samchain/econo-pairs-v1 huggingface dataset:
We have a stated tolerance interval of plus or minus 1 percentage point that will catch deviations from the target. Alan Greenspan, the Chairman of the US Federal Reserve, has said words to this effect: Inflation should be so low that the actors in the economy do not need to concern themselves with it when they make economic decisions. This seems reasonable, but what does it mean in more concrete terms? Most likely it is not advisable to aim at price stability defined as zero-inflation. Some studies indicate that inflation as measured by the consumer price index is overestimated. There are many arguments for that being the case, one being that goods may increase in price because the quality has been improved and another that the items in the valuation basket whose prices are measured may be obsolete. This is a problem of methodology and measurement. Estimates for the American economy show that owing to errors in measurement, inflation tends to be overestimated by up to 2 per cent. Estimates by Statistics Sweden for the Swedish economy indicate a smaller error in measurement. A very low inflation may also cause problems if the nominal wages are inflexible downwards, which is often the case. Some degree of inflation can then function like oil in the economic machinery. However price and wage rigidity do not follow any natural law, independently of how, for example, economic policy is formulated.

Preserving or further building up macroprudential buffers would support credit institutions' resilience and enable the authorities to release these buffers, if and when risks materialise and negatively impact credit institutions' balance sheets. But, as ever, these decisions should be made considering each Member State's specific macrofinancial outlook and banking sector conditions, in order to limit the risk of procyclicality. - Financial stability risks beyond the banking sector should also be addressed. This requires tackling vulnerabilities and increasing the resilience of non-bank financial institutions and market-based finance. In this regard, the ESRB has  2/3  BIS - Central bankers' speeches  repeatedly noted that a lack of tools is hampering authorities' ability to address financial stability risks beyond the banking sector. It has called for authorities to be provided with such tools, for example, in the context of the review of the prudential rules governing investment funds and insurers. The current heightened risk environment makes this more urgent. Against this background, let me now turn to the four distinguished panelists that are together with me today: Claudio Borio, Alfred Kammer, Lucrezia Reichlin and Ricardo Reis, who are very well known to you in the audience and, therefore, need little presentation. Let me, anyway, briefly introduce them to you, by alphabetical order: Claudio Borio is the Head of the Monetary and Economic Department of the Bank for International Settlements.
One popular area recently is, of course, the use of Hong Kong’s stock market for raising funds by Chinese state-owned enterprises. Up to late October, 38 enterprises from the mainland of China have made their initial public offerings in Hong Kong in the form of the issue of “H” shares. These shares were bought by investors both BIS Review 112/1997  -3-  in Hong Kong and overseas. It is important to note that when mainland enterprises sought to be listed on the Hong Kong Stock Exchange, they are required to comply with all the listing rules and other relevant regulations in Hong Kong. No favouritism or preferential treatment has been or will be given to mainland companies. Thus, in addition to fund raising, the listing of mainland companies in Hong Kong facilitates the upgrading of corporate governance of these listed companies in line with the international standards practised in Hong Kong. Through this process, Hong Kong has also played a strategic role in the reform of the state-owned enterprises in the mainland. 11. The third area concerns the management of systemic risks arising from but not limited to financial liberalization in this region. There is clearly identified a need for much greater monetary cooperation in this region, and here Hong Kong has been actively playing, and hopes to continue to play actively, a promotional role.

The banking market in Hong Kong is of course a very international one, with a total of 182 licensed banks, 151 of which are incorporated outside Hong Kong. 81 of the largest 100 banks in the world are licensed in Hong Kong. Collectively they provide a wide range of banking and other financial services, not just for Hong Kong but for the region as a whole. The banking sector of Hong Kong is reputed to be amongst the most efficient and profitable in the world. 9. Hong Kong’s debt market, which has developed quite rapidly in the past eight years, is also playing a significant role in the region. Financial intermediation through the debt market is still relatively underdeveloped in the region, but the prospects are good. As the very substantial savings of the region is increasingly institutionalized through the establishment of provident funds and pension funds, the demand for debt securities would grow, perhaps much faster than that for banking and equity instruments. At the same time, the huge investments envisaged for the development of the physical infrastructure in the region will require much debt financing, thus increasing the supply of debt securities. With the first class infrastructure in our newly developed debt market, Hong Kong is in a very favourable position to take advantage of these good prospects. 10. Hong Kong’s equity market is of course one of the largest and most liquid in the world, and, notwithstanding recent volatility, is the favourite market for institutional investors and for those wishing to raise funds.
2/9  In Europe, the European Commission has set the target of having a “climate-neutral” economy by the year 2050. In short, the aim would be to bring about the decarbonisation of the economy, as our Forum here today is called. According to Eurostat data, Spain emitted 285 million tonnes of CO2 into the atmosphere in 2017. That is 7.5% of total European Union emissions, placing Spain sixth among EU members. Logically, in step with their economic and demographic weight, the country with most emissions was Germany (858 million tonnes; 22.8%), while Malta emitted the least (3 tonnes; 0.1%). Since 2012, emissions per unit of value added have fallen by 14% in Spain, practically the same as in the European Union as a whole. However, emissions should also be analysed in relation to the size of the economy and to population. Spain emitted 0.25 kg of CO2 for each euro of (2010) GDP produced, slightly less than the 0.26 kg average. In terms of population, in 2017 our emissions totalled 6.1 tonnes per capita, clearly below the European Union average of 7.3 tonnes per person. A fair transition Despite enjoying this slight initial advantage, the challenge of achieving a decarbonised country is a major one. On paper, I believe nobody is against achieving this objective. However, we should be mindful that moving to a decarbonised economy entails a change in our production model. Practically by definition, such a change has systemic implications, particularly affecting specific economic sectors.

Risk measurement It will come as no surprise to you that, as a supervisor, I will begin by talking about the second of these elements, namely risks. The process of transition will entail two types of risks to the financial system:  4/9    On the one hand, the physical risks caused by the direct effects of climate change, for example as a result of the gradual increase in temperature, or more frequent or more severe climate events such as storms, flooding or natural disasters.   On the other, the transition risks. These refer to the potential effect on specific bank borrowers of the regulatory measures aimed at sustainably transforming the  economy, technological changes, and changes in customer behaviour and preferences driven by greater environmental awareness. The two types of risk are related: the more ambitious the regulations combating climate change, the greater the transition risk and the lower the physical risk, and vice versa. Environmental risk is a risk in its own right, although its impact materialises through “traditional” banking risks.
The Risk-Based Capital Framework and Risk-Based Supervisory approach give room for institutions to innovate and take more risks as long as adequate controls and risk management practices are in place. BIS Review 103/2006  1  Liberalisation of the general insurance industry MAS will also continue to encourage greater participation from a wide range of global insurance players in our market. In 2000, we lifted the moratorium on admission of new direct general insurers and removed the 49% limit on foreign shareholding in locally-owned direct insurers. Since then, the industry landscape has evolved considerably. Today, we have a diverse network of 58 direct insurers, many of whom are specialist insurers, 27 professional reinsurers and 60 captives. Most of the top international insurance and reinsurance brokers are also here. We continue to see interest from more players seeking to establish a presence here. We will consider all applicants that are well-capitalised, have an acceptable rating, and are managed by experienced professionals with a good track record even if the company is newly established. Singapore as an insurance hub Singapore has achieved a critical mass of insurance players and activities, becoming an insurance hub. This critical mass means a wide range of insurance products and services are available. Singapore is a logical choice for those seeking to purchase insurance because they know that there are capacity and expertise here. Indeed, Singapore serves as an important regional reinsurance centre as well as the largest captive domicile in Asia. Asia holds many opportunities for insurance.

“Rounding the Corners of the Policy Trilemma: Sources of Monetary Policy Autonomy”, American Economic Journal: Macroeconomics 2015, 7 (4): 33–66, http://dx.doi.org/10.1257/mac.20130237. Krugman, P. (1999). Balance Sheets, the Transfer Problem, and Financial Crises, in International Finance and Financial Crises: Essays in Honor of Robert Flood, edited by Peter Isard, Assaf Razin and Andrew Rose (Springer Netherlands) pp. 31–55. Mundell, R. (1963). Capital Mobility and Stabilization Policy under Fixed and Flexible Exchange Rates, Canadian Journal of Economic and Political Science, 29 (4), pp.475–485. Obstfeld, M. (2015). Trilemmas and tradeoffs: living with financial globalization, BIS Working Papers No 480. Obstfeld, M., Shambaugh, J., and Taylor, A. (2005). The Trilemma in History: Tradeoffs among Exchange Rates, Monetary Policies, and Capital Mobility, Review of Economics and Statistics, vol. 87 (3). Rey, H. (2014). International Channels of Transmission of Monetary Policy and the Mundellian Trilemma, London Business School, Paper presented at the 15th Jacques Polak Annual Research Conference Hosted by the International Monetary Fund, Washington, D.C., November 13–14. United States Congress (1913), Federal Reserve Act, Amended 1977, Section 2A. 4  BIS central bankers’ speeches
Such initiatives have prompted the IMF to conclude that ‘the Bank is one of the leaders worldwide in shaping reforms in this area’. Finally, efficient resilience is why the Bank of England, working with the Financial Conduct Authority, has been at the forefront of efforts to increase individual accountability in financial services. While the UK’s action plan to improve conduct includes stronger deterrents and reduced opportunities for bad behaviour, we recognise that ex post penalties are only part of the solution. 8  The FPC judges the appropriate Tier 1 capital requirement for the UK banking system, in aggregate, to be 13.5% of risk-weighted assets (RWAs), as currently measured. This compares with around 10.5% including capital conservation and SIFI surcharge buffers based on international standards. The Bank has also introduced a leverage ratio requirement in advance of international requirements that currently amounts to, in aggregate, 3.3%. If resolution arrangements were not in place, the FPC is likely to have judged that the appropriate baseline Tier 1 capital requirement for the UK banking system would be closer to 20% of RWAs than the current 13.5%. 9 Membership of the SMF has risen from 70 in 2008 to 190 today. Our Discount Window is open daily for those firms requiring a bespoke facility with lagged disclosure. We hold monthly repo auctions to provide predictable and regular access to reserves in exchange for a very broad range of collateral, including raw loans.

And second, we must ensure our institutions and markets are sources of strength for the global system. Fulfilling these dual responsibilities requires the highest standards of supervision and regulation, and a commitment to the most effective cooperation with other regulators. Let me take those in turn. III. The UK Targets a Level of Resilience Beyond Global Minimum Standards  As the FPC has repeatedly made clear, the UK financial system will require a post-Brexit level of resilience at least as great as that currently planned, which itself generally exceeds that required by international baseline standards. This imperative reflects the scale, complexity and importance of the UK financial system. This does not mean we are pursuing the stability of the graveyard. Rather, we are building the necessary resilience for our system as efficiently as possible by simultaneously implementing major structural reforms. Such “efficient resilience” allows the UK financial system to fulfil both its domestic imperatives and its international responsibilities. 7  See ‘The Promise of FinTech – Something New Under the Sun?’, speech by Mark Carney, 25 January 2017, available at http://www.bankofengland.co.uk/publications/Documents/speeches/2017/speech956.pdf. 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  Efficient resilience is why our capital standards are simultaneously well above Basel minimum requirements and substantially below the levels that would be necessary if those banks could not be safely resolved if they got into trouble. 8  Efficient resilience is why we are ring-fencing the domestic banking services on which UK households and companies depend.
Simon M Potter: Improving survey measures of inflation expectations Speech by Mr Simon M Potter, Executive Vice President of the Federal Reserve Bank of New York, at the Forecasters Club of New York, New York City, 30 March 2011. Wilbert van der Klaauw, Giorgio Topa, Robert Rich, Olivier Armantier, Basit Zafar and Joseph Tracy. The results from the New York Fed–American Life Panel Survey I will discuss today reflect data collected through mid-March 2011. Papers containing more detail on the research I have summarized today can be found on the New York Fed website. *  *  *  Good afternoon. It is a pleasure to be here today to talk with you about some of the New York Fed’s ongoing research on the measurement of household inflation expectations. The views expressed are mine and do not necessarily reflect those of the Federal Reserve Bank of New York or the Federal Reserve System. That said, I want to acknowledge my colleagues in the Research Group who have pushed our research on inflation expectations forward. Expectations, and in particular inflation expectations, play a key role in the conduct of modern monetary policy. Expectations drive people’s behavior by influencing a wide range of economic decisions such as saving, investment, purchases of durable goods and wage negotiations. These decisions in turn affect real economic activity and actual inflation.

Further, in our initial investigations we had established evidence that many respondents would prefer to give a range rather than a point estimate and that most households were able to answer questions about their uncertainty over future inflation. We had also found our measure of individual forecast uncertainty to be positively correlated with the width of any range of responses given to the standard point forecast questions. Thus, we added questions eliciting from our panel their subjective uncertainty about future inflation. I will show you an example of such a question in a minute. As emphasized above, anchoring forward inflation expectations is crucial for monetary policy. In the Michigan survey, information on forward inflation expectations is generated by a question asking about “the change in prices in general over the next 5 to 10 years.” Our initial exploratory work confirmed that many households were confused by this wording but that there was overwhelming evidence that long-term average expectations were being reported. Considering the rather elaborate structure of the Michigan questions shown in Chart 5, it also appears that small changes in the various challenges could lower the median response by a significant margin. Further, asking about the rate of inflation directly produced answers more consistent with the concept of forward inflation expectations of interest to central banks. Rather than replicating the Michigan long-term inflation expectation question replacing “prices in general” with the “rate of inflation” we decided to work with a medium-term explicit horizon and use only a probabilistic version of the question.
Luis de Guindos: Interview in Corriere della Sera Interview with Mr Luis de Guindos, Vice-President of the European Central Bank, in Corriere della Sera, conducted by Mr Federico Fubini on 13 June 2019. * * *  The 5y5y forward inflation rate is at an all-time low and clearly below where it was when Mario Draghi first hinted at quantitative easing (QE) in 2014. The ECB has already done some more easing and President Draghi himself mentioned that there was an interesting discussion at the latest Governing Council meeting on different tools to do some more easing – the asset purchase programme (APP) and others. What do you need to see in order to decide to do more? What we need to see is a de-anchoring of inflation expectations. This has not yet happened, despite the fact that there has been a drop in market-based inflation expectations. If you look at the survey of professional forecasters, the situation is a little bit different – expectations have remained stable. Then we need to see if there is a significant additional drop in economic activity – a crystallisation of the downside risks that we have indicated. We can always try to look forwards to get an idea of what might happen, but ultimately the reality is the reality. And, well, let’s see what happens. But I think the important part of our stance is that we are totally ready to react. We will have time enough to know the future when it arrives.

Our new approach is designed to counter the risk that policy is too accommodating in upswings and too harsh in downturns. Two important principles stand out for me: first, that we must carry out financial regulation with an eye on conditions in the real economy, which means promoting stable and sustainable credit creation and growth; and second, we should always be prepared to look to the risks ahead, and exercise sensible judgment. The financial crisis has taught us in the most painful way of the dangers of waiting too long to take action and then being unable to prevent the worst consequences of delay. The FPC has recommended that British banks make sure their capital level is high enough to withstand future threats. Some banks will need to increase their equity capital for a given level of risk in their balance sheets. Concerns have been expressed that this change will harm lending to the UK economy. I do not agree with these concerns. Equity capital is not money that has to be stashed away for a rainy day and thus put to no good use. It is the shareholders’ stake in the company. In nonfinancial companies, shareholder capital or equity is used to finance the acquisition of assets. The same is true for banks. Equity finances the provision of loans to households and companies, and those loans are the banks’ assets. In that sense, capital supports lending by banks and does not substitute for it.
I am aware that taking the climate and environment into consideration is quite new for the banks, but it is equally so for us. However, adapting to climate change has no alternative. As Bob Brown once said – “The future will either be green or not at all". 2/2  BIS central bankers' speeches

While the gaps in operational efficiency and productivity have improved, there remains great scope for further improvement particularly in areas where the domestic banks are evidently behind the foreign banks. For instance, productivity standards of the counter personnel as measured by the number of counter transactions per counter employee for the domestic banks averaged approximately 5,000 compared with 11,000 for the foreign banks. Meanwhile, the number of domestic banks that did not experience any disruption in their retail deposit and loan initiation systems is significantly lower than that of the foreign banks. In terms of the time taken to approve new credit card applications it averaged 8 days for the domestic banks compared with 6 days for the foreign banks. As can be seen from the scorecard, the consolidation programme for the domestic banking sector was a necessary pre-requisite to enhance the sector’s capacity to compete. Size alone however, is not a sufficient condition that will result in producing efficient and competitive banks and it does not offer guarantee of success. Being a large bank is however, an important enabler to achieving enough scale to be able to invest in cutting-edge technology and management systems and to attracting the talent required to compete with the best players in the market. Domestic institutions need to be able to meet the range of products offered by foreign competitors. But the larger scale and wider range of activities will demand stronger management teams.
Without that, human and financial resource allocation either side of the ring-fence will become blurred. For example, without separate debt issuance for retail and investment banking, the cost of debt for a big bank will be a blended mix. The implicit subsidy in funding costs would then remain and with it one of the main distortions associated with too-big-to-fail. Only time will tell whether cultural separation can be achieved under the existing structural reform proposals. In the go-go years, will these reforms be sufficient to prevent the grass always appearing greener on the riskier side of the (ring-)fence? This is the acid test of the structural reform agenda. Where next? Progress has been made over the past few years towards eliminating too-big-to-fail, with further progress on implementation planned. But today’s task is even more daunting than before the crisis. The big banks are even bigger. The system itself is more concentrated. And  BIS central bankers’ speeches  7  despite reform efforts, the market’s best guess today about tomorrow’s implicit subsidy is farlarger than before the crisis struck, at over $ billion per year (Chart 3). The market believes that illicit state promise is even more likely to be kept. The wrong conclusion to draw would be that existing reforms have failed or are unnecessary – quite the contrary. Rather it is that these reform initiatives, while necessary, may be insufficient to eliminate the too-big-to-fail externality. If so, what are the alternatives? Several have been mooted. Re-sizing the capital surcharge is one possibility.

New Estimates of Returns to Scale for U.S. Banks.” Journal of Money, Credit, and Banking, 44(1), 171–199. 14  BIS central bankers’ speeches