samchain/econo-pairs-v1 huggingface dataset:
Finance has both these raw ingredients. Most traders’ brains harbour the impatience gene. Often, they harbour little else. And traders’ behaviour is shaped every bit as much by the footfall of their friends in the herd. So, in theory, we might expect similar cycles of selfdestruction and self-improvement in finance. Gresham’s law in finance To illustrate these theoretical dynamics in action, consider a sketch model. Imagine three classes of investor:   an impatient short-term speculator, who follows the momentum of the herd, buying when prices are rising and selling when they fall;    a patient long-term investor, who invests according to where prices are relative to their long-term fundamentals;    an untested investor, who can mimic either the speculator or the long-term investor, but whose performance either way is assessed at frequent intervals by endinvestors who withdraw or maintain funds accordingly. Market prices in this model are buffeted by two winds. Momentum-based speculators cause deviations from fundamentals, while long-term investors drive prices back towards fundamentals. These are the double-selves of the financial brain, the patience and impatience genes. And as in social systems, the balance of these two genetic types results in two very different evolutionary equilibria. Under one equilibrium, patience wins the day. When long-term investors start in the ascendency, prices tend to correct towards fundamentals. The performance of untested investors pursuing momentum strategies falters, while those pursuing long-term strategies flourish. The fraction of long-term investors rises. The self-correcting tendencies of market prices are thus reinforced, further supporting long-term investors.

This pattern reflects the expectation that, in an environment of weaker growth in the euro area and globally, underlying cost, wage and price pressures in the euro area should remain modest. The Governing Council continues to view the risks to the medium-term outlook for price developments as broadly balanced. On the upside, the main risks relate to further increases in indirect taxes and administered prices, owing to the need for fiscal consolidation in the coming years, and possible increases in commodity prices. The main downside risks relate to the impact of weaker than expected growth in the euro area and globally. Turning to the monetary analysis, taking the appropriate medium-term perspective, the underlying pace of monetary expansion continues to be moderate. The annual growth rate of M3 decreased to 2.0% in November 2011, after 2.6% in October. As in the previous three months, monetary developments in November were affected by the heightened uncertainty in financial markets. The annual growth rate of loans to the private sector, adjusted for loan sales and securitisation, decreased to 1.9% in November, from 3.0% in October. The annual growth rates of loans to non-financial corporations and loans to households, adjusted for loan sales and securitisation, both moderated in November, and stood at 1.8% and 2.3% respectively, with slightly negative monthly flows observed for MFI loans to non-financial corporations.
BIS Review 32/2004  3  Facing this reality, we decided to act independently and lowered interest rates initially in March 2001, a few months before the European Central Bank. Then, facing a clear economic slowdown and a strengthening of the Swiss franc, we lowered interest rates repeatedly and aggressively. So far, the magnitude of our policy loosening has exceeded that of the European Central Bank. We thus kept our monetary autonomy intact, and the interest rate differential between the euro and the Swiss franc has even slightly increased. 4. Swiss monetary policy in the new monetary order  What have we learned about the effects of the new monetary order on the international monetary system and on the effectiveness of monetary policy? (a)  The stabilizing role of the euro  Developments in currency markets over the past 5 years have taught us that the introduction of the euro has fundamentally modified and stabilized the international monetary system. In the past, this system was dominated by the dollar. Dollar crises were violently affecting economies dependent on international trade and capital mobility. The Swiss franc was particularly vulnerable as Switzerland is a small open economy with a currency playing the role of safe haven. Today, the euro has become the counter-weight of the American currency. When the dollar tumbles, the euro absorbs funds in quest for stability. Third party currencies are thus better shielded from speculative flows. Indeed, the Swiss franc is not the only currency to benefit from this new monetary order.

In this context, on 12 December the ECB, the Federal Reserve, the Bank of England, the Bank of Canada and the Swiss National Bank announced measures designed to address elevated pressures in short-term funding markets. In particular, the ECB participated in joint action with the Federal Reserve and the Swiss national Bank. The ECB provided a total of 20 billion US dollar in two auctions to Eurosystem counterparties against ECB-eligible collateral. Through its own actions as well as the joint efforts with other central banks, the Eurosystem as well as the community of central banks have shown their capacity to cope with a number of challenges that euro and global money markets are currently facing. More than ever, in these periods of tensions, lucidity in the diagnosis, rapidity in the decision, and absence of complacency are of the essence. This total absence of complacency is particularly necessary as regards financial stability. Financial stability I would now like to share with you our assessment of the financial stability situation, as described in the recent Financial Stability Review. I will discuss briefly the role of financial institutions and supervisory authorities in coping with the present financial market correction. With financial systems undergoing a process of de-leveraging and re-intermediation, uncertainty surrounding the financial stability outlook for the euro area has heightened and may persist until it becomes clear how the potential balance sheet effects of the turbulence will be spread across individual financial institutions.
This step-up in energy and food prices has raised inflation for electricity and noncooked food and is feeding into transportation and food services inflation. The combination of domestic and external factors has led to a significant rise in inflation in Singapore. Core inflation picked up to 3.6% year-on-year in May, from 3.3% in April and 2.5% in the first quarter of the year. CPI-All Items inflation, which includes private transport and accommodation costs, rose to 5.6% year-on-year in May. Inflation is expected to get worse before it gets better. Core Inflation is projected to increase to a peak of 4.0-4.5% in Q3. It will then level off, and slightly ease towards the end of this year, though still around 3.5-4.0% - much higher than what Singapore has been used to. For the whole of 2022, core inflation is forecast to come in at 3.0–4.0%. As car and accommodation cost increases are likely to remain firm, CPI-All Items inflation is expected to come in at 5.0–6.0%. Inflation is expected to ease further in 2023 but will remain well above the 1.5% rate averaged since 2000. This inflation outlook is not without upside risks. The projected profile of inflation is based on two assumptions: some stabilisation of global commodity prices and unwinding of global supply chain constraints; and a strong pick-up in inflows of non-resident workers that helps to alleviate domestic labour shortages.

responsible wage settlements that help to restore workers’ purchasing power without setting off a wage-price spiral. The ongoing expansion in labour supply should provide some relief to labour market tightness. The relaxation of our border restrictions and resumption of foreign worker inflows should help to moderate labour cost pressures. To prevent a further build-up in labour cost pressures, it is important that the inflow of non-resident workers continues unimpeded. The risk of a wage-price spiral is contained for now but bears watching. A concern in several advanced economies with some degree of wage indexation is that wages and prices start chasing each other and inflation gets worse and more entrenched. If real wages increase faster than real productivity, the increase in unit labour costs will lead to firms raising prices to protect their margins, setting off a second round of wage increases and a wage-price spiral. Automatic wage indexation is rare in Singapore and the pass-through from prices to wages has been historically weak. Nonetheless, the risk of a wage-price spiral cannot be discounted, especially in the context of a tight labour market and high inflation. To contain the risk of a wage-price spiral, it is important that real wage growth not exceed real productivity growth persistently and firms do not pass on in prices the full impact of wage cost increases. MANAGING DEBT AMID RISING INTEREST RATES  One of the key challenges posed by the combination of rising prices and rising interest rates is the burden imposed on debt servicing.
Thus, to keep things manageable, one needs to be selective. Specific standards and codes included in the FSAP therefore differ from country to country depending on their relevance and significance to its financial system. In the case of Thailand, I suppose the scope of the FSAP would likely include most, if not all, of the following core modules: •  Banking supervision  •  Securities market regulation  •  Insurance sector regulation  •  Payment system  •  Monetary and financial policy transparency, and  •  Anti-money laundering and combating the financing of terrorism. In order to attest to the efficacy of each of these regulatory mandates, the FSAP assessment process also involves face-to-face interviews and discussions with a number of private sector institutions. BIS Review 61/2004  1  The third aspect of the FSAP involves identification of follow-up measures for the authorities to address any gaps in the country’s regulatory framework; which also provides a foundation for future technical assistance programmes, if necessary. In the course of today’s workshop, our experts from the IMF will no doubt enlighten us on what the FSAP process would entail in practice. So please feel free to ask any question you may have, especially those who have already embarked on the self-assessment exercise for the relevant modules.

It does not mean that monetary policy will be tight. We will simply be moving from an extremely accommodative monetary policy to one that is slightly less so. It also will be a positive signal about the progress we have made in restoring the economy to health. In my view, it would be a cause for celebration, because it would signal that the FOMC believes that slightly higher short-term interest rates are consistent with its objectives of maximum BIS central bankers’ speeches  3  employment and price stability. Near-zero short-term interest rates and a larger Federal Reserve balance sheet were designed to be a temporary extraordinary treatment to help the economy regain its vitality, and not a permanent palliative. I remain confident that when the FOMC does decide to begin to remove policy accommodation that we have the requisite tools to effectively support this decision. We have tested numerous tools including overnight reverse repurchase operations, term reverse repurchase operations, and term deposit facilities to ensure that, when the time comes, lift-off can be managed smoothly. The primary tool will be interest on excess reserves (IOER), with overnight reverse repurchases as a supplemental tool to be used as needed to ensure a firm floor under short-term interest rates. For financial markets, the likely path of short-term rates after lift-off is just as important as the timing of lift-off. Here, I anticipate that the path will be relatively shallow.
Revisions to nominal GDP growth Sweden  United States  8  8  6  6  6  6  4  4  4  4  2  2  2  2  0  0  8  0  GDP, previous outcome GDP, current outcome  13  14  15  16  17  18  GDP, previous outcome GDP, current outcome  13  Note. Annual percentage change. Sources: Bureau of Economic Analysis and Statistics Sweden  14  15  16  17  18  8  0  24 [24]

To conclude on this estimate of effectiveness, the IMF – regarded as an objective judge of the relevance of economic policies – was unequivocal in its assessment at the last G20 meeting in Shanghai at the end of February, saying, “The ECB’s asset purchase programme has supported the recovery by improving confidence and financial conditions [and] monetary policy should remain accommodative”. 3) What about the risks? I talked earlier about the risks of doing nothing: we need to take action in order to bring inflation back up towards 2%. That said, we also need to keep a close eye out for any possible negative side-effects of our monetary policy, notably for financial stability. We are actively monitoring the financial cycle, including in France where the task falls to the Haut Conseil de Stabilité Financière (High Council for Financial Stability), set up in 2013: I will be taking part in its 8th meeting at the Finance Ministry tomorrow. For the time being, there are no signs of any bubbles forming in the main financing markets: on the whole, developments in the equity markets appear in line with corporate profit forecasts, while evolutions in bond yields also seem consistent with the outlook for inflation and growth. Nor are there any signs of excessive credit growth in the financial system. Nevertheless, we remain vigilant over all aspects of the current macroeconomic and financial environment.
The 1999 national budget estimates that in 20 years the central government’s net wealth will have risen to 120–130% of GDP. Financially, the state will thus be well equipped to cope with the higher expenditure associated with an ageing population. So far this year, the oil price has averaged slightly more than NOK 80 per barrel. The chart shows allocations to the Petroleum Fund with oil prices of NOK 110 and NOK 90 per barrel in the years ahead. An oil price of NOK 90 will alone result in a substantially smaller surplus than previously anticipated. In this scenario, the Petroleum Fund will peak at 75% of GDP in 2015. The bottom line in the chart shows a different scenario. We are still assuming an oil price of NOK 90 per barrel – in other words, one that is not especially low under present circumstances. In addition, we have assumed a further reduction in the budget surplus, equivalent to 0.5% of GDP, each year for the next 10 years. The combined effect is that after 10 years the budget surplus will have declined by about 5% of GDP compared with the other calculations. BIS Review 20/1999  14  This may seem substantial, but is no greater than the changes in the budget balance that we have seen previously. In the previous downturn, the government reduced its surplus by slightly more than 5% by means of an active countercyclical policy – and that was only during a five-year period.

Speech  The digital euro and the evolution of the financial system Introductory statement by Fabio Panetta, Member of the Executive Board of the ECB, at the Committee on Economic and Monetary Affairs of the European Parliament Brussels, 15 June 2022 I am pleased to join you here today to discuss the progress we have made in our digital euro project. A digital euro would enable Europeans to use public money for digital payments throughout the euro area – just like they can use cash for physical payments. Bringing central bank money into the digital era is a logical step as payments become increasingly digitalised. And this is critical for two main reasons. First, we need to preserve the role of public money as the anchor of the payments system in order to ensure the smooth coexistence, the convertibility and the complementarity of the various forms that money takes. A strong anchor is needed to protect the singleness of money, monetary sovereignty and the integrity of the financial system. Second, a digital euro would contribute to our strategic autonomy and economic efficiency by offering a European means of payment that could be used for any digital payment, would meet Europe’s societal objectives and would be based on a European infrastructure. We will design the digital euro in a way that makes it attractive to users, who would like to use it to pay anywhere.
First, we announced the implementation of the Pandemic Emergency Purchase Programme (PEPP). This programme, with an initial envelope of € billion, which was subsequently increased to € trillion until June 2021, permits the ECB to purchase government and private sector bonds, as well as other debt instruments. The ECB already had a purchase programme, the APP, which increased in volume at the onset of the crisis. Why did it then need a second programme? The APP has a relatively rigid structure regarding the distribution of asset purchases both over time and by jurisdiction. 3  In the latter case, APP purchases are distributed under the so-called “capital key”, a concept referring to the percentage of the ECB’s capital held by each national central bank, which is linked to the weight of each country’s economy and population. However, faced with an emergency such as that in March, the ECB had to be able to buy proportionally more bonds from some countries than others so that it could concentrate those purchases on countries whose financing conditions, at any given time, were subject to a greater degree of tightening. The PEPP was designed precisely with that degree of flexibility in the distribution of asset purchases over time and by geographical area, although the capital key continued to act as a guide for the latter.

The problem is that that commitment means that the central bank is voluntarily breaching its future inflation objective, which may possibly not be credible in advance. 7  Andreeva and García-Posada (2019) estimate the impact of the TLTROs on bank lending policies in the euro area. For an analysis of the macroeconomic effectiveness of forward guidance on interest rates and on future developments in the central bank’s asset portfolio, see Arce et al. (2019). 9 See Eggertsson and Woodford (2003). 8  13  This is what we economists call “dynamic inconsistency”: a central bank could announce today that it will tolerate higher inflation in future in order to stimulate the economy, but once the economy and inflation recover, there would be an incentive for it to breach its initial announcement if it conflicted with its price stability objective. If agents doubt the central bank’s credibility, this type of forward guidance will not be effective in the first place. One way to avoid this problem is by modifying the monetary policy “strategy”, seeking to grant greater credibility and transparency to the central bank’s actions; in other words, to change the way in which the central bank’s objective is articulated and the way that the central bank pursues that objective with the tools available. To date, in their strategic frameworks most central banks have followed variations of inflation targeting, which entails targeting an inflation rate that is close to a specific number (for example, 2%) over a medium-term horizon.
Today, all the Swedish banks have voluntarily strengthened their capital bases by more than the Basel regulations require. Banks in many other countries have done the same. At the same time, the concept of bank sector solvency has been increasingly undermined. Many risks are not on the balance sheet. It is therefore more relevant to consider the ratio between total risk exposure and the capital base. With the expansion and growing complexity of financial market operations, it has become increasingly important that banks are capable of managing the risks in their business. The financial turbulence in recent years has underscored this and banks are also more determined to have such a capability. The  BIS Review 9/2000  2  capacity to understand, monitor and control internal risks is thus featuring more and more prominently in the organisation of financial enterprises. A major aspect of this work has been the development of more advanced methods for the quantitative measurement of risks. As one might expect, most progress has been made in the measurement of market risk; the extensive trading in financial instruments provides a good supply of price statistics and this is a considerable help when it comes to estimating market risks. Much work is now being done in many places to construct models for a better management of credit risks, which are still by far the largest risk category for banks. The difficulties here, however, are far greater than in the case of market risks.

Mr Bäckström reports on the significance of risk management  Speech given by Mr Urban Bäckström, Governor of Sveriges Riksbank and Chairman of the Board of Directors and President of the Bank for International Settlements, at the Risk Management Forum, organised by Ernst & Young, in Stockholm on 3 February 2000. *  *  *  First a word of thanks for the invitation to attend this forum and discuss future risk management. I shall be talking about the socioeconomic aspects of financial risks and what the authorities are doing in this field. Why is the financial sector so important? What makes the authorities so concerned about the financial sector? Why don’t they focus to the same extent on, say, the forest industries, car manufacturing or even on other service industries? The reason, of course, is that the financial sector - banks in particular - performs such special and central functions in a modern economy. It is not the case that parliaments, governments, supervisors and central banks around the world are particularly concerned about individual banks. What matters is the part that financial institutions play in sophisticated modern systems for credit and payments. Virtually every economic transaction involves a payment service of some kind; it can take the form of banknotes, payments on account or the provision of credit. It follows that if the facilities for payments by households and firms are seriously disrupted, the consequences for the real economy may be disastrous.