samchain/econo-pairs-v1 huggingface dataset:
In addition, the distribution of net saving flows across the globe, with large excess saving (relative to domestic investment opportunities) in some emerging market economies searching for higher global investment returns also contributed to the fast pace of financial globalisation and development in recent years. When examining and assessing the effects of  BIS Review 9/2008  5  globalisation on the financial system – its efficiency and stability – it is important to keep in mind the role of the other factors, e.g. financial innovation, new business models, risk management practices, which have simultaneously exerted a significant impact on the functioning of financial markets and institutions. The securitisation of bank loans and the development of credit risk transfer (CRT) instruments and complex structured finance products have fundamentally changed the functioning of the financial system and the distribution of risk across sectors and borders. Since the mid-1980s, an unprecedented growth in the development and issuance of new financial market instruments has allowed the transfer of risks across market participants also in connection with previously relatively illiquid assets like bank loans and mortgages. While initially the focus was on transferring market risk, credit risk transfer instruments have increasingly gained in importance since the 1990s. 13 With respect to securitisation, this development can best be described by pointing out that the outstanding value of US agency mortgage-backed securities grew from about 100 billion US dollars in 1980 to about 4 trillion dollars in 2006 [Chart 9].

You have probably seen pictures of bank runs – when queues form outside banks in crisis as people want to withdraw their money in the form of (safe) cash. This is why central bank money is still the linchpin of the system, even if it is rarely used in normal circumstances. The fact that it is available as an alternative acts as a kind of guarantee for the private bank money. 4 It is also the case that some key systems for payments are increasingly concentrated to a few agents. See, for instance, the card payment market where two American companies are entirely dominant in Sweden. Unlike our neighbouring countries, we do not have any domestic card payment network. This means that we are dependent on foreign infrastructures to make the majority of households’ payments. Without cash, therefore, an important part of the Swedish infrastructure would be completely in private ownership and dependent on foreign infrastructures and foreign companies. So if the use of cash continues to decline, it is not enough to say that this works fine at present, because the future will look rather different, regardless of whether we produce an e-krona. Other functions that cash has performed include functioning as a back-up when there have been disruptions to other forms of payment. It has also helped ensure  3  See, for instance, Fung et.al. (2018) and Söderberg (2018). 4 See, for instance, Tobin (1985).
BIS Review 41/2009  to be drawn into an overoptimistic frenzy and to underestimate the risks as long as things are still on the way up. What distinguishes this crisis from earlier ones is of course its global range and extreme complexity. This means that we can put a further couple of layers onto the foundation of Turner’s canvas. The globalisation and development of the art of financial engineering in recent decades can be said to be part of the first coat of paint on the canvas. The scope and complexity mean that the situation is in many ways much more serious than before. The course of events has also made us more confused than we have been in previous crises. At the same time, we can now see an increase in deglobalisation in the wake of the crisis. The cross-border integration of the financial sector has come to an abrupt standstill. And in the global economic downturn many countries are tempted to resort to protectionist measures. This is a worrying development. Both globalisation and the development of the financial services sector entail large potential welfare gains. In recent decades, an increasingly large share of the world population has obtained a reasonable standard of living, and a smaller share is living in poverty. Financial integration and new services lead to efficiency gains that in the long term benefit households and companies in all countries. It is important that we do not throw these welfare gains out of the window.

This is a difficult question that requires more detailed analysis, but it is unlikely that it will be easy to reach a general policy conclusion. I am convinced, on the other hand, that many central banks will review their macroeconomic models and more precisely define the role of asset prices in the transmission mechanism. I do not believe, however, that we should exaggerate the ability of monetary policy to prevent crises from arising. Even if excessively expansionary monetary policy can contribute to the build-up of a bubble, it is less clear to what extent monetary policy can entirely prevent this from happening. It is probable that it would require fairly substantial interest rate increases, something that may not be received sympathetically when the reasons for the increases are not crystal clear. But more moderate interest rate increases could, of course, contribute somewhat. If nothing else, it  14  BIS Review 41/2009  would provide a signal from the central bank that it envisages certain development problems. I also believe that risk scenarios with a longer forecast horizon may be an option for clarifying what the risks may be in the longer term. It is conceivable that the price of housing or some other asset may be driven by factors that are difficult to explain or which may be assumed to give rise to inefficient risk allocation and large fluctuations in economic activity and inflation.
[3]John Locke, An Essay concerning the true original, extent and end of civil Government, 1690. [4]UNCTAD (2018), World Investment Report 2018: Investment and New Industrial Policies. [5]There is some debate as to whether technology will evolve in the future in ways that make  global value chains less important. Technologies such as 3D printing or robotics could allow the local production of many more goods. Some scholars find that technological change has so far only mildly slowed offshoring, while others see a more significant reversal ahead. See Koen De Backer, K., Menon, C. Desnoyers-James, I. and Moussiegt, L. (2016), “Reshoring: Myth or Reality?”, OECD Science, Technology and Industry Policy Papers, No 27, OECD Publishing; and Baldwin, R. (2016), The Great Convergence: Information Technology and the New Globalization, Harvard University Press. [6] 8 / 10  BIS central bankers' speeches  [6]OECD (2018), OECD Economic Outlook, Volume 2018, Issue 1, Chapter 2. [7]in ‘t Veld, J. (2019), “Quantifying the Economic Effects of the Single Market in a Structural  Macromodel”, European Economy Discussion Paper, No 094, European Commission, February. [8]This scenario assumes a counterfactual in which trade reverts to WTO-rules, and applies  Most Favoured Nation (MFN) rates as tariffs on goods. For non-tariff barriers, it relies on estimates calculated for trade between the EU and the US. See in ‘t Veld, J. (2019), op. cit. [9]As measured by PPP-adjusted GDP. [10]Excluding intra-EU trade. [11]For further details, see ECB (2015), The international role of the euro, Frankfurt am Main, July.

There is only one answer: recovering the unity of vision and action that alone can hold together such different countries. This is not only a hope, but an aspiration based on political and economic advantage. But there are also internal challenges that have to be faced, which are no less important for the future of the European Union. We need to respond to the perception that it lacks equity, between countries and social classes. We need first to listen, and then to act and explain. So, unity and equity are needed, above all, as a guide for policymaking in Europe. I would like to recall in closing the words of Pope Emeritus Benedict XVI in a famous speech held 38 years ago: “To be sober and to do what is possible, and not to claim with a burning heart the impossible has always been difficult; the voice of reason is never as loud as an irrational cry… But the truth is that political morals consist precisely in resisting the seductions of magniloquent words… It is not moral the moralism of adventure… It is not the absence of all compromise, but the compromise itself that is the true moral of political activity”. [38]  Footnotes [1]Reflection paper by Monnet, J. (1965), Les Portes, Archives de la Fondation Jean Monnet pour  l’Europe, August. [2]European Commission (2018), “Public opinion in the European Union”, Standard  Eurobarometer 90 – Autumn 2018, Directorate-General for Communication, European Commission, Brussels.
The risk profile’s covariation with the return on human capital has to be considered, too; perhaps a 16  8  Merton, R.C. (2000), Finance and the role of financial engineering in the 21st century, unpublished, Harvard University. BIS Review 5/2001  stockbroker, for example, should be wary of exposing even her/his personal financial savings to the stock market. Other risks lie in fluctuations in the price of a home that one either owns or is saving up for, as well as in the financing costs and, not least, the cost of refinancing; even if the mortgage rate is fixed, when the time comes to renew the loan it may be too high. The risks inherent in price fluctuations apply to other capital goods, too. It is also necessary to consider the risks in any saving plan for children’s education or for personal supplementary health insurance and life assurance. Perhaps it would even be advisable to allow for the risks that are covered today by insurance against fire, theft and accidents. Merton’s point is that there is a composite package of risks that is specific to each person and needs to be identified and covered. The management of all these risks calls not only for professional advice in the construction of such a plan but also for tailor-made financial products. The plan can include a variety of financial instruments but these must be easy for the individual household to understand in order to form a picture of and decide about the potential risks.

A relatively weak stock-market trend in the 1960s and ’70s no doubt fed expectations of a favourable return in the future. Another factor was certainly that the real return on bank deposits had been negative at times in the 1970s. Moreover, the introduction of mutual funds with tax incentives in the late 1970s and their subsequent replacement by a national savings system presumably drew many people’s attention to the stock market. It is also conceivable that the rise of economic journalism in the 1970s and ’80s contributed to a greater interest in the stock market. Neither should the formation of the Shareholders Association and the Share Promotion Association in the 1960s and 1970s, respectively, be overlooked. More knowledge and information certainly contributed. However, the increased saving in shares is one item in a larger context, in Sweden as well as other western industrialised countries. I mentioned earlier that Swedish households have transferred much of their traditional saving from banks to other instruments. Thirty years ago, bank deposits and other very liquid assets with little risk made up almost 60 per cent of households’ financial wealth, as against less than 20 per cent today. The major part of this adjustment in financial portfolios has gone to shares but a good deal now takes the form of insurance saving. The trend towards forms of saving with a higher risk has been accentuated by new rules for insurance companies, permitting a high proportion of shares, although this is arranged more indirectly.
Before you ask, we are of course trying to rectify this, trying to get banking down to 55% of total credit by the year 2010, and in the last three years, somehow we have got the debt market which was before then nonexistent to be double the size of the stock market. But it takes life times and generations to change people’s habits and the nature of the country. The world monetary system could in fact be monitored quite easily if the superpowers of the world would only wish it to be done. It sends forces to keep peace in other countries, so it could quite just as well impose a system , a world monetary system that would significantly reduce this kind of crisis. But the only crisis which might have affected the superpowers were the LTCM crisis of the 1998 and the Asian crisis of 1997 and it soon became apparent that the suffering could mainly be kept to the poor nationsand so it looks as though nothing good is going to happen in the international arena. Let me end my statement therefore by saying that before coming here I looked at the list of speakers and participants and was truly impressed by the diversity and excellence. I have therefore tried to put some interesting thoughts in the area of national central banking for your perusal. All of us here wish for peace and prosperity in the world.

M R Chatu Mongol Sonakul: National Central Bank and building world peace  Speech by Mr M R Chatu Mongol Sonakul, Governor of the Bank of Thailand, at the 27th International Conference on World Peace “Building a Culture of Peace in the New Millennium”, held in Bangkok on 1 December 2000. *  *  *  Members of the Professors World Peace Academy, Participants of the 27th International Conference on World Peace, Ladies and gentlemen. The history of central banking is normally agreed to have begun around four thousand years ago in the Greece, Roman and other empires up to the middle ages when banks were put up primarily for the purpose of getting finance for governments to wage war. So the first period of central banking cannot very well be said to have been in conformity with the topic I’ve been asked to talk about here today, which is entitled “National Central Bank and Building World Peace”. But in the sixteenth and seventeenth centuries and especially later on when industrialisation began in earnest, there were great needs for finance for the many various industries that sprang up around that time. Commercial banks and great finance houses became common but the limitations of the technology of that period of using precious metals as currency became quickly apparent. Commercial banks began issuing their own paper notes, for the amount of the valuable metals that they had in stock being much more transportable.
The Bank and Benchmark Reform Speech given by Chris Salmon, Executive Director, Markets, Bank of England  Roundtable on Sterling Risk-Free Reference Rates, London 6 July 2017  I would like to thank Tim Taylor and Rob Harris for their help in preparing these remarks. 1  All speeches are available online at www.bankofengland.co.uk/speeches  Introduction Thank you to NatWest Markets for hosting this event, and let me add my own welcome and thanks to you all for coming. The Governor has set out the need for a substantial transition from Libor to near-risk free alternatives. I want to expand on his remarks by explaining what the Bank has been doing to advance this objective, and why. And, importantly, looking ahead, I want to highlight the need for action from many of you. The financial system has a Libor dependency But let me first paint a picture of where we are starting from. The financial system has a Libor dependency. I’m sure this won’t be news to you, but it bears some examination. Usage of term Libor – that is the 3-month and 6-month tenors – is widespread, especially in Sterling and US Dollar markets, but also in Japanese Yen and Swiss Franc. The greatest concentration of financial contracts referencing Libor is in derivatives markets. For example, in sterling, more than £ trillion of ‘over-the-counter’ derivatives and £ trillion of exchange traded derivatives (on a gross notional basis) reference Libor. USD Libor derivatives probably run to the hundreds of trillions.

These reforms, including to the timing of SONIA publication, will take effect from March/April next year. Working Group on Sterling Risk-Free Reference Rates Let me now turn to the issue of forging a market consensus on the appropriate risk free rate. 4  All speeches are available online at www.bankofengland.co.uk/speeches  4  Here the Bank set up the Risk Free Rate Working Group with the objectives of identifying an RFR and promoting its use as an alternative to sterling Libor. We used our convening power to do this because we recognised that individual market participants, acting alone, cannot overcome network effects. Only coordination and cooperation across a broad spectrum of market participants can create the conditions for change. We also believe that the solution must come from the market – that is why the Group is market-led. As you know, and having considered the merits of two secured benchmarks alongside SONIA, the Group has now reached a decision to recommend SONIA as the RFR. This is welcome progress: the main priority from the Bank’s perspective was for the market to coalesce. We were committed to supporting whatever decision the Group made. That is what having a market-led process means. As it happens we were not surprised by the outcome because the transition path to a secured rate would clearly be much more difficult than it will be for SONIA. A consequence of the Group’s decision is that SONIA will grow in importance.
Encouraging banks to take risks that result in large dividend and remuneration payouts when things go well, and losses for taxpayers when they don’t, distorts the allocation of resources and management of risk. That is what economists mean by “moral hazard”. The massive support extended to the banking sector around the world, while necessary to avert economic disaster, has created possibly the biggest moral hazard in history. The “too important to fail” problem is too important to ignore. There are only two ways in which the problem can – in logic – be solved. One is to accept that some institutions are “too important to fail” and try to ensure that the probability of those institutions failing, and hence of the need for taxpayer support, is extremely low. The other is to find a way that institutions can fail without imposing unacceptable costs on the rest of society. Any solution must fall into one of those two categories. What does this mean in practice? Consider the first approach. To reduce the likelihood of failure, regulators can impose capital requirements on a wide range of financial institutions related to the risks they are taking. This is the current approach underpinned by the Basel regime. In essence, it makes banks build a buffer against adverse events. It has attractions but also problems. First, capital requirements reduce, but not eliminate, the need for taxpayers to provide catastrophe insurance.

That is already pulling down on inflation and will continue to do so until spending recovers. To put money spending back on a desirable trajectory is likely to require a pick up in the growth rate  4  BIS Review 129/2009  of broad money in the economy. That is precisely what our asset purchase programme, by injecting more money directly into the economy, aims to achieve. In deciding when and by how much our present programme of asset purchases should be either expanded or reduced, the Monetary Policy Committee will continue to base its decision each month on a judgement of the action required to meet the 2% target for inflation. Before the financial crisis, a generation of households and businesses had accepted that the discipline of a market economy was the most promising route to prosperity. Uncomfortable though it seemed, the importance of more flexible labour markets, greater competition in product markets, regulation of privatised utilities and allowing unsuccessful businesses to fail, came to be widely understood. Then, out of what must have appeared to many of you to be a clear blue sky of economic stability, arose a financial firestorm that wreaked substantial damage to the real economy, and we have not yet seen its full consequences. The case for market discipline is no less compelling for banking than for other industries. So I am sure that we can turn this crisis to our long-run advantage by reviewing and reforming the structure and regulation of banking.
(cnBlog – official blog of the Czech National Bank). Adam, T. and Michl, A. (2023). Inflace klesá – prbžné vyhodnocení dezinflaního procesu v esku [Inflation is falling – an interim assessment of the disinflation process in the Czech Republic] (cnBlog – official blog of the Czech National Bank). Bianchi, F. and Melosi, L. (2022). Inflation as a Fiscal Limit. (FRB of Chicago Working Paper No. 2022-37). DOI: http://dx.doi.org/10.2139/ssrn.4205158 Blinder, A. (2022). A Monetary and Fiscal History of the United States, 1961–2021. Princeton University Press. IBSN: 0691238383. Bullard, J. (2023, 12 May). The Monetary-Fiscal Policy Mix and Central Bank Strategy [conference presentation]. Hoover Institution at Stanford University. 5/7  BIS - Central bankers' speeches  Cochrane, J. H. (2023). The Fiscal Theory of the Price Level. Princeton University Press. IBSN: 9780691242248. Czech National Bank [CNB]. (2022). Inflation through the lens of demand factors. (CNB Monetary Policy Report – Autumn 2022), 30. Ddek, O. and Michl, A. (2021, 13 October). Krotitelé nákladové inflace [Tamers of costpush inflation]. Mladá fronta DNES. Frait, J. (2023, 17 March). Monetary Macroeconomics and Central Banks in Turbulent Times [lecture transcript]. Czech National Bank. Frait, J. and Matj, M. (2023a). The current monetary conditions in the Czech Republic: tight or easy? (cnBlog – official blog of the Czech National Bank). Frait, J. and Matj, M. (2023b). Are interest rates really unusually low by comparison to inflation? (cnBlog – official blog of the Czech National Bank). Kubíek, J. and Morda, P. (2023).

In effect, the single currency has removed the exchange risk between the countries of the euro area and is facilitating the standardisation of debt instruments and their management on a much larger scale. This integrating effect of the euro has been most evident in the money market, by virtue of, in particular, the establishment of the large-value payment system TARGET, made available to the banks by the European System of Central Banks. This integration has shown itself in, for example, the rapid adoption by the market of reference rates for the euro area, such as the EONIA overnight rate or the EURIBOR rate for maturities of less than one year. Above all, we have seen a total convergence in short-term interest rates within the euro area. In the bond markets, the integration of the markets remains incomplete, owing to: national differences relating to property rights over securities; taxation, accounting and supervisory regulations; and payment systems (which are also hindering the integration of the short-term securities markets and repo markets). The integration of the bond markets is nonetheless progressing. First, we have seen European bond indexes become standardised. Second, the differences in rates between sovereign issues within the euro area fell substantially in 1998. Furthermore, 1999 was characterised by a spectacular growth in euro bonds issued by private non-financial firms (a threefold increase, over the first ten months, compared with the same period in 1998), and an increasing share of bonds being issued by small and low-rated companies.