samchain/econo-pairs-v1 huggingface dataset:
In pursuit of that New Horizon, let me briefly discuss progress and prospects in three critical areas reporting, risk and return. First, reporting Three years ago in response to a call from G20 leaders, the FSB began addressing the financial stability risks associated with climate change by ensuring the market had the right information to price climate risk and reward climate innovation. The FSB established the Task Force on Climate-Related Financial Disclosures (TCFD) led by businesses from a wide range of industries across the G20. Eighteen months later, the TCFD delivered to the Hamburg G20 Leaders Summit its recommendations for voluntary disclosures of material climate-related financial risks. Since then there has been a step change in both demand and supply of climate reporting. On the demand side, current supporters of the TCFD include three-quarters of the world’s globally systemic banks, 8 of the top 10 global asset managers, the world’s leading pension funds and insurers, major credit rating agencies and the Big Four accounting firms.2 In total, these financial firms manage almost $ trillion in assets. 1 Carney, M. (2015). Breaking the Tragedy of the Horizon. Available: https://www.bankofengland.co.uk/speech/2015/breaking-thetragedy-of-the-horizon-climate-change-and-financial-stability 2 Full list of current TCFD supporters available on: https://www.fsb-tcfd.org/tcfd-supporters/  2  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  2  As a consequence, the incentives for companies to disclose and manage climate-related risks have increased dramatically.

Such claims could arise well into the future, as the science and evidence of climate change hardens, though some are already taking action against companies on the grounds of failure to disclose the risks posed to their business models by climate change. 4  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  4    Dependency on short-term actions given that the size of future impacts will, at least in part, be determined by the actions taken today; and    Uncertain time horizon which may stretch beyond traditional business planning cycles. The nature of these risks means that the biggest challenge in climate risk management is in assessing the resilience of firms’ strategies to transition risks. Part of the genius of the private sector-led TCFD is its recognition that disclosure needs to go beyond the static to the strategic. Markets need information to assess which companies can seize the opportunities in a low carbon economy and which are strategically resilient to the physical and transition risks associated with climate change. The Bank of England has also become increasingly active in such assessments, consistent with our financial stability and prudential mandates. As the supervisor of the world’s fourth largest insurance industry, we know that general insurers and reinsurers are on the front line of managing the physical risks from climate change.
Currently, we can only see a very small number of major market players establishing ecosystems who are shifting towards new business models. I should say that ecosystems are certainly attractive for clients enabling them to receive almost everything a person needs every day in a single environment, in one application. However, we are well aware of the risks inherent in such ecosystems as banks are investing depositors’ funds in new businesses, in their expansion. Returns on these businesses may be both lower and later than expected by the bank being the centre of an ecosystem and financing its evolution. Therefore, we need to protect depositors’ and investors’ interests because those who place their funds with banks should certainly be confident that this money would not be affected by the actual profits of an online cinema or even an online cinema network owned by their banks. Another challenge posed by ecosystems is a potential abuse of dominance, and not only in the financial market. Furthermore, this may also affect the development of several sectors and, eventually, product prices and quality for end consumers. Therefore, we raised this issue long ago, and we have started to develop ecosystem regulation approaches we will be discussing with you, as Anatoly Aksakov has already mentioned. This year, we are going to publish a consultation paper on the regulation of banks developing ecosystems, which will become the first step towards the start of our joint efforts with the market community aimed at devising ecosystem regulation approaches.

We can see that these restructured loans, coupled with the safety cushion accumulated over previous periods, help protect the banking system and prevent a situation where last year’s crisis could turn into a problem for the financial system in the future. We believe that loan restructuring has already passed its peak. Since the outbreak of the pandemic, banks have restructured approximately 10% of their loan portfolio, which is quite a considerable amount. As estimated by banks themselves, up to one-third of these restructured loans may turn into non-performing ones. Banks consider that this figure may reach 20– 30%. This would imply that non-performing loans could make 2–3% of the entire loan portfolio, 1/7  BIS central bankers' speeches  and banks would need additional provisioning for them. We do not consider that this could entail any systemic risks since loss recognition would be gradual. Judging by the previous crisis period, this process takes about two years, that is, provisions will not be created immediately in any case. Most banks have sufficient revenues to form provisions without the need to use their capital. The sector also has a significant capital cushion maintaining it at six trillion rubles, which is three times more than the potential amount of additional provisions for restructured loans. In other words, we can see no problems in this respect for the banking system as a whole. There is also an unevenness in terms of both capital and income distribution and the process how nonperforming loans will be recognised in banks’ balance sheets.
In the monetary policy analysis, however, the focus is often on what will happen in the period in-between, or on developments two to three years ahead. It is generally accepted that it is at this time horizon that monetary policy has its greatest effect. As I said earlier, monetary policy aims to make monetary policy decisions that provide as good a target attainment as possible and the models are important in this context because they make it possible for us to evaluate different monetary policy alternatives in forecast terms. Models are on the whole very useful when we want to evaluate alternative scenarios in which development takes a different course than predicted in the main scenario. However, the analysis of alternative  4  BIS central bankers’ speeches  scenarios must not be reduced to a purely model exercise and it is important that such analyses are also complemented by assessments.4 Let me conclude the discussion of model forecasts by saying that they are sometimes described as being in some way at odds with forecasts that are based on assessments. In my opinion there is no such opposition between them. A forecast is always an assessment. We develop models so that they can help us to make better assessments. A good and wellfounded forecast is often produced in a structured interaction between models and assessments by experts. Forecasting, extreme scenarios and the financial crisis In normal circumstances, a forecast path can be described as a probability-weighted average of different reasonable scenarios.

MAS would like to see the sale of simple term life insurance products through the internet. BIS central bankers’ speeches  5  Commission-based remuneration and distribution structure But customised financial advice is still required for the more complicated insurance plans, tailored to suit individual and family needs and circumstances, and for those who want to supplement their term life insurance. To lower costs for such products, we must address some of the underlying inefficiencies in our remuneration and distribution structure. FAIR will fundamentally review the commission-based remuneration and distribution structure. In Singapore, insurance products are distributed through insurance agencies, banks, and financial advisory firms. The premiums for these insurance products include charges that cover mortality risk, as well as various expenses incurred by the insurer, such as distribution and management expenses. A substantial proportion of the premium in the earlier years goes to paying for distribution expenses. Over the life of a policy, this cost can account for as much as 8% of the total premiums paid. A key driver of this cost is the multi-tier distribution structure that is common in Singapore’s insurance companies and large FA firms. The commission-based, multi-tier distribution structure involves representatives in the upper tiers having a share of the commissions earned by lower-tier representatives who provide insurance and financial advice to the consumer.   Take for example a whole life insurance policy.
However, large scale randomised control experiments in conjunction with carefully designed surveys on consumers are now routinely used as they allow researchers to directly control the formation of expectations and to reliably identify causal eﬀects running from expectations to behavioural responses. 16. The article summarises the results of a notable experiment done on Singapore consumers, which show that consumers have biased inflation expectations. Specifically, the study shows that consumers do not adjust for the eﬀects of changes in quality on prices, thereby overstating the true rate of inflation. This results in a systemic upward bias in the public's inflation expectations if a society experiences widespread income growth, which at the same time induces the upgrading of the quality of purchased goods. In Singapore, the Department of Statistics has adopted hedonic regression techniques in the compilation of the CPI for used cars for example, in order to achieve a more robust quality adjustment between the obsolete and replacement models that may diﬀer in technical specifications. [8] 17. In April 2018, Professor Aurobindo Ghosh, in collaboration with researchers at the Behavioural Insights Team in Singapore and the Economic Policy Group, MAS conducted two randomised experiments with a view to improving the framing of inflation expectation questions in the survey used to form the SInDEx measure. This work found that providing respondents with current information on inflation and other key macroeconomic variables helped them better contextualise and anchor their responses.

I am quite sure that there has been a distinctive step-up in the recourse to notions of expectations and sentiments by forecasters in explaining their muted or upbeat prognosis for macroeconomic variables in the period ahead. 14. Andrei Shleifer and co-authors have worked on formalising the insights of behavioural economics, such as representativeness heuristics as the basis for realistic expectation formations, within familiar analytical frameworks [5] . Specifically, Shleifer shows how representativeness thinking may cause agents to over-weight the probability of good fortune, due to selective retrieval of information from memory, inducing excessive optimism [6] . Embedded in a dynamic model of credit, such drivers of expectations formation can amplify pro-cyclical booms and busts in the issuance of risky credit, credit spreads as well as in investment spending. 15. Separately, on the empirical side, we have also seen much eﬀort in the literature to better measure expectations. The point of departure is that survey expectations are not “noise”. They are a useful tool insofar as they reflect what market participants and other agents believe and act on. Our latest Macroeconomic Review featured an article by Professor Bernard Yeung and Sumit Agarwal of the NUS Business School, reviewing the latest research work on surveying and characterising consumer expectations [7] . Attempts to make inferences on the formation of expectations and validate any causal impact of expectations on economic behaviour are o en thwarted by endogeneity or imprecise estimates.
For example, in this month’s edition of the SCE we ask respondents what they expect the rate of inflation to be “over the 12‐month period between May 2018 and May 2019.” Our testing suggests that respondents understand this format better than that of the 5–10 year Michigan question; consumers are better able to provide their expectations over a specific time period in the future, and there is little value in asking them about a longer time horizon. In addition, we believe that the one-year two-year-forward horizon adopted in the SCE is better suited to measure inflation expectations at the medium-term horizon that matters most for central bankers, since monetary policy is expected to exert its full effect within that time frame.19 With regard to question wording, it is important to note that the Michigan Survey asks about changes in “prices in general.” The HIEP tested three alternative wordings of a potential inflation expectations question: we presented respondents with questions about the change in “prices in general” (the wording used in the Michigan survey), the change in “prices you pay,” and the “rate of inflation.” Compared with the “rate of inflation,” the phrases “prices in general” and especially “prices you pay” induced respondents to think more about their personal price experiences and to focus on specific price changes for individual items, such  17  The Michigan survey’s precise question format is as follows: First, respondents receive the question “What about the outlook for prices over the next 5 to 10 years?

The importance of the sector is evident in the balance of payments data where it ranks third in terms of its contribution to the total value of exports of services at 19% for 2021, after the financial services and ICT sectors, with contributions of 32% and 23%, respectively. Concluding remarks Let me conclude by underlining the challenges for policy makers: The global inflation dynamics are currently being addressed by central banks, but the fight is far from over. Monetary policy is being utilised at a different pace in different regions, due to the differences in economic fundamentals. However, we should not forget that other policies also play a role. For instance, state support should avoid horizontal measures and instead use targeted fiscal measures,  3/4  BIS - Central bankers' speeches  which focus on the economically vulnerable, in order to support social cohesion but avoid undermining monetary policy measures against inflation. Finally, regarding the shipping sector, it is and will continue to be the backbone of the global economy. In fact, when talking about the importance of shipping, I cannot avoid the temptation of referring to the British writer Arthur C. Clarke, who said and I quote: "How inappropriate to call this planet, Earth when it is quite clearly Ocean". Cyprus, a tiny spot on the planet, continues to strengthen its role in the shipping sector. As a hub for ship management, ship owning and vessel chartering services, it aims to maintain and enhance further the competitiveness and prospects of the sector.
Also within the framework of inflation targeting, the manner in which monetary policy has been conducted has seen some development over the years as experience and knowledge have increased. For quite a long period of time, monetary policy in Sweden took guidance from a rule reading approximately as follows: “If the forecast for inflation two years ahead exceeds the inflation target – raise the repo rate. If the forecast falls below the target – decrease the repo rate.” (Figure 1). Figure 1 A simple rule of action  Inflation  Repo rate  2  r 2 yrs  This simple rule had a number of advantages, above all in the communication of monetary policy decisions. For example, it clearly indicated that inflation was the overriding goal and that monetary policy had to be forward-looking. These were important points to make when the inflation-targeting regime was new. However, in many ways, this presented an excessively simplified view of monetary policy. One weakness was that the forecasts for inflation and the other variables were based on the assumption that the repo rate would be held unchanged for the entire forecast period. This assumption was often quite unrealistic, for example during a strong economic upturn with rising inflation, when an increase in the repo rate was widely expected. Consequently, it could be difficult to reconcile this assumption of an unchanged repo rate with credible and consistent forecasts. 2  1  Roger, Scott, “Inflation Targeting Turns 20”, Finance & Development, March 2010, International Monetary Fund.

In short, the peripatetic pound has caused, and continues to cause, severe headaches for economic policymakers. But was currency instability really the cause of those headaches in the past, or was it simply the effect of bad policies? Some of both is the answer. Large movements in sterling can create problems for monetary policy, as we have seen very recently. Equally, the absence of a credible monetary framework means that the currency is likely to be volatile. Sterling crises of the past reflected an absence of monetary stability. Inflation has eroded the value of money to the point where the purchasing power of £ in 1950 has been reduced to less than a shilling, or 5p, today. The failure to control inflation led to excessive expansions of the economy, and the subsequent struggle to bring inflation back down resulted in severe recessions. This country experienced the sharpest decline in output of any G7 economy in the early 1980s. And in the early 1990s only Canada had a more severe recession. Eventually, the realisation that inflation did not generate sustainably higher output and employment produced a determination to restore stability to the UK economy. Since our departure from the ERM, in September 1992, successive governments have put in place institutional changes that would deliver stability. First the inflation target and then independence of the Bank of England, with the new Monetary Policy Committee (MPC), have put us firmly on course to achieve monetary stability.
BIS Review 39/2000  2  Let us make a comparison between the period starting with the recession of the early 1970s up to 1989, when annual inflation averaged over 9.5%, and the period from 1993, ie the end of the last recession, up to now, with an average inflation rate of just over 1.5%. Broadly speaking, the latter period presents a brighter picture. The total rate of investment, measured in terms of year-on-year changes, is higher on average during this period, especially if investments in housing are excluded. The average productivity of the economy as a whole is broadly the same during the two periods. However, behind the average during the first period lay some years of very strong growth in productivity in the early 1970s, offset by poor productivity growth during the 1980s. The Swedish economy has grown by 2.3% on average since the start of 1993. This is only slightly higher than growth during the period 1971-1989. However, the composition of growth is different in the two periods. During the second period, growth in industry has been just under 3.5%, which is about 1% higher than during the previous period. The difference in growth would also be more marked if the latter period were to start only six months later. Average growth from mid-1993, when the recession levelled out, to the end of 1999 was 2.9%. Diagram 2. Gross investment, total and excluding housing  Gross capital formation 7 6  7 Total Excl.

UND1X, UNDINHX and import prices  UND1X, UNDINHX and import price for goods: outcome and scenario Percentage 12-month change 5  5  4  4  UNDINHX  3  3  2  2  1  1  UND1X 0  0  -1  -1  Import prices  -2 1998  -2 1999  2000  2001  2002  Sources: Statistics Sweden and the Riksbank  Diagram 8. Wage costs and inflation  Development of labour costs in the business sector and of the CPI Per cent 25  25  Inflation Labour costs  20  20  15  15  10  10  5  5 0  0 71  73  75  77  79  81  83  85  87  89  91  93  95  97  99  Sources: National Institute of Economic Research and Statistics Sweden  At this stage of economic recovery, the labour market has functioned better in some respects than the Riksbank, and many other observers too, expected. Nominal wage increases have, as I said before, been moderate and vacancies have been filled without this leading to any substantial shortages. At the same time, it would be premature to breathe a sigh of relief. The labour market and the wage formation system have not yet been tested to the full.
International reserves grew to a peak of 36.2 billion kronur at the end of July, up 5.2 billion kronur from the beginning of the year despite the repayment of some of the Treasury’s foreign debt. The Central Bank thought it desirable that the exchange rate of the krona should strengthen somewhat to lessen pressures on the domestic market and dampen inflation pressures. The Bank’s measures undoubtedly contributed to lower inflation than expected. Monetary developments changed course at the beginning of August. Currency outflow commenced anew and bond market yields began to rise. This change was the result of increased purchases of foreign securities by residents, a stop in the relending of foreign loans and an increase in general bank lending. The differential between domestic and foreign money market rates had also narrowed because of interest rate rises in some neighbouring countries. When it had become clear that this was not a temporary situation, the Central Bank responded by raising interest rates by 0.3 percent in mid-November. The interest rate had an immediate impact, the exchange rate of the krona strengthened and the currency outflow stopped. At the end of the year, the exchange rate index was 0.9 percent below the central rate of the fluctuation range after having strengthened on the whole by 1.4 percent in the course of the year. International reserves stood at 27.8 billion kronur at year-end, down 3 billion kronur from a year earlier. Reserves are now about 27 billion kronur.

The Central Bank of Iceland has partly performed this task through its Bank Inspectorate which has been built from the ground up in the Bank and is closely linked to some of the Bank’s other activities, for example in regard to a joint database. Parliament is currently debating draft legislation, which calls for the creation of a new supervisory institution, which would combine all supervision of financial institutions. I cannot deny that the Central Bank is opposed to these ideas for reasons I discussed at this venue last year, and I shall not go into the issue in any more detail now. However, since the government’s wishes in this matter became clear the Central Bank has co-operated wholeheartedly with the Ministry of Commerce in preparing the best possible legislation in this area and in securing the necessary link between the Central Bank and the new supervisory institution and also to ensure that The Central Bank will have all necessary opportunities to guard a sound and effective financial system. In some central banks, which do not have supervision among their responsibilities, such as in Sweden and the United Kingdom, much work has been put into defining the relevant tasks of the central bank. The Central Bank is bound to seek models in these countries when it becomes clear that the Bank Inspectorate will depart.