samchain/econo-pairs-v1 huggingface dataset:
Each of the concepts poses a serious threat to the reputation and credibility of the Facility. a. Excessive leverage is now regarded as one of the causes of the financial crisis. b. The proposals for protection and a first loss tranche of 20% of the nominal debt are also laden with problems. The example of Greece demonstrates that the losses may run to 60%. There is great uncertainty about who would pay for the difference between the insured loss and the actual loss if the Greek  BIS central bankers’ speeches  1  scenario was to be repeated in other countries. Likewise, it is not clear how freely tradable protection certificates would be traded, priced, settled and, in the event of default, enforced if they were to be introduced. Such certificates would de facto be quasi CDS instruments underwritten by the official institution of a community of countries that are simultaneously waging a campaign against credit derivatives because they regard them as one of the causes of the crisis. c.  The signs of a gradual shift towards short-term funding of the EFSF are a worrying signal. The risk arising from financing assets that are by definition long-term and illiquid (primarily rescue loans) through a programme of shortterm debt instruments (liability rollover risk) is more than clear. This ALM model proved to be extremely risky during the financial crisis when the commercial paper market dried up. 4. Another uncertainty is related to the project of purchasing bonds in the secondary market.

Many objectives have been hinted at in the more than 18 months since it was created, but nothing specific has been implemented so far. Yet each of the objectives is highly important, be it the issuing of protection certificates or the establishment of the special purpose vehicle or the purchasing of peripheral countries’ bonds in the secondary market. 2. The ambiguity in the definition of the Facility’s mission is indicated by the changes made both to its guarantee structure, even though the structure remains based on the “per partes” principle, and to its rules of operation during its short lifetime. The fact that the term EFSF 2 has caught on for the new structure reveals just how fundamental these changes are seen to be. 3. Uncertainty also exists on the issue of increasing the effective capital strength of the Facility using concepts such as leverage (via an SPV), protection/insurance, loss tranches and short-term funds. From the reputational perspective, these are exceptionally controversial issues, because many market participants interpret them as a mere attempt to disguise the fact that the euro area countries do not currently have enough resources for a credible rescue plan for Italy and Spain. If they did want to create such resources, they would be putting their own debt arithmetic at risk, because under Eurostat methodology the guarantees for the EFSF’s bonds are included in the guarantors’ gross government debt. If the Facility is to provide effective assistance in stabilising the larger European economies, it will need more funding.
By taking a small step towards the normalisation of the short-term interest rate level, we are thus gradually and cautiously siphoning off excess liquidity in order not to jeopardise price stability in the long term either. Financial markets Is the economic analysis on which our inflation forecast rests in conformity with that of the financial markets? In the recent past, a flattening of the interest rate curve was observed in Switzerland. Interest rates for maturities of up to ten years in particular moved up. This shows that the financial markets have anticipated a somewhat less expansionary monetary policy. Since economic activity  2  BIS Review 39/2004  began to pick up momentum more rapidly in Switzerland than in the neighbouring countries, it became evident that interest rates would rise sooner, which enhanced the attractiveness of the Swiss franc somewhat. Nevertheless, the competitiveness of Swiss companies remains intact. At the very long end of the interest rate curve interest rates have hardly moved, an indication of consistently low inflation expectations. The markets assume that the National Bank’s monetary policy is in conformity with its goal of ensuring price stability in the long term. Monetary policy still expansionary In March 2001, we initiated a series of interest rate reductions in response to the sluggish business climate and the enduring strength of the Swiss franc. In a particularly difficult international environment with deflationary trends we allowed the three-month Libor to finally fall to a historic low of 0.25% in March 2003.

For five quarters it persisted at this level. Today’s adjustment of our monetary policy should not be seen as a changeover to a restrictive policy. Our interest rate increase is merely to be regarded as an appropriate step towards more neutral monetary conditions following a lengthy period of extraordinary circumstances. It is an indication that we view economic prospects more optimistically and that we trust the economic upswing in Switzerland to be robust. Our monetary stance remains expansionary. Every forecast and every decision is fraught with uncertainty and risks. Should the economic recovery be delayed due to unexpected events or should the Swiss franc appreciate markedly, we shall react appropriately. As in the past, the Swiss National Bank shall keep all its options open. Observed inflation June 2004  BIS Review 39/2004  3  Inflation forecast on March 2004 with Libor at 0.25% and of June 2004 with Libor at 0.5%  Inflation forecast of June 2004 (98 kb)  4  BIS Review 39/2004
In the same vein, our projections suggest that the Albanian economy will continue to grow in the medium-term horizon. Although the economic activity will suffer from the negative consequences of inflation, the economic growth of Albania is expected to remain in the positive territory. Economic growth will continue to benefit from the overall financial and economic stability in Albania, the sound balance sheets of enterprises and households, as well as the continuing support of the banking sector with credit and payment instruments. In this context, it should be emphasized that the banking sector appears sound, liquid, and well-capitalised. The continuing reforms undertaken in the past years have borne their fruits. The consolidation of the banking sector, the improvement of the lending environment, the multifaceted development of financial markets and payment systems, as well as the initiatives carried out that encourage the use of national currency, have brought about notable qualitative improvements in the stability and efficiency of the banking sector. The growth rate of credit to the private sector recorded a progressive improvement, peaking to 13.7% in August. Also, it shows a good coverage of the need of enterprises and households for long-term financing and liquid tools. The stable growth of credit and the increase in the quality of its portfolio, are crucial indicators which demonstrate the sector's support to the economic recovery of Albania.

In relative prices, the real exchange rate is now about 3.5 per cent weaker than the average since 1970, whereas it is approximately 2.5 per cent stronger than its historical average measured in terms of relative labour costs. The exchange rate in the long term There has been divergence between cyclical developments in Norway and other countries. This was most pronounced in the 1980s when we had a strong upturn while Europe was in a recession. Although the economic cycles have been somewhat more similar over the years, there is still a time divergence. While the global turnaround took place in 2000, with a subsequent reduction in interest rates abroad, the Norwegian economy continued to show a high level of activity. Towards the end of the upturn, the economy was facing labour shortages, accelerating wage growth and a sharp increase in household consumption and debt. Interest rates in Norway remained high and the interest rate differential gradually widened. There have also been other differences between cyclical developments in Norway and other countries. The expansionary period in Norway led to strong wage growth from 1998 to 2002. The upturn in the global economy at the end of the 1990s was largely driven by business investment and wage growth was moderate. Wage growth in the Norwegian business sector from 1998 to 2002 was higher than the level that over time is consistent with the inflation target and with normal productivity growth.
For social systems, this does not sound too implausible. Humans are social animals. Indeed, the feature which set humans apart from other animals is their degree of social interaction  Chart 5: The most highly cited articles on agent-based  (Harari (2015)). modelling across disciplines  This, on the face of it, modest adaptation gives rise to some fundamental changes in model dynamics. Linear, proportional responses to shocks become the exception; complex, non-linear responses the rule. Single, stationary equilibria become the exception; multiple, evolutionary equilibria the rule. I discuss these differences in the next section. Before doing so, I want to bring to life some of the uses of ABMs. These models have found widespread application across a broad array of disciplines in both the natural and social sciences. They have been used to address a  Source: Google scholar; Bank calculations. Notes: This was found by performing a Google Scholar search of the relevant term for “agentbased modelling” in each field and then using the citation count of the most highly cited paper which could be fairly and solely attributed to each distinct field. When searching for “Monte Carlo” only papers modelling distinct subsystems were considered and not those using the technique of random number generation more generally. massive array of problems, big and small: from segregating nuts to segregating races, from simulating the fate of the universe to simulating the fate of a human cell, from military planning to family planning, from flocking birds to herding (fat) cats.

Yet much of modern physics does not, in fact, deal in great laws and unifying theories. Instead it deals in great unknowns and empiric regularities, in ragged edges and qualitative maxims (Buchanan (2014)). Advances in physics these days often come courtesy of massive empirical fishing expeditions,  3  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  3  industrial-scale searches for needles in haystacks, often using large-scale computational techniques. The large Hadron collider – in essence, a massive Monte Carlo machine - would be one prominent example of these techniques in practice. So even physics, for some the theoretical pinnacle of the natural sciences, is these days far from being a precise science. Through its evolution, the intellectual bloodline of physics and the other natural sciences has been mixed and re-mixed. What we have today is a methodological hybrid, an intellectual mongrel. This has been not just a natural evolution, but an essential one in making sense of our dappled world. From Natural to Social Sciences While Cartwright’s Dappled World aims to dispel the notion that natural science is precise science, it goes further in arguing that the self-same case can be made, just as forcefully, for the social sciences. It, too, is a haphazard patchwork of theories and hunches, operating at different levels of abstraction, often loosely held together. The economic and financial world is every bit as dappled as the natural world. And, as with the natural sciences, there is real virtue in that eclectic approach.
Many jurisdictions have in place statutory regimes to allow the resolution of failing banks. But until now, the potential use of those regimes on systemic and cross-border institutions has been in doubt. G20 Leaders endorsed two proposals that will allow global systemically-important banks to be resolved when they fail, without the need for taxpayer support and without disruption to the wider financial system or real economy. The first is an agreement, catalysed by the FSB, between ISDA and an initial group of 18 global derivatives dealers. This new Protocol prevents derivative contracts being terminated disruptively in the event of a bank entering resolution. It is a crucial step to closing off the risk that foreign counterparties take their money and run. Most jurisdictions already have legislation that achieves this nationally, but for global banks national solutions aren’t sufficient. This new agreement fills the gap by extending the  weights have stabilised and the increase in leverage has been unwound. The Bank of England’s proposals are set out in Bank of England Financial Policy Committee (2014c). 5  4  Much of this has been driven by the FSB and the joint public-private Enhanced Disclosure Task Force. Across the major jurisdictions, the recommendations of the taskforce are more than half way towards full implementation. Banks in the UK have implemented 95% of the recommendations. The latest progress report is in Banziger et al (2014). BIS central bankers’ speeches  approach across borders.

The Review will explore ways to improve market transparency, competition and trading infrastructure. Principles of fair markets, codes of conduct for specific markets, and even regulatory obligations can all help. There must be clear consequences – including professional ostracism – for failing to behave properly. In global markets, these are not things that any country can achieve on its own. Global solutions are needed. That is where the FSB, working with IOSCO and others, can play a role in delivering fair and effective markets on the global stage by forging international  21  See Dudley (2014). 22  See Bank of England (2014a). 23  See FSB (2014c). 10  BIS central bankers’ speeches  agreement on common standards and structures and co-operation between authorities. International firms must play their part too. Only with such global action can we begin to move on decisively from the scandals of recent years to slowly rebuild slowly the trust of society in finance. We must build trust in other ways too, including the trust of financial markets in the safety and soundness of the firms operating in those same markets. Banks’ internal models proved woefully inadequate in the crisis, and there remain worryingly large differences in banks’ RWA calculations that cannot be adequately explained. That is why the plan the Basel Committee announced earlier this month to address these differences and to balance the risk-sensitivity and complexity of capital calculations is so important.
While the funding of green technology projects from conventional banking is encouraging, the same cannot be said of Islamic banks, based on the latest data available. The approved GTFS projects indicate that only two projects have received financing from two Islamic banks in 2013, compared to the past two years, where six and seven projects were funded by Islamic banks in 2012 and 2011 respectively, Moving ahead, due to the increasingly complex, diverse and rapidly-changing nature of green technology, there is a need to develop new and innovative financial solutions to facilitate the growth of green technology companies. The Islamic banks need to respond to these needs or risk missing the opportunities brought about by the green technology revolution. Of late, greater use of equity-based models in Islamic financial solutions has been observed. This includes participatory or equity based contracts such as Mudarabah and Musharakah that support entrepreneurial ventures. In Malaysia, the adoption of these contracts has increased from 1.4% in 2008 to 5.2% in 2012. The nature of these contracts provides immense opportunities for Islamic banks to leverage on the ‘green certified’ SMEs to use participatory contracts which advocate profit and risk sharing between banks and the borrowers. The Mudarabah contract can be modeled for various financing purposes for the SMEs, such as for one-off project financing, new start-up enterprises, investment funds and sukuk structure. The Musharakah structure is applicable for private equity and venture capital  BIS central bankers’ speeches  3  investments.

I am pleased to note that a local conventional bank and an Islamic bank have recently embarked on an innovative financing for the renewable energy sector with the launch of a green mortgage to facilitate installation of solar systems for home owners to benefit from the nation’s Feed-in Tariff plan. This positive move is an indication that banks are not only looking at corporate but also retail green financing. In providing home owners the opportunity to directly participate in the renewable energy sector, this distinctive financing also helps to boost investment and awareness on green technology in Malaysia. This is an exciting prospect for further achievements in the field of renewable energy, one which provides Islamic financial institutions the opportunity to take such initiative, in support of the government’s aim to be environmentally sustainable. The sukuk market, which is a high growth segment in Islamic finance also has an important role in supporting the growth of the green technology sector. Sukuk has become an important source of funding for long term development projects, ranging from infrastructure building, healthcare, transportation, telecommunication to education. The increasing role of the sukuk market in financing green and renewable energy projects illustrates the appeal of Islamic finance towards the growing socially responsible investment, sustainable investments and ethical finance. There is strong compatibility between sukuk and funding of green projects, which usually require large capital outlays with long gestation periods.
Is there a risk that the Great Stability has conferred a golden halo on the Committee which is only partly deserved? And that a more turbulent set of events could cause that halo to slip, and possibly trigger a sharp loss of credibility? The MPC clearly cannot afford to be complacent. And we – and you - need to be realistic about what monetary policy can – and cannot - achieve. That said, I am confident that our present policy framework does have the capacity to withstand more turbulent times, should they materialise. After all it was designed for them. 6  BIS Review 116/2006

The two recent crises have brought to fore the issue of food insecurity that had been brewing under the surface. Chronic hunger, child and mother malnutrition, and pervasive poverty, always features of poorest members, have been exacerbated by the surge in global food prices that has pushed many more millions into poverty, even in some middle-income countries. The international community has to rise to the challenge. In this connection, we welcome the IMF’s new food shock window as a part of its emergency support facilities that should be accessible to all eligible members in an evenhanded manner and with the same sense of urgency. The sad plight of the Afghan people should not be forgotten. Afghanistan is facing the highest incident of insufficient food consumption in the world, with 90 percent of households, and an even higher percent of households headed by women, are facing insufficient food consumption. Close to 4 million Afghan children are acutely malnourished. It is difficult to imagine how long and how far this situation could continue. Going forward, we all bear responsibility of putting the world economy back on a sustainable and steady track. The expectation is for the AEs to maintain the delicate balance in the inflation-growth trade off, recognizing the significant negative spillovers of policy mistakes, in either direction, as they try to lower inflation and keep inflation expectations anchored. While we will all benefit from lower inflation, we cannot afford an overtightening of monetary conditions when the world is at the cusp of a serious recession.
Nevertheless, the aim is to lift the special reserve requirement as soon as conditions warrant it and that it will not, as a general rule, be used under normal conditions. Even so, the Central Bank has considered it important to be able to activate it if the need arises. The special reserve requirement would then be a third line of defence, to support conventional economic policy and microand macroprudential tools. In order for this to be possible after the capital controls have been lifted in full, a new statutory foundation (other than the Foreign Exchange Act) must be found for the special reserve requirement, which is primarily a monetary and macroprudential policy instrument. Furthermore, the efficacy of the special reserve requirement must be ensured once speculative derivatives trading in krónur has been re-authorised, as full liberalisation implies. The Central Bank is currently reviewing the technical foundations for the special reserve requirement and preparing proposals for statutory amendments pertaining to its application. Exchange rate fluctuations The new issue of Monetary Bulletin contains a Box on fluctuations in the exchange rate of the króna in international context. That article presents several points that should be borne in mind in any discussion of monetary policy and possible modifications to the monetary policy framework, including exchange rate policy. They are as follows:        Short-term exchange rate volatility increased just after the capital controls were lifted, as had been expected and as the Monetary Policy Committee had pointed out in advance in its statements.

The first entails maintaining price stability and the second involves promoting a safe and efficient payment system, i.e. contributing to financial stability. In addition, if it is possible to do so without creating a conflict with the other aims, we shall also take into account other aims of economic policy, such as economic growth and employment. Maintaining price stability means in more concrete terms that the Riksbank has set an inflation target for its monetary policy. The rate of price increase in terms of the consumer price index, CPI, shall be limited to 2 per cent a year with a tolerated deviation interval of +/- 1 percentage point. The fact that deviations from the target are tolerated, within a set interval, is because monetary policy is not sufficiently precise to be able to bring inflation to exactly 2 per cent all of the time. However, the deviations must not be too large, nor of long duration. The Riksbank mainly endeavours to influence inflation by raising and lowering its key rate - the repo rate. The aim is to subdue or stimulate demand in order to affect the balance between supply and demand in the economy, and thereby resource utilisation and inflationary pressure. An adjustment in interest rates affects the cost of borrowing and thereby also demand for housing and households’ demand for primarily durable goods. The speed and strength of the impact of these interest rate adjustments to some extent depend on household indebtedness and asset holdings, for instance, housing.