samchain/econo-pairs-v1 huggingface dataset:
This is partly because the financial crisis originated in the United States and the financial market turbulence has not been as severe as there. Another explanation is that the financial balance is better in Europe; public sector finances have improved in recent years and the current account is close to zero. We assumed in the Monetary Policy report that GDP growth in the euro area would slow down to 1.7 per cent in 2008 and 1.2 per cent in 2009, to reach almost 2 per cent in 2010. At the beginning of July we had seen little sign of the slower growth in the statistics on production and in the National Accounts. On the contrary, there had been several positive surprises. However, there were tangible signs of a future slowdown in other types of data, such as corporate and household confidence indicators. The quick figures for the second quarter now indicate that GDP in the euro area declined by 0.2 per cent compared with the first quarter, which was weaker than we had expected. Global growth still strong GDP growth in the world as a whole has been very strong over the last four years, around 5 per cent a year. Not since the early 1970s, prior to the first oil crisis in 1973, have we seen such strong growth in the world for such a long period of time.

While pull factors actually improved, and rating upgrades by Moody’s outnumbered downgrades by three to one in 2005, they cannot fully account for the magnitude of capital flows to emerging markets in that year. For example, BIS provides a measure of an average sovereign credit rating for emerging markets based on long-term foreign currency Standard & Poors ratings. While credit spreads fell to an all-time low, at the same time emerging markets sovereign ratings remained below their highest levels recorded in 1997. Therefore we may conclude that push factors have been playing an important role in emerging markets. For example, the hedge fund community came to a view that in early 2004 the Polish zloty was an obvious “no-brainer” trade, partly because it had depreciated significantly in previous years and partly because EU accession resulted in a significant and permanent drop in the country’s risk premium. In early 2005, hedge funds were telling me that the Brazilian real was another “no-brainer” trade, as the central bank would have to keep high rates to control inflation and a good external balance indicated that the exchange rate could appreciate. In both cases, the Polish zloty in 2004 and the Brazilian real in 2005 were star performing currencies, and hedge funds pursuing carry trade and momentum strategies were important players on these markets. Such a situation poses a true challenge for many central banks in emerging markets.
To say that was risky is an understatement: at such levels, a 2% fall in the value of a bank’s assets is sufficient to wipe out its capital and render it insolvent. Remuneration, especially the structure of financial sector bonuses, encouraged excessive risk-taking, and distorted the aspirations and career choices of too many talented young people. Investors, banks and regulators had been swept up by the apparent success of modern finance. When investors realised that many of the assets that banks held on their balance sheets were opaque and hard to value, there was immediate and justifiable concern about the solvency of many of those banks. At the end of 2008, these two fundamental factors culminated in the worst financial crisis in history. In the six months after Lehman Brothers collapsed world trade fell by nearly 20% – a faster decline than in the Great Depression. Around the world, the same telling phrase was repeated: economic activity was “falling off a cliff”. In its statement to the London G20 summit in April 2009, the international trade union movement argued that “The first priority for G20 leaders must be to restore confidence by halting the freefall in world growth”. That has been achieved. World output grew by 4% over the past year. And in the United Kingdom, growth has been somewhat faster than anticipated a year ago. Nevertheless, total UK output remains around 10% below where it would have been had the crisis not occurred. So how do we prevent this happening again?

That makes monitoring the economy closely, and setting policy to support it, more important than ever. At present, the largest clouds on the economic horizon in the UK come from: the effects of rising numbers of Covid cases across the UK and the accompanying policy measures taken to contain them; risks to business activity and jobs in the light of these public health developments; and the effects of moving to new trading arrangements with the EU at year-end. This unholy trinity of risks give good grounds for caution. Some degree of caution is desirable - in how we socialise, shop and work - to prevent the spread of this awful disease. But we need at the same time to prevent healthy caution morphing into fear and fatalism. Pessimism can be as contagious as the disease - and as damaging to our economic fortunes. Avoiding economic anxiety is crucial to support the on-going recovery. This has important implications for how businesses and policymakers act and communicate. The Fall and Rise of the UK Economy Let me start by running through the fortunes of the economy so far this year. The early months saw a collapse in UK economic activity unprecedented in its speed and scale – a fall in GDP of around a quarter in a matter of weeks. This recession was unique in its source as well as its speed and scale. An extreme shock to public health required extreme public health measures, restricting the flow of goods, services and people.
It has spearheaded with great success mortgage securitisation and mortgage insurance in Hong Kong. It has launched credit guarantee for SMEs as well as retirement protection solutions such as the Reverse Mortgage Programme and, more recently, the Life Annuity Scheme. The HKMC is now considering a new line of business entailing the purchase of infrastructure loans for the purpose of securitisation. 6. It is generally acknowledged that infrastructure investments are probably the most difficult and complex amongst different asset classes. The typical infrastructure projects normally involve larger investments and for a longer period than many other types of investments. They also involve complicated land acquisition, environmental, labour and other social issues that require strong support or facilitation by the host government in their resolution. However, infrastructure investments, if properly designed and run, can bring about steady and long-term cash flow and good return to the invested capital. Moreover, the space of infrastructure in the developed world is getting increasingly crowded, with yields or returns steadily declining as there is an abundance of capital chasing after limited opportunities. In contrast, there is enormous headroom and potential for infrastructure investments in the EMEs. The crucial issue is how to channel the capital to the investments or turn more projects into “bankable” or “investible” projects. 7. In this context, banks and multilateral development institutions play a crucial part. They have the necessary technical expertise in the relevant fields and the requisite local knowledge to underwrite greenfield projects.

The fact that the question of possible gold sales by the SNB in the market has not arisen until recently is due to several technical and psychological factors: • • • •  Gold is still valued at its last official price of 1971 in the SNB’s balance sheet, only one-third of its market value is shown; In the past, the SNB was required to back 40 per cent of the banknotes in circulation with gold, which did not leave any room for action; The sale of gold requires a fundamental reform of the Swiss monetary system, which, because of our direct democracy, is a long and complex process; Finally, in the public’s mind, the Swiss franc and gold were so closely linked that the idea of selling gold seemed to be rather unrealistic. Things started to move in February 1997. At that time, a first decision regarding demonetisation of gold was taken by the Economic Committee of the National Council, one of our two houses of our parliament. Two months later, in May 1997, the market became fully aware of the gold issue, when the President of the Confederation proposed to parliament to allocate a part of the revaluation gain on gold to fund a Swiss Foundation for Solidarity which would provide assistance to persons in need in Switzerland and abroad. It was established from the outset that the initial contribution to the foundation would be in the form of a 500 tonnes gold donation by the SNB.
The reform agenda of the government includes improving financial viability of the State Owned Enterprises (SOEs) to mitigate the budgetary implications for the government. While introducing clear frameworks and reforms in relation to monetary and exchange rate policies in 2017, we have implemented several policy measures during 2017 to address the challenges in the financial sector and maintain a stable financial system for effective monetary policy transmission and to support sustainable growth. With a view to promote a dynamic and resilient financial sector, the regulatory and supervisory framework of the Central Bank was further strengthened in line with international standards and best practices. At present, our banking sector accounts for over Rs. 10 trillion in assets, while the non-bank financial institutions sector accounts for over Rs. 1 trillion in assets. The implementation of Basel III capital standards was commenced in 2017 in order to develop a more robust banking sector. The framework to regulate the non-bank financial institutions was strengthened under challenging conditions, and resolution of distressed finance companies was also commenced. During 2017, the Central Bank continued to strengthen the regulatory framework for the microfinance sector, and continued to combat the menace of illegal pyramid schemes with the assistance of other government agencies. Several measures were adopted to strengthen and modernise the payment and settlement infrastructure in order to develop an efficient and stable payment and settlement system in the country, as well as to pave the way towards a digital economy.

Road Map: Monetary and Financial Sector Policies for 2018 and Beyond  Delivered by  Dr. Indrajit Coomaraswamy Governor Central Bank of Sri Lanka 3 January 2018  1. Introduction Your Excellencies, Members of the Monetary Board, Senior Deputy Governor, Deputy Governors and Officials of the Central Bank, Distinguished Invitees, Ladies and Gentlemen, First, let me warmly welcome you to the presentation of this year’s Road Map. Continuing our tradition that was initiated in 2007, today we are pleased to present the eleventh Road Map of the Central Bank of Sri Lanka. It is our belief that sharing our future policy direction and actions would help you to plan your business trajectory with more certainty. I hope this Road Map will enhance the transparency and clarity of our policies, which would help you to achieve your targets more effectively. The successful outcomes in your businesses would ultimately help us to implement our policies more effectively for the benefit of both the economy and people of Sri Lanka. The year 2017 was challenging. We have seen economy-wide effects due to inclement weather conditions. The drought and floods disturbed agriculture activities and agro based industrial activities. Spillover effects of these adverse weather conditions impacted the other sectors of the economy as well. As a result, economic growth is expected to be subdued and lower than we projected at the beginning of the year.
Another angle to cooperation arises from the “long and variable lags” in the economy – and not just in the monetary transmission process. Each committee can face very long and uncertain lags between deciding to take a policy action and the maximal impact on its objective. That makes it unlikely that any one objective can be achieved precisely at all points in time. As well as predictable lags, policy outcomes are subject to all sorts of random disturbances that constantly require changes to policy settings. Suppose, however, a committee actually tried to obtain its objectives at every moment in time regardless. That would likely necessitate wild swings in policy settings: imagine the MPC trying to set Bank Rate so that 2% inflation was achieved exactly every month! Not only would it quickly prove impossible, attempting the feat would drastically reduce the chances of the other committees achieving their objectives. So a degree of humility is required by each committee, for the sake of coordination as well as the credibility of each. In their commitments to hit their statutory primary objectives I would say that: •  The MPC should not be “inflation nutters”. •  The FPC should not seek the “stability of the graveyard”. •  The PRA Board should not seek to implement a “zero failure regime”. That is supported helpfully by the secondary objectives of each policy maker. One can interpret them in several ways, but to me they help put the primary objectives in an overall context.

Previously, forecasts were instead based on the assumption that the repo rate would remain unchanged during the forecast period. What consequences does this change have? Monetary policy could previously be described with a simple policy rule. If the forecast for inflation was below two per cent, the repo rate would normally be cut, and it was above two per cent the interest rate would be raised. If the forecast was very close to two per cent the repo rate would remain unchanged. Of course, this rule could not capture all of the nuances in the monetary policy discussion, but it provided a rough explanation of the monetary policy decisions. Now we no longer use this simple policy rule. According to our new way of thinking, if the inflation forecast is close to two per cent, the repo rate should normally develop in line with market expectations. This could mean that the repo rate should be raised or lowered in a number of stages over the coming two-year period. The new way of thinking thus means that, unlike before, the monetary policy discussion is now based on an interest rate path that stretches across the entire forecast period. This method of working enables clearer communication regarding future policy. Although it cannot, of course, be regarded as a commitment from the Riksbank that the repo rate actually will follow a particular path. Each time we make a decision, we take a stance on the repo rate path, on the basis of the information available at the time.
What applies to pay-outs to executives applies, with equal force, to pay-outs to shareholders. Whether as dividends or buy-backs, these too have been on a steadily rising tide over recent decades: from around 10% of profits in the 1970s, to 60–70% today, as short-term shareholder demands have risen steadily. 52 Yet monies paid-out to shareholders are monies also failing to be re-invested in future value creation by the company. In short – too short – the shareholder-centric model may have become a recipe for depleting long-term company wealth-creation and, thus, societal well-being. 53 Or that, at least, is the contention. So what to do about it? Earlier this week, an interim report was issued on “The Purposeful Company” by the Big Innovation Centre. 54 I should declare an interest here, as I and others at the Bank have been involved in putting together this report. The report serves two  49  Big Innovation Centre (2016). 50  “Say on pay” is a term used to describe a rule in corporate law where a firm’s shareholders have the right to vote on the remuneration of executives. 51  See High Pay Centre (2015) and Economic Policy Institute (2015). 52  Haldane (2015). 53  For example, Asker et al (2014) and Davies et al (2014) show, for the US and UK respectively, that private companies invest more than otherwise-equivalent public companies. 54  Big Innovation Centre (2016). 12  BIS central bankers’ speeches  purposes.

In my view, this absence of academic debate and challenge contributed, in no small measure, to international prudential standards being set at levels which were, with the benefit of 20/20 hindsight, not just too low but ridiculously too low. We must not repeat that same mistake. 29  Results from a poll conducted by Populus for the Bank of England in March 2016 of around 2,000 adults. 30  Douglas (1945). 31  For example see Bailey (2015) on prudential regulation, Cunliffe (2015) on macroprudential policy, Carney (2015) on markets and Bank of England (2016) on buy-to-let underwriting standards. 32  Bank of England Systemic Risk Survey 2015 H2, available at: http://www.bankofengland.co.uk/publications/ Pages/other/srs/srs2015h2.aspx. 33  Armstrong and Davis (2016). BIS central bankers’ speeches  7  So academic challenge, challenge which causes policymakers to think, and possibly rethink, their calibration of prudential standards, is an essential ingredient of a healthy financial and regulatory system. The academic debate about prudential standards for banks is not closed; it has only just opened. And one of the Bank’s public policy responsibilities is to help nurture that policy challenge. Indeed, this was one of the prime motivations behind the Bank’s new research agenda, launched last year. Third, there is a clear and obvious complementarity between improved prudential standards for banks and protecting bank customers. Since January 2011, UK banks have paid out more than £ billion to customers in redress for mis-sold Payments Protection Insurance (PPI) alone. 34 These are astonishingly large sums.
In the remainder of the lecture I will concentrate mainly on trust and credibility as two aspects of “faith”, which appear most relevant for monetary policy making. Trust and the quest for credibility are at the core of a monetary economy, the role of central banks in such an economy and the search for an appropriate monetary constitution. This is not to say that there is no room for faith as “belief based on authority” both in the public perception of central banks and of central bankers. 2. Trust: the role of money and the value of price stability  One does not have to look very far in order to find a link between faith and money. In fact, every onedollar bill bears the inscription “In God we trust”. The Euro will be more secular in this respect. In the case of Sterling, the pound notes feature a “promise to pay the bearer” of the note the amount stated. This points to the very nature of money as being built on trust, on a promise. Trust is crucial for money to function as a medium of exchange, as a store of value and as a stable unit of account. Using economic terminology, money - or rather the trust that underpins the use of money - has public good characteristics or confers positive network externalities on all participants in the economy. In this way money economises significantly on the costs of transactions that would be present in a pure barter economy.

And what will the ECB be doing on the day the troika returns home? Well, we won’t perhaps be engaging in similarly wild celebrations – we are central bankers, after all. But I suspect that I, and my fellow board members, may raise a quiet toast to the achievement of a country in so admirably fighting its way back to solvency and stability. I wish you continued success in meeting that goal and we stand ready to work with you in achieving this goal. 6  BIS central bankers’ speeches
Lars Nyberg: The crisis, the Riksbank and monetary policy Speech by Mr Lars Nyberg, Deputy Governor of the Sveriges Riksbank, at the Bankmarknadsdagen, Stockholm, 28 November 2008. *  *  *  Introduction The financial system is an important part of our social structure. The payment system and the supply of credit are central to all economic activities. When the general public’s confidence in the financial system is shaken and when the participants in the system no longer trust one another, then something serious has happened in our society. This means that all those involved, both in the private and public sectors, must have a discussion on how this situation arose and what we can do to avoid it happening again. The financial turbulence, which began in summer 2007 with problems in the US mortgage market, has during the autumn become an acute crisis. Also during the autumn we in Sweden have gone from largely watching the crisis from the sidelines, to being very much involved. Today I will give my views on how this could happen and on what has occurred during the autumn. Last spring there were many indications that conditions in the financial markets were gradually improving. I shall also reflect on the methods used by central banks and governments around the world to try to manage the problems and to safeguard financial stability.

Those who are subject to this pain should have a good understanding of the virtues of this painful adjustment and be prepared to take the bitter medicine for a permanent cure of the ailment. This casts a new responsibility on the banks, because monetary policy is implemented by the central bank through banks. In terms of this new responsibility, the banks should appreciate the intention of the central bank with a positive note. If the central bank raises interest rates and curtails credit levels, the banks should do much more than what the central bank has directed. It has to extend, both by deed and word, its full cooperation and commitment to attaining the monetary policy targets, because at the end, they are the main beneficiaries of having an inflation free world. A similar responsibility is cast on the private sector as well. The Central Bank, like a good physician, has to flush out all the causes of inflation from the system. When doing so, it has to adopt painful and unpopular measures. But such measures are taken for the interest and the long term well-being of the economy. If the economy is allowed to be hit by inflation continuously, it is the private sector which would suffer most. It would be reduced from a long term planner to an at the moment event manager. It would be pestered with numerous requests for wage increases by the employees. Its profits would fall in real terms.