samchain/econo-pairs-v1 huggingface dataset:
So, as a result of our operations, investors end up holding fewer gilts, together with more cash in their bank accounts. And corresponding to that increase in bank deposits, the banks themselves see their reserves accounts at the Bank of England increase. If the seller were indifferent between holding the gilt and holding the associated bank deposit, then that is where things would end. But because deposits tend to yield less than gilts and assets such as corporate bonds and equities, the seller is likely in due course to want to buy some other asset instead. The consequence is upward pressure on the prices of a whole range of assets, including corporate bonds and equities. That in turn increases the availability, and reduces the cost, of finance to corporates. It also boosts the value of people's wealth, which should encourage more spending. And, more generally, QE is likely to have boosted confidence by removing some of the worst downside risks associated with a potential slide into deflation. As I noted a moment ago, we aim to source the gilts from institutions other than banks. Because the banks end up with more customer deposits and more liquid assets, they may be encouraged to extend more bank credit. In this way, QE could boost the supply of credit through the banking system, as well as through the capital markets. But in the circumstances prevailing after the financial crisis, with the banks engaged in repairing their balance sheets, this particular channel was expected to be weak.

At the EU or euro area level, it is logical to consider some kind of a banking union, but in my mind, this would involve a two-tier system, wherein domestically oriented banks that are not systemically important for the area as a whole will remain within the domestic system of supervision, deposit insurance, and LOLR. What should happen at the global level is somewhat less clear to me. Some temporary retrenchment is probably not undesirable at this point, as cross-border banking – and perhaps financial globalisation more generally – far outpaced developments in public frameworks. The issue of global liquidity provision to banks needs further exploration. And finally, if countries are increasingly taking unilateral action to protect themselves, someone – probably the IMF – must monitor the process. Going forward, some rules of the game might have to be considered so that we are not faced with unintended consequences for the global system. BIS central bankers’ speeches  3
This is obviously not the case in Chile today. In our country, the extraordinary fiscal and monetary stimulus should be very effective, because these efforts are sustainable and credible. This is visible also, to different degrees, in other economies in the region that are committed to foreign exchange flexibility, price stability, fiscal responsibility and financial soundness. Developed economies will need to correctly address the medium-term effects of monetary expansions and increased public debt. If the origin of the global loss of confidence is the financial crisis, then stabilizing the banking industry and restoring the payment system is not only a priority but a necessary condition for economic recovery. Hence the importance that developed countries have placed on stabilizing the financial system, which is timidly beginning to bear fruit. No simple or rapid prescription exists to rebuild the confidence that has been lost. Some think that conveying optimism is a good idea. However, if such optimism has no ground, only a lack of sense of reality will be communicated. On the other hand, sending a pessimistic message can erode confidence even further. If there is one thing we know, not only about economics but about every walk of life, it is that people cannot be fooled forever, so the only way to act is realistically. 6  BIS Review 76/2009  We are enduring a world recession, and nobody disagrees about the current hardships the world economy faces, so the discussion has shifted to when we will see the first signs of recovery.

Economists in central banking  “Never has central banking been more subjected to scientific analysis than during the last two decades. Increasingly, the economic profession has moulded the behaviour of the central banker into abstract economic models. This has made it possible to analyse how the central banker can be given incentives that will make him do the right thing: how he should set interest rates optimally; how he should be made accountable; and what his punishment should be if he fails to comply with the terms of his contract. Yet, after the scientific onslaught of the last decades, there is still the feeling that, after all, central banking is mainly an art, and that the success of a central banker depends on such intangibles as feeling the mood of the market.”5 - This quote from Paul De Grauwe tells us that central banking is a place where economists are particularly challenged. They have to excel as professional economists and, at the same time, they need to understand what drives the moods out there in the markets. “Scientific analysis must be combined with artistic feelings to produce a successful central banker.”6 Central bankers assume responsibility for price stability as well as for financial stability. This in some countries includes banking supervision and financial market oversight. At the same time, they take care of the side effects of their policy on economic growth, employment and international trade. In other words, theirs is the world of economics in a very comprehensive sense of the term.
I was very keen to deliver this speech upon the invitation of my friend, Professor Otmar Issing. I profoundly believe that culture is at the heart of the European project. The cultural unity of Europe is based on the recognition of, and an openness to, its cultural diversity. Europe benefits greatly from the mix of cultures. This is the core concept of the ECB Cultural Days. 3. In times of crisis, culture can be seen as a luxury, a remedy or a refuge. The past two years must have been very difficult for you, presenting you with many challenges and a very heavy workload. What works of art helped you to unwind during this period? Particularly in very demanding and challenging crises, it is important to remain composed, to be able to stand back from immediate events and to develop as sound and as lucid a judgement as possible. I think that, in times like these, it helps more than ever to read a good Ismail Kadare book or a beautiful Heine poem, or to stand in quiet contemplation in front of a Caravaggio painting at the Städel. 4. Turning to the ECB Cultural Days: how did the idea come about and what is the connection between culture and central banking? I have always felt that there is a profound link between the European Union and its cultural identity. I trust this belief is widely shared by ECB staff and our Executive Board, Governing Council and General Council.

When I became President of the ECB, I was very happy to see that this initiative had already been launched by my predecessor, Wim Duisenberg. I was determined to give it renewed impetus. The event can be seen from three different angles. From the perspective of the ECB’s staff and the 27 national central banks of the European System of Central Banks, it is a way of celebrating all the national cultures and being proud of them. For Frankfurt and the RhineMain region as a whole, it is a way of appealing to a large, cosmopolitan audience. For Europe as a whole, it is an occasion to celebrate cultural unity and diversity under the auspices of one of its major institutions, the ECB. I should mention that the ECB and the national central bank co-organising the Cultural Days – this year Banca Naţională a  BIS Review 121/2009  1  României – benefit from the remarkable support of the City of Frankfurt and other active sponsors, whom I would like to thank for their contributions. 2  BIS Review 121/2009
Lars Heikensten: The Riksbank and stabilisation policy Speech by Mr Lars Heikensten, Governor of the Sveriges Riksbank, at a discussion seminar of LO (the labour organisation), Stockholm, 24 May 2005. *  *  *  Let me begin by thanking you for the invitation to attend this seminar. I look forward to an interesting and rewarding discussion. The invitation to the seminar contained a list of questions for discussion. I intend to structure my contribution in terms of working my way down the list and giving my views on these questions. Before I do so, however, I would like to take this opportunity to say that I appreciated the section on stabilisation policy’s possibilities and limitations in the LO economists latest “Economic Prospects” report. Although I do not agree with everything – which will become clear later – I perceived the article to be serious and searching in a positive way. Is stabilisation policy important? My answer to this question is (of course): Yes, stabilisation policy is important. One only needs to look at our experiences in the 1970s and 1980s to realise this. What happened then was that the policy conducted could not sustain an adequate balance in the economy. The policy conducted was often too expansionary, which created an environment where it was difficult to keep price and wage increases at a reasonable level. The rapid increases in wages and prices were repeatedly in collision with the fixed exchange rate.

According to the price information act, goods sold to individual consumers in Sweden must be priced in the currency relevant to the customer. The act does not state which currency prices should be stated in, but as long as most wages are paid in krona, the retail trade is obliged to price goods in krona. The role of the krona as a means of payment and unit of account is thus protected. Although there is great freedom to choose other currencies, the krona thus has a special position in the Swedish economy. There are also strong economic reasons for Swedish companies and households wanting predictability in their real income to use the krona as contract currency; this applies as long as the value of the krona is upheld, i.e. that there is a low inflation rate, as the real value of the income is determined by price developments on the goods and services consumed by the household/company. In the long term, the development in real purchasing power of the income is determined by productivity developments. Then real purchasing power parity also prevails, i.e. the price of an article is the same in the long term, regardless of the country in which it is sold and the currency in which it is priced. This means that a country with goods and services that cost a lot in foreign currency will sooner or later have to depreciate its currency and/or lower its domestic prices.
The value of many assets is being overestimated by investors and increased global political risks are not being taken into account. Political risks lead to greater uncertainty in economic policy. If we look at the indices of uncertainty in economic policy, we can see that they have reached their maximum values. This means that along with improving the prospects for economic growth, it is necessary to take into account possible changes in the functioning of financial markets and potential spikes in volatility. 3) On currency risk and measures for the deforexation of the economy In a climate of lowered yet still high volatility in oil prices, currency risks continue to be potentially significant. From the point of view of currency risk management, I would like to highlight the need, on the one hand for further deforexation of the balance sheets in the banking sector, and on the other for limiting foreign exchange risks in the non-financial sector of the economy. The issue of deforexation of the banking sector was raised at the Forum on Financial Stability last year, with particular emphasis placed on foreign currency lending to those sectors and companies that do not have sufficient foreign exchange reserves. This problem primarily arises in relation to companies from the construction and real estate sectors. As you know, the Bank of Russia made a number of changes to regulation in order to limit the risks associated with such lending, and to ensure that banks have a capital buffer for these loans.

Among the other tools and risks that require particular attention, I would like to turn now to interest rate risk and macroprudential stress testing. 5) On interest rate risk in the banking sector At present, interest rate risk in the Russian banking sector is low. This is largely thanks to the fact that after market stabilisation which took place in 2015 and the period following, the economy learned to adapt to external shocks, and confidence in implemented monetary policy grew. Amid slowing inflation and decreasing interest rates on bank loans and deposits, banks have been able to increase their margins of interest. This in turn has contributed to growth in net interest income, which reached a three-year peak in the fourth quarter of 2016 to exceed 700 billion rubles. Despite low interest rate risk for Russian banks, it is important not to forget the need for improvement in systems of risk management. In terms of inflation targeting, interest rates are quite heavily dependent on inflation behaviour and can significantly impact the value of credit institutions’ assets and liabilities, as well as their interest margins. When taking this into account, the challenge of effectively managing banks’ interest rate risk becomes very important. Recently, particular attention has been paid to this issue by the world’s leading central banks. A year ago, in April 2016, the Basel Committee on Banking Supervision (BCBS) released their benchmark standard, dedicated to the management of interest rate risk in banking books.
What perhaps is most relevant for today’s discussion is how the MLA has defined the Central Bank’s relationship with the Government. Towards that end, a careful examination of the MLA as well as John Exter’s “Report on the establishment of the Central Bank of Ceylon” in November 1949, (popularly called the Exter Report), will provide some useful insights as to the objectives and background of one of the most important pieces of legislation in our country. At this stage, a quick introduction of John Exter may also be relevant. John Exter was a senior official of the Federal Reserve System who was seconded for service in late 1948, to the Government of Ceylon by the US Government, to advise the Government of Ceylon about the organization and the functions of a Reserve Bank for Ceylon, and to frame proposals for a draft constitution for the Reserve Bank of Ceylon. Exter who was a brilliant banker and scholar, fulfilled his mission and was thereafter appointed as the first Governor of the Central Bank of Ceylon in 1950. John Exter’s Report, now serves as the most important  2  BIS central bankers’ speeches  and authoritative reference for Central Bankers in Sri Lanka, and is referred to often by academics and practitioners of Central Banking, whenever a clarification is required on any issue relating to central banking in Sri Lanka. Getting back to our topic, what does this analysis of the MLA reveal?

My impression is that economic agents and analysts are generally fairly close to the mark in their analyses when they attempt to predict the interest rate level. Chart: Summary  BIS central bankers’ speeches  7  When the inflation target was introduced, Norges Bank stated that it would place particular emphasis on stabilising inflation in the initial years. As inflation became more firmly anchored, there was broader scope for giving more weight to stabilising output and employment. In addition, we now have ten years of experience and insight. Compared with the first years, inflation targeting is now more flexible. When Haavelmo received the Nobel Prize, he reminded us that economic policy can be demanding. A failure to react to the build-up of imbalances undermines confidence in economic policy. If we tighten policy to rein in imbalances – and succeed – we are viewed in retrospect as having been unduly pessimistic. There is, though, reason for a certain degree of optimism. Theoretically anchored models and improved methods for quantifying them empirically provide a better basis for conducting an effective economic policy. Moreover, we use professional judgement, which we take on board when we apply and further develop models and the analytical apparatus in Norges Bank. Knowledge about relationships in the Norwegian economy, in conjunction with professional judgement, provides a good platform. Thank you for your attention.
The rise in whole-economy pay has been held back in recent years by the 1% cap on public sector pay. This, arithmetically, has lowered whole-economy pay growth. To my mind, it is likely also to have had a shadowing effect on pay-setting behaviour in the private sector, by setting a very low norm or floor for wage bargaining among private companies, in what has been a tightening labour market. Either way, that public sector pay cap is now being lifted and decisively so. In excess of 1 million NHS workers will receive an across-the-board pay rise of 3% this year. Some NHS workers, especially those in lower salary ranges, may receive pay rises in excess of 10%. That is a nice way for those workers to be celebrating the NHS’s 70th birthday. The lifting of the public pay cap for the NHS could well have knock-on effects, not only to pay settlements elsewhere in the public sector, but to private sector settlements too given the tightness of the labour market. This will add to the gradual, but now clear, upwards impetus to wage and cost pressures in the UK economy, at a time when headline inflation is already somewhat above the MPC’s 2% target. Earlier this week, I was in Wales on a regional visit. The clear message from a number of employers in a number of industries was that wage pressures had picked-up this year.

The role of quality, and its inter-relationships with operational aspects of a service organisation has been expressed in what has been described as the “service-profit chain” as follows: (i) profit and growth are stimulated primarily by customer loyalty; (ii) loyalty is a direct result of customer satisfaction; (iii) satisfaction is largely influenced by the value of services provided to customers; (iv) value is created by satisfied, loyal and productive employees; (v) employee satisfaction results primarily from high-quality support services and policies that enable employees to deliver results to customers. Superior insights on customer needs will be an important advantage. This will involve recognising the diverse needs of the different customer segments. There is now already a discernable change in the pattern of customer behaviour. There is now an increasing shift towards a customer base that has less need for the standard distribution systems for most banking services. “If you build it, they will come” used to be the by-word for domestic banking institutions. A new branch would naturally attract new customers. Now, while customer relationship is of vital importance, these needs to be addressed in the context of the needs of the younger customers for retail services who do not want the “inconvenience” of a branch. The preference is for services as much as possible over the telephone, ATM or Internet. Writing cheques has become an inconvenience. This new generation of customers have their own ideas of what a bank should be and successful banks need to respond to this change.
It is therefore a trailblazing piece of legislation at global level, aiming to avoid regulatory fragmentation across Member States vis-à-vis cryptoassets not qualifying as financial instruments or currencies. The regulation aims to improve transparency in relation to issuance, operation, organisation and governance of cryptoasset service providers; bolster consumer protection; and incorporate measures to prevent market abuse. It also aspires to cover the wide range of existing cryptoassets, including the aforementioned stablecoins. Let me conclude by thanking you once again for this invitation. The report published today accurately diagnoses the situation facing our financial sector. I think it is fair to point out that banks share this diagnosis and, broadly speaking, they are aware of what lies ahead. This does not make the challenge any less difficult, but is a necessary first step towards turning their intentions into actions. As I stated during another appearance, any challenge can be viewed from two opposing standpoints: either as a threat or as an opportunity. Whether it is perceived as one or the other often depends on the attitude adopted and the willingness deployed. Thank you. 5/5  BIS central bankers' speeches

“The Credit Rating Crisis”, NBER Working Paper, 15045. Freixas X., Parigi B. and J. Rochet (2000). “Systemic Risk, Inter-Bank Realtions and Liquidity Provision by the Central Bank”, Journal of Money and Credit Banking, 32(2). BIS Review 97/2009  3  Morgan D. (2002). “Rating Banks: Risk and Uncertainty in an opaque Industry”, American Economic Review, 92(4). Rochet J. (2008). “Liquidity Regulation and the Lender of Last Resort”, Financial Stability Review, Banque de France, February. 4  BIS Review 97/2009