samchain/econo-pairs-v1 huggingface dataset:
When the Tenth Annual International Banking Conference took place in September of last year, the market turmoil had already broken out and central banks were already engaged in interventions aiming to minimise the disruptions to money markets and to preserve the implementation of their desired monetary policy stance. While market data on future interest rates suggested that we were in for a rather protracted period of tensions in money and credit markets, it was not obvious at the time that the financial turmoil would turn out to be one of the most challenging events of the last century for our financial systems. Indeed, the international financial landscape looks today very different compared to one year ago and almost every day new events contribute to re-shape it further. In particular, over the past two weeks adverse events occurred almost on a daily basis and led to increased uncertainty and significant financial market volatility. A large bank failed, while several financial institutions had to be partly or entirely taken over by others. In response to the renewed tensions, public authorities announced a number of measures and initiatives to address problems at both stressed markets and troubled individual institutions. In particular, central banks stepped up their efforts to inject liquidity in global money markets in order to guarantee their smooth functioning. As I mentioned earlier, one of the main objectives of this series of conferences is to discuss the main lessons for public policies arising from developments in the international banking and financial sector.

José Manuel González-Páramo: Central banks and the financial turmoil Speech by Mr José Manuel González-Páramo, Member of the Executive Board of the European Central Bank, at the Eleventh Annual International Banking Conference “Credit Market Turmoil in 2007-08: Implications for Public Policy”, Federal Reserve Bank of Chicago, Chicago, 25 September 2008. * 1. *  *  Introduction 1  Ladies and gentlemen, It is a great pleasure to be here in Chicago on the occasion of the Federal Reserve Bank of Chicago’s Eleventh Annual International Banking Conference. Since its inception, this conference series has aimed to gather prominent academics, policy-makers and market participants to discuss issues of major importance for our banking industries, financial systems and economies at large, such as asset price bubbles, systemic financial instability, cross-border banking, or financial globalisation. Over time, a permanent concern of the organisers has been to focus on the implications for monetary and regulatory policies and, more generally, for public policies of such phenomena. It is fair to say that a great deal of knowledge has accumulated over time thanks to this series of conferences. It is also reasonable to reckon that the foundations of this body of knowledge have been put to the test by the financial market turmoil over the past year.
Islamic finance has now become the fastest growing segment in the global financial industry, as the $ trillion industry has shown phenomenal growth which averaged at 20 percent yearly. The Islamic financial system is no more peripheral to the conventional banking system as it has advanced from being a novelty, to become a viable and attractive alternative to the conventional banking system. Major banking and insurance groups have also shown great interest in embracing Islamic finance as part of their growth and business expansion plans in the recent years. In Malaysia, a comprehensive Islamic financial system has been established since 1983 which operates in parallel with the conventional financial system. This dual banking model has been enshrined in the Central Banking Act 2009 following recent enhancements, thereby giving significance and due prominence to Islamic finance. A strong institutional infrastructure and effective legal, regulatory and Shariah framework form the underpinnings of our Islamic  BIS central bankers’ speeches  1  financial industry. In terms of market share, the Islamic banking system in Malaysia currently accounts for 20 percent of our banking system while the sukuk market accounts for more than 50 percent of the bond market. The sukuk market in Malaysia is vibrant with various innovations taking place. As witnessed in the year 2010, Malaysia has evolved its sukuk market to become a multi-currency sukuk origination platform with the issuance of four foreign currency sukuk that amounted to about $ trillion.

Philipp Hildebrand: Swiss monetary policy Summary of a speech by Mr Philipp Hildebrand, Member of the Governing Board of the Swiss National Bank, at the Annual Meeting of the IFZ (Institute for Financial Services Zug), Zug, 1 June 2006. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  Having successfully pursued a strategy of money supply targets for around 25 years, the Swiss National Bank (SNB) decided to adopt a fundamentally new monetary policy approach in 1999. Although it integrated some of the important elements of inflation targeting, it did so less strictly, thus allowing greater flexibility. Money stocks and credits continued to play a vital role in the new concept. Unlike the European Central Bank, the SNB chose not to make the monetary analysis a separate pillar in its concept. An important distinction to inflation targeting is that monetary policy focuses on maintaining price stability in the medium to long term, while inflation targeting is generally oriented towards short-term and, in some cases, variable inflation targets. The SNB's monetary policy uses an inflation forecast as a central indicator and sets its operational goal in the form of a target range for the three-month Libor. A monetary policy that is geared to the medium and long term affords leeway for a certain degree of stabilisation of the real economy.
15 Moving depictions of financial crises and their effect on people can also be found in imaginative literature. The Norwegian author Alexander Kielland depicts the local financial bubble in Stavanger in the 1880s in his book Fortuna. There was a surge in credit growth and speculation in commercial bills that did not represent actual values. Speculation formed the basis for quick gains and it all ended in bankruptcies and banks that failed. One of the  13  See Borlaug (1999), pp 34-35  14  For more details on the Minsky moment, see www.newyorker.com/talk/comment/2008/02/04/080204taco_talk_cassidy. 15  For a further account of the tulip bubble in Holland, see NOU 1999:29 ”Commodity derivatives”, p 53. BIS Review 111/2008  7  climaxes in the book is a scene where Taraldsen – the old messenger from Norges Bank – realises that the financial bubble is about to burst: … in breathless surprise Taraldsen asked again: "Aren't your bills of exchange to be redeemed today?" "No." "Mr. Marcussen! People say that you are a jocular man; but this –" "I'm not joking – damn it!" Old Taraldsen straightened up; everyone was hunched over their work; only young Rasmus' eyes met his. The boy was white as a sheet; he began to understand.

The Council has taken a broad range of decisions and measures aimed at restructuring and regulating the economy and streamlining regulations and legislation which would help to upgrade the level of efficiency and competitiveness of the economy and support optimum operation of production factors. The objective has been to provide an advanced regulatory and administrative framework and an environment attractive to domestic and foreign investments. Since the establishment of the Council, more than 60 major restructuring reform decisions have been taken in addition to more than 130 decisions for regulatory, procedural and administrative development. Fortunately, these developments have been accompanied by remarkable improvement in the State budget and in the world oil markets. Consequently, economic performance has obviously improved in recent years. An indicator of this improvement is the private sector’s average annual real growth rate of 5.0 percent and the rise in other non-oil exports by an average annual rate of 23.1 percent to 7.3 percent of GDP at the end of 2007. As a result of these reforms, the Kingdom has gained a high sovereign rating for its financial solvency and also won the United Nations Public Service Award for the year 2008 for developing SADAD (Bill Presentment and Payment System). Moreover, the Kingdom ranked sixteenth among 181 countries worldwide in terms of competition in business and investment performance environment according to Doing Business 2009 Report published recently by IFC and the World Bank.
If, without  3  Detken C and F Smets: Asset price booms and monetary policy. Paper presented on 11 December 2003 at the Workshop on “Asset prices and monetary policy”, European Central Bank. BIS Review 40/2004  5  being certain, we judge that developments might lead to substantial disturbances, the choice lies between attempting in time to avoid the accumulation of large imbalances and waiting until the situation turns. Many within the central bank world believe that interest rate policy should not react to asset prices and credit expansion over and above their estimated implications for inflation and real and financial stability.4 The reasons are that it is difficult to evaluate correctly the price of an asset and that it is uncertain what level of interest rates would be necessary in a given situation to correct asset prices. Those that advocate a more preventive strategy meet this criticism by arguing that, firstly, models for asset prices exist and that it should not be more difficult to use these than to estimate the output gap, for example, which the majority of central banks make use of today. Secondly, by raising interest rates at an early stage when asset prices are starting to accelerate and before the expansion in credit has become too sharp, the central bank can indeed achieve somewhat lower inflation than is desirable in the short term. But one avoids a subsequent collapse in asset prices that could lead to considerably lower output and inflation in the longer term.

Only in America could two sons of a once-homeless beggar and the daughter of a boardinghouse cook become what you see here on this stage today: One the distinguished chairman of the board of trustees of Bryant University, and the other a policymaker for the most important central bank in the world who is somehow deemed worthy of receiving an honorary doctorate and being chosen as speaker for the 151st commencement of this fine university. We are blessed to be Americans. 1  Westbrook: Surviving Australia’s Most Sadistic Reformatory, by William Stokes, Sydney, Australia: Macmillan by Pan Macmillan Australia, 2010. BIS central bankers’ speeches  1  The Sages of the Ages Now, the only thing that stands between you and receiving your Bryant degree is … me. I will speak quickly and take up just a few moments of your time before you celebrate your accomplishments. By now, you have taken enough writing courses to know the tongue-in-cheek definition of a good essay: It is a collection of other people’s thoughts disguised as your own!2 Most graduation speeches are no different. The standard routine for a commencement speaker is to dig through Bartlett’s or the Oxford Dictionary of Quotations or resort to Google and Wikiquote to find something said by some sage that will grace a graduation ceremony with a lesson students can take with them as they go off into this mysterious and challenging world.
At the same time, the exchange rate target took the form of a target zone, which was then widened over the course of the decade, in part because capital movements increased exchange rate volatility and it was considered risky to eliminate investors’ exchange rate risk entirely. When growing economic imbalances were added to increased movement of capital, exchange rate targeting became even more difficult, until the dam was about to burst right before the inflation target was adopted and the króna floated in March 2001. The monetary policy framework adopted in 2001 was based on foreign models that were in the ascendant at the time. But it also reflected the broader ideas about economic policy, prudential regulation, and supervision that had gained currency but have proven in retrospect to be flawed. To simplify, it can be said that these ideas were based on separation and independence of individual aspects of economic and prudential policies, but without sufficient attention to their interactions. Monetary policy was to focus primarily on the inflation outlook, and it was largely to be implemented through a single tool: interest rates. Intervention in the foreign exchange market was to be avoided. Supervision was supposed to ensure that individual financial institutions were sound. Fiscal policy was supposed to be neutral over the business cycle. And the markets would take care of the rest. This did not turn out to be the case. Apart from the question of interactions, insufficient attention was paid to risks in the financial system as a whole.

The first is the international level. The Asian names have been issuing bonds in the international market for quite some time, in major currencies – mostly US dollar. This market is already well developed. Some people may say that nothing needs be done further by Asian governments at this level. The market will do it. However, efforts are being made by Ministry of Finance officials to introduce new products – perhaps by securitization, by combining Asian names or a few Asian currencies, hoping to come up with an attractive product. They hope to bring new benefits to bond investors, but it will be up to the market to determine whether the ideas bear fruit. The second level is, however, more important. This is the local level – the local bond markets in each Asian country – in their local currencies. The importance of these markets can only be seen clearly in the events of the 1997 Asian Crisis. The first problem was that of capital outflow. Even though foreign borrowings of many industrial companies in Thailand were long term. But a lot of the loan contracts had default clauses imbedded within. This allows the foreign creditors to recall the loans early when certain events occur. One example is the clause requiring borrowers to maintain debt to equity ratios above certain thresholds. If the borrower makes a loss, it will eat into the debt to equity ratio. When that happens, the borrower has to increase capital, or face a default.
This means: sustained momentum relative to trend; domestic cost growth resuming a path consistent with headline inflation at 2%; and core inflation measures moving notably towards the target. It is clear to me that, since last summer, progress has been insufficient along these dimensions to warrant a tightening of monetary policy. The world is weaker and UK growth has slowed. Due to the oil price collapse, inflation has fallen further and will likely remain very low for longer. This may mean modestly weaker cost growth through this year, with the likely path for inflation, both headline and core, softer as a result. In short, recent developments suggest that the firming in inflationary pressure we had expected will take longer to materialise. 23  In economic parlance, they are elements of a reaction function. One can think of a reaction function as akin to guide or policy rule relating the policy instrument to a set of macroeconomic variables. These are usually evaluated with respect to an “objective function” containing the policymaker’s target variables. For example, a flexible inflation targeting regime would be consistent with an objective function containing the deviation of inflation from its target and the deviation of a measure or measures of real activity from their equilibrium levels, weighted according to the policymaker’s preferences for stabilising one at the cost of another.

Milesi-Ferretti (2010), “The cross-country incidence of the global crisis”, CEPR Discussion Paper, No. 7954. 2  See H. S. Shin (2012), “Global banking glut and loan risk premium”, mimeo, Princeton. 3  See V. Acharya and P. Schnabl (2012), “Do global banks spread global imbalances? The case of assetbacked commercial paper during the financial Crisis of 2007-09“, NBER Working Paper, No. 16079. 4  See V. Acharya, P. Schnabl and I. Drechsler, “A tale of two overhangs: The nexus of financial sector and sovereign credit risks”, 15 April 2012. 2  BIS central bankers’ speeches  financing in foreign currency of long-term investments (maturity mismatch) and insufficient prudential standards leading to excessive risk taking and rent seeking behaviour. Unfortunately the warnings were not taken seriously until the issues and risks materialised first with the depreciation of the Thai baht in July 1997. Perhaps we have not learnt enough from the past! As growing financial market tensions made the financing of these deficits ever more difficult, the last and most unexpected layer of the iceberg – namely the so-called “redenomination risk”, the possibility of a break-up of the euro area – came to the surface in the middle of last year. By that time, the sovereign spread of high-yield euro area countries relative to other euro area countries had widened to an exceptional extent, hardly justified by fundamentals and fundamentally incompatible with a well-functioning monetary union.
This would effectively tighten financial conditions not only by changing the expected path of short-term interest rates, but also by bringing forward the expected start of balance sheet normalization. To sum up, I see substantial advantages in behaving in as systematic fashion as possible in setting monetary policy. But that should be done in a way that fully accounts for any constraints on policy imposed by the economic environment, the presence of asymmetric risks, and allows us to learn as we go. The fact is that the economy is recovering after an unusually deep recession and a severe financial crisis. We don’t have much experience with this type of episode and how the economy is likely to perform. What we need to focus on is not what interest rate a given rule generates, but what policy setting can be expected to deliver the appropriate return path to the dual mandate objectives – the type of return path that standard Taylor Rule formulations achieved in different economic circumstances in the past. Thank you very much for your kind attention. I would be happy to take a few questions.

This suggests that policymakers, faced with the economic conditions of that period, weighted deviations from their goals in a manner similar to the weights used in these versions of the Taylor Rule. Despite these attractive features, I do not believe that simple policy rules can take the place of in-depth analysis of economic conditions, evaluation of alternative policy plans, and ultimately policy judgment. While simple policy rules provide useful information to policymakers, their very virtue – simplicity – means they cannot capture all information that is relevant for policymaking. For example, such rules cannot easily incorporate asymmetric risks or financial stability issues. Moreover, the usefulness of simple policy rules depends critically on the stability of the relationship between monetary policy and economic outcomes.
The Rt Hon Sir Edward George: Changes in the financial services industry Speech by The Rt Hon Sir Edward George, Governor of the Bank of England, at the 16th European Finance Convention, London, 6 December 2002. *  *  *  Mr Chairman, Ladies and Gentlemen. May I begin by congratulating you, Claudio - and your colleagues - on organising such a remarkable 16th European Finance Convention here in London, spread over the past five days. I don't think I've ever seen such a distinguished and comprehensive list of speakers - ranging from politicians, central bankers and financial regulators and representatives of the international financial institutions, as well as representatives of private sectoral and specialist financial services trade associations and experts from commercial companies - all assembled on one program. I gather that the attendance has not been all that it might have been during the week. But perhaps that's not surprising: anyone with the stamina to attend even half of your proceedings is certainly a chronic insomniac. But those who have been here will have been rewarded by knowing everything there is to know about the recent development and current state of the financial services industry and how it might evolve. And they still have to listen to me! But don't despair - it's the last lap - and I'll try to keep it short! You have certainly had a great deal to discuss.

I think of the Takeover Panel, for example, or the work of people like Adrian Cadbury - under the auspices of the Stock Exchange - in developing corporate governance standards, or of the professional organisations which set and police accountancy rules. A similar approach was followed in relation to many commercial banking issues - through approved codes of conduct in relation to their dealings with customers accompanied by an ombudsman scheme. We were in this country sensitive to the need to distinguish between different aspects of financial market activity - very obviously in the case of the distinction between wholesale and retail activity - in trying to find the most appropriate ways of reflecting legitimate public concerns. Where there has been official intervention, it has, again by now well-established tradition, sought to avoid discrimination - whether between different types of financial institution or in the form of protective nationalism in favour of British-owned businesses, provided everyone undertaking a particular activity played by the same rules. That approach has not necessarily always been popular, I have to say, with some of those who might have benefited from such discrimination! But it is certainly one of the reasons for London's attraction as an international financial centre including its attraction to so many financial companies from elsewhere in Europe. And that international presence in turn contributes enormously to the efficiency of the London market - and indeed the European market of which we are very much a part.
There are a number of reasons that a financial conditions framework is likely to be useful when evaluating the economic outlook and the conduct of monetary policy. Most important, monetary policy works its magic through its effect on financial conditions; it does not operate directly on real economic variables. That is because the level of the federal funds rate influences other financial market variables such as money market rates, long-term interest rates, credit spreads, stock prices and the value of the dollar, and it is these variables that influence real economic activity. 1 This means that if the linkage between the fed funds rate and this broader constellation of financial indicators is not stable or completely predictable, then knowing what is happening to the fed funds rate is not sufficient to predict economic activity. The instability of the linkage between the fed funds rate and financial conditions indicators means that these indicators provide additional information about real activity and also are relevant in deciding the appropriate fed funds rate target. In contrast, if the transmission mechanism from the fed funds rate to financial conditions and onward to real economic activity were completely predictable, then there would be no need to focus on financial conditions as an intermediate target variable. The level and path of the fed funds rate matters, but it also matters how this gets transmitted to the real economy through the financial sector.

5 Also including jobs related to exports from the oil-service industry, see Nordbø and Stensland (2015): “The  petroleum sector and the Norwegian economy”, Norges Bank Economic Commentaries 4/15. 6/6  BIS central bankers' speeches