ELA). ELA loans are covered by collateral in the form of Swiss mortgages transferred to the SNB or pledged securities. Second, Credit Suisse and UBS have access to additional liquidity assistance (ELA+).
Conclusion Let me say in conclusion that the assessment of monetary policy is an important part of an independent central bank’s endeavour to be open and clear and of the endeavour to attain and maintain confidence in the inflation target. In Sweden, we publish a substantial amount of information that enables the general public to examine our analyses and to understand how monetary policy decisions are made. The developments in the economy in recent years have given rise to many important issues, not only for us decision-makers, but also for those who assess us. We are several central banks who have faced structural, unforeseen factors contributing to keeping down inflation, while monetary policy is expansionary, the economy is showing robust growth, and household borrowing and asset prices are rising rapidly. An inflation rate lower than the target level need not be interpreted in this situation as due to excessively tight monetary policy and as a failure for monetary policy. It is interesting to note that this has not been the conclusion in the most recent assessment of Norges Bank. Developments in recent years have raised issues which are extremely important in the discussion and which require improved analysis. If we were to aim at keeping inflation on target at any cost, without taking into account developments in the real economy, what would the consequences be of trying to stimulate demand further so that inflation comes closer to the target?

2  BIS Review 25/2006  We thus endeavour to attain the inflation target within a two-year time perspective, under normal circumstances. In certain cases, however, we may need to have even greater flexibility than the twoyear perspective allows. If the economy were to suffer very large supply shocks, for instance, in the form of structural changes that have a major effect on inflation, or if extreme situations such as war or natural disasters occur, the process of bringing inflation back to the target may need to take even longer to avoid excessive strain on the real economy. In this type of situation it would be even more important that there was confidence in the inflation target. However, flexibility must not be allowed to undermine the nominal anchor. If confidence were to fail, we would be forced to act more strongly and would not have the same possibility to consider the real economy. Thus, the objective of monetary policy is to maintain price stability. However, it is possible to give consideration to the development of the real economy. This does not mean having a target for growth or employment. Instead, this type of consideration is made possible by the way in which we have chosen to formulate the principles for attaining the inflation target. However, it assumes that there is sufficient confidence in the inflation-targeting policy.
The TFSME is designed to help bridge the supply of credit to UK firms through the Covid-19 disruption and reinforce the transmission of the MPC’s reductions in Bank Rate. It does this by providing banks with cheap funding over a four-year term (rising to six years for loans guaranteed under the BBL scheme). There has already been £ of lending from the scheme – a far more rapid pace than the previous TFS (Chart 12). 10  All speeches are available online at www.bankofengland.co.uk/news/speeches  10  Chart 11: UK investment grade bond issuance  Chart 12: TFSME and TFS lending compared  $ bn  Loans made through the TFS (starting September 2016)  2020 2016-2019 average  Loans made through the TFSME (starting April 2020)  45  19 Mar: Further BoE package  £ bn 40  50  35  45 40  30  35 25  30  20  25 20  15  15  10  10  5  5 0  0 Jan  Feb  Mar  Apr  0  5  10  May  Source: Refinitiv — Deals Business Intelligence and Bank calculations. Data show UK private non-financial corporate issuance in sterling, euro and US dollar.

It is against this background that we have, for example, resisted suggestions that we raise the volume of Exchange Fund paper issuance in order merely to satisfy the market’s appetite. We would much prefer to see other issuers coming forward. We are anyway constrained by our currency board arrangements only to increase the outstanding quantity of Exchange Fund paper to reflect interest payments or in response to enduring inflows into Hong Kong. Another aspect of debt market development which merits some discussion is the potential for retail activity. It is worth reminding ourselves that, although in several countries retail investors have historically been loyal direct holders of government or municipal paper, invariably for long-term investment rather than trading, only in the United States has there been much direct retail interest in the corporate paper market. We have been happy in Hong Kong to provide the means for the small investor to access Exchange Fund notes or Mortgage Corporation notes by listing them on the Stock Exchange, but one should acknowledge that bond markets as a whole tend to be dominated by professionals, trading on an over-the-counter basis, and we should not be surprised, therefore, if retail activity is relatively modest. This does not mean, however, that the man in the street has no need in his wealth portfolio for instruments in this section of the risk-reward spectrum.
In Spain, neither conduits nor SIVs (Structured Investment Vehicles) were developed, because the Bank of Spain obliged banks to consolidate these vehicles and required capital of them for the attendant exposures, which eliminated at root any incentive to create these off-balance-sheet vehicles. Accordingly, Spanish banks had hardly any toxic assets. They did not use the originate-to-distribute model to distribute credit risk but pursued a retail banking strategy, in close proximity to bank clients, households and firms alike. On the liability side, when the mistrust and uncertainty worsened, European banks began to suffer the consequences, and their difficulties in raising funds increased. Nonetheless, the long-dated maturities on these products in the past (around 10 years) meant that Spanish banks did not undergo pressing short-term liquidity problems. The financial crisis passed through rapidly to the real economy, with output slumping heavily in late 2008 and over much of 2009. The economic downturn in Spain, and the subsequent recession, impacted banks and progressively raised their doubtful assets and, therefore, their provisioning requirements. Their volume of activity, and new lending in particular, decreased, and the high profitability of Spanish deposit institutions seen so far, began to be eroded. The impact of these developments was uneven, impacting with greater force those banks that had most grown in the expansion and, in particular, a group of savings banks that had concentrated a significant portion of their lending portfolio in financing real estate developers.

Timothy F Geithner: Overview of the US financial system Remarks by Mr Timothy F Geithner, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Bond Market Association’s annual meeting, New York, 20 April 2005. *  *  *  Thanks for giving me the opportunity to join you today. The U.S. and the world economy now confront the conjunction of several different transitions, which will have important implications for the U.S. financial system. Among the most important of these transitions are: -  The approaching demographic pressures on fiscal resources, which will hit most major economies at a time when underlying fiscal positions are still likely to be in substantial deficit. -  The disposition of the global imbalances reflected most conspicuously in the U.S. current account deficit. -  The inevitable evolution in the exchange rate regimes of those countries that have been actively targeting their nominal exchange rate against the dollar to a system where there is more variability in their bilateral and real effective exchange rates. -  The transition from a long period of exceptionally low short-term nominal and real interest rates to levels more appropriate to the present circumstances. The slope and shape of this path toward equilibrium is necessarily subject to considerable uncertainty, and will depend on how the outlook unfolds. These are all types of disequilibria. They can be sustained for a time, but not indefinitely. The imbalances in our fiscal and external positions could be diffused gradually and smoothly.
But amidst all this frenzied activity, the most pressing question is how to put all of this money to work in a productive way that appropriately reflects climate factors, but also continues to deliver the desired risk and return profile for investors. 36  https://www.ft.com/content/247f4034-4280-318a-9900-87608a575ede 16  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  16  Chart 14: number of launches of new  Chart 15: AUM and flows into sustainability-  ‘climate aware’ funds  rated open ended funds  Source: Morningstar  Source: Morningstar, Sustainalytics, and Bank calculations. The nirvana is so-called ‘ESG integration’ – when climate is just one more risk factor in an otherwise fully integrated risk/return framework. Chart 16, drawn up by the Chartered Financial Analyst Institute and Principles for Responsible Investment, illustrates the sort of processes required, working outwards from research in the centre through security-level analysis to portfolio construction on the outer rim. It’s an impressive story – but the sheer complexity of the picture also rams home just how comprehensive full integration really is. Everyone may be talking about it, but few are actually doing it – yet at least. If that’s the ultimate goal, the challenge facing asset managers today is how to build robust but consciously partial or second-best investment strategies that bridge between investors’ desire to express a particular view on climate risk and return, and the practical limitations of today’s climate disclosures, climate modelling and asset universe.

Financial markets and institutions can help provide insurance against those risks, but great care is needed to ensure such cover is provided appropriately: too little, and households, companies and lenders will go under-covered; too much, and insurers may be unable to follow through on their commitments.9 But the most important force for internalising these externalities will be public policy – on climate regulation, carbon pricing and taxing, and legal liability. Such policy ‘privatises’ the social cost on specific companies and sectors of the economy, and creates powerful opportunities for those first to innovate climate-positive technologies. I will not have more to say on the priorities for future policy in this area today,10 but it is safe to say that these steps will only intensify as governments follow through on the sort of mid-century net-zero commitments legislated in law by the UK last year, and recently by China. The second factor impeding financial market pricing of climate risk has been the long horizon over which that risk has historically been thought likely to crystallise. Financial markets do not have a great track record pricing such longer-term phenomena, particularly when their scale and incidence is also uncertain – a failing 8  To take just one example amongst many, ‘Make My Money Matter’ was formed by Richard Curtis and Jo Corlett to drive change in pension fund investment: https://makemymoneymatter.co.uk/.