samchain/econo-pairs-v1 huggingface dataset:
But they had to do so after a group of actors had given an incorrect answer.4 About one third of participants went along with the majority, even though it was readily apparent their answers were incorrect.5 When asked why they went along with the group they said it was because they wanted to fit in, or because they believed the group was better informed than they were. Does the junior banker drop the issue in an effort to fit in? Does she raise the issue in private, or does she call a company hotline? The answer depends on the complex relationship between the individual and the culture in which they work. I’m particularly looking forward to hearing from Celia Moore. She spoke at the New York Fed last 2/4  BIS central bankers' speeches  year and discussed how organizations set goals and motivate people to achieve them. Praise, penalties, and rewards all influence an individual’s behavior. Signals from the organization’s leadership also have a major role to play: do the higher echelons of management value divergent views? Do they foster a culture where people feel empowered to speak up?6 All of these things shape how an individual will respond to an ethical dilemma, whether they will acknowledge it as such, and how they will lead others as they move up in an organization. As financial services professionals with great technical expertise, we often fall into the trap of thinking we can solve all of our problems on our own.

What does a good culture look like? How can leaders in the industry establish a positive culture 1/4  BIS central bankers' speeches  within their firms? And perhaps hardest of all, how do you ensure that a firm’s culture adapts to the changing world, but still stays true to its values and purpose? An Ethical Dilemma Consider this:2 A junior banker on a successful real estate investment team is asked to run projections for future rental income for a mall in Hong Kong. As part of her research she notices a number in a spreadsheet that inflates future cash flows by 4 percent. She asks a senior analyst if the number should be flagged as an optimistic assumption, so it’s clear it’s not based on evidence. The senior analyst responds by saying the number is a more conservative estimate than many. He says it’s a “judgment call” and that they can discuss it once the project has concluded. But the project comes and goes, everyone is busy, and the senior analyst doesn’t bring it up again. This scenario raises numerous questions: Should the junior team member raise the issue again or should she let it go? What was driving the behavior of the senior analyst? And why did no one else on the team view the situation as an ethical dilemma? These are the kinds of issues that people often face in a work environment. And this example demonstrates many of the ways culture influences behavior.
It plots the latest HICP inflation forecasts from the Euro Zone Barometer – a publication that produces macroeconomic and financial forecasts every month from a number of major economic forecasters in Europe. In this month’s edition, forecasters expect the spell of negative inflation in 2009 to last on average for a few months. Looking at the range of individual responses (which is shown as a shaded area), there is some disagreement between the highest and lowest forecast. But even in the lowest forecast, the period with negative inflation rate is expected to last no more than two quarters. Furthermore, according to the same survey, inflation projections for 2010 have been gradually revised downwards since January 2009 as economic conditions have deteriorated. This phenomenon is illustrated in slide 8, as a month-to-month shift to the left of the inflation forecasts. Nevertheless, the median projection still remains above 1%. So, if there is no evidence of a generalised and persistent fall in the price level in the latest inflation outturns, what is underpinning current deflationary fears? As I see it, when people think about deflation, they have in mind two possible scenarios. The first is that the accumulation of economic slack due to the recession may exacerbate downside risks to price developments, which in turn may lead to outright deflation as monetary policy loses traction in stabilising output. The second scenario is that a spell of negative headline inflation rates – perhaps due to the temporary impact of energy and food prices – might dislodge inflation expectations.

In our case, the surge in speculative capital inflows at the end of last year caused a rapid appreciation of the baht relative to regional currencies. I must stress that the recent capital surge heralds the onset, and not the end, of the unwinding of global financial imbalances. There remains considerable room for US dollar correction. As such, the threat of global imbalances to the economic and financial stability of Thailand is still very much present. You may recall that we have experienced sizeable capital inflows, and accompanied with that, a rapid appreciation of the baht effective exchange rate toward the end of last year. In dealing with the rapid appreciation, conventional wisdom suggests an adherence to market mechanisms. This proved to be inadequate. The baht continued to appreciate with the likelihood of it becoming more and more out of line with its fundamentals. After a number of unsuccessful conventional measures, we resorted to the measure of imposing a reserve requirement on capital inflows in December 2006. The measure was designed to break the one-way currency momentum, to preserve our overall economic stability, and to buy some time to allow a smooth transition. Let me be clear that we intended for the reserve requirement to be a temporary measure, designed to preserve financial stability and to afford the real sector time to adjust to a more volatile market condition. To this end, I believe that it has succeeded. To be sure, no measure is without its costs.
If given enough authority, rules can induce symmetric behaviour. It remains to be seen how the discretionary fiscal measures adopted in response to the crisis can be wound down and reversed to support fiscal sustainability in the longer run. Since the ECB has started to gradually phase out its extraordinary liquidity support measures, fiscal authorities should also start to withdraw stimulus to safeguard public solvency over the medium term. To support this, we have the right mechanisms in place in Europe. Governments will have to comply with and, as experience shows, even re-enforce the fiscal rules enshrined in the Stability and Growth Pact. Concluding remarks: some lessons From this quick overview, I draw two lessons for monetary policy. The first lesson to be learned is that central banks need to broaden – not restrict – their overview of the economy. Monetary data are critical in warning against risks that are slow to appear in inflation forecasts. Monetary analysis at the ECB consistently sent early signals that risk was broadly under-priced, when inflation was quiescent and measures of slack were moderate. BIS Review 22/2010  3  The second lesson is that price stability is the only anchor which can pin down the economy in turbulent times. It is not sufficient to guarantee financial stability, but it is certainly necessary to prevent financial instability. Increasing the level of inflation that central banks should aim at would be a step in the wrong direction.

•  Several Asian regulators, such as China, India, Philippines and Singapore, have set capital requirements that exceed the Basel III standards. •  And banks in China, India, Thailand, Hong Kong and Singapore were already subject to liquidity requirements prior to Basel III. Second, Asia’s financial systems emerged from the last crisis less affected than their global peers, with much of their financial resources and businesses intact. BIS central bankers’ speeches  3  •  A focus on traditional banking helped Asian banks avoid the fall-outs from the collapse of complex, structured products and risks from outsized trading desks. •  This, together with their strong deposit funding, means that Asian banks do not need to deleverage or withdraw from markets in order to meet the more stringent capital ratios or new liquidity requirements. Asian banks have been able to fill the financing gaps that opened up as global banks concentrated on repairing their balance sheets back home. •  According to BIS data, between 2008 and 2014, the share of Eurozone banks in international claims on Emerging Asia more than halved to just 15% whereas the share of Asian banks almost doubled to 60%. If Asian banks continue to maintain strong buffers and manage their risks well, they are wellplaced to thrive and grow in the new regulatory environment. Technological innovation A third major force shaping Asia’s banking landscape is technology, specifically digital technology. This could prove both transformative and disruptive in a region where banking penetration remains low.
Peter Pang: Launch of the new cross-border collateral management service Remarks by Mr Peter Pang, Deputy Chief Executive of the Hong Kong Monetary, at the cross-border collateral management service signing ceremony and press conference, Hong Kong, 20 June 2012. *  *  *  Mr. Grimonpont, Mr. Bhatia, ladies and gentlemen, Good afternoon. It is my pleasure to welcome you to this signing ceremony. The bilateral agreements that I shall sign on behalf of the Hong Kong Monetary Authority with the Euroclear Bank and J.P.Morgan today will pave the way for the launch of the new cross-border collateral management service, a critical building block of the cross-border bond investment and settlement platform launched in March 2012. The new service, which will commence on 25 June, will bring significant benefits to the contracting partners and the money market as a whole. For Hong Kong, it will advance the development of our repo market, enhance the stability of our financial system and strengthen further Hong Kong’s role as the global hub for offshore renminbi business. The repo market is a key component of major international financial centres. It serves as the link between the money and capital markets, and is vital to the well functioning of the financing channels. By providing credit enhancement through the use of securities as collateral, the repo market also serves as the lubricant that keeps the financial engine running particularly during times of risk aversion.

Japanese industrial production  Percentage change on a year earlier  September 2008  Percentage change on a month earlier  40  2  20  0  10  -2  0  -4  -10  -6 September 2008  -30 Jan 07  Jul 07  Jan 08  Jul 08  Jan 01  5. German export values  September 2008  6  Jan 03  Jan 05  Jan 03  Jan 05  -8 -10  Jan 07  6. US Non-farm payrolls  Percentage change on a month earlier  Jan 01  4  30  -20  Jul 06  Jan 07  0  3. Brazilian car sales  Jan 06  -10  Jan 07  two monthly change, thousands  8  1000  4  500  0  0  -4  -500  -8  September 2008  -12  Jan 01  Jan 03  Jan 05  Jan 07  BIS Review 8/2009  -1000 -1500  7. UK manufacturing output  8.
The reason for the gradual approach was that, in December 1989, Romania’s regime changed in a dramatic manner, which was more painful than the experience of other former communist countries. A completely different approach was noticeable, for instance, in Poland, where short-term concerns were left aside in order to create, from the very beginning, a climate conducive to lasting economic growth based on solid foundations. This shock therapy, delivered by the then finance minister Leszek Balcerowicz, who would later go on to become governor of the Polish central bank, kicked off by triggering extremely high inflation (its annual average rate nearing 600 percent in 1990), but afterwards enabled a relatively steep decline in inflation to moderate levels, where it stabilised. In Romania, where the “shock therapy versus gradualism” dilemma was solved in favour of the latter option, such a feat in taming inflation would not have been possible in the early years of transition. The gradual liberalisation of prices, launched in the autumn of 1990, was broadly concluded no earlier than towards the end-nineties, which translated into perpetually high inflation rates. We named it corrective inflation, but it was difficult to explain repeatedly to the public that this kind of inflation was necessary. As a result, an inflationary climate became the norm in Romania. No matter which monetary policy the National Bank of Romania would have pursued at the time, the environment in which it was implemented was utterly unfavourable for ensuring price stability.

Speaking of the past, I cannot help remembering that in the early nineties, when I took over as Governor of the National Bank of Romania, a tremendous effort was needed – not only in Romania, but also in the other former communist countries in Central and Eastern Europe – to go from a monobank-type system to a two-tier system. The effort was even bigger in a country like Romania, where – after some attempts to implement reforms in the sixties and seventies – the economic and financial system had become ever more centralised, more Stalinist-like in the final decade of the communist regime. In hindsight, now that things have settled, these changes may seem like a piece of cake, but please try to imagine how difficult it was to take the reins of an institution that had operated in the context of centralised state planning of the entire economic activity. There was no trace of monetary policy and commercial banking operations needed to be separated from central bank operations. The former were taken over by Banca Comercială Română, later part of the Erste Bank group, while monetary policy became the responsibility of the National Bank of Romania. The “parting of the waters” occurred pretty quickly, but the new NBR only accounted for less than 5 percent of the former central bank employees, most of them in cash management and accounting.
The euro area is currently witnessing a process of rapid disinflation, mainly driven by the marked decline in global commodity prices since last July and associated base effects. This is likely to cause a U-shaped profile for headline annual inflation in the course of 2009. We expect headline annual inflation to fall further in the coming months, temporarily reaching negative levels in some months around mid-year. Thereafter, annual inflation rates are expected to increase again in the latter part of 2009. Against the background of these price developments, is there a reason to be concerned about deflation? In my opinion, the risk of deflation in the euro area remains very limited. What we are experiencing in the euro area is a disinflation process reflecting reduced inflationary pressure in the supply chain due to lower input costs, a moderation of wage increases and stronger competition in a context of falling demand and excess capacity. This temporary disinflation does not constitute a persistent, broad-based and self-sustaining  12  See European Commission (2009)  13  General government debt of euro area governments was 77.4% of GDP in 1997, and had reached 69.1% in 2007. BIS Review 65/2009  7  decline in the overall price level, which may be reinforced by the anticipation that prices will decline further in the future. On the contrary, expectations of inflation over the medium to long-term are solidly anchored at levels consistent with price stability.

And today, perhaps even on your way here, you listened to a streaming service on your phone or watch using voice commands. There's been much innovation over the years, and many improvements in terms of convenience and costs, but at the most basic level we are still doing the same thing: enjoying music. It's how we're doing it that's changed. The same is true with money and payments. Both are fundamentally changing through technological transformations. As happened with the delivery of music, the pace of technological advancement is accelerating, and it's clearing the way to do things faster or more efficiently. On top of that, the development of digital currencies has boomed. This includes cryptocurrencies that are not fully backed by other assets. It also includes stablecoins that are fully backed by safe and liquid assets, and central bank digital currencies (CBDC). Both stablecoins and CBDC that are fully backed by safe assets have the potential to be a new way to hold money and make payments. While all of this innovation opens up possibilities to do things differently than the past, it also carries risks. Just like listening to music, the "how" may change, but the "what" will remain the same. As we look ahead, it's important to remember that even as the technology changes, the role of the central bank has not. It is and will always be to supply money and liquidity to bring stability to the economy and financial system.
It has been argued that targeting a 2% inflation rate results in this zero bound constraint binding too frequently, inhibiting the effectiveness of monetary policy. 47 A higher target would loosen that constraint. This academic debate may run for some time. On the financial stability side, the position is less straightforward. There is no single, easily observable or quantifiable target for systemic risk against which to hold the FPC and PRA to  45  Bernanke and Mishkin (1997) first coined this term in the context of inflation–targeting. 46  Shiller (1997). 47  Ball (2014). BIS central bankers’ speeches  7  account. And the public at large often do not have well-defined or strong attitudes towards financial stability – except, perhaps, when things go wrong. Since 2012, the Bank has been surveying the general public on how they believe the Bank has performed in protecting the financial system. Some reassurance can perhaps be taken from the fact that this has moved from a net dissatisfaction score of 13 in 2012 to a net satisfaction score of 40 today. 48 Nonetheless, by itself this approach falls well short of having a clear objective against which the FPC and PRA can periodically be assessed. The FPC has begun publishing a set of financial stability indicators against which it assesses systemic risk and is held to account.

For a start, the economy was clearly well suited to participate in Economic and Monetary Union (EMU): it has a long history as a market economy; it is already closely integrated with the euro area through trade and finance; it has close similarities with the euro area in the sectoral composition of output and employment as well as in terms of business cycle synchronisation; it enjoys a relatively high level of development, with a per capita GDP close to the euro area average; and its currency has a long history of stability. The euro, furthermore, offered the prospect of enhancing the economy’s potential to grow faster. The elimination of exchange rate risk and currency conversion costs should result in increased trade, while the low interest rate and inflation environment of the euro area should make for reduced business costs and greater macroeconomic stability. Combined with the fiscal discipline associated with monetary union, this is expected to translate into higher credit ratings and improved investment prospects. From a central banker’s perspective, moreover, a key benefit of euro area membership will be the elimination of the risks inherent  BIS Review 110/2007  1  in managing a small, vulnerable currency and their replacement by the greater security afforded by the world’s second most important currency. Finally, the object of our quest, that is participation in EMU, was desirable for another reason. We were aware that we would thus become part of a framework that has been successful in fostering economic growth and employment creation.
The real failure of economists was that too much energy was devoted to forecasting – to trying to assess whether economies would turn down – and not enough was spent analysing the question of “well, what if they do; how bad could it be?” And as a result, the financial system was unprepared. It was not a failure of economics. It was a failure to apply economics to the right question. Without economics, the answers to “how bad could it be?” relied all too often on recent historical precedent; on this time being different. 11  And, even more dangerously, they relied on market measures of risk; indicators that – as recent work at here the LSE Systemic Risk Centre shows – often point to risks being at their lowest when risks are actually at their highest. 12  The Financial Policy Committee’s mandate is to break free of the shackles of forecasting, to free us from trying to predict if the economy will turn down, and to apply economic analysis to the question of how bad it could be if it did. 13  The re-focussing of economic research since the crisis has supported us in that. It has  established, for example, how far: 14  Recessions that follow credit booms are typically deeper and longer-lasting than others ; 15  Over-indebted borrowers contract aggregate demand as they deleverage ;  While they have high levels of debt, households are vulnerable to the unexpected.

We have recently asked ourselves why it is that LIFFE has retained its position in the three-month euromark contract and the ten-year Bund contract - Europe’s most active longer-term interest rate contract. And for those of you who like to go home with a reading list, there is an interesting article on the subject of what makes for successful futures contacts in our latest Quarterly Bulletin. (I am sure the restaurants and the bars of the West End will be empty tonight as you sit in your hotel rooms poring over it.) Frankfurt has recently started making inroads into LIFFE’s share of Bund futures business - but the level of activity on LIFFE nonetheless continues to increase. Our assessment is that, in these markets, there is a considerable and long-term advantage inherent in being the first mover. That helped LIFFE to achieve a very broad and international membership, with only 27 per cent of members being UK-based. It has meant that London has an established skill base and good support functions in law and accountancy. Also a good telecommunications system - though fewer of those old telephone boxes, which may be a problem for me at super-SIB. London also has a strong clearing function and we should not forget the advantage of the English language, which is increasingly the lingua franca of the European Union, and I believe that even some Americans can now speak a kind of pidgin version which allows them to be understood. But EMU will create change. This raises three interesting questions.