samchain/econo-pairs-v1 huggingface dataset:
One of the reasons for putting the PRA inside a central bank is to integrate the work of the two institutions more closely. In particular, the market intelligence team at the Bank will work closely with the supervisory body. I believe that we can operate prudential supervision at lower cost than hitherto by reducing the burden of routine data collection and focussing on the major risks to the system. It is vital that we collect and process data only where the supervisors have a need to know. Targeted and focussed regulation, allowing senior supervisors to exercise their judgement, does not require ever-increasing resources. For example, we will reduce the number of people subject to the intensive regulatory interview process before appointment by limiting such interviews to the most senior people. And one of the benefits will, I hope, be to make entry into UK banking easier and so promote competition. Let me return to the question of which aspect of financial regulation is most deserving of the adjective “tragic”. Is it light touch regulation? No – it is the mistaken belief that by compromising on unduly low capital requirements and inadequate limits on leverage, regulators can compensate by a detailed oversight of every aspect of a bank’s activities. It did not take complex reporting to see that the balance sheet of the banking system nearly trebled in five years, or that leverage ratios had reached levels of 50 or more. The obsession with detail was in fact a hindrance to seeing the big picture.

First, because financial markets are so highly integrated, central banks need to cooperate closely in order to master the problems. Second, incentive schemes in banks that have given particular priority to rewards for risky behaviour should be changed, and the instruments for measuring risks need to be reassessed. The way in which the Swiss National Bank steers the Swiss franc money market, however, has proved its worth, with the three-month Libor being successfully held inside the target range. In this way, the real economy has been protected from the upheaval on the interbank market. BIS Review 31/2008  1
I welcome constructive suggestions very much and we are in the process of meeting with those who are so kind as to offer their views and go through the vigorous technical discussions that good ideas deserve. 17. So far I am glad that there is full support for our linked exchange rate system. No one liked the prospect of Hong Kong being swept along in the process of competitive devaluation in the region and sharper downward adjustment in asset prices. At the technical level, two schools of thought could be identified at this stage. One expressed concern on the scope in which the Hong Kong Monetary Authority exercised discretion in our rule-based monetary system. Associated with this are also suggestions for improvement on how the system could be allowed to work more effectively and automatically. The other felt that the HKMA should have been more forthcoming in relieving the tightness in the money market and therefore the pain of those affected. 18. Interestingly, the two schools of thought are quite polarized. And, as always, the correct course should be somewhere in between, involving a good mix of pragmatism in the light of present day circumstances in financial markets, having regard also to the need for the HKMA to function as the lender of last resort to the banking system, but without any departure from the strict discipline of the currency board system requiring full US dollar backing for the Hong Kong dollar monetary base. This, incidentally, has very much been the attitude of the HKMA.

Mr. Yam comments on the financial turmoil in Asia Address by the Chief Executive of the Hong Kong Monetary Institute, Mr. Joseph Yam, JP, at the Euromoney Asia Pacific Issuers and Investors Forum on 2/12/97. 1. Ladies and gentlemen, I am honoured to have been invited this year to deliver the opening address for Euromoney’s Asia Pacific Issuers and Investors Forum. 2. The year 1997 has been an unusual year for Asia, particularly for Hong Kong. Amidst financial turmoil of the worst kind in the history of Asia, Hong Kong went through political transition to become a Special Administrative Region of the People’s Republic of China. This was achieved in the smoothest manner one could imagine. And as the currencies of Asia tumbled one after another in a process of competitive devaluation, involving sharp depletions of foreign reserves and requiring financial assistance from the International Monetary Fund and others, and sending shock waves to financial markets throughout the region and beyond, our currency, the Hong Kong dollar, remained very stable and our already very substantial foreign reserves increased. Although our asset markets have been affected by the contagion, some consolidation was in any case overdue; and in the event, for the year to date, the downward adjustment has been significantly less severe than those of many others in the region. 3. Hong Kong has thus held up extremely well under the circumstances.
This is an area where the private sector has made enormous advances in recent years, much of it strongly encouraged by the banking supervisors. Risk management has become more sophisticated with more differentiation between risks: the separation of credit and market risk; the recognition of operational risk as a distinct category; and the importance of reputational risk. Notwithstanding that the nature and size of our operations are different and smaller than many private sector institutions, the Bank is exposed to many of these same risks. In managing these risks, we have wanted to ensure that our practices are consistent with best practice in the private sector, to the extent that this is applicable to a central bank. We have invested heavily in technology to allow management of the risks on a consolidated basis and where appropriate in real time. We have also instituted a number of organisational changes, setting up an Assets and Liabilities Committee which I chair and which reviews at senior level the management of our balance sheet; and a Risk Monitoring Department (based in part on the Middle Office model of the private sector), independent from our banking line management. Above this, like public companies, we have a number of Board sub-committees, and in particular an Audit Committee, taking reports from the Internal and External Audit, looking carefully at our internal systems and controls and our policies and processes for management of the main financial, operational and reputational risks.

Koop (2018), ‘An economist’s guide to climate change science’, Journal of Economic Perspectives 32(4), pp. 3–32. Hardin, G. (1968), ‘The tragedy of the commons’, Science 162(3859), pp. 1243–1248. Nordhaus, W.D. (2018), ‘Projections and uncertainties about climate change in an era of minimal climate policies’, American Economic Journal: Economic Policy 10(3), pp. 333–360. Böhringer, C., J.C. Carbone and T.F. Rutherford (2016), ‘The strategic value of carbon tariffs’, American Economic Journal: Economic Policy 8(1), pp. 28–51. For a critical assessment of the significance and effectiveness of a carbon tax and other instruments, see IMF Fiscal Monitor ‘How to mitigate climate change’, October, pp. 3–13. Page 3/12  But if it is not part of the SNB’s remit to intervene in these issues, why are central banks interested in climate risks? Why are central banks interested in climate risks? To fulfil their mandate, central banks must understand how climate change risks influence the functioning of the economy and the financial system – and hence price stability and financial stability. Economists classify climate risks into two categories: physical risks and transition risks. Physical risks include the direct material effects of climate change on income and production capacity. For example, severe storms can damage factories and transport infrastructure and disrupt value chains that are essential to international trade. In the first instance, physical risks cause supply shocks. These shocks result in a drop in production in the affected sectors and tend to engender temporary price increases.
Although we are also able to influence inflation in the shorter run, doing so is normally inappropriate because it is liable to result in large fluctuations in production and employment. Of course the rule is not applied mechanically. The basic intention is to stabilise inflation around the target and at the same time avoid unduly large fluctuations in production and employment. We tend to disregard economic shocks with effects on inflation that can be assumed to be only transitory. Moreover, there may be grounds for heeding the expected course of events beyond the regular target horizon. There may be a case for adjusting the repo rate immediately if there are already strong reasons for expecting a marked increase or decrease in inflation directly after the two-year horizon. Another point to remember is the Riksbank's mandate to promote a safe and efficient payment system; problems in this context may call for interest rate adjustments even though the inflation target is not threatened. Such adjustments may be needed both to prevent potential risks from building up in the payment system and to moderate effects of problems that have already arisen. However, departures of this type from the normal decision rule should be made restrictively. Moreover, deviations should be stated clearly, and carefully justified. Favourable economic development over several years Under the new regime the Swedish economy has experienced several years of strong growth. Since the upturn began in the summer of 1993, the annual GDP growth rate has averaged around 3 per cent.

If international activity were to move into a recovery, most things suggest that demand in the Swedish economy would start rising more rapidly again from a level of resource utilisation that is already relatively high. The earlier restrictions would then be back on the agenda, with the attendant risk of higher inflation. During the past week, new statistics on prices have been published and show that the rate of inflation has picked up more than expected. Although higher than expected inflation figures should be taken seriously, it is nevertheless important not to overemphasise them. The recent pick-up in inflation is to a large extent a consequence of a few very special factors that could prove to be temporary. The price increases for petrol, electricity, and meat could be examples of this. At the same time, resource utilisation in the Swedish economy is at a high level and there is thus reason to closely monitor the trend rate of inflation (i.e. excluding the mentioned special factors), which has been slowly moving upwards from last year's very low levels. If the storm clouds in the international economic skies were to disperse and growth were to improve, there is a risk of tensions arising that could require a tightening of monetary policy. On the other hand, it cannot be ruled out that the downturn in the U.S. economy will be more pronounced. In such a scenario the Swedish economy could experience a more pronounced slowdown, stemming through various channels from weaker exports, investments and private consumption.
Therefore the developments in these expectations play an important role in Central Bank analyses and evaluations. In this framework, analyzing the inflation expectations for the next 12 months and 24 months as of April, the following points emerge: Though consumer inflation expectations for the next twelve months have declined, the rate of decline has been slowing down significantly since February and expectations have to some extent been  6  BIS Review 67/2006  following a horizontal course. The fact that long-term consumer expectations relating to the next 12 and 24 months are slightly above the targets is interpreted as a development that requires prudence with respect to the falling inflation process. Nevertheless, the course of longer-term expectations at low levels is an encouraging development as regards the success of inflation targeting (Graph 9). Graph 9. CPI Expectations Regarding Next 12 and 24 Month Periods (Annual Percentage Change)  9 Next 12-Month  8  Next 24-Month  7 6 5 4 Apr-06  Feb-06  Dec-05  Oct-05  Aug-05  Jun-05  Apr-05  Feb-05  Dec-04  3  Source: CBRT. Supply and demand developments Supply-demand balance Distinguished Guests, At this point, I would like to touch on our evaluations relating to supply and demand developments in the light of national income data released at the end of March. In the last quarter of 2005, Gross Domestic Product (GDP) increased by 9.5 percent compared to the same period of the previous year. Hence, GDP growth was realized as 7.4 percent throughout 2005.

The factors underlying this evaluation can be listed as follows: (i) Analyzing the supply-side sources of growth, continuance of productivity gains, which is a key element of non-inflationary growth, enables the reduction in unit labor costs, thus restricts the impact of the rises in other costs. (ii) The demand-side sources of growth points to an increasing share of investments in the GDP. The ongoing strong growth trend in investment expenditures limits inflationary pressures through its support for the increases in partial labor productivity via capital deepening. Accordingly, the composition of domestic demand secures the simultaneous achievement of rapid growth and disinflation. (iii) Although the strong position of the YTL against foreign currencies is a factor that supports domestic demand growth, it restricts the impact of rapid growth on prices not only by its direct effect on prices but also by stimulating investment demand, which in turn induces productivity gains. Graph 13. Output Gap (Percent) 6 4 2 0 -2 -4 -6 -8 06-I  05-III  05-I  04-III  04-I  03-III  03-I  02-III  02-I  01-III  01-I  00-III  00-I  -10  Source: CBRT. Despite the fact that the recent data provide signals for an ongoing strong course of domestic demand, within the framework of non-inflationary rapid growth analysis explained above, the output gap is expected to support the disinflation process in the first half of 2006 as well. Nevertheless, our view that the contribution of supply-demand conditions to the disinflation process has diminished is still valid.
Prices which reflect real cost are an important instrument in this connection. Norway has a substantial head-start on most other countries in this field. Current prices largely reflect the difference in costs between various payment services, showing that “correct” prices are a suitable instrument in changing behaviour in the payment system. 3.1.2. The use of cash and the paradox of levelling off  Another characteristic of the Norwegian payment system in the 1990s has been the levelling off of the use of cash, when measured as the value of banknote and coin circulation as a share of GDP, following a considerable decrease throughout the 1980s. Chart 5: Cash in circulation as a share of GDP, 1980-1998  Cash in circulation as a percentage of GDP 8%  Percentage of GDP  7% 6% 5% 4% 3% 2%  1998  1997  1996  1995  1994  1993  1992  1991  1990  1989  1988  1987  1986  1985  1984  1983  1982  1981  0%  1980  1%  Year  Source: Norges Bank: Annual Report on Payment Systems 1990-1998, Annual Report 1980-1990, Statistics Norway: Historical Statistics 1994, Statistical Yearbook of Norway 1999, 1995. From a level of about 7% of GDP at the beginning of the 1980s, it appears that the use of cash may be in the process of levelling off at close to 4%. A similar levelling off has also been observed in other countries, even though the level varies.

The global economic performance for 2006 has so far been favourable with a more balanced growth among the major economies, including in Japan and Europe . The world economy is however, facing an extended period of high energy prices and its consequent effects on inflation. Following these developments, interest rates have been raised in most economies. While risks are now emerging for a slower growth in a number of the major economies, growth in the Asian economies have continued to remain robust and resilient. This trend has not only increased Asia 's relative significance in the world economy but it has also contributed to a more balanced global growth. The Malaysian economy has benefited from this favourable external environment. Growth has been supported by both the strengthening exports performance that has be reinforced by strong domestic demand. Domestic demand also continues to be driven by the private sector as private consumption and investment have been an important source of growth. The continued expansion in private investment is particularly important in ensuring the long-term sustainability of the growth. BIS Review 76/2006  1  The focus of the monetary policy in this environment continues to be towards achieving macroeconomic stability. More recently, the higher energy costs have resulted in an increase in consumer prices. In this environment, interest rates have been raised three times. In May this year, a pause in this increase was announced. With limited evidence of demand induced inflation, the assessment is for inflation to moderate in the second half of this year.
Cyber-attacks are fueled by increasingly sophisticated technologies along with relatively new trends in mobility usage, social media, and rapidly expanding connectivity, all in the hands of organized online criminal networks. 1/3  BIS central bankers' speeches  The first six months of 2017 have seen an inordinate number of cyber-attacks and they were not just the standard corporate breaches. Already there has been viral, state-sponsored ransomware, leaks of spy tools from US intelligence agencies, targeted denial-of-service attacks and full-on campaign hacking. Unfortunately, this is likely a prelude of more cyber-attacks to come. Let me share with you some key statistics on cybersecurity: The global cost of cybercrime will reach USD2 trillion by 2019, a threefold increase from the 2015 estimate of USD500 billion. Last year, cybersecurity researchers estimate that criminals made over USD1 billion through ransomware, with victims ranging from the chief executives of Fortune 500 companies to mom-and-pop businesses and private individuals. 1 in 131 emails contained malware in 2016, the highest rate in 5 years. 76% of organisations worldwide reported being victim of a phishing attack in 2016 Only 38 percent of global organizations claim they are prepared to handle a sophisticated cyberattack. Global spending to combat cybercrime will top USD80 billion this year, with organisations increasingly focusing on detection and response. I shall deliberate more on this shift of focus. Shift cybersecurity focus to detection and response Traditionally, the main focus of cybersecurity traditionally has been on prevention.

Moreover, such a contraction and even the closure of some firms in the industry can be understood, in some cases, as efficient outcomes on purely economic grounds. While concepts like full efficiency or maximum social welfare are “too grand” to be operative, I think we can still make some progress on this issue by posing the question in relative terms: will Basel II unduly exacerbate the tendency towards procyclicality inherent in banks’ business? In response, I find it helpful to focus on certain key determinants of bank capital supply and demand, for their interaction will ultimately determine the conditions under which banks may gain access to capital markets and withstand a general downturn. On the demand side, under Basel II higher overall uncertainty about debtors’ solvency during a recession will admittedly tend to put upward pressure on the regulatory capital. But we shouldn’t view this effect as economically artificial, since we know from basic contract theory that lenders, i.e. depositors, will optimally require a larger amount of own resources from investors, i.e. banks, whenever the former perceive higher risk in the projects to be funded. In plain terms, while regulatory capital is rising in such a situation, economic capital goes up as well. I firmly believe that the latter is the most relevant variable for understanding banks’ decisions about the amount of credit to be extended and its price. Nowadays, well-managed banks already allocate economic capital and take decisions on the basis of incurred risks.
Forecasts are usually wrong I learned how difficult it is to make forecasts during my time at the Ministry of Finance and at the National Institute of Economic Research. During different periods I was responsible for both medium-term forecasts and cyclical forecasts at the Ministry of Finance. The mediumterm forecasts within the framework of the long-term surveys were to a great extent a more or less sophisticated projection of trends. They missed recessions and were only accurate when reality followed the previous trend (see Figure 1).2 The Ministry of Finance’s cyclical forecasts are based on more information, including changes in taxes and expenditure in the government budget. Like the forecasts made at the Riksbank, they are used as a basis for policy decisions. But they are also usually wrong, which is a problem with regard to using fiscal policy to stabilise economic activity. Sometimes political aspects also have significance, such as when we deliberately had cautious forecasts as a basis for the budget consolidation in the 1990s (see Figure 2).

Uncertainty in theory Our forecasting ability is thus very limited one year ahead and almost non-existent two and three years ahead. The best forecast we can then make is normally to assume that inflation will be 2 per cent in two and three years’ time. But that is not much help when shaping monetary policy. At the same time it is reasonable to assume that monetary policy will actually affect inflation two and three years ahead and that we therefore need forecasts as a basis for monetary policy. So what can we do to manage the uncertainty in monetary policy? In a linear model, where inflation depends on the interest rate and an uncertainty term with a mean value of zero, where the parameters are known and constant, and with a quadratic objective function (loss function), the uncertainty does not matter with regard to which interest rate should be chosen to minimise the loss function.10 It is enough to take into  8  Prior to 2007 we first based the forecasts on a constant repo rate and then on estimated market expectations. It is possible that we could have made better forecasts with a different interest rate assumption. To be able to comment more strongly on forecasting ability, one should actually base the calculations on longer periods of time. One should also compare with the historical series available at the time the forecasts were made. 9  The figure is based on the period 2005–2010. 10  See, for instance, L.E.O.