samchain/econo-pairs-v1 huggingface dataset:
Trade allows us to specialise in making goods and services that other people want and which therefore have a value. The carpenter does woodwork, the dentist fixes teeth, the author writes books and so on. In the beginning, we traded with one another simply by swapping goods and services. However, the barter system is not practical, as it means you have to find someone who has what you want and who also wants what you have. The time and energy that has to be expended on finding a counterpart could be used more productively. In economist speak, we say that there are substantial transaction costs. The lower the transaction costs, the cheaper and easier it is to trade with others. And the more specialisation, and thus total output, increases in the economy, the higher economic welfare will become. Money plays an important role in reducing transaction costs and this is why money is the second most important innovation in the history of the world. Money means that we can improve the traditional barter system. Instead of having to find someone who wants exactly what you have and vice versa, you sell your goods for money that can later be used to buy other goods. Money is quite simply a hard currency that everyone wants. Transactions are made easier and faster and this cuts transaction costs. Money fulfils three functions Money, both cash and electronic money, fulfils three functions.

On the regulatory side, thc adoption of a risk-focused supervisory framework entails a shift away from a rigid, rules based approach to regulation and towards more “incentive compatible” prudential standards. By “incentive compatible”, I am referring to broad, principles based standards that encourage banks to develop and continuously update their internal risk management systems to ensure that it is commcnsurate with the scope and complexity of its operations. While the benefits are obvious, there are also some consequences for the supervisory side of our business that may not be readily transparent. First, an emphasis an broad prudential standards - while useful rot fostering sound risk management practices - will inevitably create significant challenges for front-line supervisors. This is because they will need to rely much more on sound professional judgment and critical analysis, and less on rules-based compliance criteria, in order to make proper risk assessments. This in turn, will require supervisory staff members to have a fundamental grasp of risk-based supervisory concepts and how it is applied in the field. The challenge for every emerging market supervisory authority is to equip our front line supervisors with the requisite knowledge, skills, and abilities, in order to help make their transition to a risk-based framework as smooth as possible. At the Bank of Thailand, we have placed greater reliance an this risk-based philosophy during the past several years.
That a period of relative price stability does not breed complacency? That the collective national memory is maintained? A key part of the answer can be found in the role of regimes and institutions.5 Individual policymakers and officials come and go. Intellectual ideas pop in and out of fashion. The inflation target and the MPC are the result of a long and painful search for a credible money anchor. They provide the memory to ensure that we don’t return to the inefficiency and inequity of the 70s and 80s. They provide the memory that underpins the consensus that low and stable inflation is a perquisite for economic prosperity. And they provide the memory that guards against some of the dangerous talk of late. Let me sum up this section on the twin objectives of monetary policy. The MPC has objectives for growth as well as for inflation. The current inflation targeting regime provides considerable flexibility for the MPC to support output and employment. And in recent years, the MPC has used that flexibility to the full. Indeed, some have argued excessively so. The MPC has been at the forefront in supporting growth and employment and continues to be so. But that flexibility is constrained by the discipline that monetary policy must be set in a manner consistent with inflation coming back to its target. Without that credibility, monetary policy wouldn’t have the flexibility to support the real economy.

And away from home, central banking is undergoing considerable change: both the Federal Open Market Committee (FOMC) in the United States and the Bank of Japan have recently made policy changes that emphasise their commitment to provide further monetary stimulus until their economies recover. Against that backdrop, people are understandably asking what role monetary policy in the UK should play in determining growth and inflation? This is an important debate and one that is likely to be central to economic policymaking over the next few years. What I would like to do today is to offer some of my own thoughts on this issue. I want to focus on two aspects in particular. The first concerns the objectives of monetary policy. The inflation target, given to the MPC by the UK government, states that our primary objective is to ensure that CPI inflation is equal to 2%. But it also makes clear that, in so doing, we should be mindful of the implications that our policy actions have for growth and employment. How should we go about reconciling those different objectives? The second issue relates to the current operation of monetary policy. What should we make of the view, repeated in many quarters, that the trade off between growth and inflation may be unusually favourable in present circumstances. That we could buy quite a bit of extra growth at little or no cost in terms of higher inflation? Do such free lunches really exist?
It is clear that some of the old beliefs will remain more or less intact: for instance, the idea that fiscal policy is limited as a stabilization tool. There are, however, two areas where I see more changes. BIS central bankers’ speeches  1  First, the conduct of monetary policy, through the implementation of non-conventional monetary policies; and, second, the monitoring of the efficiency of financial markets and the banking sector, and their interaction with macroeconomic stability. Let me comment on these two issues. Non-conventional monetary policies At the outset of the crisis, all central banks reacted using conventional monetary policies. First, they reduced interest rates in a rather aggressive way to prevent the disinflationary process from translating into deflation. The outcome of these decisions is that official rates in the main developed economies (Euro area, United States, Japan and United Kingdom) stand now at values very close to zero. At the same time, faced with the freeze of interbank markets, the main central banks, including the Fed and the ECB, had to take on, directly, the task of redistributing liquidity. In the early stages, the Fed and the ECB provided a generous monetary base to meet the gross needs of banks. The ECB used its flexible array of financial instruments, while the Fed was forced to adapt its operational framework to introduce new forms of intervention. However, when the crisis worsened after the Lehman Brothers crisis, it became necessary to take stronger action. This required the use of new, non-conventional, monetary policy measures.

In the US, by contrast, the Fed’s asset purchases reached a significant scale with the successive rounds of quantitative easing, aiming at lowering the cost of financing over the whole of the yield curve. These divergences in the use of non-conventional tools reflected not only the specific characteristics of the respective financial systems – the banks predominant role in the euro area compared with a greater importance of capital markets in Anglo Saxon countries – but also the institutional framework and the differing perceptions and assessments of the risks that may be assumed by central banks. Thus, I would say that the Euro system’s response has been more complex, adapting itself to the difficulties that have arisen at the different stages of the euro area crisis, seeking to act on the segments of the transmission monetary policy mechanism that were seen to be most impaired. On the other hand, the US strategy involved some blurring of the boundary which separates monetary policy from fiscal and financial stability policies. This entailed risks for  2  BIS central bankers’ speeches  the monetary authority’s independence that the ECB, as the central bank of 17 countries with full sovereignty in other non-monetary policy areas, could not assume. In short, the financial crisis compelled central banks to adopt, along with robust monetary policy responses, exceptional measures and an unprecedented expansion in their balance sheets.
With this in mind, the European Commission is reviewing the European fiscal rule framework. In my view the framework needs to be simplified, by establishing an expenditure growth rule and a debt-to-GDP ratio anchor, and countries’ capacity to build up fiscal buffers in good times for use in crises needs to be reinforced. In the case of Spain, shoring up the sustainability of public finances calls for a medium-term fiscal policy strategy. This should involve immediately setting out a multi-year fiscal consolidation plan for implementation once the economic impact of the pandemic and of the war in Ukraine has been overcome. The plan should have broad political consensus and be accompanied by an efficiency review of public spending and the tax system, including all tiers of general government. In addition to the medium and long-term benefits of such a strategy, defining the plan early on would generate greater certainty and trust in public policies, which is particularly important against the backdrop of the monetary policy normalisation I have described. In any event, the course of the war in Ukraine and the subsequent sanctions and retaliatory measures have laid bare the EU’s vulnerabilities and dependencies in key sectors, such as energy, as well as the disparities between Member States in their exposure to such tensions. A challenge of this magnitude underlines the importance of a joint response to common risks. The response to the war in Ukraine must, once again, be more Europe.

Whatever they decide more widely, it is clear in my view that, for a number of reasons, including the cyclical differences between our situation and that on the Continent, we cannot now be confident that this country could live reasonably comfortably with a single European interest rate. That is why I welcomed the Government’s decision last October to exercise, for the time being, our opt-out, but to plan the technical preparation for our future participation, when we are more confident that sustainable convergence has indeed been achieved. BIS Review 3/1998
Between 2002 and 2010, 85% of total employment growth in the EU was attributable to SMEs, and SMEs have a much higher employment growth rate (1% annually) than large enterprises (0.5% a year). And within the SME class, most employment growth takes place within young firms9, for whom external financing is particularly important as they cannot draw much on internal funds. Recent research from the US has shown that these firms also tend to be more sensitive to changes in investment opportunities.10 So what is the solution here? There are many schemes underway in Europe to address this problem that I will not try and cover today. But one unifying theme that I see as critical is to better match the needs of SMEs with the funds of non-bank investors, thus providing more diversification for SMEs. One way in which non-banks provide this diversification is in terms of counter-cyclical access to credit. When banks contract credit, less risk-averse investors such as private debt funds or peer-to-peer lenders can fill the gap and thus help smooth the credit cycle. Another way is in terms of maturities. While regulatory changes have made commercial banks less willing to make long-term loans, some large institutional investors – for example pension funds and insurance companies – need assets with maturities and returns that match their liability profiles. SME lending can provide this, especially while long-term safe assets exhibit low rates of return.

Krzysztof Rybiński: How to use globalization to improve Poles’ living standards? Address by Mr Krzysztof Rybiński, Deputy President of the National Bank of Poland, at the panel session: Globalization and Poland’s development, 4th Congress of the Polish Lisbon Strategy Forum, Warsaw, 13 October 2006. *  *  *  Ladies and Gentlemen, In my today's speech, I should like to achieve two goals: •  First of all, I would like to outline major economic changes effected by globalization. 1  •  Second, I would like to point out to such areas in Poland's economic strategy that call for profound changes necessary if we want to reap the benefits of globalization while avoiding its pitfalls. At the same time, I would like to emphasize, as I usually do, that the opinions presented in this speech reflect my personal views and by no means are an official stance taken by any institution I used to be or I am presently professionally involved with. * (1)  *  *  What major changes in the global economy and in national economies have been induced by globalization? Globalization may be defined in various ways, and I believe that its essence is best captured when we define it as free movement of goods, services, labour, capital and knowledge between countries. Before I proceed with the presentation of the most important effects of globalization, it is well worth recalling the demographic trends that are going to strongly influence the global economy.
Andrew G Haldane: Constraining discretion in bank regulation Paper by Mr Andrew G Haldane, Executive Director, Financial Stability, Bank of England, given at the Federal Reserve Bank of Atlanta Conference on “Maintaining financial stability: holding a tiger by the tail(s)”, Federal Reserve Bank of Atlanta, Atlanta, 9 April 2013. * * * Marking your own exams is a perilous pursuit. Stephen Levitt of Freakonomics fame looked at abnormalities in tests scores in Chicago Public Schools, when these tests were marked by the schools’ own teachers (Jacob and Levitt (2003)). He found systematic evidence of upgrading of scores in elementary schools by teachers marking, in effect, their own exams. More recently, the LIBOR scandal has exposed many of the same self-regulatory problems. The incentives to shade their self-assessed LIBOR exam grades proved too much for too many for too long. As we now know, systematic misreporting resulted. The self-regulatory model was again found wanting. Yet there is one area of finance where self-regulation continues to stage a last stand – bank capital standards. Since the mid-1990s, banking regulators globally have allowed banks the discretion to use their own models to calculate capital needs. Most large banks today use these models to scale their regulatory capital. In doing so they are, in essence, marking their own exams. This self-regulatory shift was made with the best of intentions. Yet its consequences have been predictable. Self-assessment has created incentives to shade reported capital ratios.

That takes us to a third potential explanation for the downward trend in risk weights, one familiar from every other field of self-regulation – the system has been gamed or arbitraged (Blum (2008), Masera (2012)). Under a self-assessed standard, banks may have both the incentive and the ability to shade downwards risk weights, or to switch to lower risk-weighted asset categories, thereby boosting reported capital ratios. The aggregate evidence is consistent with this having occurred secularly and on a significant scale. Firm-specific evidence is also consistent with this hypothesis. A survey by McKinsey in 2012 found that 65% of firms were engaged in “RWA optimisation” of some form (Babel et al (2012)). And the recent US Senate investigation of the J P Morgan “whale” incident is the latest in a long line of identified misdemeanours sourced in model manipulation. In short, while one of the original aims of the Basel Accord was to prevent a race to the bottom, the move to risk-based capital adequacy standards may in fact have accelerated it. What, then, of the second objective of the original Basel Accord - levelling the international playing field? From an economic perspective, a level playing field would imply that banks with equivalent portfolios should hold a broadly equivalent amount of capital. The most compelling test of this hypothesis comes from the hypothetical portfolio exercises (HPE) recently conducted in the UK and internationally. These take a set of common portfolios and ask how much capital banks’ internal models would set against them.
It’s understandable that employees and firms should want compensation for these losses, by raising wages and domestic prices. Unfortunately, and at least collectively, these efforts will not make us better off. The effect is to raise domestic inflation with no ultimate impact on average real incomes. The potential for these “second-round effects” was always uncertain. On the one hand, empirical estimates suggested that, since the 1970s and 80s, domestic inflation had become less susceptible to shifts in real income, perhaps because of improvements in labour-market flexibility. On the other hand, the economy hadn’t experienced a hit to real income on this scale. As it is, monetary policy has had to respond to the rise in domestic inflation as and when it’s become apparent in the data. The justification for tighter policy is clear. It remains the case that most of the overshoot in headline CPI inflation, relative to target, reflects the direct impact of higher import prices. It also remains likely that much of this is likely to fade as those prices stabilise. This appears already to be happening in areas most affected by the pandemic. The path of wholesale energy prices is highly uncertain but here too rates of inflation – annual rates have averaged over 300% in the past six months7 – are in time likely to fall significantly. Indeed financial markets suggest we’re more likely to see negative than positive inflation in wholesale gas prices a couple of years from now.

Simultaneously, the Fed tried – and I emphasize tried because the message seems to have been garbled in the minds of some intended recipients – to influence expectations of its own behavior once asset purchases have run their course. These “asset-purchase” and “forward-guidance” policies are relatively unfamiliar, and their impact is uncertain. 6  See “Assessing the Costs and Consequences of the 2007–09 Financial Crisis and Its Aftermath,” by David Luttrell, Tyler Atkinson and Harvey Rosenblum, Federal Reserve Bank of Dallas Economic Letter, vol. 8, no. 7, 2013, www.dallasfed.org/research/eclett/2013/el1307.cfm. 4  BIS central bankers’ speeches  One implication is that aggregate fiscal shocks – and, hence, also aggregate fiscal uncertainties – are likely to have outsize effects in current circumstances. Contractionary fiscal policy that would ordinarily drive down interest rates, providing offsetting stimulus to private expenditure, will have a larger-than-typical economic impact because this “crowding in” is absent once interest rates are confined to the zero lower bound. Expansionary fiscal policy, similarly, will fail to “crowd out” private expenditure if interest rates hold steady. Second, because the zero bound complicates the conduct of monetary policy and shortcircuits fiscal crowding out, it introduces a “kink,” or discontinuity, in the economy’s behavior. The existence of a kink means that uncertainty matters even if ordinarily it would not: “Certainty equivalence” no longer applies. When real growth and/or inflation prospects are weak – so that the economy is operating near the zero bound – downside risks to growth and inflation loom larger than they ordinarily would.
Once a month, immediately after the meeting of the Governing Council, the President of the ECB holds a press conference- which starts with a precise exposition of the diagnosis of the Governing Council which is immediately made available in real time on the ECB website. This was the case when we met last Thursday in Frankfurt. st  It is extremely important to stress that the Eurosystem was the first in the world to introduce, on the 1 January 1999, the concept of regular, frequent, real-time transparency in the domain of monetary policy. This illustrates the extent to which some criticisms are profoundly unjust ! It is especially noteworthy, in this regard, that soon after we had embarked upon this new concept of real-time transparency, other important central banks decided to go along the same path. Being accountable for an independent institution in a modern democracy or, as it is the case for the Eurosystem, in a subtle set of democracies like the European Union, means being accountable to public opinion at large. In this respect, the public speeches and testimonies of the President of the ECB for the benefit of both European institutions and public opinion, the public speeches and testimonies of the Governors of the National Central Banks to national institutions and public opinion, are crucial. Explaining tirelessly the reasons and the reasoning that underpin the decisions of the Governing Council is a key part of our collective duty.

The Riksbank’s balance sheet SEK billion 900  900  Assets 800  Liabilities Equity  700  800 700  Other Foreign exchange reserve  600 500  600  Foreign exchange loans  400  400  300  Assets 200  100 Gold  500  Foreign exchange reserve  Liabilities Equity Banknotes and coins  0  August 2008  Government bonds  Certificates and fine tuning  300 200  100  Gold  Banknotes and coins  0  September 2016  Source: The Riksbank  The Riksbank purchases government bonds to support the upturn in inflation ... To begin with, I would like to remind you that the aim of the Riksbank’s operations is not to make a profit and deliver dividends to the government. Our task is to maintain price stability, and bond purchases are one component of the expansionary monetary policy we are conducting in order to safeguard the credibility of the inflation target. The Riksbank started purchasing government bonds in February 2015. At that time, inflation had been low for a long time, long-term inflation expectations had fallen to a record-low level and a period of falling oil prices risked pushing down inflation expectations even further (see Chart 2). In this situation, the Riksbank needed to safeguard continued confidence in its ability and willingness to stabilise inflation around the inflation target. As we know, a credible inflation target lays the foundation for efficient price-setting and wage formation and hence promotes good growth in the economy.