samchain/econo-pairs-v1 huggingface dataset:
If we look at the performance of the banking industry over the last decade, the Asian financial crisis clearly marks a watershed. Between 1992 and 1996 our research indicates that the profitability of the average bank in our sample, measured by return on assets, improved by around 0.7 percentage points. It appears that this performance owed little to the macroeconomic environment of the time. Rather, it was due to improved performance at the individual bank level, driven by bank-specific factors such as more efficient operations and improving asset quality. In contrast, between 1997 and 2002 the average return on assets declined by more than 0.7 percentage points. This deterioration was largely driven by macroeconomic variables, with deflation contributing most to the worsening profitability. Bank-specific factors were less significant during this period in explaining both average performance and variations in performance across banks. 2  BIS Review 32/2003  It may seem somewhat obvious to say that the lower profitability of the banks over the last few years has been largely due to the poor economic environment. Certainly, as participants in the syndicated loan market, you will be well aware of the impact of the current sluggish state of the economy on loan demand and margins. But the conclusion does have important implications if we look to the future. If the profitability of the banks has gone down with the economy, equally it should go up with the economy as it improves.

Jacques Necker, who had been born in Geneva, was Minister of Finance under Louis XVI. After the French Revolution, Geneva began to evolve into an important wealth management centre. 1 In 1857, the first Swiss stock market was founded in Geneva, before those in Zurich and Basel. The Geneva stock market soon ranked fifth among European stock markets. Geneva remains one of the major world financial centres today, particularly when it comes to private wealth management. 2 The financial sector in Geneva is an engine for the regional economy. In 2014, around 120 banks were based in Geneva. The financial sector creates a significant part of cantonal value added and is a major employer. 3 A strong financial sector, such as that in Geneva, makes a substantial contribution to economic growth. It is therefore a crucial foundation, both for the regional economy and for the Swiss economy as a whole. A robust financial sector is also very important for the Swiss National Bank (SNB). The SNB interacts closely with the financial sector, and in particular with the banking sector. I will talk about this later. In my presentation, I will begin by explaining how the SNB and the financial sector are interlinked. Then I will discuss the importance of an independent monetary policy in providing stability as a long-term asset. However, in the short term, this long-term stability may generate costs. I will then explain the SNB’s current monetary policy and our reaction to international developments.
We consider that the provision of a cautious monetary stimulus,  2  BIS central bankers’ speeches  conditioned by the control of risk premiums and safeguard of financial stability, is major contribution the Bank of Albania can make to the stable and long-term economic growth in Albania. *** Based on the analysis of the information set out above, the Supervisory Council holds that the risks around the expected inflation trajectory remain balanced. On the demand-side, below-potential economic growth will continue to generate low inflationary pressures, while supply-side shocks are also expected to remain contained. At the end of discussions, the Supervisory Council decided to keep the key interest rate unchanged at 4.25%. This decision aims to create adequate monetary conditions for meeting the inflation target in the medium run. It also provides proper support to boost aggregate demand. BIS central bankers’ speeches  3

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As a result, the likelihood of a return to the zero lower bound is, in Chair Yellen’s words, “uncomfortably high, even in the absence of a major financial or economic crisis.”18 Against this backdrop, Chair Yellen has expressed her views on the Fed’s monetary policy implementation tools. She suggests that whenever possible, influencing short-term interest rates should be the Fed’s primary policy lever, but that enhanced forward rate guidance and asset purchases should be considered again if that conventional tool reaches its limit, as would be the case if a future economic downturn drove short-term rates back to the zero lower bound. This view is consistent with her 2016 Jackson Hole remarks, where she presented analysis making the case that the Fed’s use of forward guidance and asset purchases could improve macroeconomic outcomes on average in zero lower bound episodes, and indicated that she expected these tools to remain “important components” of the Fed’s policy toolkit.19 The FOMC itself has not made any formal decisions about the Fed’s long-run monetary policy implementation framework. However, minutes from a November 2016 discussion about potential choices of policy rates, operating regimes, and balance sheet policies indicate that a number of policymakers viewed expansion of the balance sheet as an “important tool” to provide macroeconomic stimulus in situations in which overnight interest rates were at their effective lower bound.20 This approach is consistent with the balance sheet reaction function described in the June addendum to the FOMC’s Policy Normalization Principles and Plans.

This interconnection, if broken down in its simplest form, has two possible outcomes that relate to financial stability. First outcome, the transmission mechanism of conventional monetary policy includes the ways interest rates directly influence the supply for credit for house purchases and indirectly influence the real economy through house prices3. In the history of conventional monetary policy decisions, the ECB, at times, responded to the presence of excessive credit in order to safeguard its price stability objective. In its August 2006 decision to increase interest rates, the ECB stated that the "stimulative impact of the low level of interest rates in the euro area has been an important factor behind the tendency for money and credit growth to strengthen". In the period of quantitative easing, monetary policy tools expanded to include, among others, targeted operations to stimulate bank lending to the real economy4. These are  2/3  BIS - Central bankers' speeches  linked to a threshold of the banks' loans to non-financial corporations and households. By recognising the impact this tool would have on housing prices, housing loans have been excluded from the this threshold. Given that monetary policy affects real estate developments, the role of macroprudential policy becomes important in addressing idiosyncratic vulnerabilities and as such the independence of macroprudential policy should be safeguarded, especially in a monetary union. The Second outcome is that, an increase in interest rates will increase the monthly loan payments.
This reflects the deceleration of the first quarter and the prospect of a smoother trajectory of sectors other than natural resources in the remainder of the year, partially offset by higher growth in mining. Partial second-quarter indicators show an ongoing deceleration of investment, but milder than earlier in the year. Private consumption, although receding somewhat, continues to show robust fundamentals related to labor market conditions and strong real wages, which should normalize as economic activity slows. Despite the slower growth of domestic demand, a lower copper price will result in a wider current account deficit this year, at 4.7 percent of GDP (table 2). Annual inflation is expected to return to the tolerance range once some transitory elements are reversed, hitting 3 percent during 2014. At the end of the projection horizon, this time the second quarter of 2015, it should stand at 3 percent. Core inflation will take somewhat longer to converge to 3 percent (figure 4). This forecast assumes that nominal wages will be adjusted in line with productivity and the inflation target. It also uses as a methodological assumption that in the projection horizon, the real exchange rate (RER) will remain fairly stable. This is based on the estimation that  4  BIS central bankers’ speeches  with the nominal exchange rate and currency parities in force today, the RER is in the range consistent with its long-term fundamentals (figure 5).

In the short term, however, these adjustments can lead to greater volatility in the real economy and financial markets as investment portfolios are adjusted to new conditions and spending plans are reviewed. I can responsibly say that our economy is well prepared to accommodate these changes in the international arena, emphasizing the contribution of our inflation targeting with floating exchange rate scheme, the strength of the fiscal accounts and the financial system as well as our sound external financing structure. All these elements allow us to be reasonably confident in dealing with the ups and downs of the external environment and mitigating its impact on the Chilean economy and the welfare of our population. In the first quarter of 2013, output increased 4.1 percent annually, 1.6 percentage points less than it did in late 2012. On the expenditure side, the slowdown of investment stood out. Part of this adjustment was expected, considering that a number of wide-ranging mining and energy projects are entering their final phase. There are also transitory elements relating to one-time imports of capital goods that are more volatile. Another portion of the adjustment has to do with our external scenario, where the world economy is expected to slow down, manufacturing industries are decelerating across the board and where, moreover, the copper price has fallen around 20 percent from the $ per pound it averaged in 2011. These factors have introduced greater caution in assessing new investments, so some of them have been postponed pending further clarity in the international scene.
Another feature of central bank legislation in other countries is legal independence, in the sense that the central bank’s use of instruments, primarily the key interest rate, cannot be overruled, whether by instruction or reversal. If the Norges Bank Act were being written today, it would probably include an objects section. As mentioned, much of the preparatory works is out of date so that the provisions of the Act of 1985 must be interpreted in the light of the current economic system. Moreover, Section 1 reads “[t]he bank may implement any measures customarily or ordinarily taken by a central bank”, and this is something that changes, as we know. The Act is thus flexible enough to provide a suitable framework also for the conduct of monetary policy today. It specifies, moreover, that Norges Banks sets the interest rates on its loans and deposits. Norges Bank’s responsibilities are also now well established through practice. The central bank is accountable Norges Bank has two parallel governing bodies. In addition to an Executive Board, appointed by the Council of State, it has a Supervisory Council appointed by the Storting. This is also shows the peculiar position of the Bank in the government administration. The direct link to the country’s national assembly reflects that the Storting under Article 75 (c) of the Norwegian Constitution “shall supervise the monetary affairs of the Realm”.

In fact, we can have world-class policies, but if we don’t have a culture where people feel comfortable bringing their whole selves to work, rules alone won’t get us to where we need to be. This is true of every element of diversity and inclusion. In a culture where taking extended leave damages your career prospects, a generous parental leave policy won’t make up for that. In a culture where people don’t feel that their voices are welcome, few will speak up. In a culture that fails to embrace differences, we won’t reap the benefits of diversity. 1/3  BIS central bankers' speeches  The data are clear. Nearly half of LGBT people are closeted at work, and the top reason LGBT workers don’t report negative comments they hear about LGBT employees is they don’t believe that anything will be done about it.3 This gets to the heart of why the “inclusion” piece of diversity and inclusion is essential, and a personal priority. Obviously, there’s a moral imperative for diversity, and numerous studies have shown the benefits to both productivity and the bottom line.4 But for me, it’s my experiences as both an academic and a policymaker that have made inclusion so important. Economics is a profession that has a glaring diversity issue. As economists, we have not done enough to create a diverse profession or an inclusive culture. When I’m sitting in a room and see a bunch of people who look and sound the same, I know it’s a problem.
Global growth is still expected to pick up gradually towards a more normal level, but the upturn may come at a later stage than previously assumed. However, we cannot rule out that the world economy is headed for a fairly long period of stagnation. Low interest rates in the US and Europe are a reflection of this risk. Weak external developments have had negative spillover effects on the Norwegian economy through the appreciation of the krone, the fall in equity prices and lower demand for Norwegian exports. Unemployment has increased, primarily in service industries. The prospects for manufacturing industry are deteriorating. High wage growth is forcing many businesses and municipalities to cut costs and reduce their workforces. In 2002, inflation was close to target at 2.3 per cent, but has been somewhat lower in recent months. The strong krone is the primary factor behind low price inflation. The rise in prices for domestically produced goods and services is marked by the considerably higher wage growth in Norway relative to trading partners. Wage growth moved up further last year, even in industries where profitability had been sharply eroded. A situation where wage growth does not react to the labour market outlook, can give rise to substantial real economic costs. Developments over the past year show that monetary policy is effective and that inflation can be kept at a low and stable level also in periods with high domestic cost inflation.

Companies report a decline in production, employment and orders for both the export and domestic market. Many companies have moved abroad or are planning to move all or parts of their production out of Norway. In recent years, the shipbuilding and engineering industries have sustained the activity level in Norwegian manufacturing. Shipyards experienced a sharp increase in new orders before end-2000 prior to the elimination of support to the shipbuilding industry in Norway and many European countries. The level of new orders has since then been very low, and the order backlog is nearly exhausted. A sharp increase in petroleum investment could provide positive growth impulses to the offshore-related industry. The demand impulses from petroleum investment to the mainland economy may, however, be weaker than has been the case earlier. Construction and installations with a high import content will account for a large share of the increase in investment from 2002 to 2003. Due to the high cost level in Norway, a growing number of contracts are also being awarded to foreign companies. At the same time, Norwegian shipyards are increasingly using foreign subcontractors in low-cost countries. This is having an impact on the Norwegian engineering industry. Many service industries have had to adjust capacity in pace with changes in operating parameters. Investment in service sectors has fallen sharply, and is expected to continue to fall. There is considerable excess capacity in the commercial building market.
What we are experiencing now is a prolonged period of low inflation, which will be followed by a gradual upward movement towards inflation rates below, but close to, 2% later on. Of course, inflation remaining low for a prolonged period of time is a risk in itself. It implies that there is only a small safety margin away from zero. And it makes structural adjustment efforts more difficult. Hence, it is important to carefully assess the causes of low inflation. In recent times, energy price developments in particular put downward pressure on headline inflation, a phenomenon that has contributed to weaker inflation at the global level. Moreover, low inflation partly reflects internal rebalancing efforts by way of which several countries, especially those in economic adjustment programmes, have aimed at improving their competitiveness. However, the low inflation outlook is also driven by continued weakness in demand. At this point in time, we do not have evidence of consumers postponing expenditure plans, which is  BIS central bankers’ speeches  3  something one would observe in a deflationary environment. But any setbacks in the absorption of economic slack may give rise to further negative developments. Against this background, we will remain alert as to whether any indications on further downside risks to price stability emerge and we stand ready to act. A second challenge we will be facing in the coming months is to make the Single Supervisory Mechanism really work.

Ultimately, the common theme in all our efforts is to further the aims of the European Union. These are to promote peace, its values and the well-being of its peoples. As the recent events in Ukraine demonstrate, these aims remain as attractive and compelling as ever. Thank you for your attention. BIS central bankers’ speeches  5
The fact that the bond in this case is linked to STIBOR 3 months is probably due to it being the same frequency as the coupon payments. It would, of course, be impractical to have settlement and coupon payments every day. In this context, backward-looking average rates have roughly the same practical and administrative advantages as forward-looking interbank rates. As the Riksbank is now starting to publish average interest rates and indices for SWESTR, market participants can therefore start using SWESTR instead of STIBOR also at longer maturities. This is, of course, an adjustment for both lenders and borrowers, but the obstacles are hardly insurmountable. In other countries, for example, various adjustments have been introduced which mean that interest payment is delayed for a couple of days. In this way, market participants can see what the final interest was and make the payment a few days later. Market participants need to work together for an orderly transition It is thus clear that there are issues that need to be addressed before a transition to SWESTR can be completed. Since reference rates are used by many participants and in a large number of contracts, it is important that this is done in an orderly manner. It will be a development project running over several years. The Riksbank would like to call on all those concerned to start the transition now. Sweden should not be left behind in the global effort to start using transactionbased reference rates.

In 1900, about 24 per cent of GDP was generated by manufacturing and other goods production. If the economists of the time had projected developments in these three industries, they would have estimated that primary industries’ share of total GDP would fall to below 5 per cent. Manufacturing and other goods production would increase its share to 30 per cent and service industries to 66 per cent. Value-added in primary industries fell somewhat more than economists in 1905 would have projected and service industries increased somewhat less. They would have been less accurate in their projections for developments in manufacturing. Although manufacturing’s share of total GDP increased up to the beginning of the 1950s, growth in private and public services gradually bypassed manufacturing, and the petroleum sector held an increasingly important position from the 1970s. The expansion of the petroleum sector and the use of petroleum revenues contributed to maintaining high growth in Norway, while other countries experienced a slowdown. Are there lessons to be learned from the pitfalls of projecting or trend-extending economic variables? Lessons to learn First, one lesson to learn is that it very difficult to predict developments in the real economy. If we were to extend the historical growth trend today to predict the future level of income, we would probably also be considerably wide of the mark. Today, we know nothing about the technological innovations that might appear in the future.
I will set out each of them, and then discuss the issues that arise from them. First, we should remove the adverse incentives introduced by the liquidity thresholds related to the use of suspensions, gates and redemption fees. Second, we should simplify the landscape to make clearer the critical distinction between cash-like funds and investment funds. We should remove the ambiguity of intermediate descriptions such as low volatility funds. Third, and to support removing the ambiguity, it will be important to define in an accounting and substantive sense more explicitly what constitutes cash-like. Current guidance leaves a lot of judgement to managers and auditors to make these decisions on a fund by fund basis1. Money-market funds are a cash management instrument, so it may seem odd that the meaning of cash-like as a term has not been well defined. The resultant ambiguity may have seemed convenient as a means to stretch the boundary of the definition to allow less liquid instruments in, but when a stress event like the dash for cash happens, the flaw is badly exposed and financial stability is in jeopardy. The authorities then have to intervene in scale to restore well-functioning markets, but that should not be the accepted way to run the system. 4/6  BIS central bankers' speeches  That said, the definition of cash-like therefore needs to be clear and appropriate rather than overprescriptive. For many purposes it does need to provide near instant access to cash – i.e.

In relation to international capital flows in particular, the answer is not at all to encourage countries to cut themselves off from international finance through the maintenance or imposition of capital controls - though that is not totally excluded. On the contrary the very positive contribution that private capital has made in recent years to the development of many of the emerging market countries is clearly acknowledged, and the objective of orderly and properly sequenced dismantlement of remaining capital controls is generally maintained. The purpose is rather to help to ensure, through greater transparency and improvements to the financial infrastructure, that capital flows to where it can be most productively invested. That should, in turn, help to reduce capital account volatility. At the same time much more attention is being paid to the importance of the maturity and currency composition of national balance sheets, including particularly the maturity and currency composition of the assets and explicit or implied liabilities of the public sector, and also of the banking sector, which can be relatively easily monitored through the supervisory process. I recognise that this emphasis on balance sheet management - which is especially important where a country is seeking actively to manage its exchange rate - may raise the cost of short-term capital inflows; but that seems to me to be a price worth paying for greater protection against sudden capital outflows if confidence declines.