samchain/econo-pairs-v1 huggingface dataset:
I don’t think we have the evidence to say that better financial education is enough to escape such a trap. But it surely can’t hurt. A recent study using data from the OECD Programme for the International Assessment of Adult Competencies, or PIAAC, found that rates of financial literacy – defined as the ability to answer relatively straightforward financial questions4 – were lower here than in other advanced economies. According to a recent, UK-specific survey by a private-sector firm, less than half of adults and barely a third of teenagers actually know what an interest rate is. And we also know that the less financially literate tend to face higher debt costs than others and more often face financial distress.5 If financial education can make any difference at all to these problems we have a duty to try and improve it. Conclusion The Bank of England has a direct interest in improving and broadening the teaching of economics. There’s an appetite for it. According to a recent poll, three quarters of the public believe economics should be taught in schools.6 Yet only around a third of schools offer children the option to study economics from the age of 14.7 We hope our online teaching materials will help fill some of the gap. However, we also hope that our “EconoME” package can help with financial literacy. I think economics is fascinating and very valuable. But you don’t need to be an economist to understand the basics of personal finance and their importance for people’s lives.

But it is, at least, a job that requires very little investment in training or equipment: the only “capital” a rag collector will need is a pushcart, which might sell for $ Yet, despite saying they’d very much like to own their own, nearly all these rag collectors instead rent their pushcarts, at a cost of $ a month. They therefore spend in a matter of 3-6 months what it would cost to own the thing outright. This is an enormous, and self-imposed, effective rate of interest – an annual rate of somewhere between 200 and 400 per cent.3  1  Gathergood (2013). Laibson (1997). This would cover any depreciation costs, which the owner of the cart would have to bear. But these are likely to be only a small part of the rental cost. 2 3  4  All speeches are available online at www.bankofengland.co.uk/news/speeches  4  Mullainathan and Shafir document many such examples. And they go further: they claim, supported by the result of interesting experiments, that the tendency to over-weight the present, at the expense of the future, is itself increased by financial stress. The more cash-strapped people feel, the more prone they are to taking decisions that make the situation worse. Financial distress isn’t just the partial result of wanting things sooner rather than later: according to Mullainathan and Shafir it can also be the cause of it. The result can be what the authors describe as a “scarcity trap”.
Generally speaking, the greater the depth of financial mediation, the larger the relative size of the banking sector in the economy and the higher the level of private sector debt, the more vulnerable the economy, the greater costs of any financial crisis and thus the higher the ensuing requirements as regards quality of banking regulation and strictness of supervision. Therefore, effective prevention of financial crises is an increasing priority for economic policy makers of countries with greater depth of financial mediation. Still, the depth of financial mediation differs systematically, for example, between the founders of the EU and recent entrants. For example, in the case of the Czech Republic, if the worst comes to the worst we can revoke the licence of a major bank, take its liabilities onto the government balance sheet and sell its viable business, as we have done in the past, without increasing our government debt-to-GDP ratio above two or three hundred per cent, provoking a sovereign debt crisis and starting the vicious circle known to many European economies. Most developed European countries do not enjoy such freedom. On the other hand, many segments of our financial industries are still underdeveloped and their space for growth is rather high. I do not believe we have reached the point at which one should question the benefits to the economy of increasing the depth of financial mediation.

Even if property prices do fall further, there is a strong incentive for homeowners to continue to service their mortgages. The main problem loans we have seen so far have been in the corporate sector and in trade finance. Some companies have run into unavoidable problems because of the regional situation while others may have over-extended themselves. However, it is worth noting that the corporate sector in general in Hong Kong has avoided the excesses seen in the rest of the region. In general, companies in Hong Kong are not highly leveraged compared with their counterparts in the region and have not poured resources into an indiscriminate build-up of fixed assets. The banks have also tended to follow more prudent lending policies than those elsewhere and are better protected by their ability to take and realise good collateral. We do not therefore expect to see the collapse of asset quality that has occurred in some regional economies where corporates and the banks have also had to contend with massive exchange rate depreciation. The local banks in Hong Kong also have the benefit of the cushion provided by their high capital adequacy ratios. This means that even if the banks do have to make higher provisions this year, it will be their profitability rather than their solvency that is affected. While lower profitability is by no means welcome, it is not, by itself, a cause for concern in terms of the stability of the banking system.
Analysis of Corporate Bond Liquidity. FINRA Office of the Chief Economist. BIS central bankers’ speeches  3  deterioration in funding liquidity also increased the degree of systemic stress as firms were forced to sell assets, which depressed their prices, undermining the solvency of firms throughout the financial system. As I noted earlier, while funding liquidity can be considered as its own distinct subject, it does have a direct link back to market liquidity. If firms that trade and invest in securities cannot obtain funding liquidity, this will likely lead to less transactions volume, thinner markets and less overall market liquidity. It is also likely to lead to less pricing efficiency resulting in wider and more persistent disparities in the prices of similar assets. Without access to funding, leveraged players, such as hedge funds, will find it more difficult to react to transient dislocations in market prices by engaging in arbitrage – that is, buying the cheaper and selling the more expensive asset. Without a reliable source of short-term funding, market functioning can become impaired, which can further disrupt funding and market liquidity. This can be seen by looking at the relationship between the volume of dealer-funded repo backed by U.S. Treasury securities versus the size of Treasury bid-ask spreads (Exhibit 11). 6 During times of financial crisis – such as in 2008 – sharp deleveraging of dealers’ repo books coincides with an increase in Treasury bid-ask spreads. However, during non-crisis periods, this correlation is quite low.

Because mutual funds are not natural providers of intraday liquidity, 5 their rapid growth may have contributed to the decline in secondary market trading activity. Fixed-income market liquidity may also be declining for cyclical reasons. Dealer inventories have historically been sensitive to changes in the size of credit risk-premia and term-premia (Exhibit 10). Finally, the effects of unconventional monetary policy on rate expectations and corporate bond issuance may also be affecting market liquidity. This is an area in need of further study. To reiterate, the evidence that market liquidity has diminished is mixed. But even if one agrees with the position that market liquidity has diminished, concluding that tougher regulatory requirements are the most important factor would be premature at this stage. The available evidence and common sense suggest that the changes in the regulatory regime are likely important, but we need to do considerably more work before we reach a definitive conclusion on their relative contribution. Furthermore, even if additional evidence supported the conclusion that market liquidity has declined due to the increase in the regulatory burden on the major securities firms, this decline would still need to be weighed against the benefits of a more resilient and robust financial system. During the last cycle, market liquidity was plentiful prior to the financial crisis. But, as the financial system became stressed and several large systemic firms teetered on the brink of failure, market liquidity quickly dried up.
These have had the aim of supporting the economy during the outbreak, and in so doing to minimise the potential for longer-term damage or scarring to the economy’s potential. On the monetary side the MPC likewise deployed its full range of monetary tools in March as the pandemic intensified. In March the Committee cut Bank Rate in two steps to a new low of 10 basis points and launched a new Term Funding Scheme with additional incentives for SME lending (TFSME for short). And against a backdrop of accelerating market dysfunction – brought on by the “dash for cash” – the MPC announced an additional £ of gilt and corporate bond purchases, to be carried out at a record pace of £ of gilt purchases per week (Figure 4).3 In June the Committee voted for a further £ of gilt purchases. And in August we gave new forward guidance. The size and pace of the asset purchase programme launched in March reflected its twin objectives – both to provide stimulus to the economy by lowering longer term interest rates, and to counteract any tightening of monetary and financial conditions that might result from the deterioration in gilt market conditions.4 Those twin objectives were successfully met. Orderly functioning was quickly restored to the market – market functioning indicators, which had been flashing increasingly red, rapidly turned back to green as pricing and liquidity metrics like bid-ask spreads returned to normal levels (Figure 5).

In my view, that now points to a gradual withdrawal of some of the stimulus we provided to the economy in more difficult circumstances last year – not so much as to undermine the recovery, but to keep it on a low inflation path, consistent with the Committee’s remit. 7  10  See Sentance (2009a) and Sentance (2009b) for a more detailed discussion. BIS Review 99/2010  References Eurostat (2010) “Regional GDP per inhabitant in 2007”, Press Release 25/2010 – 18 February 2010 Lee, N. (2010) “No city left behind”, published by the Work Foundation, July 2010 Sentance, A. (2009a) “Monetary policy in turbulent times” Speech at the Agricultural Engineers Association Annual Conference, Institution of Civil Engineers in London on 21 April 2009 Sentance, A. (2009b) “Energy and environmental challenges in the new global economy” Speech at the British Institute of Energy Economics Sustainable Energy Seminar, London on 21 September 2009  BIS Review 99/2010  11
28  All speeches are available online at www.bankofengland.co.uk/speeches  28  (7) ln Where  ∝  =  ∗  ∗  1 0  person does belongs to ethnic group person belongs to white ethnic group  From Table 3, the mixed ethnic group does not have a statistically significant pay gap. All other ethnic groups do have a significant and negative pay gap, varying from -6% and -7% for Indians and Chinese through to -20% and -13%, respectively, for workers from a Bangladeshi and Pakistani ethnic background. In other words, once we account for compositional effects, a more consistent pattern of negative ethnicity pay gaps emerges, although the size of the gap varies significantly across different ethnic minority groups. Table 3: Conditional granular ethnicity pay gaps for specification (7)  Ethnicity  Mixed ethnic Indian Pakistani Bangladeshi Chinese Any other Asian background Black/African/Caribbean/Black British Other ethnic group Observations  Coefficient (compared to coefficient for White)  Pay gap, per cent  Number of observations for ethnic minority groups  0.0186  2%  3,022  -7%  10,480  -13%  3,521  -20%  1,235  -6%  1,797  -13%  3,893  -13%  10,222  -8%  4,623  -0.82 -0.0774*** (-10.29) -0.144*** (-13.19) -0.228*** (-12.98) -0.0617*** (-3.35) -0.139*** (-11.90) -0.135*** (-17.04) -0.0824*** (-7.34) 251,064  Source: ONS Labour Force Survey and Bank of England calculations. Note: Coefficients are recalculated into percentages as per Palmquist (1980) due to log-linear specification.

Relief for those guys I think would be really, really valuable because the burden on them, they feel that burden disproportionately because they don’t have as big an asset base to spread all those compliance costs across. And I think it has more of a real consequence because a lot of these institutions support small business lending, which I think is really important to have a vibrant economy. Maureen O’Hara: So given the two goals you said that there were for the Dodd-Frank Act, it does make you wonder how the Congo Minerals Relief Act ever got into the Dodd-Frank. But maybe we’ll leave the Congo Minerals for another night. Well, I think the issues we’ve talked about here have covered a wide range of areas, and let me turn it open to the audience here and see if we can come up with some other questions. How about you? Yes. Audience Member: You alluded to China and the concerns we had about it last year that have now gone away. Why do you think the narrative changed on that, why do you think China is doing better? Also, you know, we’re seeing more about rising inflation, so is this really about rising inflation or is it about the end of the disinflationary-deflationary scare? Thank you. President Dudley: Well I think last January, early February, the markets were under a lot of distress. There was a big flight to risk aversion and markets went down pretty hard around the globe.
In the aftermath of the crisis, global imbalances were reduced as a consequence of the financial retrenchment and the severe downturn in activity worldwide. However, a large portion of the correction is likely to have been merely cyclical. As a matter of fact, as the global recovery is taking hold, a new widening of imbalances is starting to be perceived this year and is foreseen to continue into 2011. Indeed, the basic structural factors underlying global imbalances remain essentially in place; but the crisis has brought about some potentially important changes in the nature of the imbalances. As trade and capital flows experienced a sudden stop during the crisis, the immediate impact was deeper in those economies more open to trade – which collapsed – and those with higher net external financing needs. When trade recovered, export economies tended to  BIS Review 172/2010  1  rebound strongly, but countries with large external deficits generally lagged behind. In many advanced economies, particularly in those running deficits, private domestic demand remains severely impaired by the adjustment process and the need for the private sector to deleverage. As a result of this process private sector saving rates have increased sharply and public sector balances have rapidly deteriorated. In the end, external deficits do not reflect anymore the large financing needs of the private sector – as they did before the crisis – but those of the public sector.

Miguel Fernández Ordóñez: Global rebalancing, asset prices and policy responses Opening remarks by Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, at the Fifth High-Level Seminar of the Eurosystem and Latin American Central Banks, Madrid, 10 December 2010. *  *  *  Good morning and welcome again. More than three years after the global financial system started to show serious signs of instability and two years after being on the verge of a global economic and financial meltdown, the world economy seems to have avoided that risk, backed by a strong and coordinated policy response. Nevertheless, the strengthening has been uneven and the risk of economic and financial instability is still persistent and significant in some regions, like the euro area. Indeed, it is hard to emphasise sufficiently the challenges ahead and how crucial the present juncture is for the future of our Monetary Union. On the contrary, Latin American economies had learned the lessons from the severe financial and economic disruptions they experienced in the not so distant past, and the challenges they currently face are more similar to those that characterised the period of strong growth prior to the financial crisis. These very different sets of present circumstances make today’s exchange of mutual experiences and policy discussion particularly interesting. The title of today’s Seminar was chosen almost a year ago, but it couldn’t be more timely: Global Rebalancing, Asset Prices and Policy Responses.
The theme of today’s seminar – “Strategies for the Development of Islamic Capital Markets” – is most timely and relevant to Hong Kong as we are about to introduce an enhanced legal framework as a first step to promote the sustainable development of Islamic finance and we are eager to learn the other key components to form a coherent strategy. We very much look forward to the insightful views of the distinguished speakers on the latest developments of the global Islamic capital markets, the prospects and opportunities that lie ahead, and further ideas to bring Islamic capital markets to the mainstream. Growing importance of Islamic finance in the global financial scene 4. Being an international financial centre, it is important for Hong Kong to embrace Islamic finance given its rising prominence in the global financial arena. The size of the global Islamic capital markets has expanded more than 10-fold since its early phase of development in the 1980s, reaching an estimated $ trillion at the end of 2012.1 With this critical mass, Islamic finance has become an integral part of the global financial system not only catering for the needs of Muslims, but also attracting other investors and fund raisers, regardless of race and religion. Reflecting the deepening sophistication of this market, we are seeing an increasing variety of products and services, ranging from Islamic banking products and sukuk, to Islamic equities, Islamic funds and takaful. 5. This remarkable market deepening process has not been retarded by the challenging financial landscape.

On this front, a study conducted by the Hong Kong Government in conjunction with TMA earlier concluded that there are no major legal or regulatory obstacles to transactions involving wholesale Islamic financial instruments in Hong Kong. 13. However, there is a need to refine the tax regime in Hong Kong in order to provide a level playing field between sukuk and conventional bonds. Owing to Shariah requirements, structuring sukuk often involves the originator setting up a special purpose vehicle for the purposes of issuing sukuk to sukuk holders, and multiple transfers of underlying assets between the originator and the sukuk issuer in order to generate profits. These complex structures, which are not required for conventional bonds, may incur additional tax and stamp duty expenses for the sukuk issuers. 14. I am pleased to see that an amendment bill to address this issue has been introduced into Hong Kong’s Legislative Council and is now in the final stages of enactment. 3  2  Source: Institute for International Finance. BIS central bankers’ speeches  The bill, once passed, will enable sukuk to enjoy tax treatments similar to those currently afforded to conventional bonds. This would be a significant milestone in the development of a sukuk market in Hong Kong. 15. Apart from providing a level playing field, equally important is the active participation of market players, including non-Islamic arrangers, issuers and investors in the Islamic capital markets, as they will be the ones who lead market development in the future.
Some kinds of public policies may exacerbate, rather than lessen, the tendency of the housing market to price some families out of good neighborhoods. Zoning and other land use regulations are sometimes enacted to artificially reduce the supply of housing, thus driving its price up even further. Take, for example, minimum lot size zoning which specifies a minimum amount of land per housing unit. When this regulation is binding, it reduces the number of housing units that can be built in a given area, and thus introduces artificial scarcity into the housing market, thereby raising prices. 9  Heckman (2006). 10  Deming (2009). 11  See Bayer et al. (2008), Schmutte (2015), Hellerstein et al. (2011), Aslund et al. (2011). 12  Chetty et al. (2015). 4  BIS central bankers’ speeches  Zoning can also be used to promote affordable housing – to include, rather than exclude lowand moderate-income families by setting aside space for those families in exchange for the right to develop market-rate units. This is a strategy that New York and other large cities have pursued for many years, and in these cities it is easy to point to units that were developed under the program. Nonetheless, these programs are often controversial – some economists and others argue by increasing the cost of development they restrict supply. Thus, while some percentage of new units developed will be affordable, fewer new units will be developed with uncertain effects on affordability overall.

Such an environment will also make the process of adjustment and economic transformation easier. In this respect, I believe that we have the right monetary framework to best 2  BIS central bankers’ speeches  achieve this. The BOT’s inflation targeting framework has served us very well since its adoption over 10 years ago. Apart from serving as an anchor for macroeconomic stability, the BOT can also undertake steps, or act as a catalyst for the necessary changes, that will serve to enhance Thailand’s competitiveness and augment economic adaptability. Most directly, the BOT can strive to enhance the effectiveness of the financial sector in serving as intermediaries of capital. Our current strategy is to broadly deliver tangible improvements in four key dimensions. First, encourage financial innovation and the expansion of available financial instruments. Second, broaden the choice available to firms and households in terms of financial services. Third, reduce the cost of these financial services. And finally, improve access to them. To this end, the BOT has embarked on a multi-pronged approach that involves a number of strategic plans. Chief and foremost is the second Financial Master Plan. This plan, which takes into account major global developments such as regional integration and global regulatory reform, will further this vision of a modern and inclusive financial sector landscape. At the same time, we are pursuing ways to improve financial system infrastructure, including through upgrades to the payment systems to promote more efficient settlement of private sector transactions.