samchain/econo-pairs-v1 huggingface dataset:
Moving up the risk spectrum, the price of both investment and sub-investment grade corporate bonds has risen since March last year, by 20% and 60% respectively. Global equity prices have risen by over 70% over the same period. The rise in UK equity prices is one of the largest in the 316-year history of the Bank of England (Chart 4). Residential and commercial property prices in the UK have turned. And global wealth losses on private sector securities, at around $ trillion, have fallen by a factor of four over the past year alone. What explains this remarkable recovery in risky asset prices? Three factors seem to have been important, all of which can be traced to policy actions by the authorities:   First, the rate at which the future cashflows on risky assets are discounted has fallen due to lower short and long-term global real interest rates. Using a standard asset pricing model, this discount rate effect accounts for perhaps around one fifth of the rise in UK and euro-area equity prices and one third of the rise in US equity prices since March last year (Chart 5).   Second, as fears of a repeat of the Great Depression have abated, the premium that investors require to compensate for this risk – the risk premium – has fallen, boosting expected future cashflows on risky assets. This more than accounts for the rise in UK and US equity prices over the past year (Chart 5).

There are already some examples of voluntary debt-for-equity exchanges among companies. For example, Chelsea Football Club recently announced a large-scale swap, which accounts for their plummit down the debt league table. In principle, mortgage contracts could also be adapted to lessen the burden on over-indebted households by allowing lenders to convert their loan into an equity stake, as suggested, for example, by the charity Shelter. 16 Preventing tomorrow’s debt hangover Once today’s debt hangover is solved, how is tomorrow’s to be prevented? As debt crises have been with us for a millennium, it is fanciful to think they could be eliminated. But could the party be moderated in frequency and scale? In seeking new ways to tackle this old problem, two possible avenues would be the re-orientation of regulatory policy on the one hand and better designed debt contracts on the other. First, regulatory policy. Since at least the 1970s, public policy has not sought actively to moderate fluctuations in the credit cycle in most G7 economies. Moderating the business cycle was believed sufficient to hold credit in check. The experience of the past decade, in the UK and elsewhere, has called that into question. In the UK, credit grew at three times the rate of money spending over that period, sowing the seeds of the credit crisis, while inflation and growth remained remarkably stable. In tackling this problem, one option is a re-orientation of regulatory policy towards curbing the cycle in credit supply.
Pursuant to Chapter 1, § 3 of the Act on Norges Bank and the Monetary System, “the Bank shall inform the ministry when, in the opinion of the Bank, there is a need for measures to be taken by others than the Bank in the field of monetary, credit or foreign exchange policy”. 2  BIS Review 60/2009  On the basis of this provision, Norges Bank, in a letter of 6 October to the Ministry of Finance, took the initiative to establish a swap arrangement. In a letter of 18 December, we also proposed measures to strengthen banks’ solidity. The chart shows events and the measures and proposals at the initiative of Norges Bank. A critical period was the end of September and the beginning of October with the collapse of the investment bank Lehman Brothers, the savings bank Washington Mutual and the insurance company AIG. The extensive measures that have been implemented have worked. The difference between Norges Bank’s key rate and the money market rate – the premium – has narrowed, but is still higher than prior to the crisis. The flow of interbank liquidity appears to have been restored to some extent, but the money market is still segmented and the central bank an important meeting place. Even if premiums in the money market and credit market have been high and volatile, the changes in central bank key rates have fed through to money market rates.

Svein Gjedrem: The conduct of monetary policy Introductory statement by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at the hearing before the Standing Committee on Finance and Economic Affairs of the Storting (Norwegian parliament), Oslo, 14 May 2009. Please note that the text below may differ slightly from the actual presentation. The statement is based on Norges Bank’s Annual Report for 2008, Monetary Policy Report 1/2009 and the Executive Board’s assessments in the period to the monetary policy meeting on 6 May. *  *  *  I would like to thank the Chairman of the Committee for this opportunity to report on monetary policy in connection with the Storting’s deliberations on the Government’s Credit Report. My statement is based on Norges Bank’s Annual Report, but is also updated based on the Executive Board’s assessments in the period to the previous monetary policy meeting and new information received to date. I also refer to this year’s report from Norges Bank Watch, a group of experts that evaluates Norges Bank’s conduct of monetary policy. Monetary policy in Norway is oriented towards maintaining low and stable inflation. The operational target is annual consumer price inflation of close to 2.5 per cent over time. The inflation target is an anchor for inflation expectations in the foreign exchange market, for the social partners in connection with wage settlements and for those setting prices for goods and services.
Supervisory technology or SupTech The second aspect of our approach that I want to highlight is SupTech. Many of you are familiar with RegTech – the use of technology to enhance risk management and regulatory compliance in financial institutions. Well, why should regulated entities have a monopoly over the use of technology? Regulators too can harness technology to enhance the efficiency and effectiveness of supervision and surveillance. There is clearly greater scope for the use of analytics for financial surveillance and supervision: big data, machine learning, and perhaps even natural language processing. I believe securities regulators will increasingly harness big data to detect, enforce and prosecute misconduct. In a recent case, US SEC obtained a settlement against a broker-dealer for its failure to adequately train its representatives, when they were selling certain complex debt instruments. Custom analytics tools, instead of traditional investigative techniques, were used to sift through millions of trading records, which identified over 8,000 retail customers for whom the investment in the debt instruments was inappropriate. 5/7  BIS central bankers' speeches  In MAS, we have started using techniques such as clustering and network analysis in our supervision of the financial markets and monitoring of AML/CFT risks. We are developing algorithms to scan suspicious transaction reports (STRs) and identify those that warrant further attention, allowing supervisors to focus their resources on higherrisk transactions. We are working to develop algorithms that can detect and identify trading accounts suspected of syndicated activities.

I understand LumenLab already has an existing relationship with NUS, and aims to seek more partnerships across industry sectors such as data analytics, market research, pharmaceutical, and technology, to explore new business opportunities. LumenLab is a prime example of how a large enterprise can create an environment like this within its  4  The LTA and A*STAR has been working on the Singapore Autonomous Vehicle Initiative (SAVI) since August 2014, and has successfully rolled out Autonomous Vehicle (AV) trials in One-North in March 2015. 5  Telemedicine is the use of telecommunications and IT to provide remote clinical healthcare. 6  Oscar Health is a New York-based start-up that provides policy holders with telemedicine tools, enables drug and doctor searches, price comparison for healthcare services, and rewards policy holders for hitting activity goals. Obamacare start-up Oscar Health hits a $ billion valuation, Forbes (2015). 2  BIS central bankers’ speeches  structure, to foster a culture of innovation and entrepreneurship, and partner with organisations across industry sectors and academia in Singapore to identify opportunities for innovation and growth. Singapore as a smart financial centre Singapore, too, needs to position ourselves for this new future.
The Governing Council has made explicit in its communication that we expect the key ECB interest rates to remain at current or lower levels for an extended period of time. We have chosen not to be specific either about the date or the conditions. The euro area is composed of diverse and somewhat heterogeneous economies, as shown by the very different unemployment rates. And as I said, it is undergoing a phase of rapid structural change. The relationships between major economic variables are therefore very complex and uncertain and it may have been very confusing to tie monetary policy moves to any set of pre-specified dates or parameters. As it stands, forward guidance has been quite successful in stabilising the short-term part of the yield curve, thus bringing significant monetary accommodation. Some concluding remarks Let me end with two general remarks on the future and limitations of monetary policy. In the future, after many years of implementing non-conventional policies, one may wonder whether central banks will ever return to their pre-crisis framework. Is inflation targeting dead and non-conventional the “new normal”? I can only offer some conjectures. While the pre-crisis framework has been transformed, maybe irreversibly it has, in some aspects, also been strengthened: all central banks have now adopted a quantification of their price stability objective; everyone is aware that symmetry in implementing their mandate is crucial; everyone is putting increased emphasis on communication to impact monetary and financial conditions.

Its behavior has been atypical compared to previous episodes following a recession. This fall was especially marked in the euro area, from 2.7% in 2011 to 0.8% in December 2013. Recently, developments in the euro area have started to diverge downward from some other advanced economies such as United States and Canada. The sources and reasons for such a low inflation are complex and multiple. There are many uncertainties. Temporary and global factors may be at play in the euro area with import prices going down. I also think there are more permanent and deep forces pushing inflation down both at the euro area and global level. Besides there is still an important unused capacity – commonly labeled as “slack” -in most advanced economies, as demand has not yet caught up with its pre-recession levels and firms, as a consequence, have not recovered their pricing power. Commodity price inflation has been trending down recently. This is true both for energy and food prices. Commodity prices have a global impact and react very amply to small changes in supply and demand equilibrium. They act as amplifiers and transmitters of disinflationary pressures. Powerful headwinds – and disinflationary forces- are coming from the deleveraging process especially in the euro area, due to the importance of the banking sector and the amplitude of its balance sheet adjustment. We are working very hard to repair the bank-lending channel in the euro area.
Mervyn King: The Monetary Policy Committee - five years on Speech delivered by Mr Mervyn King, Deputy Governor of the Bank of England, to the Society of Business Economists, at the Royal College of Pathologists, London, 22 May 2002. I would especially like to thank Claire Lombardelli, James Proudman and James Talbot for their expert help in conducting and analysing the experiment reported in this paper. I have also benefited from useful comments from Charlie Bean, Mark Cornelius, Spencer Dale and Peter Rodgers. Richard Geare provided help with the data. *  *  *  Five years ago, the power to set interest rates in this country was given to a new Monetary Policy Committee (the MPC). That decision is still widely regarded as the most important taken by the incoming new Labour Government. At the time, the decision to create the MPC was controversial. That is hardly surprising. Few decisions have as much economic impact as the level of short-term interest rates. They attract the interest of politicians and the media, yet when the MPC sets interest rates, it acts independently of government. The government sets the target, but the Committee sets interest rates to meet that target. Compared with many other countries central bank independence in the UK is relatively recent, although not unprecedented.

This means that from a monetary-policy perspective the Federal Reserve can unwind the LSAPs at any pace that it deems appropriate when they are no longer needed. Forward guidance about the future policy rate in the form of a policy-rate forecast was adopted by the Reserve Bank of New Zealand in 1997, Norges Bank in 2005, the Riksbank in 2007, and the Czech National Bank in 2008. It has become a standard part of monetarypolicy communication in these central banks. Forward guidance in the form of statements about the future policy rate was introduced by the Bank of Canada in 2009 and the Bank of Japan in 2010. The Federal Reserve introduced language in the March 2009 statement that it anticipated rates to remain at low levels for an “extended period” and in the August 2011 statement that it anticipated rates would remain low “at least through mid-2013.” I have long been in favour of the publication of a policy-rate forecast on a regular basis (Svensson 2003). This is based on both the existing practical experience of publishing such forecasts and the fact that what matters for the economy and private-sector decisions is not what the policy rate is during the one or few months until the next policy meeting but what the longer interest rates are that result from market expectations of future policy rates and term premiums.
Banks and other financial institutions drastically reduced their exposure to the risks that they had imprudently accumulated during the phase of financial euphoria. Financial intermediation and loans to companies were curtailed in the wake of a forceful process of “deleveraging”. This was the point when important spillovers of the financial crisis set in. We saw the almost immediate spillover from the financial sector to the real economy. The credit squeeze and loss of confidence started to take a toll on the real economy, and a negative feedback loop developed between the financial sector and the real economy, and has since become a major feature of economic and financial developments. Almost simultaneously, the crisis that originated in the advanced economies spilled over to the emerging market economies. Since the fourth quarter of 2008, virtually all economies – both those of the industrialised countries and the emerging markets – have faced synchronised business cycles. Since half a year, we are facing a highly synchronised global economic downturn. The ECB’s response to the financial crisis Turning to the ECB’s response to the crisis, let me first insist that none of my remarks should be interpreted in terms of the future course of monetary policy. I stick rigorously to what I have said during my last press conference. We are indeed in the one-week “purdah period” before the next meeting of the Governing Council. Since the start of the financial turmoil, central banks around the globe face unprecedented challenges.

It aims to help people find out more about the notes and coins they use every day. On this occasion, though, there’s something new. The highlight today is the brand new ten euro note. It’s the first time it has been on public display since it was unveiled to the media just two days ago at the ECB in Frankfurt. That means you’ll be one of the first to see this new note before it starts circulating on 23 September this year. The new ten euro is part of what we call the Europa series of banknotes. It’s named after the figure from Greek mythology whose portrait is included in the hologram and the watermark on the notes. Take a closer look at those two security features in the exhibition, as well as the distinctive emerald number, which changes colour from green to deep blue when you tilt the note. They’re all examples of how we have used advanced technologies to make the notes even more secure. The security features will keep us well ahead of counterfeiters – and justify the confidence that the people of the euro area have in their money. There’s a lot more to be seen in this exhibition, which I hope you will all find as interesting and entertaining as I did. So without further ado, allow me to declare it open. BIS central bankers’ speeches  1
As always, in case of any visible change in market conditions, the Bank will be able to make adjustments to this program, which will be communicated in a timely manner. Significantly, the possibility of strengthening the country’s international liquidity position is supported by a well-functioning foreign exchange market. This has gone hand in hand with a significant drop in local uncertainty. It is important that this better climate persists. In previous years we have seen how moments of high uncertainty had a very strong impact on the exchange rate, amplifying its effects on prices and inflation. Others must also move in the direction of recovering their capacities. Some are already doing so, such as the Treasury. During 2022, it made a significant adjustment in spending, which also contributed to the process of resolving macroeconomic imbalances. Going forward, it is vital that it continue on a path consistent with the structural balance target. The current-account deficit has been significantly reduced and projections indicate that it will return to figures in the order of 4% of GDP this year, which compares favorably with its historical levels. Restoring private savings, especially those of households, is a primary task. We have stressed many times the importance of saving, particularly long-term, as well as of a deep financial market that efficiently allocates these savings to investments that will allow us to grow and develop. The overuse of private savings during the pandemic led to a very significant drop in savings.

In banking regulation, externalities are the conceptual driver behind the enhanced prudential standards for capital, liquidity, and risk management that are currently applied to the largest, most systemically important financial institutions.8 Principal-agent problems Principal-agent problems reflect incentives for employees to act in ways that don’t align with the broader interests of management or shareholders. This can lead to excessive risk-taking, underinvestment in risk-reduction and risk-control mechanisms, and a focus on short-term returns at the cost of long-run viability. Think about the trader who is compensated on short-term P&L and not long-term value creation. These issues can be amplified by the opacity intrinsic to many financial activities that allows misconduct to persist and erodes the cultural capital of the firm. 3/5  BIS central bankers' speeches  Adverse selection Adverse selection occurs when those particularly ill-suited for something are the most likely to participate. This could be a complicating factor in this context if conduct-related events change the composition of a firm’s workforce. Firms with relatively low cultural capital (and a relatively high tolerance of misconduct risk) may attract and retain employees and clients more inclined to take inappropriate risks and push beyond internal limits and controls. Further, high-quality directors, executives, and employees might leave such firms or decline to join them, depleting the firm’s human capital and contributing to the deterioration of cultural capital.
4  Ladies and gentlemen, before moving on to what lies ahead, let me briefly summarise my key message – excessive leverage is the root cause of the global financial crisis, but surprisingly, not much has changed. Many have still not learnt the lesson, and think the problems can be solved by further leveraging. And policymakers advocating extremely accommodative monetary easing still believe liquidity-driven growth is the answer. Indeed, it’s ironic that low interest rates, mispricing of risk and excessive debt levels, which contributed to the crisis in the first place, are now considered the “solution”. BIS central bankers’ speeches  What lies ahead? 14. So, we have now entered “uncharted waters” or the “world of the unknown”. It has often been argued that the Global Financial Crisis was unprecedented and one which demanded unprecedented policy action. As most of the advanced economies have very little, if any, fiscal headroom to support growth and job creation, the use of zero interest rates and QE, and leveraging on central banks’ seemingly limitless ability to expand their balance sheets, appears to be “The Only Game in Town”. Presumably, this means the situation has become so bad, we may as well try these unconventional policies to see if they work. However, as I outlined earlier, the efficacy or potency of these policies has not been as strong as first thought. In the US, the pace of economic recovery has been rather moderate, if not disappointing, despite the unprecedented fiscal and monetary support packages launched since 2009.

The base case outlook is looking good, but various uncertainties continue to loom large. Therefore, we can afford to be flexible and wait for the data to guide our approach. In that context, the FOMC decided to keep interest rates where they were at the most recent meeting, and noted the importance of patience in determining future policy actions. To use a nautical metaphor, guiding the U.S. economy is like steering a large ship. Monetary policy decisions can leave a wake several miles long, with implications that reach far into the future. We’ll consider the full range of data, the headline statistics, the market indicators, and we’ll listen to our business contacts on the ground, as we aim to keep the economy on its current course of a strong labor market, sustainable growth, and 2 percent inflation. Conclusion R-star provides a helpful framework, not just for thinking about monetary policy, but also for understanding the current progress of GDP growth and its likely trajectory over the coming years. Moderate growth, both in the U.S. and the global economy, is far less alarming when you know what the underlying factors might be. And all the signs have been pointing to a slower growth trend. You may have had Destiny’s Child—Beyoncé—turned up too loud to spot the signs, but they have certainly been there. Slow trend growth and low r-star in the current global context presents certain challenges to monetary policy, another topic for a future day.