samchain/econo-pairs-v1 huggingface dataset:
Most noteworthy to me is the fact that the regulatory regime that was in place in 2008 and 2009 was associated with an episode of the most illiquid market conditions since at least the Great Depression. A return to such a regime could lead to a higher cost for liquidity over the long-run. I think we are in a much better place today. We have a financial system that is much more resilient, and the available evidence suggests that this transformation has not resulted in any significant erosion in market liquidity. What future work is needed? There is a tendency to compress a complex world into a sound bite – such as, “tougher regulation is increasing the cost of liquidity and driving up liquidity risk.” Policy needs to be based on evidence and the available evidence supporting this claim is mixed, at best. Most importantly, I think it ignores the complex nature of the changes underway in financial markets. The methods of intermediation are changing and will likely continue to evolve. There are new players with different objectives and goals, and technology is evolving rapidly. These factors strike me as just as important as the increase in regulatory requirements for the large dealers. The recent work analyzing the October 15 Treasury market flash rally illuminates the complexity of today’s market structure.

William C Dudley: Regulation and liquidity provision Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the SIFMA Liquidity Forum, New York City, 30 September 2015. *  *  *  The charts can be found at the website (Federal Reserve Bank of New York). The financial crisis and the ensuing recession exacted a high cost on the country. Real gross domestic product (GDP) declined by over a half of a trillion dollars. Total nonfarm payroll employment declined by 8.7 million jobs, and 5.8 million households lost their homes to foreclosure. Extraordinary fiscal and monetary policy efforts were required to prevent a collapse of the financial system and the onset of a world-wide economic depression. In the aftermath, new regulations, such as Basel III and the Dodd-Frank Act, were implemented to strengthen the financial system and to limit the risk of a future financial crisis. Some opponents of tougher bank regulation claim that the increased regulatory requirements, such as the higher capital requirements and new liquidity standards, that have been imposed on large financial institutions in the aftermath of the financial crisis have reduced these firms’ market-making capacity. As a result, so the argument goes, this is leading to less liquidity for trading securities, and to more illiquidity events in which the prices of financial assets move sharply and become temporarily unmoored from their fundamental valuations.
Derivatives are very rare, and this is another area which needs development to reduce the various risks associated with the market, but of course, one should only do it under well known rules, and personally I think only to a limited extent, not to the extent that the beneficiaries are mainly the intermediaries as might be the case in a really large, sophisticated market. As to the scale of the market, I have been visiting MSCI and other important players in the world. It really is quite easy to improve our market performance. Presently, Thai market requirements are designed only to fit the Thai requirements. Requirements that are often self-destructive and unreal leading us into the bubble of 1997. The market in the Stock Exchange has not been much changed from the bubble days. It’s still doing the same thing, just without the bubble. Realistically, our rules will have to be changed so that it will comply with and take advantage of rather than be penalised by international norms. In government, the Board of Investment (BOI) is probably a crucial instrument. It’s doing a good job giving privileges on an individual project basis. That has its own limitations and faults. It might well soon be the time to make operating in Thailand generally viable. The original BOI philosophy, in that these are projects you wouldn’t get if you didn’t give tax privileges and therefore have no tax loss costs, is becoming more and more untenable.

Ladies and gentlemen, let me turn to the general economy because a central bank or commercial banks alone cannot make the country good very quickly. It is quite obvious that world grain prices are on the way down. Between the years 1800-1900 when the West was being opened in the United States, grain prices fell over 30% over a span of a century. With genetic engineering, something of a similar nature might happen over the next 20 or 50 years. We have to plan our still agricultural-dominated population for this eventuality. It does not make sense to base strategy on an expansion of production in a falling market. It makes much more sense to base strategy on cost reduction and to add value to the final agricultural products. A ton of grain may be worth 10,000 baht, but a ton of biscuits is worth 100,000 baht. But to make biscuits, you need a brand and you need flavours, things which take a long time to develop and endow to the economy. As to agricultural finance, the most that is available at the moment is crop finance. But you can’t make the weather to order. The bad year will kill you, and a mechanism must be developed to finance the disaster of the bad years from the abundance of the good years rather than leaving it to pot luck or to the effort of individual farmers as at present.
There are no definitive rules or prescriptions when it comes to monetary  5  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  5  policy tools, and no such thing as a manual for monetary policy makers.5 I’ll start by looking at QE, then come on to forward guidance, and finish with some thoughts on the possibility of negative Bank Rate.6 a. QE – plenty of headroom QE has been an effective tool for stimulating demand through the 11 years of its use in the UK. Even though we are well on the way to purchasing £ billion between March and December 2020, we have QE “headroom” remaining. And while it is increasingly clear its implementation and impact is state contingent7, to my mind it is a tried and tested tool and for me it is the MPC’s marginal policy tool at present. The headroom point is worth expanding on because it is one that isn’t always appreciated. There are £ of conventional gilts in “free float” by market value (as well as another £ of index-linked gilts which are out of scope)8. The Bank’s Asset Purchase Facility holds approximately £ of those9: so there is a further £ remaining in the market that could potentially be available for purchase. In practice the Bank does not buy very short maturity gilts. And to avoid distorting the market it avoids specific gilts where it holds more than 70% of the free float, and attempts to buy evenly across three maturity “buckets”.

The Monetary Policy Toolbox in the UK Speech given by Dave Ramsden, Deputy Governor for Markets & Banking  Society of Professional Economists 21 October 2020  With thanks to Renée Horrell and Tom Smith for their assistance in preparing these remarks and to staff across Markets and BPI and elsewhere in the Bank for their many contributions, as well as to my colleagues on the MPC for their helpful comments and suggestions. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  1. Introduction It’s a pleasure to be speaking once again at the Society of Professional Economists’ Annual Conference. When I last addressed this conference it was two years ago, in person, in the impressive surroundings of the Bloomberg building near to the Bank of England. Today we’re meeting in rather different circumstances, and for many of us at least in slightly less impressive surroundings! I'm delighted that we are able to meet virtually, and I'd like to thank Kevin Daly and all the SPE team for their work to make this event possible. The theme of today’s conference is “Policy Challenges for the Global Economy”. What I want to do as my contribution to that theme is to give you my perspective, in my role as Deputy Governor for Markets, Banking and Resolution at the Bank of England and member of the UK’s Monetary Policy Committee (the MPC), on one part of our response to the particular policy challenges of the Covid pandemic.
This experience of slow recovery and persistently low inflation is a symptom of a deeper problem afflicting advanced economies—the root cause of which is a combination of low neutral interest 1/4  BIS central bankers' speeches  rates and the lower bound on interest rates, a topic to which I now turn. What’s Past Is Prologue Underlying these events has been a sea change in the supply side of economies, owing to fundamental shifts in demographics and productivity growth. Two demographic trends are evident: People are generally living longer and population growth is slowing. Overall life expectancy in member countries of the Organisation for Economic Cooperation and Development (OECD) has increased from about 65 years in the 1950s to nearly 80 years today, and is projected to exceed 90 years by the end of this century (Figure 6). 1 Despite this increase in longevity, dwindling birth rates are bringing population growth to a standstill. In OECD countries, population growth averaged over 1 percent back in the 1950s and 1960s, but is now running at half a percent per year, and is expected to gradually fall before dipping into negative figures by 2070 (Figure 6).2 When it comes to productivity, the changes are no less dramatic. In OECD economies, growth in labor productivity—the amount produced per worker hour—has averaged a little over 1 percent per year since 1995, about half the pace seen over the prior decade (Figure 7).

Of course, expert judgment and short-term analyses still play an important supplementary role in the design of the final forecast. It is worth mentioning that the development of our forecasting system has been part of the wider evolutionary process that the Czech inflation targeting regime has gone through. The first years of the new regime were not easy, and included frequent numerical target misses. Nevertheless, the Czech Republic enjoys low inflation, and inflation expectations seem to be firmly anchored at low levels at present. Monetary policy decision-making is rule-based and transparent, thereby enhancing the credibility of the CNB. Let me conclude with the statement that a “forecast based” monetary policy framework seems to fully allow an independent central bank to commit credibly to its long-term goal of price stability and this certainly means a lot. 2  BIS Review 17/2010
There are now signs that may indicate that the turbulence in the financial markets has declined somewhat. The Federal Reserve’s actions to save the US investment bank Bear Stearns appear to have contributed to restoring confidence among investors. Some signs of this are that both access to capital and investors’ willingness to take risk have increased. The CDS premiums, which reflect the market’s valuation of credit risk, have fallen since the end of March. The so-called TED spread (the difference between the three-month interbank rate and the corresponding treasury bill rate) has fallen in the United States and is currently at around the same level as in the euro area. However, the Swedish TED spreads have not fallen back recently, and they are slightly higher than, for instance, the corresponding spreads in the euro area. This is partly linked to the short-term Swedish government rates not having risen as much as the US rates, for example, which is probably due to a reduced supply of treasury bills. In other words, this spread cannot be regarded as a sign that the market has changed its view of the risks in the Swedish bank sector. As always, the Riksbank is closely following this development and has not seen any reasons to take extraordinary measures. The Swedish banks have no problems with funding. However, there is still considerable uncertainty in the financial market, and there is a risk of setbacks.

In April it was 3.4 per cent according to the CPI. This was entirely in line with our assessment at the most recent monetary policy meeting. Since April the oil price has risen substantially. Spot and forward prices of oil are now around 30 per cent higher than they were in April. It is probable that the higher oil prices may affect inflation via higher petrol prices. In July we will once again weigh up these counteracting forces This was some of the new information received in recent weeks. Further information will be presented over the coming weeks, and we will give consideration to this information as well at our next monetary policy meeting. At the most recent meeting in April the Executive Board’s view of the interest rate path was the same as in February. My view then was that there was a greater risk of international price impulses forcing up inflation through higher inflation expectations. This was a reason why I voted to hold the repo rate unchanged. At the same time, I also considered that the financial unease and the slowdown in international growth could mean a risk of weaker growth and inflation in the long term. The counteracting forces we had to consider in April are still in place. There are discussions of what will happen to monetary policy when the oil price has risen roughly in line with the alternative scenario outlined in our February report. This could indicate a higher interest rate path. But it is not that simple.
Figure 4 Current account (*)  (percent of GDP)  6  6  4  4  2  2  0  0  -2  -2  -4  -4  -6  -6 05  06  07  08  09  10  11  12  13  14  (*) Accumulated in one moving year. Source: Central Bank of Chile. 8  BIS central bankers’ speeches  Figure 5 Interest rates on Central Bank of Chile bonds (*)  (percent)  8.5  8.5  7.5  7.5  6.5  6.5  5.5  5.5  4.5  4.5  3.5  3.5  2.5  2.5  1.5  1.5 03  04  05  5-year BCUs  06  07  08  09  10-year BCUs  10  11  10-year BCPs  12  13  14  5-year BCPs  (*) Monthly averages. Source: Central Bank of Chile. Figure 6 Domestic companies' funding cost (*)  (percent)  6  6  5  5  4  4  3  3  2  2  1  1  0  0  Jul.05  Abr.07  Feb.09 Base  Nov.10  Jul.12  May.14  Spread  (*) Considers UF-indexed private AA companies' bonds at about 5 year maturities. Dotted vertical line Source: Central Bank of Chile based on information from the Santiago Stock Exchange.

This applied both internationally and in Sweden. It was partly due to the confidence crisis suffered by the business sector as a result of corporate scandals in the United States and a number of large-scale bankruptcies. This contributed to a new stock market fall. The threat of war in Iraq and the ensuing outbreak of war for a time created greater uncertainty over the global economy than usual. The lack of clearly positive economic signals once the acute stage of the war was over, contributed to an increasingly pessimistic view of the economic situation during the first half of 2003. The weaker economic activity was also reflected in the Riksbank’s inflation and growth forecasts, and the repo rate was cut by a total of one percentage point during spring and summer 2003. During the second half of 2003 the views of economic activity became slightly more optimistic again. It now appears that economic growth in Sweden and the United States during 2003 was largely as we had expected at the beginning of the year. In Sweden, investment showed a much poorer growth than expected during 2003, but this was counteracted by good growth in consumption, in both the private and public sector, and by favourable developments in foreign trade. One could therefore say that the Riksbank, in common with other analysts, became overly pessimistic in connection with the Iraq war, at least with regard to the view of economic growth in the United States and Sweden.
In previous recessions, many large businesses in the UK were able to support smaller companies by reducing payment times to companies further up the supply chain and by extending credit to those further down. But pressures on corporate cash flows and the reduced availability of bank credit may have limited the scope for larger companies to behave in this way in this downturn. The Monetary Policy Committee, via its network of regional Agents, is monitoring closely developments in the demand for and availability of trade credit. The reduction in the availability of trade credit has been accompanied by a tightening in the supply of credit insurance. This is at a time when the demand for such insurance is at its highest. Similarly, heightened uncertainty about the global environment has increased the demand for letters of credit from UK exporters. These developments are understandable and predictable: the economic environment has deteriorated markedly and as insurers you need to protect yourselves against future losses. There is a limit to how much insurance premiums can be raised before they exceed the profit margin associated with a particular transaction. Higher prices can have the same effect as the complete withdrawal of supply. I know that members of the ABI are working hard with Government and with business to agree how best to meet these challenges. It is vital for the long-term success of both your industry and our economy as a whole that a workable solution is found. Where next for the UK economy?

I find it helpful to summarise the different mechanisms through which asset purchases may boost nominal spending into three broad channels. 4  BIS Review 46/2009  First, the purchases of gilts will act to increase their prices and reduce their yields. This change in the relative attractiveness of holding gilts is likely to cause investors to reallocate their portfolios into other assets, such as corporate bonds, which in turn will tend to reduce the yields on those assets. In so doing, the borrowing costs faced by firms and households should fall. As of today, the Bank has purchased £ of gilts from investors. Second, purchasing assets with central bank reserves will significantly increase the amount of liquidity in the system. This expansion in the supply of money may in itself encourage greater levels of lending and borrowing. Bank deposits are likely to increase, providing banks with a ready source of funding to finance additional lending. Similarly, as the additional liquidity permeates through the economy, companies may feel less constrained by the need to hoard liquidity and more able to undertake investment projects. Third, purchases of high-quality corporate debt should help to improve the functioning of corporate credit markets. Strains on financial institutions’ balance sheets, combined with heightened levels of uncertainty and risk aversion, have impaired the liquidity of key corporate credit markets. Firms’ access to some of these markets has been restricted and the cost of credit inflated.
•  Let me also acknowledge a number of Peter’s colleagues on the Committee through the critical period of 1986–88 when the Accord was settled. I am delighted that you were all able to join us today. •  Finally, I would especially like to welcome Paul Volcker to the symposium. Paul was instrumental within the G10 Governors in pushing for an international benchmark on bank capital. In particular, together with Robin Leigh-Pemberton of the Bank of England, he was critical in forging the agreement that produced the world’s first international standard for bank capital. Paul – I don’t think it is too much to say that a great deal of today’s global financial regulation was founded on your original vision. BIS central bankers’ speeches  1  As a scene-setter for this morning’s discussions, I would offer some thoughts on the key influences on the evolution of the Committee to date. The Basel Committee and its activities have changed almost beyond recognition since its establishment in 1974, or even since 1988 when the first Accord was agreed. I doubt whether the founding Governors really foresaw what the Committee would eventually become: not just an international standard setter, but also one that now conducts peer reviews of members’ compliance with their agreements. Indeed, if they had, I suspect that a few of them might have been against the Committee’s establishment in the first place! But times change, the financial sector has evolved, and the Committee has moved with the times.

•  They continuously adapt to new data as well as feedback and inputs gathered from their experiences, including interactions with humans. We are already beginning to see examples in the financial industry: •  In equity, commodity, and FX markets, some traders are using self-learning algorithms –  •  they not only analyse historical data, predict price movements and make trading decisions, but continually upgrade and adjust their trading strategies in the light of new evidence and market reactions. In lending, learning machines have been used to construct models for consumer credit risk and improve the prediction of loan defaults. The legal minds assembled here might want to reflect on where the legal liabilities arising from the actions – or inactions - of such learning machines lie. The six technologies that I have outlined have the potential to transform the financial industry globally. There could well be others that I have not mentioned. The important thing for our FIs is to be alert to these and other technology trends, understand their possible implications, and seize the opportunity to apply relevant technologies safely and efficiently - to boost productivity, gain competitive advantage, and serve consumers better. Smart nation needs a smart financial centre At the national level, Singapore has set its sights on becoming a Smart Nation – one that embraces innovation and harnesses info-comm technology to increase productivity and improve the welfare of Singaporeans.