samchain/econo-pairs-v1 huggingface dataset:
As it turned out, the three largest commercial banks reported record profits in 2006 and ended the year with their strongest capital adequacy ratios since the Basel Accord went into effect, as well as building up very strong liquidity. In the autumn the banks announced that they had completed refinancing of all their loans maturing that year and virtually all their 2007 maturities, thereby dispelling doubts about their ability to refinance outstanding debt. The liquidity risk that loomed in the first half of 2006 was a thing of the past. In their refinancing arrangements the banks rested the EMTN market that had been their main source of capital and successfully tapped others, mainly in the US but also in Australia and Japan. Some have now successfully returned to the EMTN market. The first signs of a change in foreign investor sentiment towards the Icelandic banks appeared in higher CDS spreads for their bonds in secondary markets, which had been in the range of 0.1 to 0.15%. They began to inch up late in 2005, rose sharply in the first half of 2006 and peaked around  2  BIS Review 60/2007  mid-year close to 0.8%. At that time, this trend was very much at odds with CDS spreads on issues by comparable banks in other countries. Towards the end of last year spreads began to decrease again and have narrowed steadily to only marginally higher than before the market turned uneasy at the end of 2005, at near 0.2% to 0.25%.

A natural explanation is that demand has been weak and uncertain. Our ordinary Business Survey, which was published last week, confirmed the picture that many companies currently perceive the situation as relatively uncertain and that they are so far cautious in implementing price rises. 2 Although there are some signs that price increases have been held back by an increase in competition, it is nevertheless reasonable to expect faster price increases and higher inflation when economic activity strengthens again and demand increases. In addition to inflationary pressures, developments in housing prices and household debt – and not least the counter-measures needed and their consequences – comprise an important, but difficult to assess, domestic condition for monetary policy. One should bear in mind the fact that experiences from other countries point to a high and growing indebtedness sooner or later having serious socio-economic consequences, but there is no clear limit as to when the situation becomes unsustainable. If one looks at the information available on indebtedness among the households taking on new mortgages, which thus in many respects comprise the purchaser side of the housing market today, I think there is reason for concern. On average, these households take mortgages equivalent to more than 350 per cent of their disposable incomes. The interest rates they pay on these mortgages are very low in an historical and an international perspective. This is partly due to the fact that a very high percentage of new Swedish mortgages are taken at variable interest rates.
What will inflation be like over the next decade, after the current bout of high inflation is tamed? A fair guess is that we are likely to see more recurrent bouts of higher price increases compared to the last two decades. There are four structural factors underpinning this prognosis: supply chain developments; labour market dynamics; energy transition; climate change impacts. First, the ongoing reconfiguration of global supply chains is likely to mean higher costs and hence prices, at least over the medium term. Following the disruptions caused by the pandemic and the Ukraine war, there is now heightened awareness of supply chain vulnerabilities. Countries and companies are focusing on building resilience in their supply chains through near-shoring and supply diversification, even at the expense of cost efficiency. This will increase prices in the short term and may have an inflationary impact over the medium term as supply chains reconfigurations are complex and take time. Second, we may be facing a structural shortage in global labour supply that could put upward pressure on wages, lifting prices across the board. The pandemic seems to have shifted employee preferences about working conditions and job satisfaction, prompting some to choose jobs in the gig economy or to stay home, thereby reducing hours worked or labour force participation rates. There is also a widening skills gap across many sectors of the global economy— from healthcare to digital industries – that could result in persistently high vacancy rates.

Maria Merian, one such famous artist from the 17th century, was recently celebrated for her works at an exhibition at Buckingham Palace last October. Merian’s work which featured detailed drawings of plants and insects are preserved to this day in private and academic collections all over the world. I confess I knew nothing about Maria before this week. Having now seen specimens of her incredible body of work, I can only imagine the sensation she would have created in her time with the quality and eye for detail that brought her drawings to life – and on a subject like insects, of all things, which were her passion. They are immensely, strikingly beautiful. We hope the artists of ‘Nature Nurtured’ will receive the same appreciation. The artists in this exhibition do much more than record what anybody with a handphone can manage these days. They immerse us in the natural wonders that surround us, from the bustling cities to the more distant hinterlands. Whatever the setting, every one of the artists has a visual story to tell, informed by research and many hours spent to observe and understand the subjects of their artistic creations. These are not just snapshots, in many ways they tell us as much about the artist as they do their subjects. If people centuries ago could be thrilled by pictures of insects, then surely these artists can reignite a deeper appreciation in all of us of our environment.
Looking forward, roles of Asian banks as intermediary could be diminished on the back of the growing capital markets and shadow banking, which includes not only traditional ones like asset management companies and savings cooperatives, but also more modern ones like crowd-funding and peer-to-peer lending. Capital account liberalization will also lead to asset diversification abroad. Banks’ funding sources are likely prone to be more vulnerable and volatile, with the increasing interconnectedness between banks, non-banks and capital markets. After many years of consolidating our financial systems after the Asian financial crisis, technology could fragment our financial systems in an unprecedented way. Regulatory arbitrage could lead to pockets of vulnerability, particularly in the less-regulated or unregulated areas of shadow banking. Ladies and gentlemen, the need for rapid transformation in Asia is not limited to only banks and financial institutions. Changing technology, changing demographic structure, and changing global operating environment also necessitate that Asian businesses transform themselves to be able to compete in the new environment, where productivity is key. In addition, they need to improve their risk management and immunity to be able to cope with increasing volatility and uncertainties of the modern world. It is also crucial that Asian banks and businesses understand developments in the society at large that could affect their operating environment, chief among these is income inequality.

Behaviour and culture influences operations at almost every levels within an organisation, ranging from decision making, strategic positioning, as well as risk appetite and risk taking. The risk-reward incentive structure has to focus more on long term gains rather than short-term profits, and the design of compensation scheme should fully reflect that aim. The strong culture of risk awareness and good governance should be rigorously instilled such that it becomes organisational culture and natural behaviour of bankers. Culture of transparency along with proper check and balance also contribute towards a solid foundation of banks’ immune system. The other area of immunity that will be key for financial institutions is immunity against cyber security risks. Everyone, every bank, every system must be prepared and ready to both prevent and respond effectively to cyber security risks. Incidents of cyber attacks, no matter how small, can undermine the integrity of the financial system. To boost the immune system, it is imperative that cyber resilience and cyber security be given the highest priority. Ladies and gentlemen, Financial stability could not exist without social stability, which brings me to my third and last point that requires collaboration from financial institutions. The economic benefit of growth has to be inclusive and financial system can play significant roles in promoting inclusive growth, starting with financial inclusion. The people at large must have access to basic financial products including payment, savings, credit, and insurance. The pricing has to be lower, choices wider, and access better.
Monetary policy As I mentioned, the work of constructing a new policy with a flexible exchange rate had to start from scratch in the fall of 1992. But in a matter of months the Riksbank had prepared a new target for monetary policy. The annual rate of CPI inflation was to be held at 2%, with a tolerance interval of  1  Procedures to handle the same kind of problems exist in e g USA, England and Norway. BIS Review 85/2000  2  one percentage point up or down. The 2% target roughly matched the prevailing rate and was also considered to be well in line with the ambitions in other countries in Europe. Since 1993 the way the Riksbank works has been developed quite a bit. This applies to our internal procedures, the intellectual policy framework and our external communication. Since this has been my primary task during the last five years, I could go on speaking about it for ages but I shall confine myself to a set of issues related to the role of the inflation forecasts and policy rules. In my opinion, the focus on the combination of a specific, symmetric target and published forecasts set by the policymakers has been important for monetary policy’s credibility. By consistently presenting our forecasts and acting accordingly, we have created greater freedom of action than would otherwise have been feasible. It has been a short-cut to credibility. My favourite example is the autumn of 1998.

The Riksbank do get suggestions that we should change to an inflation target similar to the one the ECB uses and aim for 0–2% in a medium-term perspective. In practice, this could very well lead to the same decisions concerning the repo rate as the model we have chosen and the difference should therefore not be exaggerated. That I personally prefer our approach has to do with at least four different aspects. Besides Goodhart’s argument that it helps us staying on track, doing what we should to keep inflation at 2%, there are three more arguments. 1. The more precise policy formulation has been beneficial for our thinking and the way it has developed, an aspect that does not usually get a mention in the literature. A clear framework kicks. Good and clear arguments that can be presented openly are needed for departing from adopted principles. 3  BIS Review 85/2000  2. Aspects of communication also favour our approach, with published forecasts and a simple policy rule. When explaining on television to the general public or to the audience at a labour conference in the north of Sweden, I can rely on exactly the same arguments as when I face Professor Lars Svensson at Stockholm University. 3. The clearer the policy, the easier it is to assess or evaluate. These assessments are an important part of the efforts to generate broader respect for what we do and healthy for our accountability.
A lot of our advisors asked why banks cannot behave in the way of best interest to the bank, doing whatever they wish. This, of course, applies to many other things that we do not allow banks to do and the answer really is that we still wish to see “banks doing other services”, rather than “other businesses also offering banking services”. This is because banks are critical organs of an economy and they should be separately supervised and examined such that they are safer than other activities which might be allowed to fail more easily. 3  BIS Review 86/2000  Virtual banking, defined as banking without counter services, is still not allowed. The only thing that we have decided in this new and expanding area of the economy is that if the e-commerce service takes deposits, a banking license must be sought before the services could be offered. But like many things in life, it is not where you are, but how fast you are going, how fast you are catching up that is more important, and in this respect we are working assiduously to formulate the new rules so that we can join the leaders in the change to the New Economy - new rules with the reliability that is always so necessary in any kind of good banking.

As this has been the system for a very extended length of time, one ends up with a lot of people being paid a lot and doing very little. As such, people don’t move on in jobs or move out of jobs if they are not competent as might happen with a proper pay system. However, a problem identified is halfway solved as the saying goes. And I am happy to note that outsiders and stakeholders who have had to work with the Bank of Thailand lately are very receptive to the change and are saying much nicer things about us and our work. I also sense that the staff are seeing that things are better and will probably give enough support to the restructure. BIS Review 86/2000  4  Ladies and gentlemen, To get back to the topic of the economy: two years ago I said that we would reduce interest rates as the basic strategy for saving the country. This we have done and now the 14-day RP, the monetary instrument we use to transmit monetary policy to the general economy, is at only 1.5%. The lowest lending rate is 7.5% - what a difference from when I talked to you two years ago. The currency is now at around 42 baht to the dollar, which some people consider weak. Yet when compared to the 22 competitor countries, it has not much depreciated in the last two years.
His work prefigured the neural networks that are used today in applications such as cancer diagnosis and self-driving cars and as yet undiscovered new technologies of tomorrow. And the Turing Test, a method for determining whether a computer can exhibit intelligent behaviour indistinguishable from a human being, remains the benchmark for judging true artificial intelligence. Turing also leaves a very different, though no less important, legacy. In March 1952, he was convicted of Gross Indecency for his private relationship with a man, avoiding prison only by submitting to chemical castration. His security clearance was revoked for no reason other than his homosexuality, bringing to an end a promising post-war career as a consultant for GCHQ. He died shortly thereafter, on 7 June 1954, from cyanide poisoning. In 2009, the then Prime Minister Gordon Brown made an official posthumous apology on behalf of the “government and all those who live freely thanks to Turing’s work” for his “utterly unfair” treatment.6 Turing received a royal pardon for his conviction in December 2013 and in 2017 the “Alan Turing Law” was passed, pardoning the nearly 50,000 men cautioned or convicted under now-rescinded historical legislation that outlawed homosexual acts. In the UK today, we are fortunate to live in more inclusive times.

1  The Fed’s policy objectives, as stated in Section 2A of the Federal Reserve Act, are that “the Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.” See www.federalreserve.gov/aboutthefed/section2a.htm. 2  See “The Fed’s Evenhanded Policy”, by Randall W. Forsyth, Barron’s, Aug. 23, 2014. 3  For the latest reading of the Dallas Fed’s alternative measure of trimmed mean PCE inflation, see www.dallasfed.org/research/pce/index.cfm. 6  BIS central bankers’ speeches  And this, indeed, is happening. U.S. companies have used this bond market and borrowing rate hiatus from normalcy to pile up cheap, nearly cost-free balances. This cheap and abundant monetary fuel, with the proper incentives from the fiscal and regulatory authorities, can be deployed to the benefit of company stakeholders (shareholders and employees) to enrich and grow the economy. In this sense, we are unique in the world. Mr. Ambassador, American businesses are rich and muscular. And those muscles are being flexed. For example, just two days ago, the Institute for Supply Management (ISM) released its Purchasing Managers Index. The data surprised most all forecasters to the upside. Activity was broad based: 17 of 18 industries surveyed reported growth in August, and new orders reached a 10-year high.
The first challenge is posed by data. As any statistician knows, the output of a model is only as good as the quality of data fed into it – the so-called “rubbish in, rubbish out” problem. Of course, there are various techniques for dealing with this problem, but fundamentally, if there are problems with the data used – be they incomplete, inaccurate or mislabelled – there will almost certainly be problems with the outcomes of the model. AI/ML is underpinned by the huge expansion in the availability and sources of data: as the amount of data used grows, so the scale of managing this problem will increase. Further, there are complex ethical, legal, conduct and reputational issues associated with the use of personal data. For example, are data being used unfairly to exclude individuals or groups, or to promote unjustifiably privileged access for others? Recent examples amongst retailers suggest that overly-personalised marketing can seem plain ‘creepy’. These questions require complex answers that are beyond my philosophical pay-grade. From a regulatory perspective, they are perhaps more directly a primary concern to the FCA given its statutory objectives of consumer protection, but are also potentially relevant to safety and soundness, not least through their impact on reputation and, in turn, confidence. The data challenge is not limited simply to its selection and processing – but also to its analysis, and how inferences are drawn.

Third, the extent of barriers - regulatory or otherwise - to adoption and what techniques and tools can enable safe use of this technology. Fourth, an assessment of firms’ perceptions of the risks, to both their own safety and soundness as well as to their conduct towards customers and clients, arising from AI/ML. And fifth, the extent to which the appreciation of these risks has given rise to changes in risk management, governance and compliance frameworks. The full results of the survey will be published by the Bank and FCA in Q3 2019, and are likely to prove insightful. Responses were returned to the Bank in late April, so some early indicative results are emerging. Overall, the mood around AI implementation amongst firms regulated by the Bank of England is strategic but cautious. Four fifths of the firms surveyed returned a response; many reported that they are currently in the process of building the infrastructure necessary for larger scale AI deployment, and 80 per cent reported using ML applications in some form. The median firm reported deploying six distinct such applications currently, and expected three further applications to go live over the next year, with ten more over the following three years. Consistent with the McKinsey survey, barriers to AI deployment currently seem to be mostly internal to firms, rather than stemming from regulation. Some of the main reasons include: (i) legacy systems and unsuitable IT infrastructure; (ii) lack of access to sufficient data; and (iii) challenges integrating ML into existing business processes.
Bond yields have, consequently, been low by historical standards, a phenomenon which has substantially facilitated private investment. This in turn, will not fail to have a highly positive effect on growth. A third benefit of the Euro is the removal of exchange rate risk and transaction costs for intra Euro area trade. This has promoted trade integration among Euro area countries without diverting trade with other countries. Indeed, it appears that business cycles tend to be more and more synchronized over time, an evolution which allows for greater efficiency and  BIS Review 115/2007  1  sustainability of the common monetary policy. This shows that monetary union is a self sustaining process: real convergence is to some extent a result, as much as a precondition of economic integration. Another benefit of the Euro is the boost it gives to financial integration in Europe. In many segments, European financial markets have reached the depth and liquidity which, up to now, were the preserve of dollar markets. This stimulates productive investment, helps in restructuring and, more generally, allows a better allocation of savings and sharing of risks. The current market turmoil is a clear test for this achievement and while the problems affecting the Euro markets have been comparable to those affecting the other major markets, the strength of the Euro shows, to some extent, that it has become a safe haven in our globalized financial world. The Euro is becoming extremely attractive, as a vehicle, a transaction, an investment and a reserve currency.

Robotisation has put the brakes on offshoring production from high-cost countries. So far there are few signs that the pandemic will lead to more permanent changes in global trade. Despite some disruptions in global supply chains and goods transport, trade in goods has held up well. Following a temporary decline, trade picked up through 2020. Travel and tourism are among the industries profoundly affected by the pandemic. Much of the tourist traffic is likely to rebound once we can cross borders freely again, but many have discovered this past year that online meetings are also an effective alternative. This may result in less travel activity than before. Environmental considerations suggest the same. During the pandemic, national governments have had to focus primarily on giving their own population the best possible protection against serious health consequences. At the same time, this past year has clearly demonstrated the importance of crosscultural and cross-border cooperation. Thanks to an extensive international research effort, effective vaccines could be quickly rolled out. Let’s hope that it is this experience that we carry forward. In the long run, all countries benefit from open borders, common standards and international cooperation. 7  A MORE ACTIVE FISCAL POLICY ABROAD  NORGES BANK  During the pandemic, economic support measures have been massive. While both monetary policy and fiscal policy action was quickly taken, fiscal policy took the lead (Chart 6). This was the case everywhere the pandemic has raged, not only in Norway.