samchain/econo-pairs-v1 huggingface dataset:
Analysis drawing on the information gathered suggests that ‘in aggregate, surveyed funds expected to be able to liquidate over one day roughly three times estimated dollar corporate bond market turnover’; see Bank of England (2015b), Box 2. 26 Interestingly, investors in bond funds do not invest with the same eagerness when prices increases; see Goldstein, Jiang and Ng (forthcoming). 27 See Bank of England (2015a) and FCA (2017). 28 See Baranova, Chen and Vause (2015). 29 The FPC has reviewed the risks to financial stability from insurers’ investment activities and concluded that the introduction of Solvency II, in January 2016, might affect the propensity of UK life insurers to invest procyclically. See Bank of England (2016). 16  All speeches are available online at www.bankofengland.co.uk/speeches  16  30  Crockett (2000).

First, a number of European politicians are calling for increased transparency requirements relating to actual portfolio positions of SWFs. 19 A more far-reaching development are the calls for legislation that would block SWFs from taking major stakes in companies in any strategic sectors. 20 Second, a number of politicians have proposed the principle of reciprocity as a guiding principle for granting market access to SWFs. 21 For example, Jean-Claude Juncker, the Luxembourg Prime Minister and Euro-group president, has stated, "Countries that protect their own markets cannot expect to be allowed to make unimpeded investments in Europe." 22 In a strict sense, the principle of reciprocity means that SWFs are only allowed to invest in a foreign country if companies in that country are allowed to invest freely in the home country of the SWF. Since many SWFs are located in countries which are financially less open than a typical OECD country, a strict application of the reciprocity principle would place strong limitations on SWF investments. Third, Larry Summers has suggested that if SWFs were to invest through intermediary asset managers, most risks associated with SWFs would be mitigated, if not avoided. 23 Incidentally, Summers argues that the added benefit of such an indirect investment philosophy is that it generates a better risk-return profile. Fourth, there is now considerable political momentum behind the idea of a code of conduct or a set of guidelines for SWFs.
oil, energy and mortgage interest)  5  4  4  3  3  2  2  1  1  0  0  -1  -1  -2  -2  Goods  Services  -3  -3  -4  -4  jan-95 Jan 95  jan-96 jan-00 jan-01 jan-02 jan-05 Jan 96 jan-97 Jan 97 jan-98 Jan 98 jan-99 Jan 99 Jan 00 Jan 01 Jan jan-03 02 Janjan-04 03 Jan 04 Jan 05  Note. 12-month changes in per cent. Inflation measures computed according to Statistics Sweden’s new method. Source: The Riksbank  3. Consumer goods 6  6  4  4  2  2  0  0  -2  -2 Importerade varor Imported goods  Inhemska varor Domestic goods  -4  -4  jan-95 jan-96 Jan 95 Jan 96  jan-97 Jan 97  jan-98 jan-03 Jan 98 jan-99 Jan 99 jan-00 Jan 00jan-01 Jan 01jan-02 Jan 02 Jan jan-04 03 Janjan-05 04 Jan 05  Note. 12-month changes in per cent. Inflation measures computed according to Statistics Sweden’s new method. Source: The Riksbank  8  BIS Review 25/2005  4.

Different inflation measures 4  4 CPI  UND1X xe  UND1X  3  3  2  2  1  1  0  0  -1  -1  -2  -2  Jan 95 jan-95  Jan 96 jan-96  Jan 97 jan-97  Jan 98 jan-98  Jan 99 jan-00 Jan 00 jan-01 Jan 01 jan-02 Jan 02 jan-03 Jan 03jan-04 Jan 04 Jan 05 jan-99 jan-05  Note. 12-month changes in per cent. Inflation measures computed according to Statistics Sweden’s new method. Sources: Statistics Sweden and the Riksbank  6  BIS Review 25/2005  1b. Different inflation measures 4  4  3  3  2  2  1  1  0  0 KPI CPI  -1  -1  UND1X UND1X UND1X exkl. energi UND1X excluding energy  -2 95  96  97  98  99  00  01  02  03  -2  04  Note. 12-month changes in per cent. Inflation measures computed according to Statistics Sweden’s old method. Sources: Statistics Sweden and the Riksbank  BIS Review 25/2005  7  2. Inflation: goods and services 5  (excl.
Third, irrespective of the exchange rate regime, there must BIS Review 109/1997  be a commitment to a stable currency, and this means strong external reserves, low inflation and a sound banking system. Asset prices and the exchange rate regime 23. The Asian market turmoil also raises the question as to whether the exchange rate regime matters. I believe the debate about whether the nominal exchange rate should be floating or fixed misses the point in Asia. The real issue is the real effective exchange rate of the economy, namely, its underlying productivity and global competitiveness. 24. For example, there is a mistaken perception that fixed exchange rates give rise to asset bubbles. But if you look at the recent evidence of asset price bubbles in advanced economies, asset price bubbles also occurred in the 1980s in countries with flexible exchange rates, such as Japan, Scandinavia and the United Kingdom. Asset price appreciation cannot be tackled alone by interest rates, since there are multiple reasons for such appreciation 25. In Asia, we can perhaps identify four main reasons:  •  First, the Asian household has always looked upon house ownership not only as a social necessity, but also as the best hedge against inflation. •  Second, Asia is a young market, experiencing a high rate of urbanization. The strong demand for housing arising from demographics alone will fairly quickly eliminate excess capacity in many economies. •  Third, housing supply constraints also gave rise to high housing costs.

Consumer goods price inflation hovered around zero for most of the last ten years, until the recent rise in oil prices. As a result, the purchasing power of UK consumers has risen with higher real wages achieved without any cost to employers. In other words, for a period the beneficial tailwind allowed the economy to run at a higher level of activity than would otherwise have been the case, without generating additional inflationary pressures. But the economic environment overseas has taken a turn for the worse. In many ways it is a tale of two cycles. The financial cycle The first cycle has been in the financial sector in the West. A banking cycle is not a new phenomenon but the scale of the expansion of cheap credit for some years and speed of the downswing in the last year has been exceptional. It started in the US with a real downturn in the housing market and rising default rates on sub-prime mortgages in particular. That led to a freeze in the structured credit markets built on those loans as investors lost confidence in the credit ratings they depend on. In finance at least, it is still true that when America sneezes the rest of the world catches a cold and the sub-prime crisis swiftly spread to financial institutions across the world. They became uncertain about the value of the financial positions they held, let alone what their counterparties held.
Where, for whatever reason - which may be a result of macro-economic mismanagement by the authorities themselves or a result of mismanagement by banks or other financial institutions - there is a threat to the stability of a sizeable part of the financial system as a whole, it is the national authorities ultimately that have to deal with it. BIS Review 66/2000  2  They can seek to reduce the risks of systemic problems originating in the financial sector in particular in a number of ways. Firstly, there is regulation or supervision of individual financial intermediaries which may, as here in Sri Lanka be undertaken by the central bank itself or by a separate financial supervisory agency as now in the UK. Financial supervision - including banking supervision - is a powerful instrument for preventing systemic financial disturbance, even when - as in the UK - the primary objective is to provide a degree of protection to the investors or depositors in individual financial intermediaries rather than to protect the system as a whole. But it necessarily has its limitations. The job of the supervisor in this context is essentially to set appropriate minimum standards for the authorisation and prudential conduct of financial institutions and to satisfy himself (or herself!) as far as possible that these standards are being observed. It is not the job of the supervisor actually to micro-manage the institution or the particular risks that it takes.

A further important similarity between the emerging market experience and that of the peripheral euro area countries is that the external debt is denominated in a currency which the national authorities do not completely control. In emerging markets, so-called “original sin” – that is, a lack of credibility created by poor macroeconomic discipline in the past – implied that external debt was overwhelmingly denominated in US dollars. 8 In the euro area, debt is denominated in euros. Although this is obviously the currency of euro area countries, the single monetary policy aims at price stability across the euro area and thus cannot take account of national priorities deriving from fiscal or financial weaknesses in peripheral countries. By implication, neither in the emerging markets nor in the euro area periphery can the real value of the external debt burden be eroded by inflation or devaluation. Any attempt to devalue would simply raise the domestic burden of the external debt. Of course, this was precisely the point: by issuing debt in a currency which they could not control, the national authorities in the euro area “tied their own hands”. Before the crisis, they obtained a credibility gain that would lower overall funding costs and thus reduced the probability of a crisis. But when a crisis occurs, the external value of the debt burden cannot be reduced by devaluation. Differences between euro area and EME experiences While many of the experiences of the euro area periphery and the EMEs are similar, there are also important differences.
High unemployment and continued deleveraging in the private and public sector will likely weigh down on the euro area economy for a long period ahead. Growth is slowing in China, partly reflecting weaker investment in the real estate sector. BIS central bankers’ speeches  1  In April, the IMF published a new assessment of the world economic outlook. The IMF forecast for global growth was revised down by ¼ percentage point, owing to weaker growth prospects for emerging economies. The IMF projects global GDP growth at 3.5 percent in 2015, rising to 3.8 percent in 2016 and judges that financial stability risks have increased, with greater volatility in both financial markets and foreign exchange markets. Consumer price inflation is low among most of our trading partners and close to zero in many countries. The oil price decline is contributing to holding down inflation. Many central banks have responded to the low level of inflation by further monetary policy easing. Policy rates are negative in some countries. The European Central Bank (ECB) and Sveriges Riksbank have, in addition, taken unconventional measures to counter the risk of deflation and stimulate activity, with large-scale purchases of securities, including government bonds. Long-term government bond yields have continued to fall in many countries. Expansionary monetary policies, including that of the ECB, have likely contributed to the fall in long-term interest rates. The rise in international interest rates has been pushed further out in time. Low foreign interest rates influence developments in the krone and hence the inflation outlook in Norway.

Against this background, there were prospects that the Norwegian economy would grow at a slower pace than expected earlier. At the June monetary policy meeting, Norges Bank kept the key policy rate unchanged, but lowered the projected path for the key policy rate. We gave weight to the possibility of a further weakening of the growth outlook for the Norwegian economy, which might warrant a reduction in the key policy rate. Through autumn oil prices declined markedly to around USD 70 per barrel at the beginning of December, or to a level at about 35 percent below the average for the first six months of 2014. At the same time, the krone depreciated considerably. A weaker krone leads to higher import prices. At the same time, the competitiveness of Norwegian trade-exposed industries improves. The depreciation of the krone thereby dampens the effects of a lower oil price on the Norwegian economy. The outlook for the Norwegian economy had nevertheless clearly weakened. At the monetary policy meeting on 10 December 2014, Norges Bank gave  2  BIS central bankers’ speeches  particular weight to reducing the risk of a pronounced downturn in the Norwegian economy as a result of the sharp fall in oil prices. The key policy rate was thus reduced by 0.25 percentage point to 1.25 percent. The analysis in the December 2014 Monetary Policy Report implied a key policy rate at that level or somewhat lower in the coming years.
As you can see, the SNB is keen to deepen its understanding of the potential implications of climate risks for its work, and it is actively engaged at the international level to achieve this goal. Beyond its prerogatives with respect to monetary policy and financial stability, the SNB integrates its thinking on environmental sustainability into its operational activities. Environmental management at the SNB For many years now, the SNB has been fully meeting its sustainable development responsibilities in its day-to-day operations. Since 1996, the SNB has applied a systematic environmental management concept aimed at reducing its energy consumption. We publish annual reports detailing the environmental impact of our operational activities and the progress being made on this front. 9 Our strategy for reducing CO2 emissions is based on four pillars: first, avoid; second, reduce; third, replace existing solutions with cleaner energy sources; and, finally, offset. For the past eight years, the SNB’s operational activities have been carbon neutral. In other words, it offsets all unavoidable CO2 emissions by investing in a range of climate protection initiatives around the world, including wind farms, geothermal projects and photovoltaic plants. But the SNB’s commitment does not end there: we have also done pioneering work in introducing the first environmental impact assessment for banknotes. This work allows the SNB to assesses the environmental impact of a banknote over its entire life cycle, and it has inspired other central banks to do likewise.

As the RMB becomes more widely used internationally, other markets that complement Hong Kong’s central role are emerging around the world. Cooperation between these different markets is conducive to growing the whole market, and we are seeing increasing linkages being set up to facilitate the flow of funds between the markets. BIS central bankers’ speeches  3  These increasing linkages are the result of several encouraging trends, including the fact that financial institutions in different financial centres have strengthened their business networks in order to serve customers’ RMB needs. For instance, the operating hours of Hong Kong’s RMB Real Time Gross Settlement system have been lengthened, providing the capability to serve the settlement of offshore transactions in the European timezone and early business hours in North America. We at the HKMA are also conducting a range of outreach activities to strengthen Hong Kong’s RMB business links with other parts of the world. These include conducting roadshows to showcase Hong Kong as the offshore RMB business centre, as well as facilitating private sector-led forums and dialogue meetings with authorities in Australia and London. These and other initiatives have encouraged actions to enhance various financial services, including RMB liquidity management and settlement arrangements, between markets in different parts of the world. Concluding remarks As I mentioned at the outset, I had the privilege of delivering the keynote address at last year’s Global Offshore RMB Funding Forum as well.
However, through discussions with governors and other representatives from central banks abroad, the Board of Governors of the Central Bank of Iceland had become aware of growing opposition to the Icelandic banks’ accumulation of deposits. No doubt this opposition stemmed from many factors, among them the fact that banks in those same parts of Europe felt the pressure of the sudden competition and communicated their concerns to their authorities. Another cause was the fact that the accumulation of deposits in foreign subsidiaries increased the potential obligations of the deposit insurance schemes in the countries of operation. A third factor may have been concerns that the relatively high interest rates offered by the Icelandic banks might reflect underlying weakness. A fourth consideration was the concern about the Icelandic deposit insurance scheme with respect to deposits in foreign bank branches. It was clear, however, that the Icelandic system fulfilled the requirements set forth in European directives, which stipulate that the government must ensure that such a deposit insurance scheme is established but do not address the issue of government responsibility for the scheme’s commitments, and certainly not in the event of a system-wide shock. Official European documents corroborate this. Some declared outright that the Icelandic banks would be prevented from receiving deposits or that they would be forbidden to receive further deposits in the countries where they were already established.

Jean-Claude Trichet: Asset price bubbles and their implications for monetary policy and financial stability Keynote address by Mr Jean-Claude Trichet, Governor of the Bank of France, at the Asset Price Bubbles conference held at the Federal Reserve Bank of Chicago, Chicago, Illinois, 23 April 2002. *  *  *  Ladies and Gentlemen, It is a great honour and pleasure for me to talk today in Chicago at the invitation of the World Bank and the Federal Reserve Bank of Chicago in front of such a distinguished audience on the theme of asset price bubbles. As a central banker, my main focus will be on the implications of asset price developments and bubbles for both monetary policy and financial stability. The far-reaching changes observed over the last decade on financial markets, the growing role of these markets for the financing of the economy, and the evidence gathered over the recent period on the key role that financial factors may play in shaping and amplifying the business cycle, have drawn attention to the relative importance of asset prices and wealth effects on the real economy. There are at least two reasons why asset prices and wealth effects may have grown over the last decade: ·  first, changes in asset valuations, mainly driven by the rise in the new economy stock prices from the mid-1990s and their subsequent collapse in 2000, have been dramatic. This is well documented for the United States.
Financial economists of course studied banks and financial markets much more closely, but they used predominantly partial equilibrium models and showed less interest in the way the financial system interacted with the wider economy. In fact, the pre-crisis paradigm in macroeconomics predicted neither the onset nor the severity of the crisis in any meaningful fashion for the conduct of policy. Unconditional trust in the selfrepairing capacities of financial markets, or simple neglect, had led to deregulation and lax supervision in the years preceding the crisis. Low quality capital with little loss-absorbing capacity, underestimation of asset risk, excessive and overlooked leverage, ignorance of the interconnections, disregard for the liquidity buffers, low resilience of the funding markets, and pervasive fraud, especially in the sub-prime sector were just a few of the factors that produced the most severe financial crisis since the Great Depression. The evolution of the financial and sovereign debt crises As the crisis unfolded, the interbank funding market dried up and credit availability contracted sharply. Annual credit growth to the private sector fell from 9.3% in 2007 Q4 to –2.1% in 2009 Q3 in the United States and from 8.5% to 0.7% in the euro area over the same period. The effect on economic activity was sudden and significant. Between 2008 Q3 and 2009 Q2, GDP declined by 2/7  BIS central bankers' speeches  3.6% in the United States and by 4.9% in the euro area.

Such an adjustment, never easy, requires unprejudiced, honest assessment of the new realities with clear eyes, unencumbered by the defence of previously held paradigms that have lost any explanatory power. Fifth, we must be aware of the gaps that still remain in our knowledge. Our mainstream macroeconomic models still have little to say, for instance, about the non-linear propagation of shocks, the distributional impacts of policies, or how endogenous firm entry and exit can affect economic performance.15 Policy actions undertaken in the last ten years in monetary policy and in regulation and supervision have made the world more resilient. But we should continue preparing for new challenges. The changes that we have discussed, profound as they are, often hinge on one fundamental idea. A natural question to ask is whether such an idea sprang out as a response to a specific policy problem or was rather conceived previously in an entirely different, unrelated intellectual environment, perhaps addressing a different set of problems. It is a question that is especially relevant in economics, when previously held consensus views change. But it is a question that is unlikely to have a precise answer. Let me rather use the 1939 words of Abraham Flexner, the first director of the Princeton Institute for Advanced Study: “Almost every discovery has a long precarious history. Someone finds a bit here, another a bit there.