samchain/econo-pairs-v1 huggingface dataset:
We are particularly focused on the given comments and recommendations for the purposes of further improvement and development of the statistics. We, however, consider that we still lack a sufficiently good statistics, but we have a good foundation for that purpose. By ascertaining this, I do not only imply to the necessity of ongoing methodological harmonization of the various statistics with the international standards and what has not been done in this light, but particularly to the satisfaction of the new needs and requirements for new statistical researches. Challenges of the statistics The change in the conditions of the operating environment of the central banks brings about a change in their needs and interests in statistical data. I would therefore like to underline several events in the economy that happened over the recent several years that considerably affected the development of the statistics and that indicate the need of new statistical researches: •  First, the rapidly increased role of the financial sector that significantly affected the dynamics, quality and structure of the economy in the future. For the central banks, this means an obligation to make deeper analyses in this area, requiring an availability of more detailed and relevant statistical data. Here, I especially refer to more detailed data on and from other financial institutions (investment funds, private pension funds, insurance companies, etc.) and to the new financial instruments developed in line with the development of the financial market.

Similar risk reduction processed largely worked for traditional corporate credit risk, but proved disastrous in the  3  See Haldane and Webber, July 2008, “Risk reallocation”, Risk, for a wider discussion of the problems in pricing tail risk and Shleifer, Gennaioli, Vishny, 2011, “Neglected Risks, Financial Innovation and Financial Fragility”, Journal of Financial Economics for the possible consequences. 4  See, for example, Haldane, April 2009, “Re-thinking the Financial Network”, speech delivered at the Financial Student Association, Amsterdam, for a discussion on the inter-connectedness of the financial system. 5  See the Quarterly Bulletin, 2010 Q2, Vol 50, p 81. BIS central bankers’ speeches  3  case of super-senior risk backed by US sub-prime mortgages. Insurance by the monolines proved practically worthless as they successively failed. And reinsurance with AIG would have proved worthless if AIG had not been rescued by the US Government. The problems affected other securities in unexpected ways – at one point, US municipal debt wrapped by monolines was trading at a discount to the same debt without the wrap. Once a default event has occurred, the correlation problems with such contracts become obvious. The question is why they are not apparent ex ante. The normal motivation for insurance is risk aversion to large losses arising through tail events. If such an insurance contract is worth having, one must be able to envision the tail event happening and what the circumstances might be.
The champagne party, fueled by the first-car tax rebate and rice pledging schemes, has ended, and we wake up with a hangover: worsened traffic jams, an overflow of durable goods and high household debt. Adding to this backdrop, political tension rose and parliament dissolved late last year. This has dented private confidence and government spending, and puts further pressure on already-weak domestic demand. Loss of confidence means postponed public and private investment as stakeholders tend to wait for more stable economic environment before taking the next steps. Last year, Thailand has not benefited from exports as we expected, due to weak global economic recovery and domestic supply constraints. Furthermore, tourism was negatively affected by the political situation. With respect to the first quarter of this year, economic performance has been unsatisfactory so far and negative growth is predicted. Naturally, negative growth numbers may have raised concern regarding a recession. However, I would like to offer a ray of hope by pointing out that the second quarter of negative growth is unlikely to occur, as the latest economic data for March suggests growth may have reached the lowest point. Furthermore the socalled “technical recession” would occur once economic fundamentals have simultaneously deteriorated, which is a lengthy process. To date, this situation does not apply to Thailand. Looking ahead Ladies and gentlemen, Despite the heavy costs of political uncertainty, Thailand’s underlying fundamentals remain supportive.

For these reasons, the euro area Member States are obliged to treat their economic policies as a matter of common concern and, to this end, a number of instruments and procedures have been developed to facilitate the monitoring and, if necessary, coordination of those policies that are still basically conducted at the national level. At the centre of this monitoring and coordination process lies the EU’s Broad Economic Policy Guidelines, which set out general orientations for the conduct of economic policies in the individual Member States, covering areas such as public finances and tax policy as well as structural reform and market regulation. While these Guidelines are not binding in themselves, their elaboration and discussion in European institutions and fora in which each of the Member States is represented usually creates sufficient peer pressure to galvanise governments into appropriate policy action. While monitoring and peer pressure are very effective tools for assuring that the various economic policies of the Member States move in the right direction, specifically in the area of budgetary policy, 3  BIS Review 4/2000  the EMU framework not only specifies commonly agreed targets, but also sets a binding upper limit for Member States’ budget deficits of 3% of the gross domestic product (GDP). The failure of any Member State to respect this upper limit automatically triggers an excessive deficit procedure under which, if the deficit is not corrected in time, sanctions can be imposed on the Member State concerned.
The work on financial stability is undertaken in three main ways. One concerns the rules and regulations that set the bounds for the operations of financial companies. Another is the continuous surveillance of the system that is performed by Finansinspektionen (Sweden’s Financial Supervisory Authority) as well as by the Riksbank. Thirdly, the state needs to be able to manage any crises that nevertheless occur. The work on stability calls for highly developed cooperation between the Finance Ministry, Finansinspektionen and the Riksbank. The laws governing financial operations are enacted by the Riksdag, with the finance ministry as an important agent. More detailed regulations are issued by Finansinspektionen, which also monitors their observance. The Riksbank’s contribution to the work on rules and regulations consists in the first place of submitting opinions; in addition, the Bank participates in international efforts to develop the regulatory framework. The role of the Riksbank in surveillance work is central and focuses on the functioning of the financial system as a whole and the risks that may arise. The identification of risks in the system as a whole means, moreover, that the individual institutions and the financial infrastructure have to be scrutinised. It is primarily Finansinspektionen but to some extent also the Riksbank that need to keep a continuous eye on the individual banks. Due to the central functions of the banks, a crisis in the banking system might swiftly have serious consequences for the payment system as well as for the supply of credit.

And will that mean that they can no longer be described as the most hazardous economic institutions known to man? This development has come further in the United States, where market financing is considerably more important than in Sweden or the rest of Europe. So what would a similar trend, where the current predominantly relation-based lending is replaced by market funding, imply for the cyclical supply of credit in Sweden? Stronger focus on aspects of efficiency A third driving-force that most clearly affects the financial system is the stronger focus on aspects of efficiency. Permit me to touch on this briefly. Improvements to the financial infrastructure in recent years have made this safer and more robust in various ways. For example, the settlement routines used by both BGC and VPC are considerably more secure that before. Every component of the infrastructure now has better solutions for continuity, which means that operations can be ensured even in connection with more extreme events. Now that the most serious shortcomings have been rectified, the focus has shifted to enhancing efficiency in the given framework for safety. Considerable social gains are to be had by making the infrastructure more efficient. This applies to the central settlement systems and perhaps even more to the different payment instruments. Increased automation and a greater use of electronic payments instead of paper-based instruments and cash can generate large savings for society in general.
I think this is a good thing, even though in my view repo-rate increases are already justified for other reasons and this is not a necessary justification. Unfortunately, our models are not very good at determining the significance of financial imbalances for fluctuations in economic activity. A lot of exciting development work remains to be done in this respect. The fact that the effects of financial imbalances on the macro economy may lie beyond the forecast horizons that we work with in monetary policy must not mean that we ignore them. We must monitor the development of housing prices and household indebtedness carefully and to the best of our ability analyse any indications that threatening financial imbalances are building up and take these into account in our monetary policy considerations. What characterises a well-balanced monetary policy? Ultimately, a monetary policymaker is forced to take a stance on different courses of action for monetary policy on the basis of difficult assessments of economic trends. Are there then any guidelines that can be of help? And what is it really that characterises a well-balanced monetary policy? It is normally a question of finding an appropriate balance between stabilising inflation around the inflation target and stabilising the real economy. It is difficult to translate what can be considered a well-balanced monetary policy in any given situation into precise and practical monetary policy. The intention behind stabilising inflation is relatively easy to understand, but the significance of stabilising the real economy is not so clear.

It is not the case that I personally believe that the risks associated with household borrowing constitute an immediate threat to the economy, or that housing prices are dramatically overvalued and that a rapid downward adjustment is on the cards. But I do believe that there are risks further ahead if household borrowing continues to increase at a much higher rate than incomes for an additional extended period. And if monetary policy continues to be too expansionary for too long, these risks will increase even further. I also believe that this is roughly the view of the majority of the members of the Executive Board. It is not possible to exactly determine at what level household borrowing will reach the “critical point”. As long as economic activity is favourable, the labour market is improving, incomes and wealth are increasing and the households have confidence in the future everything is hunky-dory. But in a different economic situation with increasing uncertainty on the labour market the behaviour of the households may change; they may begin to consolidate their balance sheets. This would reduce their consumption and reinforce the downward tendencies in the economy. The higher the debt burden the greater the risk of significant consequences. If housing prices fall in such a situation, households’ assets will be undermined while their debts will still remain. Households would therefore want to amortise rather than borrow, which would dampen demand.
A comprehensive annual stress-testing exercise is now undertaken in the US.6 More recently, the US has been joined by the UK and the EU, among others.7  Finally, one of the striking features of the pre-crisis financial system was the emergence of the so-called “shadow” banking system. In the US, on some definitions, this grew to exceed in size the conventional banking system (Pozsar et al (2010)). Since the crisis, reform efforts have focused on two areas. First, specific reforms have been enacted to sectors which, during the crisis, were found to contain fault-lines - for example, Money Market Mutual Funds (IOSCO (2012)). Second, a framework has been put in place by the FSB to define and measure shadow banking entities, to publish data on them to enhance market discipline and to help authorities identify, and develop policy tools for mitigating, the risks they might pose (FSB (2013a)). The FSB have recently put forward a package of recommendations to address structural vulnerabilities from the asset management sector (FSB (2017d)). Supporting this package of regulatory reforms, micro- and macroprudential, have been initiatives to boost the quantity and quality of reporting by financial institutions. These should help in pricing institution-specific risk by financial markets and ratings agencies. Notable initiatives have included: enhanced Pillar 3 disclosures by banks, covering all aspects of the regulatory reform agenda; and the work of the Enhanced Disclosure Task Force (EDTF), a private sector group established by the FSB. Over time, this has led to increased compliance with the EDTF disclosure template (Chart 3).

A gradual increase in the repo rate, where the policy is brought step by step onto a less expansionary path, in my opinion reduces the risk of a development that would lead to abrupt adjustments in house prices and household indebtedness later on. This also thus reduces the risk of an unfavourable development of the real economy 3 . In this context, I would, however, emphasise that the reference to household indebtedness and house prices is not, as some have understood it, an expression for our having introduced new targets alongside the inflation target. There are though, as I have just explained, reasons to take into account the impact of these factors on the real economy and inflation, even in a longer perspective, and under different designs of monetary policy. Uncertainty over the future repo rate path We thus always try to be as clear as possible about our view of future macroeconomic developments, including the monetary policy with which this development is normally associated. One question that therefore deserves a comment, before I finally go on to discuss current moentary policy, is how accurately is the future repo rate depicted by market expectations as expressed in implied forward rates? It is important to remember that our view of the development of the repo rate at the monetary policy meetings is based on the information available at the time of the decision. Our considerations may, of course, subsequently be changed due to new statistics becoming available or to the economy facing unforeseen shocks.
To encourage the incorporation of climate risks into risk management, both the Single Supervisory Mechanism and the Banco de España, within their supervisory remit, have recently published supervisory expectations relating to proper risk measurement and management. Naturally, as supervisors and central banks we should consider these risks in our analyses, whether in our work as macroprudential supervisors or in economic forecasting. As in the case of the banking sector, the inclusion of these impacts in our analyses does not only pose no problem whatsoever, beyond the methodological challenges, but is also patently necessary. For instance, in our work we clearly cannot ignore the changes posed by the transition law, given that they will have most considerable – even systemic – effects on certain sectors of activity. In fact, we are collaborating with the Ministry for Ecological Transition in assessing this impact on sectors and the economy. Lastly, it would be remiss of me not to mention in this forum the role of investors. The creation and subsequent development of green bonds, aside from official initiatives and, essentially, in response to private investor demand, shows the growing interest for responsible investment. A brief look at the press will prove that this is a consolidated trend. In sum, the financial sphere, including both the banking sector and investors, supervisors and central banks, is committed to achieving sustainability goals; but, as is known, transparency and information must be enhanced in order to continue moving forward.

The euro speaks clearly about Europe’s diversity through the architectural motifs of the euro banknotes as well as through the cultural symbols on the national sides of the euro coins. For Romania, as a euro area hopeful, thorough preparation in order to fulfil all criteria, with no exception, is crucial. As I stated before, it is important to define a target (horizon). Even if changed, the target must exist so that the commitment to implementing reforms does not wear off. The creation within the NBR of a committee for preparing euro adoption in February 2010, to whose meetings we have invited ever since October 2010 representatives of the Finance Ministry, is a solid proof for the fact that we care about are strongly interested in the future of our country within the euro zone. Nevertheless, it is of utmost importance to ensure coherent policies and a sustained reform pace to render our endeavour sustainable so as the euro adoption becomes certain as close as possible to 2015. Getting back to the Euro Exhibition, which has arrived in Bucharest shortly after Estonia, the 17th country to join the euro area, I want to underscore once again the ECB’s efforts to raise awareness of Romanians and other EU citizens about the single currency, as well as its history, role and symbols. From today until the end of May, Romanians have an opportunity to find out more about the currency we strive to adopt.
But, as we move toward more “normal” conduct of monetary policy, we shouldn’t rest easy and think we won’t confront our own fair share of future challenges. The most important one in front of us today is sustaining the long economic expansion without allowing risks to grow that ultimately undermine economic prosperity. Whatever the future may bring, I will be guided by our dual mandate, a heavy dependence on data, and a steadfast commitment to transparency. Thank you. 1 1 See FOMC Statement and Implementation Note, September 26, 2018. 2 2 See Minutes of the Federal Open Market Committee, March 17–18, 2015. 3 3 See FOMC Communications related to Policy Normalization, and Simon Potter, Money Markets and Monetary  Policy Normalization, April 15, 2015. 4 4 See FOMC Statement and Implementation Note, September 26, 2018. 5 5 See FOMC issues addendum to the Policy Normalization Principles and Plans, June 14, 2017. 6 6 See Simon Potter, Confidence in the Implementation of U.S. Monetary Policy Normalization, August 4, 2018. 7 7 See FOMC Statement and Implementation Note, September 26, 2018. 8 4/5  BIS central bankers' speeches  8 8 See Jerome H. Powell, Monetary Policy in a Changing Economy, August 24, 2018. 9 9 See Policy Normalization Principles and Plans, as adopted effective September 16, 2014. 10 10 See Simon Potter, Confidence in the Implementation of U.S. Monetary Policy Normalization, August 4, 2018. 5/5  BIS central bankers' speeches

However, what is quite certain is that the size of structural change required will be large, comparable to what Thailand experienced during the economic liberalization of the 1980s and 90s. This change, almost by definition, will not be easy. If Thailand overcomes this hurdle, it will benefit from exporting more goods, possibly more hi-tech, to the region while becoming part of the regional supply chain and enjoying a greater range of imports. But while the domestic outlook appears positive, the global environment remains uncertain. The lingering euro debt crisis and fragile US recovery continue to weigh on global growth. Why? Current technical solutions do not address deep-rooted long-term problems. As a result, resolution has been delayed, adding to uncertainty. Moreover, the longer the delay, the more interest rates and fiscal stimulus in both the US and euro area will be pushed to new limits. The tightened policy space means that new shocks will be hard to manage and could derail the ongoing recovery. In my view, it appears that the global economy currently lacks the clear leadership especially in regards to getting the advanced economies out of the woods. Countries which had previously provided the leadership for global macroeconomic management through, for example, the International Monetary Fund, are now caught in the dilemma of solving their own economic problems versus choosing policy options for the greater good of the global economy. This is a separate issue deserving of its own discussion.
Smith argued that we “are endowed with not only a desire of being approved of, but with a desire of being what ought to be approved of…”. 7 He talked about an “impartial spectator” whose judgment we imagined and imposed as a constraint on our behaviour. Smith thought the “impartial spectator” fundamental to an orderly and prosperous society. It is what stops the hunter from breaking his  4  Wealth of Nations, I.i. p14. 5  Did Adam Smith ever visit a pin-factory? He was certainly a careful observer of the world around him. As Buchan (2006, p.12) wrote, “He had visited dye-works, pin-makers, brewers and distilleries”. His description in the Wealth of Nations of “a small manufactory … where ten men only were employed” makes clear that Smith did, at some point, visit a pin factory, but there is little evidence as to where that was. And most scholars believe, with good reason, that Smith took the example of a pin-factory from the Encyclopédie, edited by Diderot and d’Alembert and published in France in 1755 – the article on épingle describes in some detail the eighteen operations identified by Smith. I am indebted to Professor Iain McLean of Nuffield College, Oxford, for drawing this entry to my attention. But his example of nailmaking a few pages further on did come from personal experience, since the manufacture of nails took place in the villages of Pathhead and Gallatown which Smith visited on his regular long walks.

Indeed, we shall see that money works only when it is trusted. But human frailty implies that trust can be placed more easily when it is supported by institutions. Those institutions may well require trust, but equally trust requires institutions. Many economists – including Viner in the essay I have already quoted – have regarded Smith’s analysis of self-interest in The Wealth of Nations as inconsistent with his discussion of “sympathy” in his Theory of Moral Sentiments. In one of the best-known sentences from The Wealth of Nations, Smith points out “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest”. 10 Smith, so the critics argue, failed to integrate the thinking in his two great works. 11 It would not, to coin a phrase, be a sensible division of labour for me to enter the debate about whether his two great works form a consistent whole or represent two different and inconsistent viewpoints. Smith was a cautious and often obscure author. What we know of his theory of law and government is through the notes of two students who attended his lectures on jurisprudence. His failure to produce the projected third great work means that we do not know what institutions he thought would best support a market economy. But irrespective of what Smith thought, two things are clear. History is littered with failed attempts to order society without reference to individual incentives.