samchain/econo-pairs-v1 huggingface dataset:
The reserve accumulation program and liquidity provision Confronted with the uncertain outcome of the financial crisis in developed countries, where difficulties in funding for emerging economies could not be ruled out, and at a time when the Chilean peso had appreciated significantly, the Central Bank of Chile deemed appropriate to strengthen its international liquidity position. To that end, in April it began an international reserve accumulation program. In recent weeks, particularly after the downfall of Lehmann Brothers in September, signs of more severely constrained international financial markets and tight foreign currency liquidity conditions began to surface. Chile was no exception. Accordingly, on September 29, the Board of the Central Bank of Chile decided to terminate the reserve accumulation program. During its application, 5.75 billion dollars were acquired, amounting to 70% of the initially announced plan, which is the equivalent to an increase of 30% in international liquidity over the level of end of March 2008. In addition, and to reduce tensions in foreign exchange market liquidity, the Bank has auctioned off one billion US dollars under the foreign currency swap modality where offers are made in terms of libor plus a premium. At first, this program considers two more auctions for a combined total amount of one billion US dollars. To sterilize the monetary effects of these operations and prevent effects on peso liquidity, Repo window operations are being offered at the monetary policy rate at 28 days. In this aspect, it is necessary to contextualize the Chilean banking sector foreign indebtedness, especially the short-run component.

Chile suffered a major banking crisis in the early 1980s, part of which can be blamed on poor regulation, which cost the country, only in GDP terms, a drop of 16% between 1982 and 1983. The lessons learned the hard way have provided the basis for strict banking regulation, where banking business supervision and limits to risk exposure prevent episodes like the ones we are now seeing abroad from being replicated in our economy. Regarding the external scenario we face, consensus projections and information at hand show that the international economy continues to grow and, surprisingly, there is a decoupling between developed economies and the rest of the world. BIS Review 123/2008  1  As can be expected in such a situation, and from the reactions we have seen at the global level, the world will see a deceleration, but from varied levels. While the developed world will probably go through a recession, emerging economies will moderate growth. This may be helped by the current-account surplus accumulation of emerging markets, favored by high commodity prices and more responsible economic policies than in the past. For example, the substantial hoarding of international reserves in many countries, Chile included, allows the financing of deficits for several years to weather the turbulences via domestic growth. Overall, more severe effects on emerging economies’ growth from a prolonged period of weakness in developed countries cannot be ruled out.
BIS Review 133/2010  11  When assessing the external demand outlook, it is important to consider our trading partner’s headline growth forecasts as well as the composition of growth. In this respect, it is noteworthy that the latest Consensus Forecasts release indicates a noticeable change in the composition of the euro area 2011 growth forecasts. More specifically, along with the depreciation of the euro owing to financial distress and the weaker growth outlook, euro area private consumption and investment forecasts have been revised downwards, thereby emerging as a potential factor to affect our external demand prospects adversely (Table 2). In other words, despite the absence of a major revision in euro area growth forecasts, the change in the composition of GDP growth indicates a weaker external demand outlook for Turkey compared to the previous Report. Although weak external demand restrained recovery in industrial employment, the steady recovery in the labor market continued in the last period and non-farm employment posted a significant rise in the last one-year period fuelled by the steady increase in employment in construction and services sectors (Figure 30). The continued rise in labor force participation rates in the first quarter of 2010 curbed further decline in unemployment rates. Unemployment rates fell markedly in April amid increased employment and reduced labor force participation (Figure 31). Leading indicators imply that the recovery in non-farm employment will continue, albeit slower.

Developments during the second quarter of 2010 confirmed the CBT’s assessment that the increase in inflation since the last quarter of 2009 was temporary. The April Inflation Report stated that aggregate demand conditions would support disinflation and that the rise in inflation could be attributed to factors beyond the control of monetary policy such as increases in food, energy and administered prices. In fact, with the reversal of these adverse factors, consumer prices declined by 0.3 percentage points and annual inflation came down to 8.37 (Figure 7). Here I would like to underline that this was the first decline in consumer prices ever in a given quarter (Figure 8). BIS Review 133/2010  3  The course of food prices was instrumental in the favorable outlook of inflation in the last quarter. After climbing dramatically in the past two quarters and prompting consumer prices to soar, food prices plunged sharply during the second quarter of 2010 (Figure 8). The fall in food prices was attributable to the significant decline in unprocessed food prices (Figure 9). In addition, the adoption of import regulations for red meat at the end of April was another factor that slowed down unprocessed food prices more than expected (Figure 10). Besides, processed food prices also decreased during the last quarter, pushing food prices down even further (Figure 9). The favorable outlook of inflation was not only limited to food prices; services and core goods prices also saw a significant slowdown in the second quarter of the year (Figure 11).
However, possibly because of the effects of globalisation, the income share of the top 1% tripled from 5% in the early 1980s to 15% by 2009, though it has fallen back somewhat since the crisis (Chart 8). The distribution of wealth also appears to have been relatively flat since the mid-1990s (Chart 9), partly vii  reflecting the pattern of home ownership, though it is much less equal than for income, with the share of the richest 1% persistently high, at around 20%. viii  For both income and wealth, some of the most significant shifts have happened across generations. A typical ix  millennial earned £ less during their twenties than their predecessors. Since 2007, those over 60 have x  seen their incomes rise at five times the rate of the population as a whole. Moreover, rising real house prices between the mid-1990s and the late 2000s has created a growing disparity between older home owners and younger renters (Chart 10). Chart 8: … yet the income share of the top 1% rose steadily to reach 15% in 2009, before falling back somewhat  Chart 7: Income inequality in the UK rose notably in the 1980s, then plateaued… Before housing costs After housing costs  Gini coefficient  Per cent 18 16  0.4 14 12 0.35 10 8  0.3  6 4  0.25  2 0  Source: "Living Standards, Poverty and Inequality in the UK: 2015", Institute for Fiscal Studies.

Here I am using the term in a broader sense, to describe the view that monetary policy is the only tool necessary to stabilise the economy. Friedman advocated the control of money as superior to fiscal measures for stabilising the economy. In Friedman (1948) he argued that financing variations in the government deficit or surplus with monetary expansions or contractions would be stabilising. Later, in Friedman (1960), he advocated a constant growth rate of the money stock as a means to stabilise the economy effectively. Following the experiences of the 1980s, there is today great scepticism that the velocity of money circulation exhibits the kind of stability necessary to make the quantity equation operative as a means of inflation control, although money may still have useful information content as an indicator. As Gerry Bouey said, “We didn’t abandon the monetary aggregates, they abandoned us.” See Friedman, M. 1948. A monetary and fiscal framework for economic stability. American Economic Review 38, 256–64; and Friedman, M. 1960. A Program for Monetary Stability. New York: Fordham University Press. ii Growth in India and China in particular has contributed to a marked fall in the global Gini coefficient, from 0.74 in 1975 to 0.63 in 2010. Niño-Zarazúa, M., Roope, L. and Tarp, F. (2016), “Global Inequality: Relatively Lower, Absolutely Higher,” Review of Income and Wealth, July. iii Reinhart, C. and Rogoff, K. (2009), This Time is Different, Princeton University Press.
More broadly industrial production, exports, and retail sales figures appear to have improved, although they remain sharply negative on an annual basis. In addition the broad-based recovery in commodity prices also suggests that the global economy is on a path to recovery. However, despite this more positive outlook for the global economy, it is not clear that Africa has seen its worst days. For many countries in Sub-Saharan Africa, the ramifications of the  1  Source: IMF World Economic Outlook (WEO) update July, 2009. Figures for exports reflect annualized percent change of 3 month moving average over previous 3-month moving average. BIS Review 128/2009  1  crisis are still working themselves through the system. Initially, financial markets rather than the financial system bore the initial brunt of the crisis in Africa, as economies experienced a sharp reversal of financial flows, and exchange rates depreciated sharply, and capital markets registered sharp declines in market capitalization and trading volumes. Thankfully there are clear signs that financial markets have now stabilized, with exchange rates appreciating and inflows of portfolio flows and FDI showing tentative signs of recovery. In Zambia, for example, between September 2008 and April 2009, the country experienced a negative portfolio inflow. Non-resident holdings of Treasury bills declined from around 16% of outstanding bills in September 2008 to zero by end March 2009. During this period the exchange rate of the Kwacha against the US dollar depreciated by around 60%.

Asian banks have also not been spared, though they have done better. The RoE of Asian banks has been declining in recent years, and is currently hovering around 8%. A recent study3 by MAS found that three cyclical factors have driven the decline in Asian bank profitability. First, weaker global economic growth has affected credit demand in the region, leading to slower loan growth. Second, prolonged accommodative monetary policy in the advanced economies has compressed domestic interest rate spreads in Asia. This has reduced banks’ interest income. Third, asset quality has declined, as non-performing loans (NPLs) have risen in many regional economies. 2/5  BIS central bankers' speeches  But an increase in NPLs must be viewed in perspective. Banks are in the business of intermediating risk. When risks materialise – as they sometimes do when those who borrow get into difficulties – NPLs must rise. This may be odd for a regulator to say – but if NPLs did not rise at all during difficult times, then the banks are probably not lending enough or taking on sufficient risk to promote business expansion or enterprise. What is important is: Is the rise in NPLs manageable and contained? Are problem loans being monitored closely and classified prudently? Are provisions made proactively and conservatively? Take for example Singapore. NPLs have risen amidst a weakening economic environment and emerging asset quality risks in the oil and gas (O&G) sector, which has been weighed down by low oil prices. But our banks’ exposure to the O&G sector is contained.
Such high growth may prove surprising given our economy’s shortcomings or weaknesses: a much lower level of educational attainment than other European countries, low capital stock, inferior technology and labour institutions which, as we shall see, do not generate the incentives needed to enhance individual and collective efficiency. Why, despite this, have we grown so much? Partly because we made more progress than the other countries in some areas, which has offset our relative shortcomings. First, the relative weight of our public sector is much lower than that of the other European countries. Consequently, the greater weight of the private sector accounts for the greater dynamism of our economy. Next, public spending has been decentralised in a manner akin to Germany after World War II, and, to date, that has allowed greater efficiency in the allocation of spending. Further, we have also been bolder than other countries in privatisation. In recent decades there have been many significant privatisations in practically all productive sectors, allowing us to push ahead more than other economies in infusing competition into many goods and services markets. Unlike in other countries, privatisation has been wholesale, which is essential for breaking the link between corporations and governments. Finally, up to 2007 Spain managed notable progress in terms of balancing public finances and reducing public debt. All these aspects might be viewed as some of the inherent virtues of the Spanish economy, which account for much of our favourable growth differential over the past 20 years.

We must all continue doing all we can to emerge from the current situation. Today, however, I wanted to pause and look beyond the crisis. For one thing, we do not know how deep and long it may be. But what is certain is that this crisis will end. We are certain we will finally emerge from it. This is not wishful thinking, but an empirical regularity. The economy has worked this way at least since the time Joseph interpreted the Pharaoh's dream about lean and fat cows. I wanted to focus today on the future of the Spanish economy because the essentially macroeconomic dimension of the current crisis makes us forget certain things: that our main problems are structural; that our chief task is to improve and boost productivity; that we ought to seize the moment to reform our regulations and institutions; and because whatever we do to improve productivity does not run counter to exiting the crisis but, quite on the contrary, may help us emerge more rapidly from it. To conclude, let me reiterate what I said earlier. If I’ve talked of only one area of structural reform, namely labour reform, it is because I think it is the most important one for relaunching corporate start-ups and reducing unemployment. But is it not the only area of reform, and nor are others less necessary.
So any decision on an exchange rate framework is not narrowly confined to external considerations, but must reflect broader policy choices, as well as the structure of the economy in question. The practical and theoretical considerations involved in deciding on an appropriate exchange rate system can be reduced to four broad factors: the external versus domestic orientation of the economy; the flexibility of its cost-price structure; the exposure to financial shocks; and the reputation and credibility of policy makers. These factors, naturally, differ from one economy to another. In theory, the choice is straightforward enough: the best system is the system that best accommodates a country’s “natural endowment” of these factors. Success in practice, however, is not simply — or even primarily — a question of choosing the preferred exchange rate framework from a textbook perspective. Policymakers on the ground need to address the much more demanding challenge of ensuring consistency between the overall policy framework and the exchange rate regime. Experience shows us that governments can choose exchange rate systems that do not appear optimal according to standard economic criteria yet still make them work if other policies are up to the task. At the same time, a regime that is appropriate on theoretical grounds will yield unsatisfactory results if it is not supported by other policies. Consider, for instance, an economy with relatively inflexible wages and prices that adopts a fixed exchange rate regime.

And it would not stop speculators from exploiting the reality that sharp capital movements can themselves affect an economy’s fundamentals and panic other investors. For the avoidance of any misunderstanding I should state once again, for the record, that I am not advocating capital controls of any kind for Hong Kong. The concerns that arise from ‘hot’ capital flows are particularly acute in Asia, whose markets are relatively small by the standards of the large industrial countries, yet relatively liquid by the standards of developing markets as a whole. The world will not become a safer place for such countries — or a better place for intermediating capital flows that ultimately foster growth and development — until we take concrete steps to reform the global financial architecture. Transparency is a critical issue. On the one hand, there is widespread support for the notion that governments should be more open in their operations — and I am happy to say that Hong Kong is at the leading edge in this area. On the other hand, there is only lukewarm support for the notion that the operation of markets could be enhanced by increased transparency on the part of private participants. I fail to see the basis for this asymmetry on conceptual grounds. On practical grounds, there are no doubt important issues to be resolved and obstacles to be overcome. But progress will not be made until all parties concerned start to address the issue in a more energetic and concerted manner.
Satellite Seminar on Financial Inclusion held in conjunction with the 61st World Statistics Congress  Opening remarks by Mr. Abdellatif JOUAHRI Governor of Bank Al-Maghrib Marrakech, July 14, 2017  1  “While data is important, the right data is essential” Albert Einstein  Honorable Chair of the Irving Fisher Committee, Honorable Governor of the BEAC, Distinguished guests, Ladies and gentlemen, It is with great pleasure that I welcome you to Morocco on the occasion of this international seminar on financial inclusion, which will focus on data and their important role in developing policies and strategies that take into account on-the-ground realities and then measuring and assessing the impact of these policies. First of all, I would like to thank our partners, the Irving Fisher Committee on Central Bank Statistics and the Center for Latin American Monetary Studies for their valuable contribution to the organization of this event, held as usual on the sidelines of the 61st World Statistics Congress. The topic of our meeting further underscores the importance that central banks and international standardization bodies attach to financial inclusion. It is a subject that is of increasing interest to them, particularly with regard to its interactions with financial stability, resulting in hindering the policies put in place to develop access to and use of financial services. A sustainable and efficient financial inclusion requires a long-lasting balance between innovation and the safeguards that need to be developed in order to ensure the soundness of the financial sector.

François Villeroy de Galhau: How to develop a “financial Eurosystem” post-Brexit Closing remarks by Mr François Villeroy de Galhau, Governor of the Bank of France, at theEurofi High Level Seminar 2019, Bucharest, 5 April 2019. * * * Ladies and Gentlemen, It is a pleasure to be in Bucharest today to conclude this Eurofi High Level Seminar. I am grateful to D. Wright and D. Cahen for offering me the opportunity to give this keynote speech... but perhaps less grateful about the theme they asked me to address: “Opportunities for developing EU autonomy in the financial area post-Brexit”. We are still faced with great uncertainties, and Brexit is and remains bad news, not only for the United Kingdom, but also for Europe. This unchartered territory has nevertheless the merit of making one thing very clear: it costs dearly to leave the single market. So we are still hoping for the best, but we have to prepare for the worst: a no-deal Brexit and all the risks it implies. This will be my first point today. Then, your theme obliges us to look ahead, beyond Brexit: Europeans should use the demands created by the current context to build a more integrated “financial Eurosystem”, and add some pillars to Europe’s financial sovereignty. **  I. Preparing for the risks It has been – first and foremost – the responsibility of the financial industry itself to prepare for the consequences of Brexit, starting with the loss of EU passporting rights.
But if we do identify deficiencies, how can we implement the necessary changes? Winston Churchill once pleaded, in a famous World War II speech, to President Roosevelt: "Give us the tools, and we will finish the job!" So far, the Riksbank has lacked specific “hard” tools for financial stability. We have relied on communication and moral suasion, hoping that our arguments will convince financial system actors to change their behaviour. Our experience is mixed. Before the crisis, our banks reduced their credit expansion to the Baltic countries, warned by us, but they did too little and too late. One conclusion is that we must be even clearer and more forceful in our communications. The Riksbank is presently analysing its tool kit with the aim of arriving at a proposal in the near future. I do not think it is necessary that the tools should be vested with the central bank. For instance, there could be a rule implying that if the central bank sends a recommendation to the supervisory authority, they must “act or explain”. The supervisors could then use microprudential tools such as increasing bank capital requirements for certain activities or jurisdictions or reducing the maximum level of loan-to-value ratios. As in my previous discussion on monetary policy versus regulation, I believe that monetary policy and promoting financial stability are mutually interdependent. During the recent financial crisis, we observed the difficulties of conducting monetary policy in a non-stable financial environment.

During much of this period, banks internationally were engaged in a highly competitive ROE race. Therein lies part of the explanation for these high returns to labour and capital in banking. 4. Explaining aggregate returns in banking – excess returns and risk illusion How do we explain these high, but temporary, excess returns to finance which appear to have driven the growing contribution of the financial sector to aggregate economic activity? In this section we discuss potential balance sheet strategies which may have contributed to these rents. Essentially, high returns to finance may have been driven by banks assuming higher risk. Banks’ profits, like their contribution to GDP, may have been flattered by the mis-measurement of risk. The crisis has subsequently exposed the extent of this increased risk-taking by banks. In particular, three (often related) balance sheet strategies for boosting risks and returns to banking were dominant in the run-up to crisis:   increased leverage, on and off-balance sheet;    increased share of assets held at fair value; and    writing deep out-of-the-money options. What each of these strategies had in common was that they generated a rise in balance sheet risk, as well as return. As importantly, this increase in risk was to some extent hidden by the opacity of accounting disclosures or the complexity of the products involved. This resulted in a divergence between reported and risk-adjusted returns. In other words, while reported ROEs rose, risk-adjusted ROEs did not (Haldane (2009)).