samchain/econo-pairs-v1 huggingface dataset:
That statement indicated that, in principle, a successful single currency within a single European market would be of benefit to Europe and to Britain. But, in order for EMU to be right for Britain, the economic benefit should be clear and unambiguous. If, in the end, a single currency is successful, and the economic case is clear and unambiguous, then the government believes Britain should be part of it. The statement identified five economic tests that define whether a clear and unambiguous case can be made for the UK to join EMU. These are: whether there can be sustainable convergence between Britain and the economies of a single currency; whether there is sufficient flexibility to cope with economic change; the effect on investment; the impact on the UK’s financial services industry; and whether it is good for employment. 11. Applying these five economic tests has led the government to the conclusion that British membership of a single currency in 1999 could not meet the tests, so that joining at the start of EMU is not in the country’s economic interests. The government will therefore be notifying our European partners, in accordance with the Maastricht Treaty, that we will not seek membership of the single currency on 1 January 1999; and, barring some fundamental and unforeseen change in economic circumstances, making a decision during this Parliament to join is not seen as realistic.

As a result, the Norwegian financial system only had limited exposure to the subprime mortgage market – notwithstanding some municipalities in the northern part of Norway that got involved, with a less than full understanding of inherent risks. Our banks were therefore relatively unaffected by the recent crisis when it comes to credit risk. The downturn that our economy experienced in 2009 was modest in relation to other countries – but this is of course also due to the composition of our production and exports, with oil accounting for a large share. More than two decades ago, in the early stages of the Norwegian banking crisis, Norges Bank provided a large liquidity loan to a savings bank. The bank, however, soon became insolvent. We learnt how fast illiquidity can turn into insolvency. At the time, the bank was rescued partly by Norges Bank writing off its loan. This incident showed that it was important to clarify the division of responsibilities between the central bank and the fiscal authorities. The Government Bank Insurance Fund was established, which would be able to extend loans and inject capital into distressed banks in the future. The aim was to make sure Norges Bank avoided intruding into the arena of the fiscal authorities. It is not up to an independent central bank to spend taxpayers’ money. When Norwegian banks’ funding dried up in the aftermath of the Lehman Brothers collapse, government bonds were swapped for covered bonds issued by banks.
The FDIC has also guaranteed bank  BIS Review 28/2009  3  and bank holding company funding through its Temporary Guarantee Liquidity Program. As a result, bank term funding spreads have narrowed a bit this quarter. However, while the Federal Reserve can provide liquidity to the banks and dealers and the FDIC can reduce counterparty concerns via its guarantee program, these steps cannot force banks and dealers to on lend these funds to their customers. This is where several new initiatives may show the way forward. First, the Federal Reserve has begun to bypass the banks and dealers, which are balance sheet constrained, and instead has begun to provide liquidity directly to borrowers. One of these programs, the Commercial Paper Funding Facility or CPFF has been up and running since late October. Under the terms of the CPFF, the Federal Reserve offered to purchase A1-P1 rated commercial paper at 84-day maturity from issuers. Although A1-P1 rated paper is the highest quality stuff, it makes up almost all of the CP market. The only catch is that the CPFF will only buy at rates that are quite high compared to the rates one would expect in the market during normal times. The Fed has to charge a high rate and up-front fees to provide some equity in the fund to offset potential credit losses. This facility has worked extremely well in restoring market function in the commercial paper market. Initially, there was a surge of issuance into the facility.

It cannot therefore be argued with great conviction that it is possible to identify one particular interest rate forecast that provides the indisputably "best" trade-off in monetary policy. More often than not, there will be a number of possible interest rate paths that might be said to provide a reasonable balance, in view of the uncertainty involved. The results of balancing this trade-off are published in the Inflation Report in the form of a chart that presents central projections for the interest rate, the exchange rate, inflation and capacity utilisation in the economy. The formulation of a precise inflation target, our projection for the interest rate 3 - 4 years ahead and our desire to achieve a balance between output and inflation stability may perhaps give an impression of excessive optimism with respect to managing the economy and invite a repeat of earlier attempts to fine-tune the economy. But it is important to bear in mind the lessons drawn from the 1970s and 1980s, i.e. high stabilisation policy ambitions may lead to wide fluctuations in the economy, with high  BIS Review 90/2006  3  and variable inflation. In our conduct of monetary policy, we must not underestimate the uncertainty surrounding the decisions taken. Even if the Bank publishes a forecast for the interest rate, this does not mean that the interest rate will follow the forecast throughout the projection period.
So if I were to predict the direction of the market movement correctly for five successive weeks you might think that I knew something you didn’t. Indeed, you might be willing to subscribe to an investment service with that sort of track record. So let me explain to you how one might create the illusion of clairvoyance. Select around 6000 or so names and addresses from the London telephone directory. Divide the names into two groups. To the first write predicting that the market will rise over the coming week. To the second write predicting a fall in the market. At the end of the week keep the 3000 or so names who were given the correct prediction and discard the others. Divide those names in turn into two groups. To the first predict a rise in the market and to the second a fall. Repeat this process for five weeks, at which point there will be around 200 people to whom we could write the following letter. “You may well have been sceptical when you received our first letter, but by now you will know that we have worked out the secret of predicting successfully the direction of movement of the stock market. You know that our method really works. To subscribe to our investment service please send £ by return”. Quite what our President, as the former Deputy Chairman of the Financial Services Authority, would make of this scheme I do not know.

But it illustrates vividly that the interpretation of ex post outcomes depends critically on understanding the ex ante process which generated those outturns. Another example shows that it is not just lay people who find statistical inference difficult. Experts of all kinds do too. The advent of DNA profiling in the 1980s led to the use of match probabilities in criminal cases. The jury is told that the probability of finding a match between the sample taken from the scene of the crime and the DNA of the defendant is, for example, only 1 in 500,000. That is sometimes taken as evidence that the probability of the defendant being innocent is also only 1 in 500,000. Such an inference is incorrect. In a city such as London where there might be about 5 million people who could have committed the crime, around ten people would have DNA that matched the relevant sample. Hence, in the absence of any other evidence, the probability that the defendant is guilty, far from being overwhelming, is only one in 10. Of course, in practice other evidence is usually available. But this incorrect statistical reasoning has swayed enough cases to be given its own name - the prosecutor’s fallacy.11 The cases of Sally Clark and Angela Cannings, both convicted and imprisoned for the alleged murder of their own children, show the desperate consequences of the false use of statistics to create a presumption of guilt to resolve the cause of apparently inexplicable events.
The total value of our external trade in goods and services in a year is equivalent to well over 250% of our gross domestic product (GDP). 4. Businessmen engaged in these externally oriented economic activities would I am sure be acutely conscious of the currency risk arising from the many international transactions that they enter into. They would obviously prefer clarity and predictability in the exchange rates of the domestic currency against those currencies to which their business is exposed. They would, I am sure, prefer fixed exchange rates over floating exchange rates, unless they are in the foreign exchange business in which case it is understandable that they would prefer the greater volatility that comes with floating exchange rates. It is of course an uneasy feeling that profits might be eroded, or for that matter enhanced, by volatile exchange rates. One simply cannot plan one’s business ahead properly with such volatility. Under the circumstances, prudent businessmen have no alternative but to hedge their currency exposures at considerable costs. It would clearly be beneficial for those conducting externally oriented business if currency risks could be eliminated by a fixed exchange rate system that has credibility. I believe this is why Europe has largely been operating with fixed exchange rates, the benefits of which are so clear that we shall soon see the unification of European currencies as the Euro comes into being. And I would be surprised if some of the Asian economies which floated their currencies recently are not regretting it.

With few exceptions, all the advanced economies were already in a net debt position and many are now facing funding problems related to an aging population. If the global economy is to recover from the crisis, government debt must be stabilised fairly soon in order to prevent a string of crises in state finances. Norway is in a unique position due to government petroleum revenues. Monetary and fiscal policy have stimulated domestic demand and output. Growth in mainland GDP was higher in the second quarter than projected in the June Monetary Policy Report. Household consumption seems to be picking up again. Petroleum industry activity has also had a stabilising effect on the Norwegian economy. There are plans to develop a number of oil fields on the Norwegian continental shelf in the years ahead, but it is likely that these investments will require an oil price of more than USD 60–70 per barrel to be profitable. BIS Review 115/2009  3  The events of September 2009 spread rapidly to the firms in Norges Bank’s regional network. In August 2009, manufacturing enterprises reported that growth would hold up. In November, the turnaround was described as a “heart attack”. Norges Bank established its regional network in 2002. Regular interviews provide information about enterprises’ assessment of the economic outlook before other official statistics are available. This information is therefore an important part of the decision-making basis in the formulation of monetary policy. Statistics Norway’s quarterly national accounts are available about 50 days after the end of the quarter.
It is also important to think hard about the supply of labor—the willingness of people to work, and the education and skills that they have to bring to the market. Labor supply is equally important, but less widely discussed than the demand side of the market. Labor force participation is lower at all ages in Puerto Rico than on the mainland. This is a crucial impediment to growth, and addressing it 3/4  BIS central bankers' speeches  requires innovative policy options. One idea to address this problem would be to extend the Earned Income Tax Credit to Puerto Rico. In addition, the structure of the Commonwealth’s tax system creates disincentives to work in the formal sector, and suggests that tax reform could produce a growth dividend as well as a more reliable source of revenue. On top of the low labor force participation is the well known and deeply concerning high level of out-migration. In addition to the lack of labor demand, it seems likely that quality-of-life concerns such as high crime rates are playing a role in these decisions. This underscores the importance of basic public service delivery and is another example of the interplay between fiscal and economic outcomes. Another important dimension of labor supply involves the skills that workers bring to the market. Many of these skills are acquired while in school. Our research indicates that test scores for school-age children on the Island are low, suggesting that there is an opportunity for improvement in the quality of public education.

William C Dudley: Opportunities for economic growth in Puerto Rico Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, to representatives of Puerto Rico's business and academic communities, San Juan, Puerto Rico, 29 November 2016. * * * Jason Bram, Tony Davis, Andrew Haughwout and Joseph Tracy assisted in preparing these remarks. I am very pleased to be here and to have this opportunity to speak with representatives of Puerto Rico’s business and academic communities. In my remarks, I will discuss the lessons learned from municipalities in the United States that have faced crises over the years―such as New York City―and what those outcomes might imply for Puerto Rico as it seeks to restore and sustain economic growth. I will also touch briefly on the Puerto Rico Small Business Survey, a new survey from the New York Fed that focuses on the business performance, financing needs and borrowing experiences of firms across the Island. As always, what I have to say reflects my own views and not those of the Federal Open Market Committee or the Federal Reserve System. My meeting with you today is part of the New York Fed’s continuing efforts to understand what is going on at the grassroots level within our Federal Reserve district. We plan these trips so we can interact with a diverse group of stakeholders.
In the pursuit of this objective, the Bank of Algeria will use all of the available data provided by the new credit bureau, which complies with the international standards and was fully implemented in September 2015. Given the expected reversal of the liquidity cycle during 2016, the role of the Bank of Algeria as a lender of last resort, following fourteen years of structural excess liquidity, will be reactivated in the second half of the year to refinance the banking sector. This will contribute to the activation of the role of interest rates as a transmission channel of monetary policy, in the context of an active interbank money market. To mitigate the liquidity stress some banks are starting to face, the Bank of Algeria may reduce the reserve requirement rate, which now stands at 12 percent. In this situation of external shock coupled with an emerging acceleration of the credit cycle, the use of macro-prudential tools will support the conduct of monetary policy, itself being in transition as of 2016, with credit risk remaining the main risk to financial stability in the medium term. Finally, the role of the committee on financial stability will shortly be strengthened, notably with regard to the regular assessment of banks’ financial soundness using relevant indicators and stress tests. This will be supported by a strengthening of the Bank of Algeria’s capacities in conducting macro-prudential policy. 3.

This is dictated by the need to strengthen growth potential. Achieving the non-hydrocarbon growth potential will rely on productive investment, notably in the private sector, in a context of continued public investment programme implementation at  4  BIS central bankers’ speeches  an appropriate pace, given the constraints imposed by the acuity and persistence of the external shock. The development and dissemination of economic information for the benefit of economic agents, particularly SMEs, is key to better investment orientation. In particular, appropriate ministerial departments should focus on promoting advisory structures to improve the provision of accurate information on investment sectors and markets. Sustained improvement in the business environment is crucial to boost the private sector’s contribution to high and inclusive non-hydrocarbon growth. In this regard, improving investment effectiveness and increasing its impact on employment should be a strategic objective. BIS central bankers’ speeches  5
10  5  5  4  4  3  3  2 1974  1982  1990  1998  2 2006  Note: Inflation and growth have been calculated as in figure 1 over the same country groups. Volatility is measured as the standard deviation, over a rolling window of five years. Source: IFS. 8  BIS Review 74/2008  Figure 3: Inflation volatility in developing economies: IT versus non IT  6  6  4  4  2  2  0 1998  2000  2002 Non-IT  0 2006  2004 IT  Note: Inflation has been calculated as in figure 1. Volatility is measured as the standard deviation, over a rolling window of five years. Countries were considered part of one group when more than 50% of the window corresponded to that group. Source: IFS. Figure 4: Real WTI oil price $ of February 2008 per barrel)  120  120  100  100  80  80  60  60  40  40  20  20  0 1947  0 1962  1977  1992  2007  Note: Price deflated by US Producer Price Index. Source: Bloomberg.

For example, the ability to transfer funds between different bank accounts may increase deposit volatility and could, in extreme situations, lead to “virtual bank runs”. Banks will need to build this possibility into their liquidity management policies. Similarly, it is possible that credit risks could increase in the future if the relationship with customers becomes more distant and more transitory, and if the banks relax credit standards because of competitive pressures. On the other hand, banks will be better placed to obtain and organise information about their customers in an electronic banking environment, and this could help to improve credit evaluation techniques as well as to assist marketing. It all depends how much information each bank has about a given customer. If the customer spreads his financial affairs across a large number of internet-based banks, each one will have only one piece of the overall customer profile. Regulatory Framework So how do we regulators address these various kinds of risk? The first point to make is that our approach to the regulation and supervision of e-banking is still at an early stage, like the product itself, and is still evolving. We recognise that we have a lot of work to do in keeping abreast of, and monitoring, developments. This is part of our general approach of trying to improve our ability to determine that banks have in place adequate systems to measure, identify and control the various types of risk with which they are faced.
Such considerations will no doubt have played a part in the recent decision by the six members of the Gulf Cooperation Council to seek the advice of the European Central Bank (ECB) in developing a blueprint for forming a currency union and introducing a common currency by 2010. In a similar context, the announcement last week that Iceland is considering joining the euro is most significant. The country’s Prime Minister is reported to have said, “It’s clear [that] it’s not easy to run a small economy and a small currency in a big market”. There will also, of course, be long-term costs arising from the adoption of the euro associated with the loss of monetary and, particularly, exchange rate policy autonomy. Studies based on the Optimum Currency Area (OCA) criteria, however, suggest that NMS are not likely to suffer from a more pronounced incidence of asymmetric shocks than the existing non-core euro area members. 3 Moreover, the nature of shocks to which the economies of these countries are generally subject do not  1  Faruqee (2004)  2  Schadler et al (2005)  3  Fidrmuc (2001), Boreiko (2002)  BIS Review 53/2006  1  necessarily require intervention on the nominal exchange rate, provided that more efficient mechanisms for aggregate demand management are in place.

It is, therefore, important that in the examination that follows a country’s request for a convergence report due consideration be given to the policy consistency and credibility of the applicant country. A comprehensive economic analysis that is not only quantitative but also qualitative, and which recognizes the difficultly of simultaneously satisfying all the Maastricht criteria in the current world environment would encourage EMU candidate countries to persist in their efforts to achieve even closer nominal and real convergence. It would also provide further evidence that the euro project is credible, that it is both feasible and realizable in a near-term perspective. Let me conclude by thanking you again for being here to contribute to a deeper understanding of the challenges ahead. I also wish you a pleasant stay in our country. BIS Review 53/2006  5
I am not advocating for a vast expansion of the role of the compliance function. It is tempting to think that vesting compliance officers with greater and greater authority over business will lead to better outcomes—at least in terms of the safety and soundness of the financial institution. But, I am very sensitive to the risk that as compliance becomes more involved in business decisions, it loses its independence. That independence is critical to effective governance and, ultimately, to the safety and soundness of an institution. What’s more, there is some point at which compliance becomes an end in itself, detracting from broader corporate and social purposes. I will return to this thought later. Here is my point: Most if not all firms could use greater clarity about who is responsible for what within their organization. I offer this observation based, in part, on the compliance enhancements required in many Federal Reserve enforcement actions. Many compliance professionals have a very clear understanding of their own role—in terms of both duties and limitations—and strive to maintain their independence. I am less confident about the degree to which others in an institution are aware of what the role of compliance is, and what it is not. A shared understanding between business and compliance about this is critical. A misunderstanding of roles can lead to confusion of responsibility (or diffusion of responsibility), laying the groundwork for control failures. Let me explain how confusion about rules might play out.

Future demand growth has been judged to exceed what the economy can cope with in the long term without generating higher inflation. To date, however, price trends - not least in the domestic economy - have been lower than we had expected, even though our forecasts were below those of most other observers. One recent event is the notable fall in share prices. To date, however, this seems to be more of a desirable normalisation than a fall that endangers economic activity. There are also more and more indications that the recent strong growth of production and employment is tending to slacken. To date, however, that has been broadly in line with our earlier assessment. Finally, there is the rather mixed information about the ongoing wage negotiations. This year’s wage outcome is, if anything, somewhat lower than expected. At the same time, it looks as though several of the demands that have been presented are a little bit high in relation to the inflation target, particularly considering the risk of future wage drift in an increasingly strong labour market. These are matters we will be deliberating in the Riksbank in the run up to the next Inflation Report and monetary policy meeting in December.