samchain/econo-pairs-v1 huggingface dataset:
The sub-standard credit crisis in the US revealed that individuals in most cases did not manage to pass this test. Consequently, the debt load on individuals grew even heavier, while access to crediting became tighter, resulting in a big risk for their financial future. A similar analogy may be drawn for lending in foreign currency in some Eastern European countries. Secondly, financial education should be seen as a public good that brings about positive externalities to the society. It not only increases individuals’ financial welfare, but also affects directly economic policy efficiency undertaken by relevant authorities. The more-educated the public, the higher economic policy efficiency is. Maintaining inflation and economic activity under control is almost impossible in a society ailing from financial illiteracy. Macro-economic balances are achieved and maintained through monetary and fiscal policies instruments. The society needs to be aware of these instruments, understand them, evaluate stimuli and incentives, and properly respond to them. The important role of consumer behaviour for the policies success is clearly evidenced in the “rational expectations” theory. A simple intuition behind this theory is that rational individuals shape their expectations using the available information optimally. They respond to new information by adopting their behaviour to maximise welfare. In this case, individuals “equipped” with financial literacy read and understand developments in economic policies and respond to them rationally. This mutual understanding would drive the economy towards the desired direction.

Mr. Carse reviews the impact of the Asian crisis on the Hong Kong banking sector Speech by the Deputy Chief Executive of the Hong Kong Monetary Authority, Mr. David Carse, at the Sixth Conference on Pacific Basin Business, Economics and Finance in Hong Kong on 28/5/98. I am pleased to have the opportunity to talk to you about the impact of the Asian financial crisis on the Hong Kong banking sector. The Asian financial crisis is one year old this month, though this is a birthday that we do not want to celebrate. The crisis can be dated from late May when the Thai Baht came under severe pressure. A renewed attack in early July, while we were celebrating the success of the Handover in Hong Kong, led to the floating of the Baht, which promptly plunged in value. The contagion then spread to neighbouring economies, and although Hong Kong was for a time immune, it eventually reached us too. Explaining the origins and causes of the Asian crisis has become a major growth industry and I have no intention of adding to the debate today. Suffice to say that one point on which almost all the commentators are agreed is that weakness in banking systems in the region has been one of the main reasons which explains the intensity of the crisis and the speed with which it took hold.
Demand for goods was high during the pandemic, underpinned by expansionary monetary and fiscal policies. At the same time, the pandemic led to supply chain disruptions. In sum, these factors have led to rapidly rising prices for globally traded goods. Freight rates have also risen sharply. Supply problems have been amplified by Russia’s invasion of Ukraine. The invasion has also led to soaring energy prices. Gas and electricity prices have continued to increase through summer and could push up inflation abroad in the short term. Other prices, some of which rose sharply following the invasion, have recently edged down. These include oil prices and prices for metals and agricultural products. Global supply chain disruptions also appear to have eased somewhat. Because of the high level of inflation, central banks in many countries have raised policy rates and signalled further rate increases ahead. Several central banks have raised rates by larger increments than usual. High inflation and rising interest rates could dampen growth among many of Norway’s trading partners ahead. In Norway, prices for many imported goods have risen sharply. But external developments are only part of the story. The rise in prices for domestically produced goods and services has also accelerated in recent months. One of the main reasons for this is the pressures in the Norwegian economy. Chart: The labour market is tight We feared for some time that unemployment would become entrenched at a high level in the wake of the pandemic.

In just under a year, we have raised the policy rate five times. This means higher interest expenses for two out of three households. Both in terms of hard cash and as a percentage of disposable income, interest expenses will increase most for households with the highest incomes, which is also the group with the highest debt to income ratios. As things stand now, the rise in prices will be notably higher than wage growth this year. Indebted households will face both higher interest expenses and higher electricity and food prices. Many households will be facing a tighter financial situation, and I am fully aware that some of them will also be facing a financial struggle. Most households will be able to cope with higher interest rates on their loans. Unemployment is very low. Many will be able to cut down on other expenses or draw on their savings. Chart: Monetary policy meeting on 17 August We could have decided to raise the policy rate more gradually. But then we would have run the risk of inflation becoming entrenched at a high level. That would have made it more difficult to bring inflation down and could have required a sharper tightening of monetary policy somewhat further out, increasing the risk of an economic downturn. Inflation has surprised to the upside in recent months. This is why the policy rate has been raised somewhat more rapidly than signalled earlier. And the economy might evolve differently from what we have envisaged. The level of uncertainty is high.
The twelve-month change of the total PCE deflator was just 0.3 percent in February, with the core PCE deflator at just 1.4 percent. Despite these low readings, my expectation is that inflation will begin to firm later this year. Importantly, most of the impact from the decline in energy prices that has weighed down overall inflation is likely over. Although the appreciation of the dollar may cause some further softness in import prices, the continued decline in resource slack as the economy expands should push in the opposite direction. We are already seeing some firming in rent inflation as rental vacancy rates have returned to more normal levels and employment and income growth have strengthened. Longer-term household inflation expectations have been well maintained through this period of very low inflation as shown in our Survey of Consumer Expectations. This should reinforce the effect of a higher level of overall resource utilization in slowly pushing inflation back towards the FOMC’s 2 percent objective. Monetary policy As the FOMC has consistently communicated, decisions on monetary policy, such as the timing of lift-off will, depend on how the economic outlook evolves – in particular with respect to the labor market and inflation. As I have discussed, the labor market has improved substantially over the past few years and I expect to see inflation begin to firm later this year.

In part, this is out of simple self-interest, since the international effects of Fed policies can spill back onto the U.S. economy and financial markets. In part, too, it reflects a sense of special responsibility we have given the dollar’s role as the international reserve currency. We are and will remain attentive to the risk that the onset of Fed policy normalization could bring a new round of market pressures on EMEs. Yet I think there are good reasons to think that this adjustment will prove manageable and not be very disruptive. First, many EMEs appear to be better equipped today to handle the Fed’s prospective exit from its exceptional policy accommodation than they were during past tightening cycles. This reflects the fundamental reforms that EMEs have put in place over the past 15 years, as well as the hard lessons learned from past periods of market stress. Among the positives are: •  The absence of pegged exchange rate regimes that often came undone violently during periods of acute stress;  •  Improved debt service ratios and generally moderate external debt levels;  •  Larger foreign exchange reserve cushions;  •  Clearer and more coherent monetary policy frameworks, supporting what are now generally low to moderate inflation rates;  •  Generally improved fiscal discipline; and  4  BIS central bankers’ speeches  •  Better capitalized banking systems, supported by strengthened regulatory and supervisory frameworks.
Of course, access to data should always be in line with the authorities’ mandate and with the CPSS-IOSCO guidance, issued last month, on authorities’ access to trade repository data. However, even if this is warranted, privacy laws, blocking statutes and indemnification clauses which are in place in several jurisdictions restrict effective access to the detail of OTC derivatives transactions. Another important issue is whether authorities will be able to aggregate data across trade repositories and jurisdictions. Where there is more than one authorised repository in a single jurisdiction, it will be necessary to aggregate data across repositories. This in itself will be challenging. If no central entity is responsible for such aggregation, it could well mean that a plethora of public authorities with an interest in accessing data will need to conduct this task. This would hardly be efficient. It gets even more complicated if data, for example for all entities of a large financial group which is present in several markets, have to be aggregated across jurisdictions, as the level of information reported to repositories is different. A lot of work has already been done to address these issues. The January 2012 CPSSIOSCO report on OTC derivatives data and reporting and aggregation requirements identified the Legal Entity Identifier (LEI) as an essential tool for aggregation. Good progress has been made in the development and implementation of the Global LEI System.

396, 2018 6 Federal Reserve Bank of Boston and Massachusetts Institute of Technology Digital  Currency Initiative, Project Hamilton Phase 1 Executive Summary, February 3, 2022 7 Vice Chair for Supervision Michael S. Barr, "Managing the Promise and Risk of  Financial Innovation," remarks at D.C. Fintech Week, October 12, 2022 8 The White House, Executive Order on Ensuring Responsible Development of Digital  Assets, March 9, 2022 9 Fedwire® Funds Service Volume and Value Statistics , FRBservices.org  5/5  BIS - Central bankers' speeches
And this, of course, means that movements in interest rates have, everything equal, a bigger (and may be less predictable) impact on the financial system, credit aggregates and asset prices. A lot of work remains to be done to precisely quantify that channel and disentangle its effects from those of the more “traditional” credit channel. Nevertheless, it is clear that, in the future Central Banks will need to pay greater attention to that specific impact of their decisions on the financial system and the economy. The risk taking channel provides the best rationale for “leaning against the wind” when financial imbalances tend to grow. 4/ – the last question is especially topical here, in Korea. How much should we care about the “global monetary stance”? This is not an easy concept to define, or to use from an  4  BIS Review 76/2010  operational point of view. On the other hand, we know that some determinants of price stability are global: they depend on the combined effects of our national policy stances. Put it differently, there are externalities associated with our different monetary policies. For instance, divergences in monetary policies, however justified by national circumstances, can fuel capital flows and create financial imbalances. In theory, those problems can be dealt either with total exchange rate flexibility or , on the contrary, fully sterilized interventions and the dynamic use of foreign exchange reserves. Neither of those polar solutions appear fully attractive or feasible. This is why the search for new “financial safety nets” i.e.

  systemic risk should be contained via the creation of resolution mechanisms for financial institutions as well as promoting more resilient market infrastructures, such as CCPs for clearing and settlement of derivatives products. The financial crisis also gives us the opportunity to think about Central Banks fundamental task: the making of monetary policy. Amongst the many questions currently asked in academic and policy making circles I will select four: 1/ – the mandate: recent proposals have been made to assign monetary policy additional financial stability objectives, possibly by amending Central Banks mandates. I see those proposals as misguided. First, adding a financial stability objective at the same level as price stability could weaken the latter. Second, if price stability is not a sufficient condition to ensure financial stability, it is certainly a necessary one. And, finally, current mandates seem absolutely appropriate to allow Central Banks to fulfil all their responsibilities. Looking, more specifically at the Eurosystem we have a “hierarchical” mandate, giving clear and unambiguous priority to achieving price stability; and, once this objective has been met, it allows us to pursue other goals. Financial stability easily fits into the set of those “secondary” objectives. This clear priority was understood by the markets. It was most apparent in our decision to raise policy rates in July 2008. It was essential to give us the necessary leeway to act decisively later – when the financial system was in danger of paralysis – without compromising our credibility.
In this respect, the ACP, which maintains close links to the Banque de France and operates under its aegis, is naturally particularly attentive to and involved in all these matters. This is why we are accompanying the prudential reform with more general and macroeconomic reflections on the financing of the economy, and in particular on credit developments and the relationship between banking regulation and monetary policy. The new liquidity ratios therefore cannot be applied as they stand as they do not take into account all their consequences and interactions beyond the prudential objectives themselves, which include in particular the functioning of the interbank market, the level of intermediation or the conditions  2  BIS central bankers’ speeches  of monetary policy implementation. I therefore believe that the work underway on the calibration of these ratios is of the utmost importance in order to properly manage all the consequences of these new rules. * *  *  Before handing the floor to Danièle Nouy, Secretary General of the Autorité de contrôle prudentiel, I would like to conclude with a few words on recent developments in Europe. You are aware of my commitment to full harmonisation in Europe: this “single rule book” is the only way to achieve a truly efficient single market. You are also aware that the negotiations between the European Council and Parliament might reintroduce the national options that the Commission had removed.

In response to these developments, the international community adopted in 2009, under the impetus of the G20, an ambitious reform programme including Basel III, which is a key element for the banking sector. Indeed, a banking system that is more robust as a whole and capable of absorbing major shocks is vital to avoid the repetition of such chain reactions in the future. In this respect, despite the delay in the reform agenda in the United States, Europe must clearly press forward: the credibility of our banks and our economies is at stake. Basel III is naturally based on Basel II which establishes the current capital adequacy rules. However, Basel III goes further than merely changing and updating the existing rules. –  Basel III indeed considerably strengthens the capital requirements that banks must meet, but this reform is more extensive in that it significantly enhances the prudential framework: in addition to capital requirements, it establishes liquidity requirements, and a leverage ratio is set to be introduced in the medium term. From this point of view, Basel III is a far-reaching reform of banking regulation. BIS central bankers’ speeches  1  –  Furthermore, and most importantly, I believe that Basel III is a major step forward in that it leads to a much closer interaction than has been the case to date between the individual supervision of banks, known as microprudential supervision, and the overall supervision of the banking and financial system, or macroprudential supervision.
This will surely require a smoothly functioning credit channel, of such importance in European economies. The European Central Bank’s strategy review In this third part of my address I will take a longer-term perspective and reflect on the changes that are occurring in the conduct of monetary policy in the advanced economies, which have prompted the ECB, like other central banks, to review its strategy. In the years leading up to the 2007-2012 crisis, which in our case coincided with the initial years of the ECB’s existence, a broad consensus took hold in the advanced economies regarding the role and functioning of central banks. Specifically, according to this view, the monetary authorities should act as independent entities, not directly controlled by governments, with a clear mandate to promote price stability and, in some jurisdictions, such as the United States, full employment. 11  The price stability mandate is normally expressed as a numerical inflation target, frequently 2% or, as in the case of the ECB, a rate below, but close to, 2%. To achieve its price stability target, the central bank adjusts the general level of interest rates on the funding raised – via bank loans or in the debt markets – by agents in the real economy (businesses, households and governments). Although the central bank controls the nominal interest rate, it is the “real” interest rate – that is, the nominal rate less expected inflation – that is relevant for households’ and businesses’ spending decisions.

Domestic inflationary pressures, including wage pressures, have so far remained reasonably subdued and it is crucially important that that should continue. But it does explain our caution in moving interest rates down. Somewhat similar concerns explain my reaction to recent speculation that the Government would now make a strong push for early entry to the euro. I take no position on the five economic tests which are a matter for the Chancellor. But I do see the present external environment – and in particular, as I said elsewhere last week, the euro's present weakness – as a potentially serious obstacle to early entry. So I very much welcome the considered and cautious approach to making the assessment of the five tests, which the Chancellor set out this evening. Most people agree that sterling's exchange rate on entry to the euro would need to be substantially lower than our present rate, which few would regard as sustainable in the medium and longer term. Given the euro's present general weakness, that could come about in either of two ways. If, achieving what was considered to be an appropriate entry rate against the euro – whatever that was precisely – involved a substantial depreciation of sterling's overall, effective, exchange rate (that's to say sterling's rate against other currencies generally), that would be bound to put strong upward pressure on our domestic rate of inflation.
Charles Bean: The UK economic outlook Speech by Mr Charles Bean, Deputy Governor for Monetary Policy of the Bank of England, at the Society of Business Economists Annual Conference 2013, London, 22 October 2013. *  *  *  Good morning! It is now more than five years since Lehman Brothers collapsed, ushering in the worst phase of the financial crisis, followed by a sharp and synchronised contraction in global economic activity. While growth was reasonable for the first year after output troughed in the middle of 2009, the pace of expansion since then has proved disappointingly weak. Just how disappointing is illustrated by Chart 1, which shows our August 2010 Inflation Report projection for GDP growth, together with the ONS’s present estimates of what actually happened. It is not a pretty sight. Whereas our central expectation was for a cumulative rise in output of 9% over the following three years, the actual rise is presently estimated to have been a miserable 2%. And we weren’t alone. The performance of other forecasting outfits was pretty similar. At a global level, a similar story can be told. The IMF has consistently revised down its projections for global growth. Back in October 2010, it was forecasting a cumulative expansion in output of 14% over the following three years, whereas the actual figure was just 10%. Indeed, the Fund has revised down its world growth forecast for 2013 in every subsequent World Economic Outlook: it now expects just 2.9%, against the 4.6% it projected three years ago.

The risks to the banks, particularly credit risk, will diminish. But on the other hand, the risks will instead be assumed by the institutions and the general public which invests in these funds. In the event that the value of the funds decreases the investors will suffer. This may in turn affect their behaviour in the economy, for instance it may reduce their consumption and also the value of property. We have not yet seen any such situation so the outcome is unclear, but we should not neglect the risks. Another form of transferral of risks is taking place in the financial sector. Through the use of new instruments and structures it has become easier to transfer and redistribute risks. For instance, a bank may deem that it has too much exposure to one customer or to a sector. It could then divest itself of this risk through credit risk derivatives or by securitisation. The advantage from a financial stability view is that the risks become more widely dispersed between the various holders and that the individual bank can build a well-balanced portfolio. But at the same time a new risk has emanated – the risk that the new holder of the risk cannot fulfil his obligations. In the event that there is a credit default, the seller of the derivative to the bank may not have the necessary financial means. Or, there could be an unclear legal position about the risk transfer agreement.