samchain/econo-pairs-v1 huggingface dataset:
Rajan (2005), “Has financial development made the world riskier?” Proceedings of the FRB Kansas City Jackson Hole symposium “The Greenspan years: Lessons for the future”; and F. Allen and D. Gale (2007), Understanding financial crises, Oxford University Press. 19  See: G.B. Gorton and A. Metrick (2009), “Securitized banking and the run on repo”, Yale ICF working paper no. 09–14. BIS Review 45/2010  7  element of truth in this characterisation. But the conditionality of such pre-commitments on the state of the economy may prove hard to communicate. Financial intermediaries may interpret pre-announced paths as a liquidity guarantee, promoting the excessive risk-taking behaviour I have discussed. Such behaviour may then limit the future flexibility of monetary policy-makers to react promptly to changed circumstances. All in all, such pre-commitments are not useful and, may even be damaging. Effective central bank communication should allow market participants to understand the decision-making framework. But a pre-commitment to a future path of short-term rates is best avoided. It limits the flexibility of policy-makers – operating within a transparent, rules-based framework – to take decisions as conditions evolve. Looking back over recent years, it seems likely that the adoption of such pre-commitments by some central banks led them to tighten policy too late and too slowly, thus helping to maintain the overly loose monetary stance that fuelled financial imbalances. 3. Assessing economic conditions  Even with the most sophisticated models of the economy, policy-makers are still heavily reliant on an accurate assessment of the conjunctural situation.

The reaction to the crisis has however shown that central banks learn fast and can take decisive action to protect the economy. Their response is in stark contrast to how they reacted to the Great Depression. On that occasion, monetary policy-makers were largely responsible for causing the crisis, for deepening it and for preventing a quick recovery. We can be more optimistic this time around. 12  BIS Review 45/2010
They consist of, first, risk-sensitive minimum requirements; second, a more consistent system of supervisory review; and, third, enhanced transparency and market discipline. Each of these three pillars offers unique benefits on its own, but the real strength of the three pillars stems from their ability to complement each other. The first pillar - which specifies the minimum capital requirements - constitutes a very direct approach to supervision. By applying a uniform set of rules to banks, the first pillar adds transparency to the regulatory process. Applying a shared set of rules to all banks makes it easier to compare organisations and get a sense of their relative degrees of solvency. On a technical level, the Committee based the measures of risk on the advanced practices that banks are adopting. The rules reflect the evolution in credit risk management by allowing qualifying banks to rely partly on their own estimates of the drivers of credit risk to determine the amount of capital required against particular exposures. One such driver of credit risk might be the bank’s own estimate of a borrower’s probability of default. Similarly, the new capital rules will reflect the advances in operational risk measurement by incorporating an explicit capital charge for such exposures to loss. BIS Review 32/2004  3  So the minimum rules will align capital charges more closely to better measures of the actual underlying economic risks that the industry is developing.

Supervisors and global market participants face significant hurdles in exercising discipline on an entity whose operations span more than one jurisdiction. Business practices differ between countries. Legal systems may be unfamiliar. Deciphering balance sheets prepared under national accounting systems can be an extremely taxing undertaking. Considering those burdens alone, it is easy to agree that supervisory and market discipline would be more effective under more harmonious - if not completely harmonised - accounting rules. But the task is formidable. In our duty to safeguard and reinforce financial stability, central banks and financial supervisors have a legitimate interest in the quality of accounting standards and their effective implementation. We believe that in order to help fortify the financial system, accounting standards should support - or at least be consistent with - sound risk management and control practices in use in the industry. In addition, accounting standards should facilitate market discipline by providing a more transparent “window” into an organisation’s financial position and performance and likewise into its measures and management of risk exposures. Finally, accounting standards should facilitate the effective supervision of financial institutions. In the specific case of the insurance industry, I think it’s fair to say that almost all of us believe that, for international standards to be complete, we need a single, high quality standard developed to address insurance liabilities.
Koh Yong Guan: Review of Singapore’s economy and financial sector Opening remarks by Mr Koh Yong Guan, Managing Director of the Monetary Authority of Singapore, at the press conference releasing the MAS’s Annual Report, Singapore, 21 July 2004. *  *  *  Introduction Good morning, ladies and gentlemen. Let me first give you a quick overview of current economic conditions. I  Supporting non-inflationary economic growth  As you know, the Singapore economy experienced a difficult first half last year. Global economic conditions had improved markedly since then, providing support for a rebound in the domestic economy. We have since recorded four consecutive quarters of solid growth. The latest economic data released by MTI showed that GDP in second quarter this year grew a robust 9.1% on a seasonally adjusted annual rate basis. Looking ahead, the prospects for the external economy remain bright. Notwithstanding the risks from rising interest rates, higher oil prices and a sharper than expected slowdown in China, the upturn in the global economy is likely to be sustained through the rest of this year and will support the continued expansion in the domestic economy. Barring any major shocks, Singapore is on track to achieve GDP growth of 5.5% to 7.5% this year. Following an extended period of very low domestic inflation, signs of inflationary pressures have emerged in recent months. The forecast for CPI inflation in 2004 was hence revised upwards to the 1.5-2.0% range.

International capital markets play an important role for Norway. We drew on borrowing opportunities abroad when the petroleum industry was under development. We did the same in order to expand welfare schemes and to finance the countercyclical policy of the mid-1970s and the early 1990s. In the past 15 years, international financial markets have enabled us to convert national oil and gas resources into foreign equities and bonds. See chart “Real return on the fund” at the end of the speech. Since its establishment in 1998, the fund’s average annual real return after costs has been 2.9 per cent, or somewhat lower than the expected long-term return. This figure is marked by the challenging character of the financial crisis. The fund lost NOK 633 billion 4 in 2008, but a market reversal in 2009 has resulted in a positive return of NOK 716 billion over the past five quarters. So far, the fund seems to have fared relatively well through the most severe financial crisis for many decades. We still consider a real return of 4 per cent as realistic over time. This is based on the assumption that investment in sound government securities in the market can provide a reliable real return of about 2½ per cent. At the same time, the fund can reap a return of 2 to 2½ per cent in the long term from the three-fifths equity portion, some gains on corporate bonds and returns from active management.
During the past year the situation in the Swedish labour market has improved appreciably. Since the beginning of 1999 the number in employment has risen by almost 100,000. A continued improvement can be expected, but more employers are reporting difficulties in recruiting qualified labour even though unemployment in Sweden is still historically high. There is still a need for measures of a structural nature to improve the workings of the labour market and thereby the long-term conditions for economic growth. Consumption The demand side of the Swedish economy, above all private sector demand, has picked up properly in recent years. In 1997 private consumption rose 1.6% from the previous year, followed by 2.4% in 1998 and a preliminary rate of 3.4% between the first halves of 1998 and 1999. Major factors behind the growth of private consumption are the better labour market situation, rising disposable income and increments to household wealth. The consumption trend is particularly dependent on future household income. Expectations of an improvement will lead to increased spending on consumption at the expense of current saving. At present, households’ optimism about their own economy seems to have stabilised at a level that is historically high. The Riksbank envisages that household expenditure on consumption will be stimulated in the future by, for example, rising real wages, low interest costs and tax relief. Moreover, international economic prospects have stabilised and employment in Sweden has risen. These developments suggest that the consumption trend will remain favourable.

Some observers consider that this performance represents a new economic era in which high economic growth and falling unemployment can be achieved without generating increased inflationary pressure. According to this view, potential output has risen in recent years, accompanied by a fall in equilibrium unemployment. Explanations for this could be, for example, improved productivity as a result of new technology and increased international competition. An alternative explanation is that transitory factors, such as the loss of global demand in connection with the crisis in Southeast Asia, have caused prices to fall or remain unchanged. In Sweden, too, economic growth since the mid-1990s has been comparatively good without inflationary pressure giving cause for concern. The monetary stance has been adjusted accordingly and  3  BIS Review 90/1999  the repo rate is currently 2.9%. It is too early, however, to say whether or not this is a sign of some farreaching change in the Swedish economy. The Riksbank will have to take a close look at the incoming statistics and endeavour to arrive at a conclusion. Conclusion There are many signs that the Swedish economy is growing more rapidly. It is only now that we are beginning to see growth rates above 3%. For the Riksbank – as well as for the economy in general – it is important that this trend does not again land us in a situation where inflation is high and variable. Provided the cards are played correctly, growth can be sustained and lead to a permanent increase in employment.
However, it also identifies two circumstances under which the Riksbank can depart from this aim; namely transient effects on inflation  BIS Review 37/2005  1  and large deviations from target. The main idea behind this is that we do not focus solely on inflation in every situation; we should also be able to regard developments in growth and employment when these do not conflict with the inflation target. Transient effects refers to certain determined factors which affect the inflation forecast one to two years ahead, but which will then subside without having any lasting effect on inflation trends. This was the case, for instance, in 2002-2003, when large fluctuations in oil prices had a significant effect on inflation. We made it clear then that monetary policy should disregard these transient effects. Large deviations from target refers to when inflation deviates so far from the target level that there may be justification for bringing it back to the target level over a longer period of time than the usual two-year horizon. A more rapid return to the target could cause undesirable fluctuations in, for instance, production and employment and thereby lead to large costs for the real economy. Since the decision on the clarification was taken in 1999, it has become increasingly evident, in my opinion, that there are a number of good reasons for allowing deviations from the inflation target during short or long periods of time.

Should the repo rate be used to slow down this development to try to prevent prices becoming so high that the fall, when it actually  BIS Review 37/2005  3  comes, will be too fast and too far? There are many examples of how the air has gone out of asset markets and thereby triggered or aggravated a downswing in economic activity. Or is it more reasonable to wait until the “bubble” has burst and then try to counteract the effects the best one can? This question is neither a simple one nor a new one. It is discussed by central banks around the world, whether or not they have specific inflation targets. And there is hardly a clear-cut answer. As I see it, the seriousness we in Sweden should attach to households' increased debt burden is closely connected with how we assess price trends in the housing market. Although there has so far been a large rise in prices, particularly in metropolitan areas, we have not seen the clearly speculative tendencies apparent in other markets, for instance Australia and the United Kingdom. In Sweden we still usually buy housing to live in it ourselves. In some other countries, where the tax legislation and housing loan markets are different from in Sweden, people buy one or more additional properties in the hope that they will rise in value, rather like buying equity or other financial assets.
François Villeroy de Galhau: Big techs in finance - a bildungsroman that is far from over Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the highlevel BIS conference "Big techs in finance – implications for public policy", Basel, 9 February 2023. *** Ladies and Gentlemen, It is a pleasure for me to introduce the second day of this BIS high-level conference on big techs in finance. While it is a pity to do so from a distance, perhaps that is fitting for a conference on the changes in our working lives brought by digital innovation. Very early on, big techs saw finance as a natural complement – and booster – to their core businesses, launching a technological revolution that might bring many benefits to consumers, across different fields such as payments and stablecoin issuance. Big techs have met with success on some of these roads, and less so on others. Interestingly, some of these developments do not exactly match what we could have expected even four years ago. We can therefore consider big techs' entry into finance as a bildungsroman – a sort of coming of age story – with promising early years and somewhat disappointing learning years partly behind usi. Building on this already significant experience, the maturity years may be ahead of us – but that will only be possible under consistent conditionsii. I. Big techs and finance: a bildungsroman unfolding under our eyes A.

In 2019, Facebook unveiled its Libra project that consisted of issuing stablecoins pegged to several currencies, claiming cheap and efficient payment solutions (including for cross-border payments) and greater financial inclusion. Around the same time the strange word "cryptocurrencies" appeared, a word that hurt the ears of politicians and central bankers. From time immemorial, money had been sovereign in order to be reliable and lasting. B. Disappointing learning years? Needless to say Libra had its risks. I will not list them all, but it raised very significant concerns about financial stability, money laundering, etc. The issues at stake reached far beyond mere financial regulation, and also included more acutely than ever the question of competition. This is when big techs entered their learning years in finance, confronting reality. Libra did not materialise, even after it was adjusted and rebranded as Diem. Existing stablecoins are issued by players other than big techs, mainly from the digital asset industry. Incidentally, after the failures and/or crimes committed by some of them, it is high time to regulate cryptos in full and to require licensing. Let us not kid ourselves into believing that we can count on the so called "crypto winter " which has actually lasted for over a year now, to make the problem disappear by itself. That would be a dangerous illusion and would further delay supervision that is so badly needed.v All jurisdictions agree in principle to regulate, under the common FSB umbrella.
Despite the upwards revision to growth, financial markets’ best guess of how rapidly the first percentage point of tightening will take place is essentially unchanged over the past year – around 20 basis points per quarter. So too is their best guess of where interest rates may settle in the medium run – around 2–3%. Views may in time differ across the MPC on the preferred lift-off date for interest rates, as you would expect at a difficult-to-predict turning point in the cycle. These will reflect individual members’ different reading of the runes, not their individual preferences. That is a real benefit of the MPC’s committee-based structure, with individual member accountability. It is not difficult to see why this choice over timing is a difficult one. The policymaker in this situation faces the self-same dilemma as the batsmen facing a ball pitching in the corridor of uncertainty. In that situation, the coaching manual no longer offers a clear guide. Two strategies are equally justifiable. The first is to stay on the back foot and play late. This has the advantage of giving the batsmen more time to get a read on the trajectory of the ball as it swings and darts around. It avoids the risk of lurching forward and then needing hurriedly to reverse course if the first movement is misjudged. This is the way, Joe Root, the Yorkshire and England batsmen, plays his cricket. If he were on the MPC, he’d be called a dove. But this strategy is not riskless.

But the Bank’s estimates suggest it may have been more than 6% smaller than it is today. In money terms, we as a nation would have been between £ billion poorer – roughly, the GDP of Yorkshire and Humberside. As defensive measures go, then, UK monetary policy for the past few years has been positively Boycott-ian.1 Since the start of 2013, the economy has begun to respond to the medicine. UK output is estimated to have grown by over 3% in the past year – that is, at the top of the league table  1  Again for the uninitiated, Geoff Boycott was a famous Yorkshire and England batsmen venerated for his defensive technique. BIS central bankers’ speeches  1  among the G7 nations. And growth this year and next is forecast by the Bank to remain around 3%, again at or close to the top of the G7 league table. Output is now just about back to its pre-crisis levels. The employment picture has been even more positive. Over 1.5 million jobs have been created in less than three years. Unemployment has fallen from a peak of 8.4% in 2011 to 6.6% today. It is expected to fall further, to below 6% by 2017. Over the same period, inflationary pressures have abated, with inflation falling from a peak of 5.2% in 2011 to 1.5% today, below the Bank’s 2% inflation target. The Bank’s forecasts suggest it is likely to hover around that target in the period ahead.
In August, inflation, measured in terms of CPI and UND1X, was forecast from this perspective to rise slowly to around our 2-per-cent target. There is currently no reason to alter this forecast markedly. Some factors that are difficult to access Of course there are factors that could thwart the main scenario I've just presented. One such factor is a delay in the European economic recovery. Several countries in the euro area are contending with growth problems. Germany's GDP, which comprises one-third of that of the euro area, declined during the second quarter. Investment in Germany has fallen since 2000 while consumption has been weaker than the euro area average. There was also a contraction in second-quarter growth in France, whose GDP comprises roughly one-fifth of that of the euro area. This came after the country had enjoyed relatively robust growth in consumption in recent years, which had compensated  2  BIS Review 42/2003  for weak investment growth. There are also more fundamental problems in the euro area which could have a negative impact on economic activity. For instance, Germany is still suffering from the aftereffects of reunification. Moreover, the euro has appreciated sharply. In light of this, there is no doubt that the world economy is strongly dependent on a US revival. The outcome of the forthcoming wage bargaining round will also be of great importance, both for economic activity and inflation prospects.

Lars Heikensten: The Swedish economy and monetary policy Speech by Mr Lars Heikensten, Governor of the Sveriges Riksbank, at a seminar arranged by the Stockholm Chamber of Commerce and Veckans Affärer, Stockholm, 29 September 2003. *  *  *  Let me begin by thanking you for inviting me to speak at the seminar. As we all know, the Swedish people have voted to remain outside the single European currency. As regards monetary policy this means that we will carry on as before; price stability in Sweden will continue to be the focus of our efforts. We will be continuing to make forecasts of economic activity and inflation as a basis for our monetary policy decisions, and to publish inflation reports and minutes of monetary policy meetings explaining the reasons for these decisions. To some extent the outcome of the referendum must be interpreted as a vote of confidence for the stabilisation policy regime we have had over the past ten years. Important components of this have been a budgetary policy with an expenditure ceiling and surplus target, and a monetary policy with an inflation target. The changes we have made in stabilisation policy can only be described as a success. The budget balance has been turned around from a deficit of 12 per cent of GDP in 1993 to a substantial surplus at the beginning of 2000. Inflation has been stable and has largely been close to 2 per cent.