samchain/econo-pairs-v1 huggingface dataset:
But, it is a very useful tool, because on their own, risk-based measures can be arbitraged too by claiming that the measured risk has fallen when the real risk has not. The leverage ratio helps to put a floor into the system which stops that type of activity beyond a certain point. Does this approach of using several tools leave the whole system of regulation too complicated? It certainly puts an emphasis on having good people in regulation, but I come back to the quote of the late 1980s, namely that good regulation has to understand how firms take risks. That does not, however, mean that a supervisor should allow a free-for-all and then (usually vainly) hope to understand it. We are doing a number of important things to counter complexity. First, the proposal on ringfencing from the Independent Commission has a strong element of separating more straightforward activities from the more complex. It should not be a matter of rules and good behaviour inside the ringfence and the Wild West outside, because the outside could damage the financial system, but we will be able to use different approaches on each. Second, the Prudential Regulation Authority will be very focused in its judgements on the things that matter for our objectives. For me, this is where simplicity is key – keep it very focused, but to do that we must have good people who can see the wood for the trees. That is what we are developing for the PRA.

Basel I was flawed in that it failed adequately to cover investment banking activities that grew after the late 1980s, arguably because of the regulatory arbitrage. Basel II failed to fill these gaps adequately. But Basel I, through its simple risk weights, also encouraged the property-lending boom. One part of the story goes something like this: demutalised building societies came under pressure to generate higher returns for shareholders and thus devised business models that pushed them towards greater leverage and larger risks for a given amount of lending – in other words, higher LTV lending. And they also exploited another flaw in Basel I, the ability to securitise loans without properly assessing the impact on the viability of the business models. Thus, Northern Rock grew its high LTV, low-margin lending and developed a securitisation operation that was ultimately too big for the bank to sustain. Now to be clear, this is not a defence of Basel II. Far from it. Basel II introduced a modelbased approach alongside the so-called standardised approach. It created complexity, and it encouraged the use of models generally, including for assets that are not, in my view, susceptible to robust modelling. Basel II was also implemented in what looks like too much haste – it may not have seemed that way at the time I accept. But bad models were allowed through the gate. Commercial property was a bad case in point. One has to ask whether commercial property loans are too lumpy to be modelled. But, modelled they were.
A common method for imputing rent for owner-occupied housing is to apply the rent for a dwelling of an equivalent type, which is often referred to as rental equivalence. In addition to Norway, statistical agencies in Denmark, the US and Germany, among others, use imputed rent to calculate owner occupants’ housing costs in the consumer price index. The consumer price index is designed to measure price developments for a stream of goods and services. It is the service the dwelling provides that the consumer price index is to capture. House prices are more like asset prices, such as share prices or bond prices. It may nevertheless be interesting to look at the relationship between house price and rents, at least in theory. Let us assume that the rental market and home ownership market are in equilibrium. In this case, home rental prices will reflect the cost of owning a home. What is included in the cost of owning a dwelling? The cost of acquiring a home must obviously be included and the financing cost is determined by the interest rate. Norwegian households primarily finance home purchases with floating-rate mortgages. Long-term interest rates are still important because they provide information about developments in short-term interest rates over time. The long-term interest rate is therefore the most relevant rate. Housing depreciation also has a bearing on user costs. Moreover, the expected increase in the price of a dwelling represents a gain that must be deducted from costs.

In this period, there were a total of ten devaluations or "technical adjustments" that entailed devaluation, often with the aim of bringing costs back under control. The objective of keeping inflation stable was set aside. Repeated devaluations eventually led to expectations that the authorities would not in the future stand by their promise of a fixed exchange rate, and that if price and cost inflation became too high, it was expected that the krone would be devalued again. The social partners began to take higher inflation into account in wage demands and price setting. The last devaluation came in 1986. Subsequently, the interest rate was used to maintain a fixed krone exchange rate in order to bring price and cost inflation under control. We again chose a fixed exchange rate and other countries' inflation as a nominal anchor. Economic policy was influenced by the experiences of other countries that had dealt with the problem of inflation earlier, such as the US and Germany. The decline in inflation in Norway thus came in the wake of the fall in inflation abroad. Historical data seem to suggest that after turbulent periods, inflation gradually reverts to a low and stable level and that over time domestic inflation is determined by external inflation. However, inflation in a country with its own national currency is not something that just drifts in with the wind from abroad. It is the monetary policy choices we make in Norway that determine price developments here.
In this respect, African countries may have to consider the utilisation of domestically generated resources such as international reserves’, pension funds as well as the enhanced use of stock markets in raising financial resources required to finance development in Africa. However, it is important to stress that the effective utilisation of  1  IMF World Economic Outlook Database, April 2009. BIS Review 126/2009  1  resources will be dependent on the credibility of the institutional frameworks within which these resources are deployed and the quality of the projects themselves in terms of their economic and social returns. Sources of development finance (a)  International reserves  The global economy has witnessed an unprecedented accumulation of foreign exchange reserves in the last ten years, particularly in developing countries and Africa has been no exception. According to the IMFs currency composition of official foreign exchange reserves (COFER), between 2001 and 2008 total world reserves increased by 227 percent from $ 2,049.6 billion to $ billion while emerging and developing country foreign reserves grew by 418 percent from $ 818.1 billion in 2001 to $ 4,237.7 billion in 2008. The rapid build up in foreign reserves resulted mainly from high commodity prices and increased portfolio and foreign direct investments in emerging and developing countries. Most developing country central banks approach foreign reserve asset allocation with a view of preserving capital and liquidity. This normally means that central banks invest in low risk, highly liquid assets with short-term investment horizons.

These incentives are offered in the context of the so-called "international headquartering" policy. According to the latest Central Bank of Cyprus forecasts of December 2022, the growth of the Cypriot economy is expected at 2,5% this year which compares well to the euro area average of 0,5%. Inflation is expected to decelerate in 2023, levelling at 3.3%, from 8.1% in 2022. Foreign investment in Cyprus, as I mentioned before, constitutes a significant driver for development. In recent years, major multinational firms in the Information, Communication and Technology industry (ICT), have relocated or expanded their activities in Cyprus, supporting Cypriot GDP and reinforcing the vision to transform Cyprus into an emerging technology hub in the Mediterranean. Cyprus' importance as a foreign investment hub is also reflected in the Greenfield FDI Performance Index1, created by FDI Intelligence, according to which in 2021, Cyprus was ranked in 18th place out of 84 countries included in this index (climbing by 50 places compared to 2020). Undoubtedly, the shipping sector is another important pillar of Cyprus' economic success. Limassol, Cyprus' maritime capital, is the home of influential names in the shipping industry, which boosted the country to the top ranks of the sector. Indicatively, Cyprus is the largest third-party ship management centre in the European Union, one of the largest in the world2 and is primed for further growth.
The discretionary component of budget policy, by contrast, can be measured by the variations in the primary balance adjusted to account for cyclical effects. According to the OECD’s figures, the budget balance in the United States, adjusted for the economic cycle, as a percentage of GDP shifted from a break-even situation in 1998, to a 0.9% surplus situation in 2000, and then to a 4.5% deficit in 2003 (and a 3.2% deficit in 2007; Figure 2). The aggregate deficit in the euro area adjusted for the cycle fluctuated between 2.7% in 2002 and 0.7% of GDP in 2007. The budget balance fluctuation range has thus been significantly 23 narrower than in the United States. To summarise, automatic budget stabilisers are more important in the euro area, while in the United States there is greater recourse to discretionary policies. 3.3  Shocks  As with monetary policy, the difference in the shocks hitting the two economies may explain the varying degrees of fiscal activism. In theory, an economy which is hit principally by demand shocks should make greater use of anti-cyclical budget policies than an economy hit mainly by supply shocks. This is a topic on which, as far as I know, no empirical studies have been conducted to date and it is thus a particularly interesting field of research. A hypothesis worth examining is the extent to which the greater frequency of demand shocks in the United States has justified greater fiscal activism in an anti-cyclical direction.

In light of this, the 1990 Budget Enforcement Act (BEA) introduced restrictions to the discretionary component of expenditure and ground rules designed to restrict spending to real revenue; on the basis of those rules, any new discretionary spending (apart from the legislation on social security and revenue) was to have a neutral impact on the budget. Thanks to this method, a positive budget balance was achieved and maintained for a certain amount of time under the Clinton administration. Yet the deficit’s disappearance proved short-lived; negative balances were repeatedly recorded in the wake of the taxation and spending policies adopted by President Bush’s administration. 3.4.2  The economic structure  Moving on to the deep-seated differences in economic structure, a crucial difference between the United States and the euro area lies in the far smaller size of the US government sector. 24  Alesina, A. and E. L. Glaeser (2005), A World of Differences. Fighting Poverty in the United States and in Europe. Published by Editori Laterza, Bari. 25  Persson, T., G. Roland and G. Tabellini (2000), “Comparative Politics and Public Finance” , Journal of Political Economy, No 108, pp. 1121-1161; Persson, T. and G. Tabellini (2003), The Economic Effects of Constitutions, Munich Lectures in Economics, MIT Press, Cambridge. BIS Review 135/2008  9  It follows that the automatic stabilisers, in particular, operate in somewhat different contexts in the two economic areas. This could partly explain why countries with larger governments generally show less product variability.
Since the end of the Great Recession, overall inflation has averaged near the 2 percent longer-run objective of the FOMC. The rate of overall inflation in each of the past few years has been somewhat variable, reflecting sharp swings in energy and commodity prices that largely have been driven by conditions outside of the United States. While swings in commodity prices can cause fluctuations in expenditures for consumers that can be difficult for them to manage, these swings tend to be transitory and self-correcting. For these reasons, most economists prefer to gauge underlying inflation pressures by monitoring movements in prices that are less transitory. These include, but are not limited to, the core measures of inflation that exclude food and energy components. Based on the personal consumption expenditures deflator, or PCE, measure of consumer price inflation, which is more comprehensive than the more widely known consumer price index, or CPI measure,  BIS central bankers’ speeches  1  the core inflation rate was 1.4 percent over the 12 months through December, below the 2 percent level that the Federal Open Market Committee (FOMC) has stated as its inflation objective, consistent with its mandate of price stability. The latest CPI indicates that inflation remained similarly subdued in January. Measures of longer-term inflation expectations have remained stable. Sluggish improvement in labor market conditions, subdued inflation, and well-anchored inflation expectations, were noted as the primary factors underlying the FOMC’s decision, at its January meeting, to continue to pursue a “highly accommodative” policy stance.

In conclusion, allow me to say that the Bank of Albania is in the process of perfecting the supervision regulatory framework, in the context of its cooperation with the European System of Central Banks. However, full and timely respect of legal and regulatory framework requirements on operational capitalisation and liquidity, as well as bank’s overall operational risk management methodology will continue to be an ongoing supervision priority. This process is oriented by the common objective to maintain banking and financial systems stability. The Bank of Albania remains committed to cooperate with the banking sector to achieve successfully this objective. As in previous years, the Bank of Albania will make the appropriate decisions to ensure that its fundamental objectives to maintain price and banking sector stability are constantly accomplished for the country’s stable growth in the long run. Thanking you for your valuable work, I wish you a New Year full of successes in your work and happiness in your families! Thank you! BIS central bankers’ speeches  3
Since the compilation of report, moreover, the political reasons for participating from the start have grown in that more countries than expected will now be members from the beginning. 2. The euro’s stability The euro will exist as an account-based currency as of next January. While banknotes and coins denominated in euro will not yet be in circulation, it will be possible to make transactions in euro. So what will be the euro’s role in currency markets? Will it be stable? And will it compete with the dollar as an international reserve currency? As we all know, predicting exchange rate movements is difficult. In general, one can say that a currency’s nominal exchange rate is determined by the real exchange rate together with differences in inflation with the rest of the world. A currency’s real exchange rate can be described as the price of goods and services in that country relative to the rest of the world. If a difference in inflation grows, a corresponding depreciation of the currency is needed to keep the real exchange rate stable. The current exchange rate is also influenced by expectations of future rates. The credibility of economic policy’s commitment to long-term price stability is thus important for exchange rate tendencies. The value of a currency is also susceptible to influences of a more temporary nature. Cyclical factors may play a part. When the economy is in an upward phase, a country may need a tighter monetary policy, which normally leads to an appreciation of its currency.

Traditional money market funds seek to maintain a constant NAV (CNAV funds) ie they invest with the explicit goal of maintaining a stable NAV of $ per share. Investors like this because it avoids any market price fluctuations in their investments. A CNAV money market fund is said to “break the buck” when its NAV falls below $ per share (or the equivalent in a fund’s respective currency). This is a rare event. Prior to the crisis, it had not happened to a US money market fund since the Community Bankers US Government Fund broke the buck in 199413. The conventional perception was that the principal should be “safe”. When money funds came under pressure during the crisis, more than 60 asset managers (among others, Wachovia and Legg Mason) unilaterally made up more than $ billion of losses14. On 16 September 2008, the Prime Reserve Fund, the oldest U.S. money market fund, wrote off 3 cents of losses on Lehman Brothers. Not being able to make up the losses, the fund was left with a NAV of $ triggering a “run” in the money markets. On 19 September 2008, the U.S. Treasury announced the establishment of a temporary one-year guarantee program to protect investors in money market funds. The funds that were eligible had to pay a fee to participate in the program, and any fund that had already “broke the buck” could not participate. This example raises several interesting issues.
In retrospect, we see that market participants failed in their risk assessment through the ten years following the introduction of the euro. Economic policy also failed. EU rules relating to budget deficits and public debt were disregarded early on when Germany and France exceeded the limits they had so eagerly advocated when the European Monetary Union was established. Other countries followed their example. Low interest rates made it easy to finance deficits by issuing new debt. BIS central bankers’ speeches  1  When financial markets collapsed in autumn 2008, the authorities had to intervene. Bail-out packages for banks shifted debt from private to public hands. Governments increased spending to curb the fall in activity. But Keynesian policy – increased spending to stimulate demand during a downturn – requires a willingness to exercise fiscal restraint during an upturn. Many countries had large budget deficits and high debt already before the crisis despite many years of prosperity. Limited growth capacity in the private sector also came into evidence when some countries could no longer stay afloat on borrowed funds. Good times turned into bad with the need for crisis-related measures. The burden became heavy to bear. Many countries are now attempting to rein in large deficits and rising government debt. Structural reforms are being implemented in Europe. Pension rules are being tightened and tax systems are under review. The cost of such reforms would have been lower in good times.

Confidence in some countries’ ability to service debt has been weakened. The monetary union is under pressure. (Chart 1: Current account) The crisis has its roots in global trade imbalances, with high saving in emerging economies and comparably large deficits in many advanced countries. The imbalances drove down long-term interest rates to very low levels and the appetite for risk grew. Inadequate financial sector regulation led to a further deepening of the imbalances. (Chart 2: Yield on 10-year government bonds) Four years after the financial crisis engulfed the world, a European version has now emerged. Both market participants and the authorities failed in their assessments after the introduction of a single currency. Prior to the introduction of the Economic and Monetary Union, there were wide differences between interest rates facing different European countries, which primarily reflected different inflation expectations across countries. But through the 1990s, long-term interest rates drifted down to German levels. Over the next 10 years, sovereign interest rates were fairly similar – and very low – for all euro area countries despite wide differences in debt levels, budget deficits and growth rates. Market participants did not take into account differences in sovereign creditworthiness. Sovereign debt was treated as virtually risk-free, both in the markets and by the authorities. The period contrasts with the recent two to three years during which interest rates on sovereign debt have widened sharply. For many countries, interest rates have reached very high levels.
William C Dudley: Remarks at the Regional Employment Press Briefing Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the 2010 Regional Employment Press Briefing, New York, 14 April 2010. *  *  *  Good morning and welcome to the New York Fed’s 2010 Regional Employment Press Briefing. The past few years have been an extraordinary time for policymakers. We have been very aggressive in providing support to the economy and it now appears that we are emerging from a deep and protracted recession. Economic activity expanded over the second half of 2009, suggesting that a recovery has begun. While we continue to receive encouraging news, growth is likely to be muted compared with the early stages of past recoveries. As a result, the unemployment rate is likely to decline over the near term at a very gradual pace, if at all. In the labor market, employment has begun to expand. We hope this is the beginning of a sustained period of job growth. Total employment shrank by roughly 8 million jobs since the peak of the cycle, and the current unemployment rate of 9.7 percent remains unacceptably high. At the regional level, here in the New York-New Jersey region, the labor market was not hit as hard as in many areas in the country, and the pace of job losses in our region has eased.

We recognize that timely and accurate information about our region, which is highly valuable to us, can also help to reduce uncertainty and inform the economic and financial decisions of regional residents, businesses, communities and governments. To that end, we make our various regional measures and analysis available to the public through our website and a variety of outreach activities. These activities include making presentations on topics of current concern to business and community organizations throughout the District. We welcome you here today to brief you on our views of the current state of activity and employment in the regional economy and to review the rich portfolio of resources that we make available to help monitor economic conditions across the region. 2  BIS Review 49/2010