samchain/econo-pairs-v1 huggingface dataset:
Therefore, in periods of market stress they are likely to face less pressure than most private investors to reduce the size or increase the liquidity of their investments. They are well placed to play a contrarian role and help to stabilise markets by investing in times of stress. For example, when the global equity market fell sharply between 2000 and 2002, the Norwegian Government Pension Fund was a large buyer of global equities. And a number of sovereign wealth funds have played an important and welcome stabilising role during the current turmoil by providing around $ billion of new capital since November to some of the world’s biggest commercial and investment banks (Table 1). 8 Taking a broader view, the switch of some reserves from government debt into SWFs which invest in a wider range of instruments should help to improve the allocation of resources if these investments are based on commercial criteria. Investing in equities may also help to reinforce and bring to the surface the common interest that EMEs and the advanced economies have in the good performance of the companies involved and the markets they operate in. It may thus help to integrate EMEs into the global financial system and encourage them to participate more in global policy making. From a parochial point of view, the prospective increase in demand for equities relative to bonds could have a positive impact on London and sterling.

Developments are weaker in the euro area – unemployment remains high and consumer confidence has fallen. In Japan, it appears that growth will be positive from the fourth quarter of 2004 to the first quarter of 2005. Growth in Asia, except Japan, and in Central and Eastern Europe is expected to moderate but to remain strong. The outlook for growth in different regions indicates that the imbalances in the global economy, with large deficits in the US and large surpluses in some other countries, will persist. Low growth in the euro area and Japan is weakening the prospect of a gradual correction. This increases the risk associated with these imbalances. Increased imbalances in addition to high oil prices and volatile oil markets are contributing to the uncertainty surrounding developments in the global economy. There are particularly large imbalances in the US balance of trade and current account. This partly reflects the US federal budget deficit. Moreover, US households have a high level of consumption and a low level of saving. Strong demand in the US has sustained growth in the world economy. The deficit in the US is matched by surpluses in Europe and Asia. A persistent deficit has pushed up US foreign debt to a high level. The US population is growing faster than that of other OECD countries. This may suggest that saving in the US is somewhat lower and investment somewhat higher than in other countries, but the impact is now considerably greater than implied by demographic factors alone.
Of this, about a quarter have piloted or are preparing to pilot their solutions in the sandbox, with some already having graduated to offer their solutions in the broader financial system. The insights gained have led to adaptations of existing regulations as well as the development of new frameworks for firms that exit the Sandbox. They have also informed the Bank’s thinking on regulating innovation, with lessons taken in the development of the digital bank framework which will be issued for consultation very shortly. The idea of the sandbox has since been replicated internally within the Bank as an avenue for staff to prototype new solutions that will improve the way the Bank works. This includes new technological applications in regulation and supervision, surveillance, data analytics, communications and in the delivery of the Bank’s public services. The third imperative has been to ensure alignment in the Bank’s governance and culture with our digital objectives and priorities. At the Bank, we are keenly minded that it’s the people and the risk culture, or “the way we do things around here” that ultimately matters. 2/4  BIS central bankers' speeches  This arguably remains the most difficult part of our journey. Digitalisation is driving disruption, and the digital world is inherently complex – in its logic, design, development and delivery. We have put in place strengthened and more integrated governance arrangements to direct our digital strategy, policy and standards.

European Central Bank: Press briefing – transcript Transcript by Mr Jean-Claude Trichet, President of the European Central Bank, following the meeting of the Governing Council, Frankfurt am Main, 2 August 2007. *  *  *  Let me just say a few words and then I will be ready to respond to questions, as usual. Recent economic developments and survey indicators confirm that sustained economic growth continued in the euro area through the second quarter. Rising oil prices, emerging capacity constraints and the potential for stronger wage and cost dynamics, among other factors, imply upside risks to price stability over the medium term. The existence of upside risks to price stability at medium to longer-term horizons is confirmed by the strength of the underlying rate of monetary expansion: strong vigilance is therefore of the essence to ensure that risks to price stability over the medium term do not materialise. Both, our previous economic and monetary analysis as expressed in particular in the last press conference have been fully confirmed by the ongoing information we have received since the last meeting of the Governing Council. Let me also stress that we never precommit, we decide at the moment of the meeting of the Governing Council on the basis of the information that we have, facts and figures, and according to the judgement that we make at that moment. I re-emphasise that we never pre-commit.
Although inflation has on average remained fairly close to target, there have of course been both shorter and longer periods where inflation has deviated significantly from the target. How have inflation expectations been affected by this? Even though inflation expectations can be measured in different ways, I believe that the overall picture is clear. From around 1996-97 expectations about inflation a couple of years ahead have been in line with the target. In the shorter term, of course, they have sometimes fluctuated in line with the actual inflation rate. But seen over a longer period of time, expectations have been neither significantly higher nor  1  See Berg, C., and L. Jonung, (1999), ”Pioneering Price Level Targeting: the Swedish Experience 1931-1937”, Journal of Monetary Economics, 43, 525-551. 2  BIS Review 111/2006  significantly lower than the target. This is a much better development than many people expected when the new monetary policy regime was introduced in the early 1990s. It must also be pointed out that the change in stabilisation policy regime involved not only monetary policy. Compared with other countries that have implemented similar reforms, it is perhaps primarily the changes in fiscal policy that distinguish Sweden. In the mid-1990s a vigorous consolidation programme and a framework with an expenditure ceiling and a balance target were introduced. The comparatively sound central government finances have been a great strength for our country over the past ten years.

Each time we make a decision, we take a stance on the interest rate path, on the basis of the information available at the time. Our considerations can and should be altered if the economy develops in a  6  See Jansson, P., and A. Vredin, (2004), ”Preparing the Monetary Policy Decision in an Inflation Targeting Central Bank: The Case of Sveriges Riksbank”, in the conference volume Practical Experience With Inflation Targeting, the Czech National Bank, Woodford, M. (2005), ”Central-Bank Communication and Policy Effectiveness”, paper presented at the FRB Kansas City symposium ’The Greenspan Era: Lessons for the Future’, Jackson Hole, Wyoming, August 25-27, and Faust, J., and D. W. Henderson, (2004), ”Is Inflation Targeting Best-Practice Monetary Policy?”, Federal Reserve Bank of St Louis Review, 86(4), 117-143. BIS Review 111/2006  5  different direction than we had expected. We also emphasise that the assumption that the repo rate will develop in line with financial market expectations does not imply any standpoint as to what interest rate path the Riksbank considers most desirable. One possible further development could be to follow the examples of central banks like those in New Zealand and Norway and actually publish our own views on future interest rates, instead of using market expectations as a basis. This is a possibility we are currently considering. Personally, I look positively on such a change. My experiences of increased transparency have been only positive.
In the context of pricing, consumer/investor protection, distribution, dispute handling and resolution, the interests of the financial firms or intermediaries must not take precedence over those of the consumers or investors. This is a difficult mission to accomplish as it requires not only a robust and yet user-friendly regulatory regime, but also a corresponding change in the culture, values, mind-set and behaviour of the financial firms and their staff. As hard as it seems, I strongly believe that we cannot afford not to accomplish this mission. We must try harder and harder until we have got it right. I simply cannot envisage how a financial centre can thrive and sustain its competitiveness over time if it cannot build a credible reputation for treating customers and investors fairly. Conclusion 23. Ladies and gentlemen, with quality products credibility of fair treatment, trust of customers will follow naturally. Customers who use Hong Kong for their financial needs would feel safe because they know, and trust, that their moneys and wealth are in good hands and that their interests are being looked after. If you earn the trust of the customers, you have won their loyalty as well. With the reputation and words of mouth, more customers would wish to use Hong Kong as the hub for their financial transactions. However, the regulators and the Government cannot do it alone. The private sector, the industry and the practitioners must also own this mission and, most importantly, join hands with the public sector to do it together.

Additionally, blockchain, robotics and augmented reality are also being explored by banks to improve their services or streamline their operations. 17. To further support the development of Fintech in the banking sector, I am pleased to announce today the launch of HKMA’s second initiative, which is the “Fintech Supervisory Sandbox”. This Sandbox allows banks to conduct testing and trial of newly developed technologies and applications on a pilot basis. Within the Sandbox, banks can try out their new Fintech products without the need to achieve full compliance with the HKMA’s usual supervisory requirements. This will enable banks to gather real-life data and user feedback on their Fintech products or services more easily and in a controlled environment, so that they can make suitable refinements to their products before the full launch. The HKMA does not intend to stipulate an exhaustive list of the supervisory requirements that may potentially be relaxed within the Sandbox. Examples of these requirements include security-related requirements for electronic banking services and the timing of independent assessment prior to launching of new technology services. Banks intending to access the Sandbox are advised to get in touch with the HKMA early. My HKMA colleagues stand ready to discuss with the banks individually on the appropriate supervisory flexibility that can be made available to them within the Fintech Supervisory Sandbox. 18. Further details of the Fintech Innovation Hub and the Fintech Supervisory Sandbox will be announced by the HKMA later today. Competition from neighbouring centres 19.
The interaction between price stability and financial stability I think that probably the main challenge that emerges from the recent crisis is in the conduct of policies by central banks – and in particular in the interaction between the two key objectives I mentioned above, price stability (PS) and financial stability (FS). Let me begin by discussing the interaction between financial and price stability in normal times, that is, before an event leading to a period of financial turmoil like the one we witnessed in late 2008. In many cases there is no conflict between setting short term interest rates to pursue financial stability and price stability. For example, faced by a change in future income perception that leads to higher consumption, debt levels and rising inflation, rising rates will be conducive to both PS and FS. In several other cases, however, the optimal short term policy decision for FS and PS conflict and additional tools are required. I will argue that these cases fall into two broad categories. The first is when the monetary policy framework itself can amplify financial vulnerabilities. Financial agents take the distributions of asset prices into account when determining their risk exposure, and as such, they adjust their portfolios according to the policy framework. The problem arises because policies cannot always bring stability when faced with unusual  4  BIS Review 76/2010  shocks, which may even require changes in the policy regime. There are some important examples of this. One example is currency mismatches.

In either case, the argument goes, the global financial crisis should lead central banks to reevaluate their role in this new era. There is no doubt that we have the responsibility to carefully assess the recent events. We need to do it in order to improve our understanding of the economy and in order to improve our macroeconomic policy design, so as to avoid crises, but also handle them appropriately. In my view, many of the lessons will not be new, but they draw from lessons from previous experiences, but forgotten in academic and policy circles in industrialized countries. I will start my discussion on the new role for central banking after the recent financial crisis by discussing the factors that were behind it. Understanding these factors will be crucial to analyze if and how the objectives of central banks should be modified and potential tradeoffs between competing objectives. Finally, I will discuss the interactions between price and financial stability and the challenges for central banks in the new times. What caused the financial crisis? There are many candidates being pointed out as the culprits of the financial crisis of 2008–2009. Many have blamed monetary policy. In my opinion, even though monetary policy may have played a role, it was a secondary one.
4  BIS Review 7/2002  The uncertainty associated with the analyses is one of the reasons that we normally proceed gradually 5 in adjusting the interest rate to the inflation target. In this way, we have the possibility of utilising new information that becomes available along the way. Most central banks have chosen such a model in their use of instruments. In exceptional cases, situations may arise that demand strong and immediate reactions. An example of this is the situation in Norway in the autumn of 1998, when there was unrest in the financial markets and a rupture of confidence in the Norwegian krone. Another is the Federal Reserve’s interest rate cuts in 2001. Even in these cases, however, the entire interest rate adjustment was not made immediately. In an uncertain world, central banks cannot guarantee that a process of increasing or decreasing the interest rate will necessarily continue. New information may require an adjustment of the projections. Nor can ”gradual” be construed to mean that an adjustment to a new interest rate level will be achieved by changing the interest rate at every monetary policy meeting. ”Gradual” may also imply that we want some time to evaluate new information or are awaiting further information before making a move. Transparency about intensions, strategies and implementation of monetary policy makes it easier for economic agents to assess monetary policy. A monetary policy that is understood and predictable may contribute to improving the efficiency and impact of monetary policy.

The plus and minus signs show the extent to which Norges Bank has signalled upside or downside risks. As a reference for the extent of the effect, the lines around the time axis show the average daily absolute change in the three-month money market rate. As from the monetary policy meeting on 21 July 1999, the date of the meetings have been made public in advance. We see that changes in the money market rate are modest in connection with most monetary policy meetings. The money market rate changed by more than 0.20 percentage point in connection with only four of the nearly 30 meetings included in the chart. We have also made similar estimates for a number of other countries in order to have a basis for comparison. The next charts show changes in connection with monetary policy meetings in the European Central Bank, the Bank of England and Sweden’s Riksbank. BIS Review 7/2002  7  The effect is not systematically different from the effects in other countries. If interest rate decisions are largely anticipated, adjustment costs will decline. This is an advantage. What we must be measured against primarily is whether we are setting the interest rate correctly in relation to the inflation target. Guidelines for fiscal policy The fiscal policy stance is a key factor for developments in domestic demand. Towards the end of the 1990s politicians were facing new challenges in the formulation of economic policy.
We tested a variety of specifications of Equation (1) to see which fit best, using different set of factors and different functional specifications for the utility function. Some of these specifications are shown in Table 1. Our preferred specification is shown in Column 5. Its key features are:   Both current income and wealth (permanent income) affect household well-being, as we would expect in a standard utility function, in a statistically significant way.   Our preferred specification includes a variety of separate measures of gross wealth and gross debt. The different components of wealth have a different likelihood of being spent and hence have a different impact on well-being. For example, the coefficient on deposit wealth is eight times larger  32 33  See, for example, Layard, Nickell, Mayraz (2008). The results are not sensitive to using subsets of the answers. 12  All speeches are available online at www.bankofengland.co.uk/speeches  12  than the coefficient on pension wealth, consistent with the former being more accessible than the latter and, therefore, more likely to be spent. Debt is bad for household well-being, as others have found.   34  The functional specification which best fits the happiness regression is a logarithmic one. This implies that there is diminishing marginal utility of income, as we would expect and as other studies have found. It also implies that changes in happiness that arise as a result of changes in income 35  and wealth are appropriately captured in percentage, rather than in money, terms.

The decline in demand in the economy is documented by the following: Household consumption, which is crucial for the future course of demand-pull inflation, fell for the sixth consecutive quarter. The saving rate is now 21.7%, while the long-term average is 12%. The decline in demand is also illustrated by the fact that prices of new apartments are already falling quarter on quarter. This is accompanied by the fact that the economy is below potential output and we have a negative output gap. I would like to mention two important problems: (1) the CNB's large balance sheet and (2) government debt. Regarding the CNB's large balance sheet, over the last ten years, interest rates were too low, in fact zero for a long time. In addition, in early 2017, interventions led to an increase in the CNB's balance sheet within four months, or rather in the banking sector's liquidity. It increased from CZK 1,300 billion in December 2016 to CZK 2,300 billion in April 2017, i.e. there was an additional CZK 1,000 billion in the balance sheet, or an almost doubling of the balance sheet within four months of 2017. During these interventions, demand for Czech government bonds from non-residents increased. This further expanded the country's borrowing options. Budget constraints  3/7  BIS - Central bankers' speeches  were eased. Then, during Covid, in particular at the end of March 2020, interest rates were reduced too close to zero.
As to removing the weakest institutions from the system, 2 banks and 28 savings banks had disappeared up to December through integration processes, and there should be further processes in the coming months. Finally, as concerns having institutions on a more efficient scale, average size measured by managed assets has doubled over these years. 1  RDL 9/2009; Third Additional provision of Law 3/2009; RDL 6/2010; RDL 11/2010; RDL 2/2011; RDL 16/2011 y RDL 19/201; and RDL 2/2012  BIS central bankers’ speeches  3  But perhaps the results best testifying to the transformation of Spain’s banking system during the crisis are not quantitative but qualitative, for example, the metamorphosis of savings banks into banks. If before the crisis someone had said that, except for two small institutions, all Spanish savings banks would be converted into banks, nobody would have taken them seriously and they would have been accused of seeking to do away with one of Spain’s oldest and best-loved institutions. Yet today what this conversion brings in terms of improved management, market discipline, etc. has been accepted, and should in the future spare Spaniards from again suffering the consequences of the excesses detected at certain savings banks. Another most important qualitative advance with a view to the medium term has been the enhanced transparency of our banks, not only thanks to the stress tests which, as you know, were first proposed by Spain, but above all to the greater disclosure requirements progressively imposed over recent years.

So as to be able to have a new toolkit adapted to this crisis, more than half a dozen laws1 had to be approved, from first creating the Fund for the Orderly Restructuring of the Banking Sector (FROB) in 2009 to the last Decree Law approved in February, with regulations that have set about righting the shortcomings. These include the creation of an institution/fund allowing for the obligatory and orderly restructuring of non-viable banks and encouraging the merger of viable ones; the regulation of institutional protection schemes; the possibility of converting savings banks into banks; new capital requirements to speed through restructuring; the granting of greater powers to the Banco de España; the merger of the deposit guarantee funds, etc. Promoting all these changes in a full-blown crisis was like carrying out two tasks on a ship that has hit the rocks: while evacuating the passengers, it was necessary to repair the lifeboats. A most difficult task, as I said, but the seven laws have now been passed. And there is one very positive aspect, namely that all these regulations had the backing of the country’s two main parties. This is perhaps why these reforms have maintained a series of common characteristics and, while giving due merit to the main actors, i.e. the different governments and the legislative chambers, mention might be made of the advice that the Banco de España has offered and continues to offer.