samchain/econo-pairs-v1 huggingface dataset:
In order to contribute to satisfying the fundamental preconditions for stability in the exchange rate, Norges Bank decided to increase interest rates. This occurred at a time when the krone exchange rate against the euro had strengthened further and was stronger than the initial range. There was thus a risk that we would end up in the situation represented by the box in the lower right-hand corner of the matrix, in other words the exact opposite of the situation expected at the beginning of 1999. The fact that in the first case we decided to lower interest rates, even though the krone was weak against the euro, while in the second case we decided to increase interest rates, even though the krone was strong against the euro, reflects the symmetry in our response pattern. In this period, movements in the euro exchange rate against the US dollar have influenced the krone exchange rate against the euro without this being driven by conditions in the Norwegian economy. This is a factor that we have not emphasised when setting interest rates. If we look at the two-year period as a whole, consumer price inflation has averaged about 2.7 per cent. However, a more accurate impression of inflationary impulses is obtained when we exclude factors that have only a short-term effect on inflation, such as changes in indirect taxes, electricity prices, the revision of the house rent index and changes in petrol prices. The underlying rise in consumer prices has averaged about 2.3 per cent in this period.

If price and cost inflation is on a par with the level aimed at by the ECB, one of the fundamental preconditions for exchange rate stability has been satisfied. The exchange rate may nevertheless be  10  BIS Review 7/2001  regarded as "too strong" or "too weak" in relation to the initial range. This may be because conditions in the real economy imply a real appreciation or real depreciation of the krone. The reason for these exchange rate changes may be a deterioration or improvement in the cost competitiveness of the Norwegian business sector. For example, a greater use of petroleum revenues in the government budget may mean that the internationally exposed sector has to be scaled back in order to create room for higher domestic consumption. The equilibrium level for the krone exchange rate may therefore change. In this situation, Norges Bank should have carefully evaluated the reasons for exchange rate movements. If there is reason to believe that the exchange rate will remain strong or weak for a prolonged period, Norges Bank will have to decide whether to notify the government authorities that measures other than those available to the central bank may be necessary. We can imagine situations in which the interest rate had to be kept at a high level, leading to a deflationary recession, in order to allow the krone exchange rate to remain close to its initial range for a period. However, this situation would hardly be stable.
Due to a combination of factors, including over- confidence, a hostile environment and poor communication, the expedition ended in one of the worst tragedies of the peak’s history. Rob Hall, one of three team leaders of the great expedition, had successfully scaled the mountain numerous times before. Underestimating the risks when faced with unstable weather conditions, Hall decided to proceed with the climb rather than turning back. He had strong belief that his past successes, which invariably inflated his confidence, sufficiently equipped him for the challenges ahead. This has now become a classic case study on leadership and risk management under extreme conditions. Interesting parallels can be drawn in the context of crisis preparedness in the financial sector. Over the course of crises history, policymakers and market participants that were involved in every financial bubble were repeatedly afflicted with the conviction that “this time would be different”. The majority voice was quick to dismiss rising risks, and contrarian views were often ignored. It was reasoned that efficient markets would work as they should to contain risks, and economies would have the structural flexibility to adjust to residual risks that might materialise. In hindsight, such views were surprisingly intractable throughout periods that have followed multiple episodes of crises – from the 30’s Great Depression, the 80’s debt crisis, the 90’s Asian and Latin American meltdowns, to the Great Recession of this century. Conditions surrounding each crisis differed widely, but this recurring mindset appeared to prevail in the run-up to each major collapse.

And in the UK, we will be helped by the FPC’s responsibility to advise the government on when the perimeter of regulation needs to be altered. Deposit insurance and resolution The reforms of Deposit Insurance are hardly less important. In the UK, there is a push towards the deposit insurer, the Financial Services Compensation Scheme, being able to pay out within 7 days. The Bank attaches very high priority to this indeed. There is still work to be done. It will entail costs for banks. The weaker standard of 20 days being contemplated by the EU is a serious mistake. That will eventually become apparent when, somewhere in the EU, depositors in a failed bank protest that they are suffering severe hardship from being cut off from their current account for weeks. Those are circumstances in which there would be calls for the state to step in to prevent the closure of ailing banks. This highlights the biggest hole in the old Social Contract – the absence of a regime for resolving distressed banks in a way that avoids both taxpayer support and systemic disorder. How to go about doing this was the principal subject of my speech here two years ago. Much has happened since. Next month, the G20 Financial Stability Board will publish a consultative document on the resolution of systemically important financial institutions (SIFIs). It will cover resolution instruments; cross-border co-operation; and steps needed to reduce obstacles to resolution inherent in the organisation and practices of firms themselves.
When information on risks is provided to the public, it is often in a form that is hard to assess. Thinking carefully about communication is important to the level of public debate. The quantity of information is less relevant than its quality - sometimes less is more. And managing risk means making choices - collective choices - on the basis of a rational shared assessment of the risks involved. We cannot avoid uncertainty. So let us face up to it. 25  The question of who should bear collective longevity risk has been discussed by Blake and Burrows (2001), Blake (2003), Dowd (2003), Cox and Lin (2004a, 2004b), Willets (2004), Auerbach and Hassett (2002) among others. BIS Review 73/2004  9  10  BIS Review 73/2004  BIS Review 73/2004  11  12  BIS Review 73/2004  BIS Review 73/2004  13  14  BIS Review 73/2004

This is particularly true of international payment schemes in the area of card payments (Visa, Mastercard), through which nearly two-thirds of card payments made in the European Union, especially cross-border transactions, are routed. Eighteen countries depend entirely on international schemes for the processing of their domestic transactions. Mobile payments, whose share is increasing, depend largely on mobile operating system developers such as Apple or Samsung. In addition, private systems entering in the instant payment sector are multiplying – Paypal, Lydia, and also Alipay, which will soon be launched in France, for example – at the risk of undermining bank interoperability and competition. Restrictions on the use of certain proprietary technical solutions such as NFC sensors, or payment card acceptance software for example, may also constitute an obstacle to free competition. Hence, the importance, in this context, of including collective interest projects in the European strategy for retail payments, which has reiterated the need for the EU to ensure the independence of its range of payment solutions. A key example of this is the project conducted by a group of banks to propose a solution, known as the European Payment Initiative (EPI). This is why the Banque de France and the Eurosystem as a whole are encouraging and supporting this market initiative, which would represent a further major milestone in the creation of an integrated European payment area since the creation of the SEPA area. B- Central banks may also contribute as providers of settlement services in central bank money, particularly with regard to financial intermediaries.
The Eurosystem was not forced to take such measures, since its collateral framework already foresees the acceptance of a very wide set of collateral. The Eurosystem framework specifies that this very wide range of collateral is accepted for all types of Eurosystem credit operations: intraday operations and monetary policy-related operations, the latter including both access to standing facilities and open market operations. The wide and unified set of collateral supports both the smoothness and systemic stability of intraday and overnight liquidity management of banks. Payment systems and financial stability The global financial system has been going through a phase of major structural change, which may have several implications for payment systems and financial stability. 3 First, we have witnessed the creation of new financial instruments and products to address market and credit risk, and in principle to enhance liquidity of financial assets. At the same time, the size of the financial sector in relation to the real economy has significantly grown. This suggests that the stability of the financial system has become more important for the real economy. Moreover, there has been a growing symbiosis between markets and intermediaries. While intermediaries and markets have often been seen as alternative forms of arranging financial relationships, they are increasingly complementary. Indeed, intermediaries such as banks have become increasingly reliant on markets as a source of income and for their risk management, through their hedging operations. Markets in turn have become increasingly dependent on intermediaries for the provision of market-making services and of funding liquidity.

Given our starting point, with inflation somewhat below target and expected to remain so for a while, we are relatively well placed to weather the storm if it begins to blow more strongly. BIS Review 33/2001  3
For example, Robert Shiller has also suggested governments should  18  Bernanke, B and Gertler, M (1989), “Agency costs, net worth and business fluctuations”, American Economic Review, 14–31. 19  Shiller, R J (1993), Macro Markets, Oxford University Press. 8  BIS Review 10/2010  issue GDP bonds, with coupons which vary with GDP. These would lower the public debt servicing burden at the point in the cycle when public deficits are likely to be largest. In this way, they would help smooth public expenditure and taxation over time. To date, GDP bonds have only been issued by some emerging markets. But in principle, they could serve as a quasi-automatic stabiliser for any country whose public debt experiences cyclical or crisisrelated fluctuations. 20 Given recent events, perhaps their day is nearing. Conclusion It is said that the longest journey begins with a single step. Events of the past twelve months have been a first step – and a big one. But they are just the start of the journey for the financial system and economy as balance sheets are repaired. This adjustment needs to be fast enough to repair balance sheets, but not so fast as to risk a setback for the financial system or real economy. What a hangover requires is neither a day in bed nor a night on the tiles. Having taken one big step forward, we should guard against taking two steps back.

Evans, Charles L., and Jonas D. M. Fisher, 2011, “What are the implications of rising commodity prices for inflation and monetary policy?,”(pdf) Chicago Fed Letter, Federal Reserve Bank of Chicago, No. 286, May. Friedman, Milton, and Anna J. Schwartz, 1963, A Monetary History of the United States, 1867–1960, Princeton, NJ: Princeton University Press. Krugman, Paul, 2013, “Secular stagnation, coalmines, bubbles Summers,”(external) New York Times, opinion pages, November 16.  and  Larry  Summers, Lawrence, 2013, speech(external), Fourteenth Annual Research Conference in Honor of Stanley Fischer, International Monetary Fund, Washington, DC, November 8. Taylor, John B., 2013, “A review of recent monetary policy,” testimony(external-pdf) before the U.S. House Committee on Financial Services, March 5. 13  For more about the quantitative easing programs (also referred to as large-scale asset purchases) and the rationale behind them, see Board of Governors of the Federal Reserve System (2013). BIS central bankers’ speeches  9  Taylor, John B., 1999, “A historical analysis of monetary policy rules,” (external-pdf) Monetary Policy Rules, Chicago: University of Chicago Press, pp. 319–341. Taylor, John B., 1993, “Discretion versus policy rules in practice,”(external) CarnegieRochester Series on Public Policy, Vol. 39, Vol. 1, December, pp. 195–214. Taylor, John B., 1979, “Estimation and control of a macroeconomic model with rational expectations,”(external) Econometrica, Vol. 47, No. 5, September, pp. 1267–1286. 10  BIS central bankers’ speeches
The recent BIS report on macroprudential instruments – presented in our last meeting in Mexico – is an good step in that direction. However, the report and the discussion surrounding it also highlights the difficulties of setting up a proper macroprudential framework, at the local, regional and global level. Another lesson I would like to mention refers to the importance of a close cooperation between home and hosts supervisors, which has materialized in Supervisory Colleges, playing an important role in this context. Indeed, the setting up of the European Single Supervisory Mechanism, a process which will have its starting point next year, will entail new challenges for euro-zone supervisors, who will also need to develop new procedures in their relations with supervisors of other regions. Before concluding, I would like to thank Banco Central de Chile and President Vergara for the hospitality and the perfect organization of this event, the European Central Bank for the collaboration and support and all the participants for their interest. I wish all of you a very good continuation of the Seminar tomorrow and a very pleasant stay in Santiago de Chile. Muchas gracias a todos. Muito obrigado. Thank you very much for your attention. 4  BIS central bankers’ speeches

Free flows of capital across borders can make the domestic financial market deeper and wider, increase liquidity, and facilitate price discovery, thus improving efficiency of resource allocation. At the same time, diversification by investing overseas can help raise investment returns for households, which would in turn help promote private consumption and support sustainable growth. For emerging markets in particular, participation of foreign financial institutions can speed up the  1  Kaminsky, G.L., C.M. Reinhart and C.A. Vegh (2004), "When it rains, it pours: procyclical capital flows and macroeconomic policies", NBER Working Paper, 10708. BIS Review 141/2008  1  learning process and facilitate the adoption of best international practices by the financial sector. Therefore, while a more liberal regime for capital flows could at times bring about negative impacts, the relevant response should not be to keep the capital account closed forever, but to find ways of effectively managing the potential risks. International experiences have provided some broad suggestions on how such risks could be managed. Foremost is the importance of appropriate sequencing between liberalising the capital account and other domestic reforms. Development of financial institutions and markets, enhanced macroeconomic stability, and proper risk management by banks and enterprises would help to increase the resilience of the domestic entities in dealing with volatile capital flows. In addition, prudential regulation and supervisory framework need to be established, in order to prevent excessive risk-taking by domestic financial institutions.
The total foreign exchange reserves of the major Asian economies outside of Japan nearly doubled in a short period of three years, from about $ bn in 2000 to over $ bn in 2003, generating quite strong investment demand for bonds. We are of course aware of the risk inherent in investing too much of the foreign reserves of Asia back in bond markets in Asia. Indeed, the withdrawal of foreign reserves invested in the region in times of stress in the region can exacerbate the stress. But there is a strong need from the investment  BIS Review 40/2004  1  point of view for diversification and not be stuck with or overly exposed to bonds, for example, of a jurisdiction that is running a current account deficit that is so large as to be unsustainable. On top of the demand from the public sector, private sector funds are increasingly diversifying into bond investment. There are, I think, two main reasons, and both can be related to the idea of “maturity”. Greater investor awareness - resulting partly from investor education programmes and retail bond schemes - has encouraged individual investors to think of bonds, instead of just sticking with deposits and equities. In addition, the population of the region - like all of us - is growing older. About 7.5% of the population of the region was over the age of 60 in 2000. That percentage is expected to double to 15% by 2030: in Hong Kong, we have already reached 11.5%.

Both initiatives are aimed at promoting the development of index bond funds in the regional markets and, at the same time, enhancing both domestic and regional bond market infrastructure. This is a very concrete initiative, involving the allocation of funds by a considerable number of central banks. These three sets of initiatives use differing approaches and a variety of tools. But they have common aims. One important aim is to identify - through individual studies, experience-sharing, and the practice of fund management - where obstacles exist and how best standards and practices can be harmonised to facilitate cross-border financial transactions within the region. A separate, but parallel  BIS Review 40/2004  3  consideration is the development of financial infrastructure. A number of studies have been carried out to explore the feasibility and desirability of establishing region-wide infrastructure, such as a regional rating agency and regional settlement and payment systems. Apart from the many technical complexities, any proposals for infrastructure on a regional dimension would require thorough discussion among different jurisdictions and rigorous assessment of business viability and impact on the market. Long planning time would therefore be expected before any conceptual proposal could be put into practice. Effective financial infrastructure across the region is a precondition for debt market development within the region. Without it, all of the other initiatives I have described would be about as useful as buying aeroplanes without having the airports in which to land them.
What seems to be the inevitable consequences of a solely GDP-driven growth strategy include problems of water shortages, which we now see repeatedly on a yearly basis. More worryingly, this trend seems to be intensifying each year as the demand for water continues to rise and is projected to double within twenty years (with current rates of population and economic growth). These coming water shortages have begun to take effect on manufacturing industries; but the more worrying impact has been on villages and communities with limited ability to reserve water. At the same time, opposite, extreme events have also occurred, such as destructive seasonal floods. Recently, bouts of intermittent drought and flood have both caused much destruction. In addition, the expansion of large cities and construction which has interfered with natural drainage routes, such as in the case of Had Yai or the natural water drainage on the Eastern side of Bangkok, are good examples of economic development which have intensified the problem of flooding. The tourism industry is another sector that has seen remarkable growth and has helped sustain high rates of GDP growth. But in the past, such tourism growth has been to no small degree at the expense of our natural environment and destruction of our natural resources. In some places, the environment and natural ecosystem have been put off-balance. Natural scenery which has been part of our national identity and drawn tourists to our country has been diminished, or in some cases ruined.

After requesting and receiving the Government endorsement on this course of action, the Bank of Thailand is now entrusted with the oversight role of all credit card providers, including non-deposit-taking companies. Since November 2002, the Bank of Thailand has issued circulars to regulate the provision of credit card services. A minimum income requirement for cardholders has been set at 15,000 baht, and a cap on the maximum interest rate charged set at 18% per annum. This initial action has somewhat slowed the expansion of credit card businesses; however, further measures were needed. In April 2004, the Bank of Thailand revised regulations to raise the minimum amount of monthly payments from no less than 5% to 10% of outstanding debt, and shorten the term for debt payment from 20 to 10 months. The increase in the minimum monthly payment to 10% aims to prevent cardholders from spending more than their ability to repay, as well as help pace their purchasing of items in order to prevent an excessive debt repayment burden in the future. After the second regulatory revision, the annual growth rate of credit outstanding for installments of credit cards issued by commercial banks declined from 40% to 17 %, a rate which may be less likely to create problems. BIS Review 43/2006  1  With more stringent supervision in the credit card business by the Bank of Thailand, a new phenomenon has arisen: growth in the personal loan business, particularly since 2003.