samchain/econo-pairs-v1 huggingface dataset:
Yet this view jars somewhat with the dominant methodological direction of travel in economics. That methodological lead was provided by Karl Popper in the 1930s (Popper (1934)). In The Logic of Scientific Discovery, Popper argued for a “deductive” approach to advancing knowledge. This involved, first, specifying a clear set of assumptions or axioms. From those were deduced a set of logical propositions or hypotheses. And then, and only then, were these hypotheses taken to the data to be validated or falsified. This pursuit of empirically-falsifiable hypotheses had even-earlier antecedents. The use of dynamic optimisation techniques goes back at least to Leon Walras (Walras (1874)). And he, in turn, drew on the tools developed by mathematicians such as Leibniz, Lagrange and Euler. These techniques were used to construct early “general equilibrium” models of the economy, models which where internally consistent when looked at as a whole. Newtonian physics was built on the same principle of internal consistency within systems, with energy within that system always preserved. Those systems were subject to disturbances which could cause them to oscillate dynamically. Ultimately, however, these systems typically had an equilibrium or steady-state to which they returned. As one of the simplest examples, Newton’s pendulum exhibits damped harmonic motion once displaced before returning to a state of rest. Much of mainstream macro-economics and finance has essentially followed this intellectual lead. It typically starts with a set of assumptions or axioms – in economics often defining the preferences of consumers and the technology facing firms.

Due to the present economic environment, fiscal policies and structural reforms can and should be more and more part of the policy mix. But it also follows from the guiding principle that I have highlighted today: the more tools available, the easier it is to combine them to minimise the trade-offs between price and financial stabilities. Fiscal policy can help monetary policy in fostering financial stability in several ways. First, it can of course help by taking away some of the burden of policy accommodation. But fiscal policy can also directly assist monetary policy in fostering financial stability. It can help monetary policy to provide the safe assets necessary to a resilient financial system, if possible including in the form of a euro area-wide safe asset. On the tax side, it should reduce all excessive incentives towards real-estate investment, and foster a more neutral allocation of savings according to a sound reward of risk. Let me end with one question: what will monetary policy be like in ten years? We clearly can’t be certain of anything, but we can at least share a conviction: the more progress we have made together on these issues I mentioned, the better our monetary policy will be. Thank you for your attention and your cooperation.
BIS Review 23/2006  1  In the new global economy, the public sector must be active and innovative, and it must support its citizens and business community. By way of illustration, the National Bank of Poland, as part of its statutory tasks and in cooperation with its partners in the financial sector, has created a modern payment infrastructure for large-amount (the SORBNET system operated by NBP) and retail (the ELIXIR system operated by the National Clearing House — KIR S.A.) payment systems, thus ensuring provision of safe and efficient services related to settlement of both types of zloty payments. The scope of services for the banking sector was expanded in 2005 to include two new types of payment systems for settlement of eurodenominated (domestic and cross-border) transactions, namely: the SORBNET-EURO system, processing mainly large-amount (interbank and customer) payments, and the EuroELIXIR system, which provides cheaper and more rapid settlement of retail payments in euro. The SORBNET-EURO system facilitates transfers of payments to the TARGET system, thus ensuring real-time processing of cross-border payments between banks in Poland and those in the EU Member States. Apart from Poland, only three EU Member States outside the euro area (i.e. Denmark, Sweden and Great Britain) have introduced similar changes to the domestic payment system and ensured a link to the pan-European infrastructure. No other new EU Member State has implemented such changes to-date. The ELIXIR system, operated by KIR S.A., is one of the state-of-the-art payment systems in the European Union.

In the banking industry, for example, statistical and computational analyses developed for evaluating exposures to market risk led, over the past decade or so, to the application of similar techniques to credit risk. Indeed, the introduction of increasingly reliable estimates of the drivers of credit risk, such as the probability of default, led to many of the proposals that form the basis for the Basel II bank capital framework, as I will discuss in a few minutes. The Joint Forum found that the “ultimate expression” of risk aggregation is the summation of many types of risk into a single risk measure. This measure, often called “economic capital,” estimates the amount of capital a firm requires to protect itself against all risks with a certain degree of confidence. But the benefits of developing more aggregated measures of risk across diverse business lines are especially appealing to complex financial organisations whose activities span many kinds of activities. 2  BIS Review 32/2004  As a result, it is not surprising that large, mixed financial conglomerates have tended to invest the most in the development of economic capital estimates. III. The structure of financial supervision  The two trends in the financial services sector to integrate risk management into a dedicated function and to aggregate risk measures into a single measure of economic capital form the first part of the “virtuous circle.” These trends are influencing much more than the behaviour of individual firms. They are similarly influencing the structure of financial supervision.
What applies to single financial institutions obviously also applies to institutions of financial market infrastructure, to central banks and to institutions of supervision and oversight in general. The same insights apply to everyone: Be aware of the new dimensions of systemic risk within globalized financial markets and refrain from early satisfaction with what you appear to have achieved. At this point, I would like to stress that the overall resilience of the financial sector also depends on the financial strength of each institution. In retrospect it might be said it was a benign coincidence that the September 11, 2001 attacks happened in a period of comparatively favorable economic conditions in the financial industry. Under less favorable circumstances the capacity to absorb shocks could have been considerably smaller. This is another reason why the rapid implementation of the new Basel Accord on capital adequacy is so very important for the financial system as a whole. In addition to this it is obvious that further and new tasks arise for regulatory agencies and central banks at the national as well as the international level. Addressing the issue of disaster recovery has to become part of the routine supervisory process. Supervisory guidelines and examination procedures are being adjusted in this light and they are helpful tools in increasing resilience. Also, when overseeing payment systems resilience and business continuity will have to be scrutinized anew.

Christian Noyer: “The Brussels agreement is sound” – interview with Le Télégramme Interview with Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, in Le Télégramme, published on 15 December 2011. *  *  *  Does the Brussels agreement protect the euro area over the long term? I believe it is a sound agreement. It includes rules of governance that had been missing up until now. Of course, we had the Stability and Growth Pact, but it was of an inadequate legal standard, and it was not complied with as it should have been. Setting up clear rules of governance that are sound in substance and that will be integrated into the constitutions and organic laws of Member States is a good solution that should provide us with lasting protection. What would be the consequences of France losing its triple-A rating? I do not know what rating agencies will do. What I see is that these agencies have managed, through their criticisms, to weaken the positive sentiment that prevailed on markets after the Brussels summit. In addition, downgrading France’s credit rating does not seem justified when considering economic fundamentals. Otherwise agencies should start by downgrading the United Kingdom which has larger deficits, the same level of debt, more inflation and a lower growth rate than us as well as slumping credit. What is the legitimacy of these rating agencies? Agencies have become totally incomprehensible and irrational.
To summarise, HLIs themselves cannot be seen as direct risk to financial stability, at least not at their present stage of development. However, there are two potential transmission channels through which shocks on HLIs could spread to large international banks. If these shocks are large and banks are not robust enough, then the stability of the financial system could be at risk. However, available data and experience with failures of larger HLIs in the past suggest that the disruptive capacity of HLIs is rather limited. 4. Should HLIs be regulated? As we discussed earlier, the HLI industry itself does not appear to be a threat to financial stability. However, the failure of one or more large HLIs could – primarily via credit exposures – weaken a systemically important bank which, in turn, could weaken the financial system. This potential chain reaction, however, does not in itself prove the need for regulation. This challenge can be met by other initiatives. First of all, there is market discipline. Market discipline can compensate for a lack of regulation. I assume market discipline to be more effective in the case of HLIs than in the case of banks for three reasons: (a) Investors in HLIs are generally well informed and relatively “sophisticated”, (b) the number of investors is small and (c) HLIs do not constitute an industry regarded as worth being rescued in terms of the public interest. However, we should make sure that market discipline works.

They are largely exempt from reporting and disclosure requirements and there are no restrictions with regard to investment strategies, financial instruments or leverage. The term “hedge fund” goes back to the 1950s, when the first hedge funds were established. These funds were designed to be neutral to general market movements. Their investment strategy was to combine short and long positions to hedge some of the market risk and thus to achieve absolute returns in different market conditions. Nowadays, they no longer just “hedge” since they apply a wide range of investment strategies. They make intensive use of short selling and of complex financial instruments such as derivatives. The term “highly leveraged institution” is also of limited value in terms of defining the entity it designates. 2 At a rough estimate, HLIs have an average leverage of 1.4. 3 This is indeed a much higher leverage than traditional investment funds have, for which there are strict restrictions on indebtedness. In Switzerland, for instance, traditional investment funds are only allowed to have a leverage of up to 0.1, and this only on a temporary basis. However, a leverage of 1.4 is low compared to large international banks which have a leverage of ten to fifty. In terms of market share, the role of HLIs is less important than is generally believed although, in the last few years, their activity has grown tremendously. Since 1999, HLI assets under management have increased by a factor of five. An important driving factor has been the increased inflows from institutional investors.
And there is some corroborative evidence in the rise in output price inflation relative to costs, and in anecdote of some firms being able to pass on cost increases (Chart 17). Given a tight labour market, how does that fit with earnings inflation having been relatively subdued? One possibility is that as aggregate demand has picked up, firms have in the first place increased output by making greater use of their existing workforce and capital. That would be consistent with anecdotal evidence of firms having held on to labour during the earlier slowdown in aggregate demand; and with the pick up in private sector productivity growth over the past year or so (Chart 18). Looking ahead, it would also suggest a degree of upwards pressure on earnings growth. As reflected in the Inflation Report published a couple of weeks ago, conditions of excess demand, combined with the likelihood of stronger import prices, point to inflation gradually rising back towards and through the 2% target over the next two years or so. There are many risks around that central outlook but, taken together, compared with November I judge them to be slightly less to the downside over the medium term. The recent rise in CPI inflation suggests, for example, that we were not stuck  9  Nickell, S. (2005), ‘Why Has Inflation Been So Low Since 1999?’, Bank of England . BIS Review 16/2005  5  materially below the inflation target.

During the transition, the supply capacity of the economy accordingly increased by more than would otherwise have been achieved; and any given increase in real aggregate demand would have put less pressure than otherwise on supply, and so would have had a weaker effect on firms’ costs and prices. That does not mean, however, that the feed through of demand pressures into inflation will be permanently weaker. Instead, the apparently flat relationship, illustrated in Chart 3, between unemployment and wage inflation is, at least in part, most probably a symptom of the sustainable level of unemployment having gradually fallen. That is effectively what the MPC has assumed in making judgments about the outlook for inflation. We can be reasonably confident about the direction of change, but not about its size. That can be illustrated by the current conjuncture. Over the past few years, there have been at least two other influences at work. First, for some years we enjoyed an improvement in our ‘terms of trade’. That meant, simply put, that the aggregate price of the goods and services we produce and export rose relative to the aggregate prices of our imports. This increased the purchasing power of households’ incomes (Chart 9), and so may have dampened wage pressures as the labour market tightened. To the extent that this explanation should be given any weight, it would tend to be a temporary factor, pointing to an upside risk to earnings growth looking ahead. A second apparent feature of our environment works the other way round.
If inflation expectations were to pick up in the wake of a rise in inflation this year, then only a more prolonged slowdown would allow inflation to return to target. But if the rise in inflation does not affect longer-term expectations, then inflation could start to fall back towards the end of the year. We are determined to keep inflation on track to meet the 2% target in the medium term. When the Monetary Policy Committee sets Bank Rate, it has to balance the risk that a sharp slowing in activity, by creating a margin of spare capacity, would pull inflation below the target, against the risk that, without such a margin of spare capacity, higher inflation in the short term might have a tendency to persist. So we face a difficult balancing act in the course of 2008. But we start the year from a position in which Bank Rate, at 5.5%, is probably bearing down on demand. After a decade and more of a non-inflationary consistently expansionary (nice) economy, a phrase I coined in 2003, we moved to a somewhat bumpier but still rather stable path, which I described the following year as the not-so-bad period. You might think we have now  BIS Review 8/2008  3  entered a not-so-good period. To put it bluntly, this year we are probably facing a period of above target inflation and a marked slowing in growth.

Ravi Menon: Singapore as a centre for fund-raising in Asia Keynote speech by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the Singapore Exchange Capital Markets Symposium, 17 November 2021. * * * Ladies and gentlemen, good afternoon. Asia is becoming a global force in capital markets. In 2020, equity capital raised in the AsiaPacific region increased by two-thirds. Debt capital increased by 10%. The Asia-Pacific accounted for more than one third of global equity proceeds as well as one-third of debt issuance last year. There are three reasons why Asian capital markets are poised for continued rapid growth: dynamic companies with large fundraising needs; large pools of capital looking for investment opportunities; and effective platforms to match fundraising needs with capital Asia is fertile ground for innovative companies to thrive. With rising household incomes and increasingly tech-savvy consumers, Asian consumer markets are burgeoning. This has helped to spur a burst of entrepreneurship in Asia. We see this innovative energy across Asian cities, from Bangalore to Shenzhen, Jakarta to Manila, from Ho Chi Minh City to Bangkok, and of course Singapore. Asia is now home to a large number of high-growth companies, such as Carousell, Carro, Justco, MiRXES, and Ninja Van. To scale up, Asian companies need to raise capital. As these firms expand into more markets, they will need PE/VC funding, and eventually tap on the public markets. Asia has attracted substantial institutional funds from around the world.
James McAndrews: The economy and the household debt and credit report Remarks by Mr James McAndrews, Executive Vice President and Director of Research of the Federal Reserve Bank of New York, at the household debt and credit press briefing, New York City, 28 February 2013. *  *  *  Good morning and welcome to the New York Fed. I am pleased to have this opportunity to talk with you about some of the exciting research we are doing here at the Bank. This morning my remarks will focus on national economic conditions and then I will introduce our special presentation today on household debt and credit conditions. What I have to say reflects my own views and not necessarily those of the Federal Reserve Bank of New York or the Federal Reserve System. National economic conditions It has been three and one half years since the end of the “Great Recession.” But, the pace of this expansion so far remains very sluggish compared with previous post-World War II business cycles: the level of real gross domestic product (GDP) in the fourth quarter of 2012 was only around 2½ percent above its previous peak in the fourth quarter of 2007. To put this into perspective, at this point in time following recessions in 1973, 1981, 1990 and 2001, the level of real GDP ranged from 14 percent to 18 percent above the previous cyclical peak.

There is no doubt that the updated recommendations will enhance the level and methods of protection of the economic system against such type of crimes threatening it. In conclusion, I would like to express my thanks and gratitude for your respected group for its achievements accomplished during its short life, wishing you continued success. I thank the organizers for their efforts. I also welcome you again in the Kingdom of Saudi Arabia and I hope that your meetings in this session will be a success. 2  BIS central bankers’ speeches
Guidelines for identification of Important Business Services Given this divergence in approach, you might reasonably ask me whether these differences are justified, what the ‘right’ answer is, and why the regulators do not just specify what it is? In response, I think it’s important to recognise that we have deliberately built some flexibility into the policy to allow firms to identify IBS in a way that best suits their specific business models. So a degree of difference is absolutely expected. As we continue our supervisory work we will be asking firms to clarify how they have incorporated the key points of the policy that make clear that IBS should: deliver a specific outcome or service to an identifiable external user. This means if it’s more than one outcome, or the user cannot be identified, then the granularity is too high; be granular enough that they are distinguished from business lines which are a collection of services; be at a level where one impact tolerance per regulatory objective can be set; not be at the level of internal services (where the granularity would be too low); and be at a level where boards can make prioritisation and investment decisions. We expect these guidelines for setting IBS to inform firms thinking and that differences in approach will narrow over time. Bodies such as UK Finance also have an important role to play in facilitating and encouraging information sharing across firms, which in turn is likely to help increase consistency where appropriate.

A key objective for this is to mitigate the problem of ‘rolling bad apples’ within the Malaysian financial industry. Conclusion Business ethics has become a popular topic in the world of finance. We must be careful not to pay lip service to the hype. We must be careful not to pretend that it can be addressed with simplistic solutions. We must instead take a holistic, thoughtful and realistic approach in building a culture of professionalism and ethics. Allow me to conclude here by leaving you with three key messages– First – we cannot afford to underestimate the power and danger of “bad barrels”. The evidence demands that we focus carefully on cultivating a “system” and designing “situations” that encourage continuous ethical behaviour. This is a shared responsibility. As I have said, regulators play a crucial role in articulating the letter of the law. But it is the private sector leadership that determines whether its moral spirit will be pursued. Second – we must not neglect the uncomfortable reality that there are “bad apples” out there. A clear message needs to be sent out, that the financial industry does not have room for these. Fair, proportionate and transparent disciplinary action will be central in communicating this message. Finally – the entire financial sector must embrace the language of ethics and objectivity. Just like in any human relationship – trust, honesty and integrity are moral values which must permeate through the business.