samchain/econo-pairs-v1 huggingface dataset:
There were examples of demands that the banks reduce their deposits, in spite of the provisions in EU directives on financial companies’ equal right to conduct business anywhere within the European Economic Area. In this case national interests outweighed pan- European commitments. As a result, it appeared as though the banks’ plans to meet their funding needs through retail deposits would be, at best, difficult to carry out. The Board of Governors of the Central Bank explained the foreign authorities’ attitudes towards this deposit accumulation to the leaders of the Icelandic banks and informed them that they would be faced with strong and swiftly mounting opposition. The Central Bank of Iceland was unequivocally of the opinion that the banks’ foreign deposits should be held in subsidiaries rather than branches and that Landsbanki’s deposit business in London should be transferred to a subsidiary of the bank. The preparation for this transfer began early in 2008, and the Central Bank was informed soon thereafter of what was needed to make the change and how long it would take. Judging from discussions with senior executives at Landsbanki, the Central Bank assumed that the process had begun that spring. In July, it was revealed that this was not the case. Although the Central Bank’s position on the matter was clear, it did not have the power to force changes or make demands. Moreover, other Icelandic authorities also had limited legal power in this respect under the legislation then in force which was and is based on EU Directives.

The banks were urged to show restraint and downsize, and to follow that up, the Central Bank specifically collected information from them on their downsizing efforts. They realised, of course, that they were in a tight position, and they responded by selling assets and discontinuing selected activities in a number of countries, among other things. Kaupthing Bank’s decision to abandon its plans to acquire NIBC in the Netherlands was very important in this regard, not just for Kaupthing itself but for all of the banks. The Central Bank supported all of these actions wholeheartedly; however, it did not have the statutory authority power to force the banks to change their conduct. It is known that the Central Bank expressed its growing concern over the position of the banks during meetings with governmental authorities. Early last year, the Central Bank’s concern centred not least on the banks’ large near-term refinancing requirement for the coming years, which I have already mentioned, and the opinion, expressed by leaders of a number of international banks, that the global credit crunch was unlikely to ease in the foreseeable future. The Central Bank feared that credit markets could remain closed to Icelandic banks for some time to come. Although various explanations have been given for the swift rise in the Icelandic banks’ CDS spreads, first in early 2008 and again that summer, it is perhaps possible to claim that the most important explanation lay in growing scepticism about the banks’ ability to obtain the medium-term funding they needed for refinancing purposes.
What new infrastructure or architecture is needed for collecting and assimilating these views? And how do we ensure they balance diversity and deliberation so as to be representative of the general public’s views? These are deep questions, but they are not new ones. They have been debated by philosophers and political scientists for thousands of years. Alternative models of representative decision-making have been tried and tested throughout the course of history. This experience contains some useful lessons for central banks, and other public institutions, seeking to strengthen the infrastructure linking them to wider society. Let’s start at the very beginning. The birthplace of democracy is, for many, ancient Greece. Around 2,500 years ago, the city-state of Athens pioneered a particular form of representative decision-making when it came to judgements on some of the most complex, societally-significant, issues of the day. The centrepiece of this decision-making infrastructure was a public body – a Council of Five Hundred, or boule. The boule comprised individuals drawn from the general public by random selection (or sortition). They served for a year. The purpose of the boule was to debate key issues affecting public life and devise policy proposals. These were then taken to a public assembly for discussion, where a wider set of the general  39  Wagner and Vinaimont (2010). 16  All speeches are available online at www.bankofengland.co.uk/speeches  16  public participated, often running into the thousands. For a small number of positions requiring specialist skills, public officials and experts were elected or appointed.

Stock, J and Watson, M (2003), ‘Has the Business Cycle Changed and Why?’, NBER Macroeconomics Annual, Vol. 17. Surowiecki, J (2004), The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations, Doubleday Books. Taylor, M (2018), ‘What Democracy Needs Now’, Royal Society for the encouragement of Arts, Manufactures and Commerce, RSA Chief Executive’s Lecture 2018. Tetlock, P and Gardner, D (2016), Superforecasting: The Art and Science of Prediction, Broadway Books. Tucker, P (2018), Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State, Princeton University Press. Tuckett, D (2011), Minding the Markets: An Emotional Finance View of Financial Instability, Palgrave. Tuckett, D and Nikolic, M (2017), ‘The role of conviction and narrative in decision-making under radical uncertainty’, Theory & Psychology, Vol. 27, No. 4, pp. 501-523. Turner, M and Pratkanis, A (1998), ‘Twenty-Five Years of Groupthink Theory and Research: Lessons from the Evaluation of a Theory’, Organizational Behavior and Human decision Processes, Vol. 73, Nos. 2/3, pp. 105-115. Wagner, C and Vinaimont, T (2010), ‘Evaluating The Wisdom of Crowds’, Issues in Information Systems, Vol. 11, No. 1, pp. 724-732. Van Reybrouck, D (2016), Against Elections: The Case for Democracy, Bodley Head.
The best way to justify why a certain reporate path has been chosen is to compare the consequences of this path for inflation and the real economy with those of the alternatives. What does this mean in concrete terms? Well, it means that one must be able to show that the repo-rate path one prefers gives rise to the forecast for inflation and resource utilisation that best stabilises inflation around the target and resource utilisation around a normal level. It is as simple as that. Figure 2: Forecasts Figure 2 shows the forecasts for CPIF inflation (panel a), the output gap (panel b) and the hours-worked gap (panel c) for the main scenario and for the extended repo-rate path. The curves marked “Expected” show the forecast under the following assumptions: The extended-repo-rate path is announced in April. It is perceived as credible in the sense that the market from and including April expects an unchanged repo-rate path until the end of the fourth quarter of 2010. The curves marked “Unexpected” show the forecast under the following assumptions: The extended repo-rate path is not incorporated in market expectations and the market instead continues to believe in the main scenario’s repo-rate path. The market is taken by surprise in the third and fourth quarters of 2010 when the repo rate is left unchanged. We can see that the effects of an expected extended repo-rate path are greater than those of an unexpected extended repo-rate path.

Forecasts for the CPIF, the output gap and the hours-worked gap in the main scenario and in the extended repo-rate path, for expected and unexpected deviations. Source: The Riksbank  We can also see that the extended repo-rate path provides a higher level of CPIF inflation closer to the target and a higher level of resource utilisation closer to normal for both the output gap and the hours-worked gap. This applies irrespective of the assumption of whether the extended repo-rate path is credible or not but to a greater degree if it is credible. Figure 3: Different forecasts of resource utilisation Resource utilization is usually measured as so-called output gaps or hours-worked gaps. These gaps are calculated as the differences between actual and “potential” levels. These measures of resource utilisation are uncertain. However, according to all available measurements, there is no doubt that resource utilisation is and will remain very low during the forecast period. Other forecasters’ output gap forecasts are shown in Figure 3. Several of the forecasts from other forecasters indicate an even lower level of resource utilisation than the measure published by the Riksbank. points, in output of 0.38 (0.22) per cent and in hours worked of 0.40 (0.24) per cent. The increase then abates over time. 6  BIS Review 60/2010  Figure 3. Different forecasts of resource utilisation  Sources: The Riksbank, National Institute of Economic Research, European Commission, OECD, IMF, and the Ministry of Finance.
In some environments, this requires central banks to forecast demand for liabilities and execute open market operations to supply needed reserves. In recent years, the demand for many central bank liabilities has become higher and less predictable. However, most central banks have been operating with abundant liquidity surpluses, which has limited the impact of this reduced predictability on implementation.12 As central banks embark on balance sheet reduction, however, understanding demand for liabilities may become more important. The demand for digital currencies is not well understood, as these are instruments for which there is no precedent or experience. For a CBDC, central banks would have to understand the behavior of the demand for this new liability. If stablecoins were to be issued by commercial banks, it would also be important to understand drivers of growth in these coins and how that growth might affect banks’ demand for reserves. Trend growth in these central bank liabilities could be quite different than it is for other liabilities, such as cash or reserve holdings of traditional banks. And, the variability in demand could potentially be high, driven by shifts in the market environment or in response to geopolitical developments or other exogenous events. This variability could be amplified if digital currencies were available internationally, potentially leading to larger flows. The variability could create new challenges for supplying the appropriate amount of reserves to the banking system to ensure that administered rates continue to control rates, and could lead to a need for larger liquidity surpluses to ensure interest rate control.

But this design may not ultimately be the most efficient use of central bank liabilities for the financial system, because an important role for commercial banks in the two-tier monetary system is their ability to support the provision of credit in the economy.16 Stablecoins backed by other instruments, such as high-quality liquid assets, could moderate growth in the central bank’s balance sheet relative to a stablecoin backed entirely by central bank reserves. However, this structure would also give rise to liquidity risk for stablecoin issuers, which might in turn give rise to a need for a backstop source of funding. These considerations raise important questions for how best to integrate digital currencies and ensure smooth market functioning and interest rate control in times of stress. How might the central bank’s balance sheet adapt? Possibly the biggest question over time for monetary policy implementation is how much of the central bank balance sheet should be used to support innovation in currencies. The current two-tier system of money and payments has central bank balances at its center, but also features an expansive set of private money offered through bank deposit balances. Innovation in payment systems may have clear benefits for consumers and businesses, and private currencies backed by safe central bank balances or other highly liquid safe assets are certainly better than alternatives created by less regulated firms and backed by lower quality or illiquid assets.
These measures are oriented toward promoting the activity, so that you will not wait for the client to ask for the government papers but search and find this client yourself. And the very first step you should make in this direction is: abandon the traditional pension fund security portfolio classification as “hold to maturity”. In other words, this implies the necessity for more flexibility, more diversification and for the existence of efficient risk management structures. A constant concern, which I want to pay particular attention and get your highest interest on it, is the professional development of human skills. I am not making any prejudice about the human resources that are currently working at the banking system, but I would like to point out that the mobilization of capable human resources, devoted to and shaped professionally is vital for the accomplishment of success. To be more competitive and bring new developments, we have to constantly upgrade the skills of each employee at all levels. It is true that the majority of the banks of our banking system represent international well experienced banking groups. However, I would like to emphasize that there is still room for more expertise and qualified human resources, so that the best practices of the international markets are infiltrated in our banking system. In addition, within the framework of this association, I would advocate that the Dealers Association must very soon come up with a Code of Conduct, agreed by all its members.

•  Thailand is therefore poised to assume the role of a connector – by acting as a link or point of reference for the entry of global banks into the subregion. This is underpinned by our established financial platform, familiarity with the local business practices, as well as close cultural ties among our people. •  Of equal importance is our own inherent understanding of the challenges of developments faced by GMS, through our own experience. This is particularly important in two aspects. •  First, Thai financial institutions are still focused on core financial intermediary functions such as payments services, deposit, and loans which serve the basic needs of the real sector. Thai banks are inclined to serve the needs of the real economy rather than in speculative types of businesses such as proprietary trading. For these reasons, Thai banks are also less complex, with good risk management  2  BIS central bankers’ speeches  and strong capital base. Regulators in Thailand and GMS neighbours can understand fairly well the business model of our banks and their risk. We believe that given the lesson of the current global crisis, this type of bank model makes good sense for home and host regulators. •  Secondly, both regulator and the banks in Thailand could well remember the bitter experience of our own economic and financial crisis in 1997. We understand that financial liberalization needs to be properly sequenced.
Starting from this premise, I would like to specify what kind of challenges oversight authorities face and share with you some ideas on what the role of an institution like the Swiss National Bank should be. But first of all, I would like to clarify a fundamental point. Some people claim that the oversight authorities’ objective of promoting the stability of the financial system hides an undue interventionist activism. Well, these claims are beside the mark. Let me quote Andrew Crockett, BIS General 7 Manager and Chairman of the Financial Stability Forum : “[…] systemic stability is critically determined by the collective behaviour of individual market players. […]. And supervisors need to analyse the interaction between individual incentives and systemic outcomes.” In other words, systemic stability depends on how negative externalities, which are not priced or internalised by the market, are dealt with. Thus, we should not waste our time discussing whether regulatory intervention is necessary or not, but rather how oversight authorities, focusing on systemic risk, should shape the process. Keeping this in mind, the challenges oversight authorities face are numerous and well-known. The Giovannini Group lists no less than 15 barriers to efficient cross-border and settlement procedures within the European Union. These barriers are categorised according to their technical nature, their fiscal implications and their legal aspects. A remarkable feature of this report is the distinction between what market forces can achieve and what regulatory authorities should do. In particular, there are several issues that cannot be tackled by the private sector, e.g.

Later on, it is expected to gradually reduce to 20 billion US dollars by the end of 2022. I would like to emphasise once again that the fiscal rule mechanism smooths out the impact of a decrease in the current account balance on the domestic economic environment. However, it only pertains to oil price fluctuations. I would like to stress that we have slightly changed our approach to publishing forecast scenarios. The key rate decision relies on our baseline macroeconomic forecast and the analysis of uncertainties and risks for the baseline forecast. This is the reason why we will continue to publish the baseline scenario four times a year in our press releases and Monetary Policy Report following core meetings. We will release our supplementary scenarios – the high oil price scenario and the risk scenario that assumes that prices will plunge – in the same manner as the baseline scenario but once a year, in the Monetary Policy Guidelines. It is determined by the essence of these scenarios that remains almost unchanged across the meetings. The 2020–2022 Guidelines will be published on Monday. Winding up, I would like to comment on monetary policy prospects. 2/3  BIS central bankers' speeches  After the five years of the evolution from tight to moderately tight and then to neutral monetary policy, we have finally entered the key rate range we consider as a probable neutral interval.
Should global conditions and consequently domestic economic activity further deteriorate, the CBRT would consider another cycle of rate cuts, and then maintain policy rates at low single digits for an extended period of time. Another possible scenario is a surge in capital inflows to emerging markets owing to the relative improvement in creditworthiness of these countries. In this context, receding risk premia and appreciating currencies would present downside risks regarding inflation prospects. These circumstances could also trigger acceleration in rate cuts, or another easing cycle, which could then bring policy rates which hover around low single digits for a prolonged period of time. Increasing budget deficits worldwide continue to pose risks on inflation expectations and thus on global interest rates in the long term. The medium-term forecasts presented above envisage that the slow recovery in global economic activity and rising saving rates will keep global interest rates at low levels for an extended period. However, the lack of a clear exit strategy from global fiscal stimulus packages creates upside risks regarding global inflation rates and therefore longer-term global interest rates. Counter-cyclical fiscal policies to curb the contractionary effect of the crisis on economic activity, which have also been introduced in Turkey in line with global trends, have accelerated the rise in budget deficit. The relatively low level of public sector indebtedness in Turkey compared to other countries implies that we have a broad fiscal space.

Durmuş Yilmaz: Press conference for the presentation of the Inflation Report Speech by Mr Durmuş Yilmaz, Governor of the Central Bank of the Republic of Turkey, at the press conference presenting the third issue of the Inflation Report, Central Bank of the Republic of Turkey, Ankara, 29 July 2009. *  *  *  Distinguished Guests and Members of the Press, Welcome to the press conference to convey the main messages of the July 2009 Inflation Report, one of the most important communication tools of the inflation-targeting regime. The report typically summarizes the economic framework addressed in monetary policy decisions, elaborates global and domestic macroeconomic developments and presents the medium-term inflation forecasts, which have been revised in view of the previous quarter developments, along with the monetary policy stance. As you know, in the summary of Monetary Policy Committee Meeting published yesterday we pointed out that global interest rates are likely to remain at low levels for an extended period, given the significant slowdown in growth and the increase in saving rates. We therefore specified that this view should be emphasized more forcefully to align market yields closer with future policy intentions. In this framework, as a result of our evaluations with Committee members, we agreed that it would be possible to provide more solid information regarding the policy stance in the upcoming Inflation Report. Before presenting this information to you, I would like to give you a summary of recent developments related to the factors affecting global and domestic inflation. 1.
Toward the end of the year, we will publish the results of our first round of simultaneous across major UK banks stress tests, which will follow the publication by the European Banking Authority of its stress tests in just over a week from now. Our stress tests are a real step in the direction towards the full use of such tests as one of the three pillars of the capital framework. This is a major development compared to the cumbersome and slow process of stress testing one bank after another that we developed during and after the height of the crisis. We will be using these tests to assess whether firms have capital positions and capital plans looking forwards which will provide re-assurance that they will be safe and sound under stressed conditions, as the name suggests. If they don’t – and you should take no inference on the results from what I say here – we will ask them to look again at their plans. Stress tests should not be a dramatic event, they should be part of the health check and they should prompt measured responses where necessary, and reflecting the fact that at different speeds banks are heading out of the crisis. Last on capital is the issue of loss absorbency in going and gone concern states. For the major banks this is the too big to fail problem.

•  Banks in the region could face higher non-performing loans. They could also face reduced US Dollar funding if there are large capital outflows from ASEAN. •  But their liquidity and capital positions are generally sound and they should be able to weather this. ASEAN growth story still good Over the medium to long term, ASEAN is expected to remain among the fastest growing regions in the world. Last year, the combined GDP of ASEAN was close to $ trillion – larger than India. •  The ASEAN-4 – Indonesia, Malaysia, Thailand and the Philippines – are projected to grow by at least 4% per annum on average over the next five years. •  It could be as high as 6% if ASEAN becomes more integrated and these countries successfully implement structural reforms to raise productivity and competitiveness. For banks in ASEAN, it is not just the size and growth of the economies that matter. It is the composition of that growth and demand. Rising incomes and the agglomeration effects of urbanisation will significantly expand the ranks of the middle class in ASEAN. •  In 2010, ASEAN had a population of 600 million, with around a quarter making up the middle class. BIS central bankers’ speeches  1  •  In 2030, ASEAN will have a population of 700 million, with about two-thirds attaining middle class status. •  In other words, the size of the middle class will swell by as much as three times over two decades.