samchain/econo-pairs-v1 huggingface dataset:
The greater the distance the circle is from the center of the target, the greater are  3  Putting equal weight on (squared) inflation and unemployment deviations is reasonably standard. Given Okun’s law, this is equivalent to a formulation that weights inflation deviations four times more heavily than output deviations. In his seminal 1979 analysis, John Taylor noted that any heavier weight on inflation would reflect “extremely uneven concerns about inflation.”  BIS central bankers’ speeches  3  our policy misses. And the greater our policy misses, the greater are the social gains from aggressive monetary and other public policy actions to correct them. The bull’s-eye scorecard approach has three benefits. First, it provides accountability by clearly describing success and failure to achieve our mandated goals. Second, it renders operational the concept of the FOMC’s intent to take a balanced approach in achieving our goals. Third, the bull’s-eye guides the public’s judgment of the FOMC’s likely response to current economic conditions. While we have made considerable progress toward our goals since 2011, we still have some ways to go to reach the bull’s-eye. Missing on the full employment mandate That’s certainly clear in the case of our employment mandate. While we’ve made much progress since the onset of the Great Recession when unemployment reached a high of 10 percent, 6.7 percent is still well above the 5–1/4 percent rate I think is the longer-run normal. Indeed, 6.7 percent is higher than the 6.3 percent peak unemployment rate in the previous recession.

Moreover, we have to ask ourselves if this gap is a good measure of the current degree of slack in the labor market. For example, some of the decline in the unemployment rate over the past four years reflects people dropping out of the labor force instead of finding jobs. Of course, certain demographic factors such as the increasing number of baby boomers reaching retirement age mean we should have expected to see a substantial drop in labor force participation for reasons unrelated to cyclical job prospects and the health of the labor market. But, when you take a detailed look, it appears that the labor force participation rate has recently declined more than can be accounted for by demographic trends and other such structural factors alone. In addition, the end of extended unemployment insurance benefits and other factors likely have decreased the natural rate of unemployment that is our target. So, the decline in the unemployment rate likely overstates to some degree the reduction of slack in the labor market over the past year. This discussion illustrates how difficult it is to judge where the labor market stands relative to our full employment mandate. A while back, this wasn’t such a critical issue: When the unemployment rate stood at 9 or 10 percent, it obviously far exceeded the natural rate of unemployment. Now, as the unemployment rate falls closer to its natural rate, disentangling structural from cyclical changes becomes more important.
Therefore, the agencies' incentives to do a proper job should be quite enough without regulation. Crisis management – preparedness needs to be strengthened Another issue that I believe needs particular attention is how to achieve better crisis preparedness, which means that I am now switching to talk about crisis management issues. As on numerous occasions in the past, many countries were ill prepared for this crisis and had to rely on ad-hoc solutions for handling it. In the case of the EU, member states quickly had to reach an improvised agreement on a co-ordinated and comprehensive financial support plan. We have had the same situation in Sweden, both when we had a crisis in the early 90s and, more surprisingly, even now. Despite the quite recent experience of a systemic crisis, legislators had not been able to get a proper framework for the management and closure of distressed banks in place. Thus, also this time we had to rely on improvised solutions. Even if these ad-hoc measures often seem to work out pretty well there is no guarantee that they will do so consistently. To let financial system stability become the hostage of improvised political processes is obviously not an optimal order. Experience from previous crises also shows that improvised crisis management measures often come too late, are inadequate, and ultimately turn out to be more costly then they would have needed to be. I would say that British Northern Rock is the perfect example of all this.

My point of view is that the need for policy response is not so much about imposing more and heavier regulations, but instead about improving and developing existing ones. When doing so, two conditions must be met: first, some kind of market failure has to be proven, and second, the benefits of imposing new rules must exceed the economic costs. Given recent events, there are numerous regulatory issues to discuss within this context. In many cases work has already started. For example, how to achieve better management and supervision of liquidity risk as well as greater transparency in the financial sector are important matters currently under review. Further issues include regulatory treatment of the originate-and-distribute model and off-balance sheet entities, as well as procyclical elements in regulation. Of particular interest is the issue of clearing and settlement arrangements in the unregulated credit derivative markets. One partial explanation of the uncertainty that has prevailed in the financial system recently is the absence of a resilient infrastructure for these markets. No central counterparties have existed and there has been no common market place for exchanging these instruments. As a result, trading has been fragmented and opaque, which in turn has implied that nobody has really known where the credit risks are and few have realised that these risks – directly or indirectly – actually have remained on the banks’ balance sheets. Clearly, there are many issues on the agenda and the course of events over the past year has underscored the need to get to work.
A degree of humility is appropriate given the lack of experience as to how markets will respond when economic conditions eventually cause investors to anticipate exit. When asset purchases are anticipated to end or when asset sales begin to be anticipated, this will affect term premia in ways that cannot be precisely predicted in advance. That said, I do expect the repricing will prove manageable. We will seek to communicate so as to avoid generating sharp shifts in term premia and in long-term interest rates. Also, we will play close attention to ensure that financial institutions are managing their interest rate risks appropriately. The third set of costs is the impact of higher short-term rates on the Federal Reserve’s earnings and balance sheet when exit occurs. When we ultimately raise short-term interest rates, this will squeeze the Fed’s net interest margin. Also, when the Fed sells long-term assets, there is some prospect for losses on these sales depending on the level of long-term interest rates at the time when such sales occur. This means that the Fed’s earning could fall sharply or even turn negative in a given year. We look at this issue very closely to understand the risks here. The good news is that a very large proportion of our liabilities – those associated with currency outstanding – has no interest cost. This mitigates the risk of a sharp net interest margin squeeze.

Another reason why monetary policy has become less effective in stimulating the economy is because the impetus from a given level of monetary accommodation likely has become attenuated – that is, less powerful – over time. Historically, attenuation has not been important because monetary policy typically has not stayed exceptionally easy for long periods of time. But this time is different and that difference may be important. So how might the monetary policy impulse on economic activity have become attenuated over time? I would suggest two potential channels. The first channel is that monetary policy works, in part, by changing the timing of purchase decisions. If interest rates decline, the drop in financing costs may induce some households to buy a motor vehicle or purchase a home now rather than in the future. Of course, if the car or home is purchased today, this will borrow at least a portion of those sales from the future. There is a limit to how many cars and homes most people will want to buy, given their budget constraints. In this case, as the stimulus from the policy stays in place, the impulse on economic growth will gradually “wear off” as there are fewer and fewer households who can be induced to pull their future planned purchases forward to the present. The same argument applies to mortgage refinancing activity. The stimulus comes from the refinancing activity, which increases the amount of income that borrowers have available for other expenditures.
An important question is whether this increased relative attractiveness of alternative liquid assets would also reduce the PMRR. Few of the firms we spoke to expected a big effect on their minimum holdings. That’s consistent with more detailed surveys carried out by the Federal Reserve, which suggested little response  15  In practice, of course, asset prices are jointly determined with reserves demand: they will have adjusted to ensure that the aggregate supply of reserves, determined by asset purchases, is willingly held. 10  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  10  even to quite large changes in the opportunity cost of holding US dollar reserves.16 But we should be cautious of these findings when alternative rates of return have been so low for so long. Bringing all this together, our conversations with firms suggest the current sterling PMRR is of the order of £ Table 1 breaks this down into a base estimate of firms’ ‘true minimum’ demand to meet payments and liquidity outflow needs, and an additional estimate of the buffers held above these minima.17 These estimates draw on firms’ descriptions of their preferred holdings and their management of fluctuations in reserves levels, cross-referenced with our own analysis of historic reserves account activity.

And that is how we will continue to manage the Bank’s balance sheet in the years to come. Thank you  16  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  16
Corporate lending in relation to GDP has remained relatively constant over the last four years, and is currently far below the levels which prevailed at the end of the 1980s. The financial statements presented by companies are also currently strong, which suggests good solvency. In this context, I would also like to point out that those companies within the “new economy” that are currently very much in the news and which show weak profitability finance themselves primarily via the risk capital market and not via bank loans. This means that a possible downturn in this part of the corporate sector should only have limited direct effects on the banks. In terms of household lending, the situation is rather different. Lending to households has risen relatively strongly over the last two years and currently amounts to over 40% of GDP. It is therefore approaching the levels we saw at the end of the 1980s. However, it should be stressed that households’ interest expenses are currently lower due to the low interest rates. This rise in lending is also reflected in the household debt ratio, i.e. debts in relation to disposable income, which has risen and which now amounts to 104%. Households are borrowing to an increasing extent, at the same time as their economic situation has improved as a result of rising disposable incomes and falling unemployment.

As always, what I have to say represents my own views and not necessarily those of the Federal Open Market Committee or the Federal Reserve System.1 The first trend has been the development of a global financial system. This has increased financial system interdependencies and, hence, the importance of harmonizing standards across national regulatory regimes. It also has made it more important to avoid regulatory arbitrage and race to the bottom types of behavior that could weaken the resiliency and robustness of the global financial market infrastructure. The second trend is the increasing importance of FMIs within the financial system. As trading across a more complex array of instruments and products proliferates, and as more trades are centrally cleared, well-managed FMIs play an increasingly important role within the financial system. The third trend stems directly from the first two. With the global financial system becoming more prominent and FMIs playing a bigger role within this global financial system, it has become ever more essential that major FMIs operate safely. When run well, they mitigate risk. But, run poorly, they could be a source of contagion and risk propagation throughout the global financial system. This means that the CPMI’s work has become much more critical in ensuring a safe and sound global financial system. The growing influence of the CPMI can be seen in its success in staying ahead of these trends.
William C Dudley: Enhancing financial stability by improving culture in the financial services industry Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the workshop on “Reforming Culture and Behavior in the Financial Services Industry”, Federal Reserve Bank of New York, New York City, 20 October 2014. *  *  *  As I noted earlier at the start of today’s workshop, improving culture in the financial services industry is an imperative. This endeavor is important in order to ensure financial stability over time, but also to ensure the public trust in our financial system. In my remarks today, I will first talk about what I see as the culture problem. Then, I will focus on how incentives could be improved within the financial services industry to encourage better culture and behavior. This includes how we compensate employees of a financial institution, but it also extends to how these firms identify wrong-doers and punish them. As always, what I have to say today reflects my own views and not necessarily those of the Federal Reserve System. 1 The existing culture problem In recent years, there have been ongoing occurrences of serious professional misbehavior, ethical lapses and compliance failures at financial institutions. This has resulted in a long list of large fines and penalties, and, to a lesser degree than I would have desired employee dismissals and punishment. Since 2008, fines imposed on the nation’s largest banks have far exceeded $ billion.

Unless the financial industry can rebuild the public trust, it cannot effectively perform its essential functions. For this reason alone, the industry must do much better. As was discussed earlier, in the U.K., seven of its largest banking institutions have recently founded the Banking Standards Review Council under the leadership of Sir Richard Lambert, who joined us today. I would strongly encourage the largest institutions based here in the United States to work to develop collaborative solutions aimed at improving culture and rebuilding the public trust. The key role for senior leadership Correcting this problem must start with senior leadership of the firm. The “tone at the top” and the example that senior leaders set is critical to an institution’s culture – it largely determines the “quality of the barrel.” As a first step, senior leaders need to hold up a mirror to their own behavior and critically examine behavioral norms at their firm. Sustainable change at any firm will take time. Turning around a firm’s culture is a marathon not a sprint. Senior leaders must take responsibility for the solution and communicate frequently, credibly and consistently about the importance of culture. Boards of directors have a critical role to play in setting the tone and holding senior leaders accountable for delivering sustainable change. A healthy culture must be carefully nurtured for it to have any chance of becoming self-sustaining. Firms must take a comprehensive approach to improving their culture that encompasses recruitment, onboarding, career development, performance reviews, pay and promotion.
Under certain conditions, the Riksbank can also act as a temporary market maker by buying and selling financial instruments at predetermined prices to support the functioning of systemically important financial markets. The aim is to avoid major negative consequences for other parts of the economy. At the end of 2021, inflation started to rise rapidly in different parts of the world. Monetary policy shifted from expansionary to more contractionary in order to curb price increases. This could lead to a new conflict between price stability and financial stability, but the conflict is different now than in the wake of the global financial crisis. Inflation is now too high, not too low, and the risks in the financial system are greater, partly because households and companies are highly indebted. This makes the economy more sensitive to interest rate increases and it may be more difficult to manage various shocks. I can note that this is a situation that we have not found ourselves in during the period with an inflation target, that is, since the mid-1990s. Excessive private debt risks leading to financial dominance In Sweden, household and corporate debt is high, see Figure 3. A large proportion of households also have variable interest rates, which makes them relatively sen-  23 Taper tantrum refers to the strong market reactions that occurred in August 2013 when the Federal Reserve  announced that it would begin to reduce its asset purchases. US government bond rates rose sharply in a short time. 24 See Brunnermeier (2023).

Banks in both the United States and Switzerland have suffered major problems, forcing authorities to make far-reaching interventions to avoid a financial crisis. Once again, we have seen confirmation of how dependent we are on the functioning of financial institutions, and how financial problems in one part of the world can easily spread to other parts. As a consequence, global standards for financial regulation are likely to require a number of changes. 1 Thank you to Magnus Jonsson and Jonas Niemeyer for help in preparing the speech and to Stefania Mammos  for help with data and figures. Thanks also to Björn Andersson, Mikael Apel, Hanna Armelius, Aino Bunge, Charlotta Edler, Mattias Erlandsson, Frida Fallan, Martin Flodén, Rebecka Hallerby, Iida Häkkinen Skans, Jens Iversen, Gustaf Lundgren, Marianne Nessén, Christina Nordh-Berntsson, Åsa Olli Segendorf, Marianne Sterner, Ulf Söderström and Anders Vredin for valuable comments and Elizabeth Nilsson for the translation. 1 [30]  Monetary policy and measures to promote financial stability are interdependent. If the financial system is not stable, price stability is threatened and without monetary stability, financial stability is threatened. When inflation is high at the same time as there are risks in the financial system – which in Sweden is mainly due to the large private debts of households and companies – this can increase the risk of "financial dominance", that is, that consideration of risks in the financial system limits the possibilities for monetary policy to combat inflation and that the credibility of the inflation target is thereby undermined.
Question 2: Inflation, policy, and the economic recovery A second key question involves the concerns about Fed actions stoking inflation. This question is not a distinct and separate issue from the one we just discussed – the strength of the recovery. In fact they are crucially related. If housing-related growth is not going to boost the recovery this time around, we may need policy – particularly monetary policy – to continue playing a stimulative role. But it is important to look at possible costs of stimulative policy, as well as benefits. If inflation were to become a problem that would certainly fall in the costs column. But if analysis  2  Figures 8 and 9 are based on data from McDash Analytics LLC, a subsidiary of Lender Processing Services, Inc. The McDash data contain loan-level data from mortgage servicers, and cover more than half of all outstanding mortgages in the United States. The number of servicers contributing to the McDash dataset is growing over time, so the decline in purchase loans depicted in Figure 8 probably understates the true decline in lending to a small extent. The 2010 distributions reflect data through November 2010. 3  The share of subprime loans in the McDash data is generally smaller than the true subprime share of U.S. mortgages. To create Figure 9, subprime loans in the McDash data were "upweighted," so that the adjusted 12 subprime share matches the true subprime share in a benchmark year (2006).

In order for us to attain this vision, we need to improve the financial infrastructure in Zambia. The Government intends to achieve this through the implementation of the Financial Sector Development Plan. An improved financial infrastructure will result in efficient capital and money markets which will in turn attract foreign investment into our economy. However, in order to attract and retain foreign investment, we need to have the ability to provide investors with transparent information that will result in efficient investment decisions, higher returns and greater investor confidence. Without confidence, investors will simply find somewhere else to invest their money. High quality, investor oriented and transparent financial reporting attract both seekers and providers of capital. This is where accountants come in, to ensure the provision of reliable and transparent financial information to potential investors and other users of financial statements. 2  BIS Review 57/2010  Ladies and Gentlemen, I am certain that as members of ZICA you take pride in helping improve the financial sector in Zambia. This is done through standard setting. I recognize the fact that Accounting standards provide the foundation for the production of high quality financial information. I am aware that ZICA has adopted International Financial Reporting Standards (IFRS’s) in full and that all members of ZICA are obliged to ensure compliance with IFRS. However, it is unfortunate that despite ZICA adopting IFRS, it is not a legal requirement under the Securities Act, the Insurance Act, the Banking and Financial Services Act and also at the Lusaka Stock Exchange.