samchain/econo-pairs-v1 huggingface dataset:
Banks sharply curtailed their lending. A full fledged panic had started and was spreading rapidly; the financial system was facing the threat of collapse. In light of the circumstances at the time, a bankruptcy filing by AIG would have had disastrous consequences. Federal Reserve Chairman Bernanke has stated that it could well have “resulted in a 1930’s-style global financial and economic meltdown, with catastrophic implications for production, income, and jobs.” Because of the decisions made that morning, we can never really know. Let us be clear, though, about the risks that the policymakers did know. Policymakers knew that AIG’s largest creditors were other financial firms and that those firms clearly would have been directly impacted by an AIG bankruptcy filing. But the gravest risks were not the direct exposure of other financial firms to AIG. The gravest risks related to the indirect consequences of a bankruptcy of AIG, indirect consequences that would impact millions of Americans. AIG’s role as one of the world’s largest and storied insurance companies meant that its failure likely would have had a contagion effect, causing damage as it spread throughout the insurance industry. Policy holders would be hurt. Municipalities, who were already reeling from a lack of financing options for their building projects, would have seen their financial protection disappear. Workers whose 401(k) plans had purchased $ billion of insurance from AIG against the risk that their stable value funds would decline in value would see that insurance disappear.

Loan growth in July increased to 11.8 percent while deposits including bill of exchange grew by 1.9 percent. Liquidity in the system remains adequate, with loan/deposit ratio excluding interbank transactions at 90.1 percent in July. On asset quality, gross NPL ratio edged downward to 6.4 percent in June. These numbers show that the performance of the Thai banking sector is quite robust, and is well positioned to support the economy. Fourth, a more difficult picture to assess is the impact of the turmoil on the economy and how this would translate into the impact on the banking sector. So far, notwithstanding the less helpful global environment, the Thai economy has performed relatively well, with growth averaging 5.7 percent in the first half of this year. But going forward, market participants expect the economy to become more affected by the slowing global economy. Our own forecast also sees growth to be less buoyant in the second half of the year, reflecting a more adverse impact on exports. But overall, the momentum of growth should not be too adversely affected given the support that growth could gain from domestic demand which is being supported by high farm income, continued credit availability, and supportive fiscal policy. Moreover, lower oil prices and monetary policy that focuses on inflation should provide a stable price environment conducive to domestic demand and to export competitiveness. Also, continued current account surpluses, lower external indebtedness, and high domestic savings have made the economy’s financial conditions more stable, by reducing its dependency on capital flows.
In a boom phase such a policy will tend to have a restrictive effect and in a cyclical downturn it will tend to have an expansionary impact. ·  The second element is an inflation forecast. We publish a quarterly forecast of medium-term inflation. Not only does our forecast provide extremely valuable information on the future effect of monetary policy; it also plays a key role in explaining the central bank action to the public. ·  The third element is the publication of a target range for the three-month interest rate. The target range sets the parameters for day-to-day implementation of monetary policy. Our experience with the new approach is positive. We have been able to enhance the transparency of monetary policy and to simplify lines of communication with the market. How do we take account of the fact that Switzerland is now fully surrounded by the euro zone? Indeed, the introduction of the single European currency at the start of 1999 has profoundly changed the environment for our monetary policy. But the fears that were expressed when the euro was introduced four years ago failed to materialise. In particular, the Swiss franc is no more volatile against the euro than it had previously been against the D-mark. Immediately following the introduction of the euro it remained remarkably stable for more than a year. This was due in part to the fact that the economies of Switzerland and the euro area were strongly converging and that both central banks were pursuing a similar monetary policy.

Some of these are “left-overs” from the first bilateral agreements, some are new issues which have been raised by either the EU or Switzerland. The EU wanted the adoption of anti-fraud measures and the creation of a tax system in Switzerland which would allow the EU to adopt a regime of exchange of information between tax authorities. On their side, the Swiss sought an improved cooperation in the areas of internal security and asylum policy. The negotiations on seven out of the ten issues have now been substantially completed. We hope that this second round of negotiations will be concluded this year, provided that the right balance can be struck in the overall package. You may well be asking yourselves: why doesn’t Switzerland simply join the EU instead of following the bumpy path of bilateral agreements ? The reason is that there is still no consensus in Switzerland on the question of EU membership. Winston Churchill used to say to his chauffeur: “Drive slowly. We are in a hurry”. These words could apply to Switzerland’s policy on Europe. Eleven years ago the Swiss people voted “no” to entry into the European Economic Area, because many saw this as a first step towards EU membership. Two years ago a referendum aimed at speeding up the process towards EU membership was likewise roundly rejected. Since any further moves would clearly lack political support within the country, EU membership is not on the Swiss agenda at the present time. There are many reasons for Switzerland’s scepticism.
The recent experiences in the UK, the US and Germany with extraordinary measures needed to deal with the crises in the building society Northern Rock, the investment firm Bear Sterns and the bank IKB respectively, is a reminder that these situations can, and in many cases have, surfaced anywhere. They also seem to confirm that the measures that you wish to take may be in conflict with laws and regulations which were not drafted with the specificity of a banking crisis in mind, but nevertheless apply to banks in these situations. A telling example is the Northern Rock experience, where it was assessed that the preferred option to fix a private takeover might be difficult to arrange given the design of the regulations on insider trading and take-overs. More generally, there is also a debate on whether measures that restrict the rights of the existing shareholders might be in conflict with company law and even with human rights more generally, and on whether guarantees extended might be in conflict with state aid rules. I want to make it clear that I have no views on market abuse regulations, regulations on shareholder rights in company law or state aid rules as such. They fulfil an important function and as far as I can see usually work well together. The fact that human rights must be respected can hardly be called into question. And I wish to emphasise that I do not call into question the role of the EU in the regulation of our markets.

Turning to Thailand, although the Thai banking sector is resilient and has been largely immune to the global financial turmoil, the impact of the crisis on Thailand has been quite hard owing to the economy’s high dependency on exports. As noted earlier, economic activities contracted sharply in the fourth quarter of last year and in the first quarter of this year, but the situation started to stabilize from the second quarter onward as economic activities began to show signs of improvement consistent with the developments observed elsewhere. Latest data for September point to continued improvements in economic activities, both in private consumption and investment, reflecting largely the benefits that domestic demand has gained from fiscal stimulus and supportive monetary policy. Exports in September contracted by 8.3 percent year on year, much lower than the contractions of 17.9 and 25.7 percents of the previous two months. On the output side, recovery in domestic demand has been met by stronger activities in production. Index of manufacturing production rose by 0.4 percent year on year in September, while the rate of capacity utilization in manufacturing increased to 64.7 percent. On economic and financial stability, economic stability remains intact in Thailand with strong external positions marked by continued current account surpluses, high level of international reserves, and a low and stable external debt. As for inflation, the emerging signs of recovery have not put pressure on domestic prices.
Productivity growth has been high. Use of new technology and the shift away from private shops to chain stores have reduced distribution and administration costs. Digital technology is now driving yet another shift, towards online shopping. Chart 9 High productivity growth in retail sales. Index. 1980 = 100. 1980 – 2018 400  400  Gross product Employment  300  300  200  200  100  100  0 1980  0 1985  1990  1995  2000  2005  2010  2015  Sources: Statistics Norway and Norges Bank  In other areas, intermediaries are changing or disappearing. Travel, cinema tickets and doctor appointments are bought or made online. Government agencies, banks and insurance companies are offering more and more do-it-yourself online services. Restructuring involves job losses, with potentially painful consequences for those affected. But over time labour is freed up for employment in other higher value added jobs, generating gains in the form of cheaper goods and services. Structural change is the basis for growth and welfare. 11  AN EVOLVING PAYMENT LANDSCAPE New and more efficient forms of payment are playing an important role in the ongoing transformation of supply chains. NORGES BANK ECONOMIC PERSPECTIVES 14 FEBRUARY 2019  Customers are steadily being offered new and simpler payment solutions. Bank cards have largely replaced cash. Using a PC or mobile phone, we pay for goods and services online or use a mobile app to transfer money to friends.

But his view, which I share, is that there would be a “a strong, though not irrebuttable, presumption of denial [of a merger or acquisition] by any firm that falls in the higher end of the list of global systemically important banks…”5,6 Another step for dealing with the firms that might be viewed by some as already TBTF is to understand better the interconnections and pathways through which the distress or failure of one firm impairs the larger system and causes harm to society. We have made progress through the supervisory process in mapping out critical activities performed by firms. Also, we have identified a number of areas, such as collateral management, where better practices could both improve the safety and soundness of the individual firm and reduce the negative externalities generated by a firm’s failure. Work is also underway to evaluate what changes would be required to make the future bankruptcy of large complex firms less disruptive, while also developing an alternative means for the orderly resolution of such firms outside the normal bankruptcy process. The costs to society of large complex financial firms failing can be reduced at least to some degree by having firms, working in conjunction with their regulators, “pre-plan” their own failure through the so-called “living will” process. The largest and most systemically important  5  See Governor Daniel K. Tarullo, “Financial Stability Regulation”, October 10, 2012.
In the presidential election campaign, both the conservative candidate Nicolas Sarkozy and the socialist Ségolène Royal argued that the ECB should, for example, do more to support economic growth. I will only remind you that, by the will of the French democracy, the Banque de France was made independent from French politics before the establishment of the ECB, with a primary mandate for price stability. To allow the central bank to become independent, both chambers of the French parliament changed the constitution of General de Gaulle with a three-fifths majority. It rather looks like people in your home country have forgotten that. BIS Review 18/2007  1  Certainly not the people, who, according to surveys, are firm supporters of our independence. In any case, the Maastricht Treaty calls for the full independence of the central bank. Under the Treaty, governments are not even allowed to try to influence the ECB. Nevertheless, would it not be better for the ECB to be a little more flexible and – like the Federal Reserve – react more strongly to the needs of the economy as a whole? Our mandate is unambiguous. Our primary objective is price stability. And price stability is a necessary condition for sustainable economic growth and job creation. The central banks of nearly all industrialised and emerging countries have policies based around the combating of inflation, and that is precisely what our fellow citizens want.

Jean-Claude Trichet: Interview with FOCUS Interview with Mr Jean-Claude Trichet, President of the European Central Bank, conducted on 20 February 2007 by Ms Alexandra Kusitzky, Mr Bernd Johann and Mr Thomas Zorn, published in FOCUS on 26 February 2007. *  *  *  Central bank presidents must take enormous care over what they say. Your US counterpart Ben Bernanke caused turmoil in the financial markets when he made remarks to a journalist at a party regarding Federal Reserve strategy. How do you guard against inadvertently divulging information? We central bankers know that we are watched very closely indeed and that any sign can be overinterpreted. But I do not think that we are very different in that respect from other people with important responsibilities in the public eye. But you could at least tell us what you expect the key ECB interest rate to be at the end of the year? I invite you to participate in my next press conference on Thursday, 8 March. As ECB President, if you so much as smile for slightly too long, that can give rise to speculation. With such intense scrutiny, is it at all possible to have a private life? My private life is unfortunately subject to tough constraints. Nevertheless, I try to make time for myself, even if I don't succeed all that often. European and international meetings are often held during weekends, of all times. But when I have a free Saturday or Sunday, I really enjoy it, believe me.
Indeed, institutions such as the IMF, the OECD and the European Commission have testified as much in their forecasts. This would be the consequence of the conjunction of several factors. They include the relatively more unfavourable course of the pandemic in our country. Thus, for instance, at the height of the first wave, the number of daily deaths per 1,000,000 inhabitants stood at over 17 in Spain, compared with fewer than 14 in Italy, 9 in the Netherlands and 3 in Germany. Moreover, the second wave of the virus began in Spain almost two months before it did in the rest of the euro area. Compounding this was the effect of the greater stringency of the lockdown measures during the early stages of the pandemic in the spring. Lastly, the different structural aspects of the Spanish economy also come into play: the high temporary employment ratio in the labour market, the prevalence of SMEs in the productive system and the high weight of the so-called “social sectors” in GDP. These aspects make our economy particularly vulnerable to this shock. 7  While the temporary employment ratio in Spain averaged 25.2% over the past decade, it was below 14% in the other euro area countries. In 2019, moreover, 78% of firms in Spain had fewer than five employees, clearly higher than the figure of 69% for the euro area on average.

Andrew Bailey: Innovation to serve the public interest Speech by Mr Andrew Bailey, Governor of the Bank of England, at the City UK Annual Conference, 15 June 2021. * * * It’s a pleasure to be participating in the City UK Annual Conference. Amongst the themes you have chosen, I will focus on innovation, and how we think about and assist innovation as public policy makers. In doing so, I will draw on our work on payments and digital currency, including an important paper on the latter that we published last week. To cut to the end briefly, I believe that as public policy makers we have to be clear on the rules of the road that innovation needs to follow to serve the public interest, and in doing so be clear that innovation can rightly challenge those rules and cause them to adapt. But, what we cannot have is a world where innovation gets a free pass to ignore the public interest. The odds of such an approach not ending well are too high. It follows that as public policy makers we need to provide a lead in setting out these rules of the road and be prepared to think openly about how they can be fitted to changing circumstances. This requires early engagement, something we are seeking to do on digital currency. Playing catch up with public policy is not a recipe for success.
Although there is a, by now extensive, literature on financial frictions, including attempts to incorporate them in New Keynesian models, it turns out that such extensions make little difference to the propagation of shocks, to optimal policy, or to the quantitative conclusion that overwhelmingly the most important objective remains inflation stabilisation. 12 There is no doubt that financial frictions such as asymmetric information, credit constraints, and costly monitoring of borrowers, to name but a few, are an important part of the story of how crises happen and why they impact on output. But those models do not provide a convincing account of the gradual build-up of debt, leverage and fragility that characterises the run-up to financial crises. 13  8  This specification of the objective function can be derived as an approximation to the maximisation of the welfare, defined over consumption and leisure, of a representative consumer with an infinite horizon (see Rotemberg and Woodford, 1997). 9  The frontier is named after the US economist John Taylor. 10  To implement such a policy reaction function requires an empirical judgement about the factors that drive the volatility of both inflation and output. In principle, these should include those factors in the banking and financial system, including movements in asset prices, that generate fluctuations in demand and output and affect the way in which shocks are transmitted through the economy. In practice, however, rather little attention was paid to the role of the banking system in determining inflation and output. 11  Brazier et al.

Zdeněk Tůma: Education as investment in human capital Speech by Mr Zdeněk Tůma, Governor of the Czech National Bank, for the graduation ceremony, The New Anglo-American College, Prague, 20 June 2008. *  *  *  Ladies and gentlemen, dear colleagues, It is my pleasure to be here today and to share with you some thoughts that concern the role of education as an investment in human capital in the long-term development of our economy and society in general. Today it’s commonplace for politicians to swear by concepts like investment in education, knowledge-based economy or the effect of education on long-term economic growth. They are also quick to add something about the necessity to pay for university education, at least those on the right wing of the political spectrum. Don’t worry, we haven’t met today to assess individual political ideas, and we all know that sometimes it’s a long road from what politicians say to what they do. However, the fact that you are sitting here today indicates that viewing education as an investment has its place in today’s society regardless of political preferences. I would like to use this opportunity to point out that although the concept of investment in education may be somewhat misused and can have unfortunate overtones for somebody, it has a rigorous theoretical foundation and is of high empirical relevance.
That should include, in addition to exchange rates, rules of the game for controlling capital inflows, plans to raise saving in the deficit countries, structural reforms to boost demand in the surplus countries, and even the role and governance of the international financial institutions. What is needed now is a “grand bargain” among the major players in the world economy. A bargain that recognises the benefits of compromise on the real path of economic adjustment in order to avoid the damaging consequences of a move towards protectionism. Exchange rates will have to be part of such a bargain, but they logically follow a higher level agreement on rebalancing and sustaining a high level of world demand. A natural forum in which to strike such a bargain is the G20. But to turn the regular round of international meetings into a real agreement will require a revolution, different in nature but no less significant, than that which put the Black Country on the map. Landlocked though the Black Country may be, our local economy has always been linked to a wider world – by canal, rail, road, and air, even fibre-optic cable. So the manner and speed with which the global imbalances unwind will have a direct impact on the Black Country and the UK economy as a whole. Such developments in the real economy are important also for the Monetary Policy Committee, because they are an important influence on our primary goal of ensuring inflation is on track to meet our 2% inflation target.

The biggest risk to an orderly rebalancing of our economy comes from abroad. Efforts to restore world demand are impeded by the scale of the imbalances in trade, which are beginning to grow again. If the UK and other low-savings countries are to rebalance their economies, demand for their products must increase overseas. Lower domestic demand in the deficit countries must be accompanied by strong growth in domestic demand in the surplus countries if the world economy is not to slow. That will require a change in the strategy of those countries that have built their own policies around export-led growth. In searching for a solution, some ask who is to blame. But that misses the point. Before the crisis, all the main players were rationally pursuing their own perceived self-interest. Policymakers in countries like China wanted to develop via an export-led strategy, and policymakers in the low-saving countries took actions to maintain an adequate level of overall demand, consistent with steady, low inflation. But what seemed to make sense for each player individually did not make sense in aggregate, and we can see the consequences. A key lesson from the crisis is that we must find better ways of ensuring the right collective outcome. That challenge is clearly visible today. All countries accept that global rebalancing is necessary.