samchain/econo-pairs-v1 huggingface dataset:
This means there is a fiscal honeymoon in the first year of higher prices that creates the illusion for policymakers that there is additional room in the budget to spend. It is only during the next year or two as costs adjust and indexation mechanisms start to work that the painful reckoning comes due. Caution is therefore needed when any additional fiscal support measures are designed. Ongoing research at Eesti Pank has attempted to estimate the extent to which an unexpected rise in inflation would affect fiscal balances in the euro area using data from the mid-1990s to 2021, and has found that inflation has a sizeable positive effect on the fiscal balance as a percentage of GDP7. The positive effect comes both from the expenditure side of the budget and from the revenue side. This is particularly true when there is a significant positive inflation surprise, meaning when actual inflation turns out to be higher than expected. Governments in Europe increased their spending in 2022 so they could fund energy subsidies, invest in their defence forces and provide the help needed by Ukraine. Despite this extra spending though, the fiscal picture has remained relatively benign in most countries and in the euro area overall. This also applies to Estonia, where preliminary data suggest that the fiscal deficit for 2022 will be around 1.2 per cent of GDP. This benign outcome can in large part be ascribed to the high inflation that we saw last year.

3  All speeches are available online at www.bankofengland.co.uk/speeches  3  But such big transitions take time. Workers generally cannot move seamlessly to new jobs in which they can be productive. The benefits of the First Industrial Revolution, which began in the latter half of the 18  th  th 7  century, were not felt fully in productivity and wages until the second half of the 19 . th  Indeed, at the start of the 19 century in the UK, despite a sharp pickup in productivity, wage growth stalled and the labour share fell – a period dubbed “Engels’ pause”. A Framework for Examining Technical Change and the Labour Market 8  To understand such dynamics it helps to have a common conceptual framework. The impact of technological change on employment and wages can be depicted as the sum of three major effects: destruction, productivity and creation. The destruction effect is the focus of most alarmist accounts: the replacement of labour by technology, with an associated reduction in labour demand, wages and employment. Less commonly acknowledged are the positive effects on aggregate demand of new technologies, what can be termed the productivity effect. This effect is analogous to the classic Say’s law in which supply creates its own demand. Technology makes those in work more productive, in time boosting wages and increasing the returns to those who own capital. This greater income boosts aggregate demand and leans against the destruction effect.
9  All speeches are available online at www.bankofengland.co.uk/speeches  9  This growing understanding will be crucial if we are to be able to identify and manage risks from this sector as it grows in size and spreads geographically. Greater understanding between national macroprudential authorities and their market regulator counterparts is important. But given the international nature of these markets, and indeed the benefits they can have in diversifying risks across borders, it is increasingly only at the international level that we can really get our arms around the risks and how to mitigate them. Fragmentation This brings me to my final set of risks – the potential risks not from market-based finance but to market-based finance that could arise from fragmentation and a rolling back and national ring-fencing of the global integration that has taken place in these market. Post-crisis, not only was market-based finance important for plugging the gap that banks were leaving, it also proved important for maintaining the flow of financing between countries. Cross-border bank lending fell sharply in 2009 as banks not only stopped lending but actively retrenched. International investment in debt and equity securities was substantially more stable (Chart 4). 19  My concern is of course heavily coloured by Brexit and by the prospect that it raises of fragmentation in European financial services.

12  All speeches are available online at www.bankofengland.co.uk/speeches  12  Chart 1: Growth of market-based finance  Chart 2: Growth in open-ended fund assets worldwide and flows  USD trillion 200 180  Total net assets Flow Residual (valuation)  $ trillions 22 20 18 16 14 12 10 8 6 4 2 0  160 140 120 100 80  60 40 20  Equity  Bond  2008 2009 2010 2011 2012 2013 2014 2015 US  Euro-Area  China  UK  1.00 Q4 2008  Others  Q2 17  Q4 2008  9.00  Q2 17  Source: FSB Global Shadow Banking Monitoring Report 2016 dataset Notes: Data are for 21 participating jurisdictions and the Euro Area, Data include insurance corporations, pension funds, other financial intermediaries and financial auxiliaries. Source: Bank of England Financial Stability Report, Nov-17 Notes: Adjusted for a break in the series due to expanded coverage in 2014 Q4 on best-endeavours basis. Including money market funds but excluding funds of funds where possible. In 2008 Q4, bond and equity funds accounted for half of all openended funds; in 2017 Q2 it was two thirds. Chart 3: Impact of a 10 basis point increase in yields on sell volume  Chart 4: Gross capital inflows to advanced economies by instrument  % change in sell volume  Procyclical  Rest of sample Taper tantrum  Countercyclical Dealer banks  Non-dealer Insurance banks and Companies sec.
We risk either being blown onto the Scylla of excessive domestic exuberance or sucked down by the Charybdis of external weakness. But we remain on watch, ready to tack as conditions change. My Lord Mayor, yours is a great office with a great tradition. You – and the Lady Mayoress – have maintained that tradition this evening by entertaining us in such splendid style. And you have maintained that tradition, too, in your tireless promotion of the City of London – in its civic affairs, in its business activity, and in its engagement with our surrounding communities. In this last connection I look forward to joining with you and Howard Davies next Wednesday at the Heart of the City Carnival to celebrate, and encourage, the City's community and charitable involvement; and I hope that some of your guests this evening might care to join us at the Guildhall for that occasion. But in the meantime I thank you for your gracious hospitality and I would ask all your guests to rise and to join me in a toast to your good health. My Lords, Ladies and Gentlemen, the Toast is "The Lord Mayor and the Lady Mayoress, David and Val Howard". BIS Review 56/2001  3

I recall that not too long ago (about 18 months or so) Stanbic Bank took the very bold step of entering the community banking sector by adding Matero Branch to the bank’s network and thereby brought superior banking services to the bottom end of the market. This was later followed by the opening of the Solwezi Branch, in what is now regarded as the new Copperbelt. Ladies and Gentlemen, what has particularly caught my attention is that Stanbic Bank expansion has gone in tandem with the introduction of ATM services to these markets via the ‘state-of-the-art’ Stanbic Auto Bank to improve service delivery to our people. This is commendable. Mr. Chairman, Ladies and Gentlemen, one of the major concerns that the Financial Sector Development Plan, and the Bank of Zambia in particular, have identified is the spectre of the unbanked public that hangs over the Zambian economy. The problem with having a greater number of our population being left out of the banking system is that it discourages the culture of saving and removes the un-banked population from the formal structure of the financial system. This ultimately leads to reduced funds being available in the economy for investment purposes. Mr Chairman Sir, The opening of Mazabuka Stanbic branch is therefore particularly significant because it will not only address the problem of catering for the un-banked population, but also tap the tremendous business growth potential that this town offers.
Andrew G Haldane: The debt hangover Speech by Mr Andrew G Haldane, Executive Director, Financial Stability, Bank of England, at a Professional Dinner, Liverpool, 27 January 2010. *  *  *  I am grateful to Marnoch Aston, Simon Brennan, John Carmichael, Geoff Coppins, Sebastiano Daros, Richard Davies, John Elliott, Simon Hall, Salina Ladha, Jack McKeown, Laura Piscitelli and Nick Vause for comments and contributions. Economists have not covered themselves in glory recently when it comes to forecasting. Tonight I want to put that right by making a prediction that is big, bold and frighteningly precise. Liverpool Football Club will finish this season third in the league. Manchester United will top the table followed by Arsenal. Having been top for most of last year, Chelsea will finish the season near the foot of the table. Newcastle United, meanwhile, will finish fourth. I know what you are thinking. Even by economists’ standards, some of those predictions sound implausible. Liverpool third? So let me explain. The season I have in mind is not the English football season; it is the financial reporting season. And the table to which I refer is not the Premiership points table; it is the league table of English football club debt 1. Rarely has securing a slot in the top four held less allure. Debt is the subject of my talk tonight. We are living through an extraordinary period for the economic and financial system.

If contingent capital became more widespread, banks’ capital ratios would be automatically stabilised over the cycle, lowering the chances of future banking crises. As several academics have argued, the same basic principles could be applied to the debt contracts issued by households, companies and even sovereigns. Take a typical mortgage contract. A rise in the value of a property relative to the loan gives the borrower equity against which they can borrow. This provides an incentive to trade-up, raising house prices and generating further equity. This amplifier operates symmetrically, as falling collateral values reduce refinancing options and drive down prices. Economists call this effect the financial accelerator. 18 It adds to cyclicality in credit provision and asset prices. US economist Robert Shiller has suggested it might be possible to devise mortgage contracts that slow, or even reverse, this financial accelerator 19. Instead of being fixed in money terms, imagine a mortgage whose value rose with house prices. So the repayment burden would rise automatically with asset prices to slow a credit boom and fall in a recession to reduce the chances of mortgage default. Mortgages would operate like a contractually pre-committed debt-equity swap between households and banks. They would automatically stabilise household loan-to-value ratios. By reducing the amplitude of the credit cycle, they ought to benefit both borrower and lender. Governments cannot issue equity. But this does not prevent them issuing debt with equitylike characteristics.
3  Article 7(4) of the Law of Autonomy of the Banco de España, in keeping with Article 130 of the Treaty on the Functioning of the EU, which states: “When exercising the powers and carrying out the tasks and duties conferred upon them by the Treaties and the Statute of the ESCB and of the ECB, neither the European Central Bank, nor a national central bank, nor any member of their decision-making bodies shall seek or take instructions from Union institutions, bodies, offices or agencies, from any government of a Member State or from any other body. The Union institutions, bodies, offices or agencies and the governments of the Member States undertake to respect this principle and not to seek to influence the members of the decision-making bodies of the European Central Bank or of the national central banks in the performance of their tasks." 4  In practice, the personal independence of the institution’s senior officials is sought through the arrangements in respect of appointment, exercise of mandate and stand-down from the post set in place, as a general rule, beforehand.

The corporate debt market has quadrupled since end-1996 with $ 103 billion of corporate debt securities outstanding as at end-2003. Debt issuance has increased substantially from only $ 5.4 billion at end-1996 to $ 67 billion in 2003, a compounded annual growth of 43%. The profile of debt issuers has also changed. Statutory boards used to dominate, but now form only 3% of total issuance. Instead, the debt market has a stable base of large corporates and financial institutions issuing bonds well over $ 1 billion in issue size. This has increased liquidity in the secondary market. Large international issuers such as IFC, Freddie Mac, Fannie Mae and ADB, which can tap any market in the world, have chosen to raise funds in Singapore. Treasury markets have also stayed buoyant, as Singapore remains one of the established leading global FX trading centres. The creation and hedging of structured products have boosted turnover in derivative markets. Singapore now ranks 6th globally, in OTC FX and interest rate derivatives. Reforms were also introduced to deregulate the stockbroking industry. The industry has consolidated, operating more leanly on much lower commissions. The bigger local players have expanded their product range and also expanded overseas. More foreign players have entered the market. Overall, investors have benefited from lower trading costs. SGX became the first demutualised, integrated stock and derivatives exchange in the Asia-Pacific in December 1999. It is now well placed to grow its business, and respond to developments in regional capital markets.
The first signs of the effects of the interest rate cuts appeared in the foreign exchange market. The interest rate differential against other countries narrowed. It became more attractive to borrow and less profitable to invest in the Norwegian krone. The movement in the krone exchange rate was reversed and it depreciated through 2003 and into 2004. However, the impact on the krone exchange rate has been considerably dampened because external interest rates have remained low. High prices for oil and gas and other export goods also contributed to an appreciation of the krone last year. The depreciation of the krone in 2003 contributed to restraining the fall in prices for imported goods. The effect occurred gradually. Companies and importers may have preferred to observe changes in the exchange rate over time before changing their selling prices. After several expensive wage settlements and a short period of a strong krone had weakened profitability in the Norwegian business sector, the depreciation of the krone contributed to curbing the decline in activity and employment. There is nevertheless uncertainty as to the magnitude of the impact of short-term exchange rate fluctuations because companies engage in currency hedging. There are different ways to hedge against currency fluctuations. Some enterprises buy intermediate goods in the same currency in which they sell their products. Other companies raise a loan in the same currency as that of the company’s assets. In addition, companies can hedge against currency swings in the forward exchange market and options market.

firms  Hedge Funds  10 8 6 4 2 0 -2 -4 -6 -8 -10 -12 -14  Asset Managers  Source: Czech and Roberts-Sklar (2017) Notes: Based on Zen database maintained by the Financial Conduct Authority (FCA) which includes transaction-level information on trading in sterling corporate bonds for all firms regulated in the UK, or branches of UK firms regulated in the EEA. Dataset covers the period between 1 September 2011 and 31 December 2016. Hashed/dashed bars indicate no statistically significant coefficient. Source: Hoggarth et. al. (2016) Notes: Quarterly gross capital inflows are divided by annual GDP and averaged over four quarters. 13  All speeches are available online at www.bankofengland.co.uk/speeches  13  References Adrian, Tobias (2017) ’Shadow Banking and Market Based Finance’ speech given in Helsinki Allard, J and Blavy, R (2011) ‘Market Phoenixes and Banking Ducks: are recoveries faster in market-based financial systems?’ IMF working paper Bank of England (2014) ‘Procyclicality and structural trends in investment allocation by insurance companies and pension funds’ discussion paper by the Bank of England and the Procyclicality working group Baranova, Y, Coen, J, Lowe, P, Noss, J and Silvestri, L (2017) ‘Simulating stress across the financial system: the resilience of corporate bond markets and the role of investment funds’ Bank of England Financial Stability Paper No.
Looking beyond short‐term volatility, the real question is whether this architecture will be conducive to the efficient and stable allocation of capital over the long run; or whether, on the contrary, it will lead to an accumulation of imbalances and recurrent bouts of instability. An optimistic view can be found in the “Bretton Woods II” theory, which posits that the pattern of international capital flows results from a mutually beneficial equilibrium between two groups of countries. On the one hand, emerging economies follow an export‐led  BIS Review 127/2010  1  development strategy and seek to prevent appreciation of their real exchange rates by constant foreign exchange intervention (together with capital controls). As a consequence, they accept to accumulate increasing stocks of liquid assets denominated in dollars. On the other hand, the United States is happy to receive both reserve inflows to finance its deficits and cheap imports to fuel their demand for consumption goods. Such equilibrium is stable by virtue of the mutual benefits it brings to both groups. Moreover, the longer it lasts, the more impossible it is to change since both groups become mutually dependant through the stock of claims and debts they have reciprocally accumulated. This “financial balance of terror” is supposed to keep the system in place for a long period of time. A more recent, and pessimistic, explanation is provided by the “asset shortage” theory according to which the world has a shortage of liquid and riskless assets.

It is notable that countries, such as Korea, which had very significant amounts of reserves prior to the crisis and a flexible exchange rate regime, nevertheless felt the need to enter into currency swaps with the Federal Reserve. During the crisis, foreign exchange reserves were used as a tool for internal – as well as external – financial stability. National central banks, especially in Latin America, acted as dollar lenders of last resort to their domestic banks. This function will develop in the future and is bound to impact the demand for reserves. Financial openness and integration means that domestic banks will engage increasingly in foreign currency operations. In turn, the expansion of international balance sheets will increase the potential demand for liquidity support in the event of shocks. This trend should be accepted as a normal consequence of open capital markets and international banking, together with the predominance of a very limited number of currencies in international finance. One general lesson can be drawn from that experience. In the current environment, there is an inescapable trade‐off between financial openness, on the one hand, and the need for protection against external financial volatility, on the other. An essential question for the future is whether we can improve this trade‐off and avoid the costs and distortions associated with growing amounts of foreign exchange reserves and/or further restrictions on international capital mobility. International financial stability: what should be done? Looking at the next decade, a number of different developments in the international financial system are possible.
Others used price-based measures, such as swing pricing and redemption fees, to ensure trading costs were borne by redeeming investors. [19] However, if applied systematically in a stress scenario, such measures could even further limit the ability of firms and other financial institutions to raise liquidity. For instance, if MMFs had broadly suspended redemptions, some insurance corporations and pension funds may have found themselves unable to meet margin calls on their derivative exposures. Widespread suspensions may also have had adverse effects on the confidence in the wider financial sector, possibly amplifying risk-off behaviour. The role of monetary policy in stabilising financial markets Forceful monetary policy action, on both sides of the Atlantic, ultimately filled the void that was left by asset managers and regulators having limited liquidity management tools to curb systemic stress. The fast rise of the non-bank sector, however, meant that traditional monetary policy tools, such as increasing the money supply to banks and accepting broader collateral, were not sufficient. A frozen money market impaired the intermediation of liquidity from banks to non-banks. [20] In such disrupted conditions, central banks face two broad options. They either provide liquidity directly to non-banks – that is, they expand their role as lender of last resort – or they purchase large quantities of illiquid assets. A priori, there are no fundamental reasons to dismiss either of the two options.

Senior Management The Federal Reserve published a proposal on corporate governance that states that senior management is responsible for the execution of strategy and day-to-day operations consistent with the firm’s stated risk appetite, ensuring safety and soundness, overseeing business lines and risk management, and ensuring compliance with internal policy, procedures, regulations and laws.8 Development of a firm’s cultural capital links directly to these core responsibilities and is evidenced by behavior throughout the firm. To address these concerns and build cultural capital, some firms have established culture and conduct committees or groups that meet regularly to review cultural indicators and assessment efforts. Providing these groups with sufficient stature, developing the proper infrastructure to support them, and defining clear roles and responsibilities are essential for success. It is critical that there is alignment between the board, senior management, and middle and lower management on issues of conduct and culture, as employees take cues from their direct managers even more than the tone from the top. The performance management framework established by senior management sets powerful incentives to influence conduct and culture within a firm.9 Financial incentives, however, are not the only drivers of culture and conduct. Employees alter their behavior based on a variety of formal and informal, intrinsic and extrinsic motivations. Intrinsic motivations could include growth opportunities, independence, power, and social factors, while extrinsic motivations could include pay, benefits, profit sharing, or other forms of awards.