samchain/econo-pairs-v1 huggingface dataset:
Charles Dow himself chose these stocks, nine of them being railroad companies, the key growth industry at the time. Over time, he would revise the index as he saw appropriate to be reflective of ongoing market and industry developments. Ladies and Gentlemen, The construction and use of benchmark market indices today has undergone much advancement since then. Indeed, financial markets have undergone dramatic transformation. Economic, industry, and corporate expansion; the sophistication, proliferation and diversity of instruments; the expanding investment communities are all factors that have led to an increase in the number of benchmark indices and their greater use. Benchmark committees deliberate over the construction of the index and determine the rules of the benchmark. Investors need the benchmark indices to be used as performance indicators of the broad market and for an indication of the market direction and investors' sentiment on the corporate sector and economy. The representative stocks within a benchmark index need to be highly liquid and reflective of the key corporate sectors that drive growth in the economy. At the same time the index should also reflect the underlying changes in the economy incorporating the emergence of new industries. Thus, for an index to be a useful benchmark and to be used as a reference by investors and market players, the index needs to be regularly reviewed and adjusted accordingly in line with market developments and the transformations taking place in the economy. Indeed, benchmark market indices would reflect the broader investor participation and growing maturity of a markets.

4 per cent of the Fund’s value as an annual average through the business cycle. This establishes a clear division of labour among the different components of economic policy. •  Monetary policy steers inflation in the medium and long term and can also contribute to smoothing swings in output and employment. The inflation target provides  BIS Review 139/2007  1  economic agents with a stable basis for their decisions concerning saving, investment, budgets and wages. •  The central government budget – growth in public expenditure – influences the krone exchange rate and the size of the internationally exposed business sector in the medium term. Government expenditure and revenues must be in balance in the long term. •  How well and how efficiently we utilise our labour resources and other economic resources is largely determined by wage formation and economic structures and incentives. When monetary policy anchors inflation expectations, this provides a sound basis for the interplay between monetary policy and other components of the economy. Inflation targeting provides a fixed framework for monetary policy and gives a clear indication of how the central bank is to respond in different situations. The social partners can determine wage growth in the knowledge of the monetary policy response. This system works well whether wages are set at the central, local or individual level.
Chart 17 looks at different percentiles of the firm-level productivity distribution over time, both in levels terms and indexed to 2002=100. There has been a widening dispersion in the distribution of productivity across companies over time. In th  particular, there is a striking and widening divergence between frontier firms (say, the 99 percentile of firms) and the long tail of non-frontier companies. If we define frontier firms as the top 5% of firms by productivity performance, in line with the OECD, there is clear and widening blue water between frontier and laggard companies (Chart 18). In arithmetic terms, it is non-frontier companies that largely explain flat-lining productivity over recent years (Chart 19). These dynamics cast the secular innovation versus stagnation debate in an interesting light. The distribution of UK companies’ productivity suggests both forces have been operating, albeit at different points in the distribution – innovation in the upper tail, stagnation in the lower one. Widening productivity dispersion means that secular innovation and stagnation are complementary, not competing, hypotheses. For a relatively small cohort of frontier companies, secular innovation is clearly evident, with both high and rapidly-rising levels of productivity. For example, around 1% of UK firms have seen average productivity growth of around 6% per year. This poses a serious challenge to the notion that stalling innovation has been 46  For example, Andrews et al (2015). This work contains statistical data from ONS which is Crown Copyright.

Notes: Scenario 1 assumes that half of firms with interest cover ratios of less than 1 exit the market. In scenario 2, only the lowproductivity half of firms with interest cover ratios of less than 1 exit the market. Chart 25: The estimated relationship between leverage and labour productivity  Source: Bahaj, Foulis, Gal and Pinter (2016). Notes: The figure plots the results from local regressions. The red line shows the results from local weighted scatter smoothing (LOWESS), the blue line shows the results from a third degree kernel weighted local polynomial smoothing where the gray area depicts the associated 95% bootstrapped confidence bands. Labour productivity is defined as the log of gross value-added per number of employees. During the local regression estimations, we trim the data by deleting the top and bottom 1% of estimated productivity and leverage values in order to mitigate problems of outliers. 35  All speeches are available online at www.bankofengland.co.uk/speeches  35  Chart 26: Distribution of average pay across companies  Source: ONS Research Database and Bank calculations. Notes: Series show wage deciles/percentiles. Chart 27: Distribution of firm level labour productivity, wages and profits in 2014  Sources: ONS Research Database and Bank calculations.
High - and thereby in practice varying inflation and unstable exchange rates can threaten financial stability through several channels. First, it is more difficult to assess the risk of an investment project. Inflation makes it difficult to differentiate between a change in prices for a good or service and a change in the overall price level. It makes it more difficult to determine the discount rate to be applied. Second, fluctuations in the inflation rate are often accompanied by interest rate variations. A sharp rise in interest rates can also result in substantial losses on financial assets such as bonds and equity. Loans that have been granted against collateral in the form of such assets are even more exposed to losses. When rising inflation and inflationary expectations necessitate a tightening of monetary policy a crisis often ensues. In several countries the financial system has been on the verge of collapse during such a period of adjustment. This was the case in the US in the early 1980s and in the Nordic countries around 1990. Financial stability primarily contributes to price and exchange rate stability by facilitating the use of monetary policy instruments. Unstable institutions and markets constrain the use of interest rates because tighter liquidity and higher interest rates may increase the uncertainty concerning the stability of the financial system. Asset prices are an important linkage between monetary and financial stability. A surge in property prices with a risk of a subsequent fall threaten to undermine banks’ collateral. BIS Review 124/1999  4  5.

In 1936, he wrote his seminal work “on computable numbers”, and this research formed the basis for modern day computer algorithms. We can see some of the calculations from his paper in this table on the new bank note. In his research, he demonstrated how, what he called universal machines, could perform any solvable computation they were presented with. Of course, these universal machines are what we now call computers. Quite simply, his mathematical research in 1936 laid the foundations for modern computer science. After the war Turing returned to computing, but this time helping turn it into reality. Moving to Manchester to work at the National Physical Laboratory, he dedicated the next few years to designing the UK’s first electronic stored program computer. And here is an image of that invention, along with the diagrams Turing drew when designing it. The ACE Pilot machine, although much larger than anything we would use today, was one of the world’s first computers. Recognising the potential for computers to revolutionise the world around us, Turing delivered his now famous quote, when describing the ACE Machine. “This is only a foretaste of what is to come, and only the shadow of what is to be”. He has turned out to be prophetic. And this is reflected in one of the key security features of the note – a two colour foil featuring a microchip image over the main see-through window. Within this are two gold foil squares, which change between a pound symbol and the number “50” when tilted.
For instance, the Bank of England has introduced regular auctions of liquidity in which loans can be secured against either the safest collateral or, at a cost, a wider collateral set, including high-quality private securities. An increase in bids offering the wider collateral as security then provides an early warning of financial stress. And here, the Reserve Bank of Australia has also permanently widened the range of collateral it accepts. More recently, the movements in the size and composition of our respective balance sheets reflect transactions carried out for monetary policy purposes, especially our large-scale purchases of government debt (and, in the US case, also government-backed GSE debt and mortgage-backed securities) financed by the issuance of reserves. Commonly called “quantitative easing”, I shall say more about the efficacy of these operations later. Before the crisis, central banks saw these two objectives of monetary and financial stability as largely complementary in nature. According to the conventional wisdom, the maintenance of price stability would help foster stable macroeconomic conditions more generally by anchoring expectations. And the consequent reduction in macroeconomic volatility should help reduce the likelihood of episodes of financial instability. All that was necessary, then, was to ensure that banking regulators and supervisors ensured individual financial institutions followed appropriately responsible policies with regard to their lending decisions and were sufficiently well capitalised and all would be well. We know now that this confidence was misplaced.

Before the crisis, the policy rate and marginal cost of funds were close together, with the spread of the loan rate above funding cost reflecting the cost of intermediation and the default risk. The onset of the crisis then pushed both market rates up relative to the policy rate as concerns about the solvency of financial intermediaries rose. Focusing on the policy rate alone overstates the degree to which the effective monetary stance loosened in the wake of the collapse of Lehman’s. A corollary of this, together with the severity and the duration of the downturn, is that policy is more likely to be constrained by the zero lower bound than previously thought. Ahead of the crisis, simulations with macroeconomic models suggested that, with an inflation target of 2 per cent, the zero lower bound would bind around 10 per cent of the time. The costs of this were pretty modest, however, because such episodes were likely to be short in duration (see e.g. David Reifschneider and John Williams, 2000). That analysis looks less persuasive now. Indeed a study by Williams (2009) suggests the ideal level of the US Federal Funds rate after the collapse of Lehman’s would have been around minus 4 per cent6 and puts the cost of this constraint – ignoring the scope for other policies – at around $ trillion over 2009–2012. Other policies are, of course, available.
Domestic demand for goods and particularly for services has been unsustainably strong and large parts of the economy have been doing very well on the back of that. But the sectors which are most exposed to international competition have been suffering enormous pressure as a result, initially, of the exaggerated strength of sterling - especially against the major European currencies in the run up to decisions on the euro; and as a result subsequently of the successive waves of turmoil spreading through large parts of the global economy. Overall demand growth - at least until fairly recently remained excessive and the labour market has continued to tighten. The question was what should we do? It was not that we didn’t know that large parts of the economy were under the hammer - we have been as conscious of that as anyone. Still less was it that we didn’t care - we care, just as you must, about activity and jobs in all sectors of the economy. But the stark choice confronting us was either to tighten policy, knowing that that would inevitably increase the pain which the internationally exposed sectors were already suffering, or to disregard the developing excess overall demand in order to protect the internationally-exposed sectors from further damage. BIS Review 71/1998  -4-  This second course might have meant less pain for the internationally-exposed sectors in the short run.

As the banking system becomes more concentrated and complex, that just increases the financial stability risks, making the too big to fail problem even more acute. So what should we do about it? Today, I will evaluate three broad sets of choices: 1) Building a credible resolution regime and more resiliency in the financial system that together reduce the systemic costs of failure sufficiently so that large, complex firms can be allowed to fail; 2) taking steps, such as tougher prudential standards, that further reduce the probability of failure of such firms; and 3) breaking up the too big to fail firms so that no firm is so large that its failure would threaten financial stability in the first place. To summarize, I conclude that building a credible resolution regime is necessary but not sufficient. Even if the single-point of entry resolution framework proposed by the Federal Deposit Insurance Corporation (FDIC), which I very much endorse, is fully perfected, the costs of resolution for the largest systemically important financial institutions (SIFIs) will still be significant. I will argue that at least as much effort should be made to lower the risk of failure of such large, complex firms. Not only does this include higher capital and liquidity requirements, which we are implementing, but also building incentives into the system so that firm managements will act more forcefully and much earlier to put their firms on more solid ground before they encounter greater difficulties.
Sir Leslie’s early years at the Commonwealth Bank were spent dealing with the Great Depression, one of the great pathologies of economic history. I joined the Bank of England from academia a little over a decade ago. While my first seven years turned out to be an unusually tranquil period for the economy, the past four years have been anything but. So tonight, I thought I would discuss some of the lessons that I think central banks should draw from the Global Financial Crisis of 2007–8 and the subsequent Great Recession. The distinctive feature of a central bank derives from its role as the monopoly supplier of outside money, comprising notes and coin and commercial banks’ reserve deposits. These constitute the ultimate settlement asset for an economy and mean that a central bank has a unique ability to create or destroy liquidity through the use of its balance sheet. The primary objective is to ensure that the supply of that liquidity is consistent with the smooth functioning of the real economy. From this follows the two core tasks of a central bank: the maintenance of broad stability in the price level, nowadays often enshrined in a formal numerical target for inflation; and supporting the process of financial intermediation during times of stress, including acting as Lender of Last Resort to solvent, though temporarily illiquid, financial institutions. Of course, central banks sometimes carry out other tasks too. The Bank of England, for instance, manages the government’s foreign exchange reserves and used to manage our national debt.

And in some countries, central banks are responsible for banking supervision. But such tasks do not by their nature have to be carried out by the central bank. Charts 1 and 2 show the balance sheets of the Bank of England and the US Federal Reserve1 during the crisis. The near-tripling in size is striking, reflecting operations in pursuit of both the financial and monetary (price) stability objectives. Before the crisis, central banks provided predominantly short-term loans to banks against generally only the safest collateral, mainly highly-rated government debt. But when financial intermediaries found their sources of finance drying up, particularly after the collapse of Lehman Brothers, we began providing  1  The US Federal Reserve’s outright securities holdings before the initiation of large-scale asset purchases on 18 March 2009 are included in the “Other” assets category and held constant at the level on this date for the remainder of the period. BIS central bankers’ speeches  1  larger loans, of longer tenors, against a wider range of collateral; the Federal Reserve also dealt with a broader range of counterparties. The same is true of the central banks of other countries caught up in the maelstrom, including here in Australia. This leads me to my first general lesson: in a crisis, central banks need to show flexibility. The demand for many of these support programmes wanes naturally as conditions normalise, but the crisis has also prompted permanent changes in monetary frameworks.
(2016), “Assessing the implications of negative interest rates”, speech at the Yale Financial Crisis  Forum, Yale School of Management, July. 9 These challenges are set out in more detail in an ESRB report on the macroprudential issues arising from low  interest rates and structural change in the EU financial system. 10 European Systemic Risk Board (2016), “Macroprudential policy beyond banking: an ESRB strategy paper”, July. 11 European Systemic Risk Board (2016), “EU Shadow Banking Monitor”, July. The methodological background to  the ESRB’s EU Shadow Banking Monitor is described in: L. Grillet-Aubert, J. Haquin, C. Jackson, N. Killeen and C. Weistroffer (2016), “Assessing shadow banking – non-bank financial intermediation in Europe”, ESRB Occasional Paper no.10. 12 European Systemic Risk Board (2012), “Recommendation on money market funds”, December. Further  analysis of money market funds’ systemic importance is provided in J. Ansidei, E. Bengtsson, D. Frison and G. Ward (2012), “Money market funds in Europe and financial stability”, ESRB Occasional Paper no. 1. 13 Abad, J., I. Aldasoro, C. Aymanns, M. D’Errico, L. Fache Rousová, P. Hoffmann, S. Langfield, M. Neychev, and T.  Roukny (2016), “Shedding light on dark markets: First insights from the new EU-wide derivatives dataset”, ESRB Occasional Paper no. 11. 14 European Systemic Risk Board (2015), “Report on the efficiency of margining requirements to limit pro-cyclicality  and the need to define additional intervention capacity in this area”, July.

According to the GDP data of the third quarter of 2014, economic activity was relatively weaker compared to the outlook presented in the October Inflation Report. In the third quarter, the GDP rose by 1.7 percent on an annual basis, while growth remained limited compared to the previous quarter with 0.4 percent (Chart 13). Analysis of national income components on the production side indicates that the contraction in agricultural value-added led by adverse weather conditions is an important factor in the low growth of the national income (Chart 14). Data on the expenditures side reveal that in the third quarter, final domestic demand compensated for the fall in the first half and stood slightly above its level in the last quarter of 2013 (Chart 13). Following an interval of two quarters, private consumption expenditures recorded a robust recovery. In addition, the languishing trend in private investments, which lasted for a long time, reversed due to the increase in machinery and equipment investments. These two factors supported quarterly growth. However, the relatively weak course of exports limited the growth in this period. We expect industrial production, which fell below its previous-quarter average during October-November 2014, to decrease on a quarterly basis in the fourth quarter in line with the decline in December’s PMI and BTS survey indicators. Yet, data for the fourth quarter of 2014 point to a quarter-on-quarter pickup in consumer demand, a moderate course in machinery-equipment investments and some recovery in construction investments.
Norges Bank considers it important, therefore, that payment services are organised in a way that enables the market to find efficient solutions for production and use of such services. In this presentation, I will focus on retail payment systems. BIS Review 66/2002  1  Criteria for assessing efficiency We place emphasis on four elements when assessing the efficiency of the retail payment system. 2. Efficiency in retail payments depends on • Access to appropriate payment instruments • Direct pricing of all payment services • Exploitation of economies of scale and network externalities  • Competition in the supply of payment services  It is important that both corporate and retail customers have access to payment instruments that cover their needs in all payment situations. Customers must feel confident that payments reach the correct payee at the correct time. This in turn requires a high level of operating reliability in the electronic payment systems and correct processing of paper-based payment instruments. The security experienced by customers in connection with different payment instruments has an impact on the use of the instruments and thus also on the public’s perception of whether the service range is acceptable. Prices tell customers something about the value of the product or service and the costs associated with procuring the product. This affects customer preferences. Prices which reflect the relative costs of producing different payments services provide important incentives for selecting the services that satisfy their needs at the lowest possible cost.

But we also intend to develop the huge opportunities related to the financing of the transition towards a low-carbon economy – up to USD 90 trillion are needed till 2030 –, while preventing the risk of “green washing”. It would certainly make sense to promote a convergence towards a harmonised European standard for green bonds – including UK –, leveraging the Green Bond Principles approach in terms of processes and transparency, and building on the Climate Bond Initiative approach with regard to taxonomy. Much has to be done in the coming years. In that regard, I am very happy to count the Bank of England among the founding members of the Central Banks and Supervisors Network for Greening the Financial System (NGFS) that was launched by the Banque de France last December. This is an enthusiastic and rapidly developing “coalition of the willing”: the nine founding members should shortly be joined by three new members and two observers: the BIS and the OECD. Several other major central banks and supervisors are on the verge of applying. Stephen Hawking once famously said about the Internet: “We are all now connected […] like neurons in a giant brain”. This could also apply to the finance of tomorrow in an interconnected world. Each of us – whether regulators or professionals – is at least a neuron; we need to be connected to other neurons to produce innovative ideas.