samchain/econo-pairs-v1 huggingface dataset:
The second view is to “lean–against–the–wind”, i.e. that as price stability may not be sufficient for financial stability, central banks should lean against the emergence of financial imbalances by tightening the monetary policy stance over and above the level necessary to bring inflation back to target over a policy horizon that is generally understood to be around two years. The third view is that “financial stability is price stability”. Proponents of this view advocate a more radical change in the objective of monetary policy, arguing that financial stability and price stability are so intertwined that one cannot distinguish between the two.3 Under this view, both standard and non-standard monetary policies are in the first place attempts at stabilizing the financial system, addressing malfunctioning financial markets and smoothing the monetary transmission process. While all these viewpoints recognise the important interplay between financial stability and monetary policy in pursuit of price stability, their relevance ultimately depends on (i) the weight to be attached to the “risk-taking” channel of monetary policy, (ii) the strength of the macroprudential framework and (iii) the policy strategy of the monetary authority, especially as regards its policy horizon. The risk-taking channel Monetary policy contributes to financial stability by smoothing business cycles and anchoring inflation expectations. Monetary policy works through its effects on intertemporal substitution and risk appetite. By lowering risk-free rates, monetary policy increases the attractiveness of investments projects which would not have been profitable under tighter financing conditions.

As far as ERM II is concerned, the minimal exchange rate movements observed over the past few years suggest that Malta would have kept within a hypothetical ERM II band. The indications are, therefore, that this criterion, too, is achievable. Indeed, this should not be any more difficult than the current task of maintaining a hard peg with a currency basket. This leaves the fiscal criteria as the major outstanding problem since the budget deficit is well above the 3% limit and the debt ratio likewise exceeds the 60% reference value. The need to curb the deficit is widely acknowledged and is a central objective of the Government’s Convergence Programme 2004-2007. This is most welcome because progress in the area of fiscal consolidation and structural reforms is desirable not only because of the need to satisfy the Maastricht criteria. It is also required to support the exchange rate as long as Malta continues to pursue a fixed exchange rate regime. Progress in this direction is certainly also necessary if we want to have a smooth passage through ERM II. Indeed, the size of the fiscal deficit is a determinant of the degree of exchange rate fixity which a country can afford, and thus also has implications for the width of the band which will apply to the Maltese lira in ERM II.
5 It is therefore useful to explore parallels between the emerging market experience and what we are currently seeing in Europe. Here in Hong Kong, it is natural to focus on the Asian experience in the mid- to late-1990s, although events in Latin America are also useful to bear in mind. To set the stage for a discussion of policy responses, allow me first to set out what I see as the key similarities and key differences between these episodes. Similarities between euro area and EME experiences The accumulation of financial imbalances and vulnerabilities prior to the crisis is an important feature of both the European and Asian experience. Over-optimistic expectations of longerterm growth performance stimulated a surge in credit expansion and economic activity, associated with massive inflows of capital from abroad (Chart 11). 6 The risks associated with these capital inflows were under-appreciated by investors and therefore under-priced by markets, in part because the aggregate and systemic consequences of a “sudden stop” in such flows were neglected in the decisions made by individual investors (Chart 12). Rating agencies acted in a pro-cyclical manner, also failing to adequately assess systemic risk (Chart 13). 4  See: Calvo, G.A. (1998). “Capital flows and capital market crises: The simple economics of sudden stops”, Journal of Applied Economics 1(1), pp. 35–54. 5  The literature is too large to offer a complete list of references. For a summary, see: Edwards, S. (ed.) (2000). Capital flows and the emerging economies: Theory, evidence, and controversies, University of Chicago Press.

It is easy to understand why lenders may find credit sensitive alternatives attractive in the short-term, but what is less clear is why non-financial borrowers who look to their financial service providers to help them manage their risks would want to see their cost of borrowing being driven by thin liquidity in CP and CD markets. And it is clear they don’t, in a survey of borrowers by the Alternative Reference Committee’s Nonfinancial Corporates Working Group in March this year, over 80% of respondents would prefer alternatives based on SOFR than on credit sensitive alternatives. [16] In fact if lenders looked past the short term benefits of substitutability they too would see that when  Descending safely: Life after Libor ‐ speech by Andrew Bailey | Bank of England  Page 5  the limited durability of these credit sensitive rates is combined with the need, and in some jurisdictions the requirement, to ensure there is access to robust fallbacks the sensible option is to make your primary rate selection the most robust you can. In the UK there is a clear consensus that credit sensitive rates are not required or wanted as part of sterling LIBOR transition and in my view this is sensible. Widespread use of RFRs will ensure we are using benchmarks that will remain transparent to users and embed rates that have long-term durability for the future. Conclusion The use of SOFR in US dollar markets is growing.
However, crude oil prices in the futures markets as of October are still largely aligned with the  BIS Review 159/2010  11  assumptions in the July Inflation Report. In this context, our previous assumption of oil prices are kept unchanged, as you can see on the slide (Table 1). Moreover, based on commodity prices in the futures market, we assume that import prices will exhibit a gradual upward trend throughout the forecast horizon (Figure 27). Now I would like to share with you our inflation and output gap forecasts produced in line with the framework that I have outlined so far. While producing our forecasts, we assumed that the measures outlined in our exit strategy would be completed during the rest of the year, and that policy rates would be kept constant at current levels for some time to be followed by limited increases starting from the last quarter of 2011, with policy rates staying in single digits throughout the 3-year forecast horizon. Within this framework, we project that, with 70 percent probability, inflation will be between 7 and 8 percent with a mid-point of 7.5 percent at end-2010, and between 3.9 and 6.9 percent with a mid-point of 5.4 percent by the end of 2011. Furthermore, inflation is expected to decline to 5.1 percent by the end of 2012 (Figure 28).

Durmuş Yilmaz: Recent economic and financial developments in Turkey Speech by Mr Durmuş Yilmaz, Governor of the Central Bank of the Republic of Turkey, at the press conference for the presentation of the Inflation Report, Ankara, 26 October 2010. *  *  *  Distinguished Guests and Members of the Press, Welcome to the press conference held to convey the main messages of the October 2010 Inflation Report. The report typically summarizes the economic framework addressed in monetary policy decisions, elaborates global and domestic macroeconomic developments and presents the medium-term inflation forecasts, which have been revised in view of previous quarter developments, along with the monetary policy stance. Before moving on to the Central Bank’s assessments of inflation outlook and economic activity, which I will share with you in detail shortly, I would like to summarize the current global conditions that continue to be determinant of the domestic economic outlook. Data released in the third quarter indicate that the recovery will be quite slow and gradual albeit a second contraction in global economic activity is not very probable. The marked decoupling between the developed and developing countries in terms of growth dynamics persisted through the second quarter; where global growth continued to be driven by developing countries (Figure 1). Meanwhile, the persisting negative outlook in the labor markets of developed countries confirms the slow pace of rebound in these economies on one hand; and leads us to believe that the improvement in employment conditions will take a long time, on the other (Figure 2).
Indeed, the major global custodians each posted growth in assets held in custody in excess of 20% in just the past year. 31 And differences between the regulatory regimes for incumbent providers of infrastructure and those for either commercial bank providers or smaller new entrants could tilt the playing field. For example, CLS is subject to close central bank scrutiny, operates as a narrow bank, and has to meet exacting – and costly – resilience standards. New clearing arrangements and bilateral netting schemes are now penetrating the foreign exchange markets, threatening the volumes passing through CLS. In messaging, too, SWIFT – which submits voluntarily to central bank oversight – is beginning to face competition in certain markets from new entrants not subject to oversight. Authorities must be alert to the challenges these competitive developments provide. 32 Other regulatory initiatives are contributing to a reshaping of the landscape. MiFID, in the EU, and RegNMS, in the US, have sought to encourage increased competition in trading; and the Code of Conduct, recently signed in the European Union, establishes terms under which infrastructures operating in one member state can clear and settle (initially equity) trades in another. More than 20 applications have now been made under the terms of the Code. 4  BIS Review 130/2007  33 Whether trading, clearing and settlement infrastructure markets can support a wide range of providers in the long-term remains an open question.

Miguel Fernández Ordóñez: Financial crises – impact and challenges for Spain Opening speech by Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, at the “XIX Encuentro del sector financiero”, organised by Deloitte-ABC, Madrid, 10 April 2012. *  *  *  Good morning, Four years have gone by since the Federal Reserve had to bail out Bear Stearns and what was then known as “turbulences” began, ultimately turning into the most serious crisis the developed countries have faced since the Great Depression in the 1930s. A year earlier, Spain had begun to feel the effects of the exhaustion of a long phase of disproportionate expansion, in the form of a build-up of private debt and a loss of competitiveness. The latter, under way before Spain joined the euro, was fuelled by the low interest rates that suited the euro area as a whole, prompting an extraordinary deficit on the current-account balance. The joint outbreak of these two crises, the international one and the domestic one in Spain, led output to fall and public revenue to collapse. And this, together with a further increase in public spending aimed at softening the recession, meant that the budget surplus run from 2005 to 2007 turned into a deficit in 2008 and came to exceed 11% of GDP in 2009. If this were not enough, in April 2010 a third crisis hit Spain: the sovereign debt crisis or the euro crisis.
I recognize fully that there can be no return to pre-crisis business as usual – whether on the part of the financial sector or on the part of regulators like ourselves. We must learn from the economic catastrophe of the past few years so that the financial system is able to perform its essential role in supporting economic activity without being a source of instability for the economy as a whole. All in all, there is a lot to keep my colleagues and me quite busy – even in normal times. National economic conditions Now, what is the outlook for and risks to economic activity, employment and inflation in the nation? Since the recession ended in 2009, the economy has grown at a relatively modest pace. Economic growth in the first quarter of 2011 was somewhat softer than anticipated, with the  2  BIS central bankers’ speeches  advanced reading of real gross domestic product (GDP) – that’s the economic output of the economy – increasing at only a 1.8 percent annual rate. A number of factors contributed to the slowdown. Construction activity fell – likely reflecting the continued large supply of unsold homes – and government expenditures at the federal, state and local levels declined. In addition, real consumption growth (that is, spending on goods and services adjusted for price increases) in the first quarter was slower than in the last quarter of 2010.

EU-Singapore FTA (EUSFTA) Finally, as we seek to maintain an open economy and to stay relevant, Singapore will work on deepening our engagement beyond the Asia Pacific, for example, with the EU. BIS central bankers’ speeches  3  Negotiations on the EU-Singapore FTA were recently concluded. This is the first FTA which the EU has concluded with an ASEAN country. The EU-Singapore FTA can serve as a pathfinder FTA for EU’s on-going bilateral FTA negotiations with other ASEAN countries, such as Malaysia and Vietnam, and it signals the EU’s interest to engage with the region. When implemented, the EU-Singapore FTA will enhance Singapore’s attractiveness as a gateway for EU companies seeking to tap the opportunities in our region. Conclusion So ladies and gentlemen, to summarise, Singapore is pursuing a strategy of broader and deeper economic integration with major economies through multilateral agreements, such as the RCEP, TPP and EU-Singapore FTA. In addition, we are enhancing our role as a trusted and modern financial hub by expanding into new services, such as offshore Renminbi trading. These initiatives will help investors and companies based in Singapore to “open doors” and “unlock value”. Let me once again express my appreciation to Deutsche Bank for holding the annual Deutsche Bank Access Asia Conference in Singapore and bringing together thought leaders, investors and policy makers together to find ways to tap the opportunities that are being created by Asia’s economic growth. I wish you all a very fruitful conference. Thank you. 4  BIS central bankers’ speeches
This involves cross-border trade and financial interactions between countries, with flows of goods, services or information at increasing volumes and velocities. It is akin to interactions within a social network or across the World Wide Web. At least in principle, each of these individual layers could be complex. These layers are also likely to interact. For example, there are likely to be strong interactions between the financial system and the macro-economy and between individual national financial systems and the global financial system. This coupling between sub-systems adds to the degree of complexity of the system as a whole. Let me present some stylised facts on each of these layers, from microscopic through telescopic, to illustrate why each has the characteristics of a complex sub-component. I will also present some evidence on interactions between these sub-systems, which means we have a genuine macro-financial system of systems. (a)  Complexity among individual firms  There is no off-the-shelf measure of organisational complexity, whether within banks or more generally, but a number of proxies have recently been constructed. For example, the Basel Committee has recently devised a range of complexity metrics for the world’s so-called SIFIs – systemically important financial institutions. 7 So far, 30 institutions globally have been designated by the Financial Stability Board (FSB) as SIFIs, from across a range of countries.

For participants to acknowledge that such actions are questionable would in fact require the activation of slower, more effortful “System 2” thinking. The initial transgression may be small, but the culmination of many small transgressions can result in a set of behaviours which would normally be unacceptable becoming the norm, and an undesirable culture becoming ingrained. This is a version of the old proverb that one bad apple spoils the whole barrel. But the initial argument that it is just the case of “a few bad apples” is no longer credible. Instead it seems that there were deep rooted problems in the nature of FICC markets that resulted in practices that would be unacceptable elsewhere. As the Archbishop of Canterbury put it at a recent panel on ethics and finance at the IMF: “bad business models can corrupt good people.” Perhaps there is something also wrong with the barrel? The characteristics of the Fixed Income Currency and Commodity markets So what are the distinctive characteristics of FICC markets, and how might they have contributed to these problems? First and foremost, the FICC markets are notable for their heterogeneity. That reflects a key role of many FICC markets in providing bespoke instruments, tailored to meet the needs of investors and issuers. For example, while there are just under 2,500 publicly listed equities in the UK, there are over 11,000 different UK corporate bonds. In the US the disparity is even starker, with more than 36,000 bonds compared with just over 5,000 listed stocks.
The Phillips curve – central but controversial Allow me to begin with the correlation that is normally called “the Phillips curve”. The name comes from the New Zealand economist, William Phillips, who, in an article in 1958, showed that there was a negative correlation between unemployment and wage increases in British data for the period 1861–1957. High unemployment tended therefore to be associated with low wage increases and vice versa, as in Figure 1. When many people compete for jobs, demand for higher wage increases falls while a shortage of labour leads to greater wage increases. 2 [16]  Wage increase  Figure 1. The Phillips curve  Unemployment  Subsequently, the Phillips curve concept was broadened to accommodate slightly different, though similar, correlations. In 1960, two American economists, Paul Samuelson and Robert Solow, both awarded the Prize in Economic Sciences in Memory of Alfred Nobel, reformulated the curve in terms of unemployment and inflation rather than unemployment and wage increases. As there is a close relationship between unemployment and output, the Phillips curve was also often formulated in terms of the correlation between inflation and output – or, as it is commonly expressed nowadays, resource utilisation. But it is basically the same thing we want to identify, namely a correlation between economic activity and the rate of increase in prices and wages. For a time, the Phillips curve was interpreted as economic policy-makers being able to choose a combination of inflation and unemployment.

Thomas Jordan: The challenges of the global economic crisis – can Switzerland master them? Summary of a speech by Mr Thomas Jordan, Vice-Chairman of the Governing Board of the Swiss National Bank, on the occasion of a panel discussion at the Central Bank of the Republic of Austria, Vienna, 1 February 2011. The complete speech can be found in German on the Swiss National Bank’s website. *  *  *  Many countries are facing major economic challenges as a result of the financial and economic crisis. Which of these are of particular importance for Switzerland? And how can we tackle them? Switzerland is currently facing three key challenges. First, the crisis has shown that countries can encounter serious difficulties due to systemically important banks. Switzerland has two systemically important banks, in fact, these big banks are systemically important even at the global level. Thus for our country, in particular, it is essential that the stability of the financial system be sustainably reinforced. Second, the crisis has substantially changed the economic environment in which Switzerland – an economy with an extremely global orientation – operates. On the one hand, our country has to cope with the appreciation of the Swiss franc, particularly against the euro, which has come under pressure because of the sovereign debt crisis affecting certain European countries. On the other hand, the crisis has reinforced the shift in economic power towards the emerging economies.
Of course – as I have explored in previous talks (Pill, 2022) – assessing how supportive any particular stance of monetary policy will prove is difficult, since it relies on conceptually and empirically uncertain measures of neutral benchmarks for policy, such as the natural rate of interest or R-star. 9. On Tuesday, the ONS published an unemployment rate for March 2022 of 3.5% (single month basis) (‘Labour market overview’, Office for National Statistics  ). 10. Private sector regular average weekly earnings (AWE) growth increased to 4.8% in Q1, while annual whole economy AWE growth was 7.0% (‘Labour market overview’, Office for National Statistics ). In part, the difference between these two indicators reflects the strength of bonuses in the data, which – despite adding to household income – are not ongoing costs to firms. 11. Of course, that means the assumption of stable energy prices has not proved very accurate in the recent past. But commodity prices are hard to forecast, and the random walk forecast has performed as well as alternatives over most periods. In particular, there is scant evidence that the path of commodity prices embodied in market futures pricing has outperformed the random walk assumption. 12. See Broadbent (2022). 13. See the discussion of a Brexit ‘doppelganger’ model reflected in Chart 1 of my MPC colleague Catherine Mann’s recent speech (Mann, 2022). 14. See Nickell (2005). 15. See the discussion of labour market trends and long Covid reflected in Figure 6 of my MPC colleague Michael Saunders’ recent speech (Saunders, 2022).

[15] In this context, the MPC needs to ensure that domestic price setting does not achieve a selfsustaining, expectationally-driven momentum, which would maintain inflation at elevated levels even as the direct external impulse coming from commodity prices recedes and unemployment starts to rise. Avoiding any drift towards the embedding of such ‘inflationary psychology’ into the price setting process is crucial. With that in mind, and after a very prolonged period of supportive monetary policy in the United Kingdom since the onset of the global financial crisis, the time has now come to withdraw that accommodation in the interest of returning inflation to target in a sustainable way. It is the need for a continuation of this transition in monetary policy that led me to support the 25bp hike in Bank Rate at the May MPC meeting. And, even after this hike, I still view that necessary transition as incomplete. Further work needs to be done. Chart 9: Inflation forecast conditional on alternative assumptions about the path of Bank Rate(a)  (a)This chart shows central projections drawn from fan charts shown in the May 2022 MPR. These depict the modal outcome for CPI inflation in the future, conditioned on an assumption of constant interest rates at 1% and on an assumption that interest rates would follow the market implied curve. Please see the May 2022 MPR report for information on the conditioning assumptions underlying the forecast.