samchain/econo-pairs-v1 huggingface dataset:
Although optimism everywhere else did not become as excessive as in the United States, decisions were no doubt made about consumption, investment and shareholdings that possibly would not have occurred if more lasting economic considerations and more realistic expectations had prevailed. Importance of learning from history History teaches us that in business, euphoric phases tend to be followed by a clear change of mood. The fact is that a similar wave of over-optimism attended the era of railway-building in the nineteenth century. The invention of the electric motor and the combustion engine likewise generated a high degree of over-confidence in the early twentieth century. In Sweden it was the possibilities of using the new technology to reap large profits from such natural resources as hydroelectric power, timber and ore that were exaggerated. In the late 1990s the jubilance was about the huge profits that were going to be reaped instead from computer and telecom technology. Once again, the expectations of rising profits and incomes overshot the mark. We should bear in mind, however, that the major innovations did play a tremendous part in the emergence of industrialised society and the welfare state. Railways have been of lasting importance, not least in Sweden. Without those investments in the early twentieth century, the mining and forest  BIS Review 82/2001  1  industries could hardly have done what they did to launch Norrland and other parts of our country on the world market.

It was mainly rising energy prices, higher interest rates, falling stock markets and a sudden downturn in corporate investment that resulted in the almost simultaneous and abrupt slowing of global economic activity in the latter part of last year. Weaker demand led in turn to stock adjustments and thereby to a further downward effect on orders and production. At the same time, the falling share prices muted private consumption. On top of this, the terrorist attacks will entail a short-term loss of production and probably also postpone an upturn. The cyclical downturn is following the normal pattern in many respects and is therefore not particularly surprising. Its course has been accelerated, however, by the collapse of the excessive optimism which had accompanied the technological breakthroughs that gave rise to the notion of a new economy. For a time there was no end to the hyperbole about the blessings that the new facilities for information and telecommunication had in store. Expectations of rapidly rising profits and incomes pervaded households and businesses in many parts of the world, perhaps above all in the United States. Investment and consumption rose. So did share prices. Production plans were revised upwards. In time, imbalances arose in the American economy between investment and saving, as well as between current and more fundamental stock market valuations.
To do so, you have undoubtedly used your strengths, which I believe most notably include your close relationship with your customers, your extensive knowledge of the local economic situation and your down-to-earth management (far removed from speculative business models and focused on harnessing your knowledge of those customers and their needs). Furthermore, on a day like today, I feel that it is fair to highlight as one of your strengths your ability to support one another when necessary. You know better than I do that mutual support is one of the basic principles of the cooperative movement, and over these 50 years you have demonstrated that solidarity is an essential means for overcoming problems and difficult situations. Indeed, if we look back in time we see that today’s society – and economy – are very different from those of 50 years ago. So another key to your success lies in your ability to adapt to that changing reality. The crisis triggered by COVID-19 is clearly a dramatic test of how changeable things can be. It is obvious that, for once, the origin of the crisis is not financial and is not linked to macroeconomic imbalances. Nevertheless, although this crisis is unrelated to previous ones, there is something that still holds true in this type of situation: the strengths that we have built up when the crisis hits will be the strengths that enable us to weather the storm.

Between these two extremes – the US and the no-hoper – there are of course many cases where the situation is less clear-cut or less predictable. Euroland provides an interesting example. Given the careful steps which were taken before the advent of the euro to ensure the insulation of monetary from fiscal policy and to outlaw monetary financing of budget deficits, we might wonder why the news of impending budget overruns should cause the euro to weaken. It seems that not only do credit spreads faced by individual deficit countries widen (presumably for fear, however slim, of sovereign default), but also the currency weakens for fear of governments conspiring with the central bank to abandon its mandate against inflation or to break the rules against monetary financing. A rather different interpretation could be that foreign exchange markets are merely exhibiting a pavlovian reaction: having been brainwashed to the effect that a deficit is inherently bad if it surpasses certain preannounced limits, the reaction when such a breach does occur is bound to be negative, even if analysis of the substance underlying the breach provides little or no justification for such a reaction. In the context of trying to identify a relationship between the fiscal position and the exchange rate, these examples demonstrate that there is no simple, pre-ordained relationship. The outcome depends on a wealth of factors, including the nature of the disturbances affecting public finances, the policy regime and policy responses, and the state of sentiment in financial markets.
But we also use other and smaller models with rich economic structures to look at specific issues as part of our suite of models. We also want to quantify the likely impacts on inflation and output of a range of pieces of data news as accurately as possible. The numbers matter, so empirical performance is important, too. We have worked hard at ensuring that BEQM does well in this dimension, but we have also, within our suite, been developing more statistically based models. We may use these models on their own – as stand alone forecasting tools – or to inform the judgements that we make in using BEQM. Let me say a few words about both the main model and the suite. The motivation for the BEQM project was to help with the ‘intellectual framework’ role of the forecast. Without losing empirical performance, we wanted to improve upon the previous main model’s articulation of the underlying structure of the economy, to make it more explicitly consistent with the Committee’s beliefs.5 This was made possible in the light of recent advances both in economic understanding – particularly the emphasis on providing coherent micro foundations in macroeconomic models – and in sheer computational power (both in terms of computing power and the techniques applied). BEQM is a large scale model by the standards of most academic research, but it is small scale compared with traditional macro-econometric models. Compared with the latter, it is also more of a general equilibrium model with an emphasis on internal consistency.

As it happens, market economists have tended to think that interest rate changes were more likely in Inflation Report months. Since 1998, Reuters have asked a group of economists (initially around 2030, now 40 or more) to attach probabilities to a range of different outcomes for interest rates, so we can calculate a mean and a mode expected interest rate change across individuals. Panel B in Chart 3 split the months in which the mode is for a (25bp) change into Inflation Report and non-Inflation Report months. According to this measure, markets have consistently thought that changes were more likely in Inflation Report months. The data on interest rate changes provide mixed evidence. Over the period since 1997 as a whole, the Committee has displayed a preference for changing rates in Inflation Report months. But it showed no such tendency in its early years. The picture since 2001 is very different, with almost two thirds of rates changes taking place in Inflation Report months, compared with the one third that would be expected if rate changes were evenly spread over the year. And no fewer than six of the last eight rate changes have coincided with the publication of an Inflation Report. (See Chart 3 and Table 2 for details). BIS Review 17/2005  5  Chart 3. months.
Prasarn Trairatvorakul: Financial inclusion and financial literacy in Asia Opening remarks by Dr Prasarn Trairatvorakul, Governor of the Bank of Thailand, at the OECD/Thailand Seminar on “Financial Inclusion and Financial Literacy in Asia”, Bangkok, 16 December 2014. *  *  *  Mr. André Laboul, Chair of the OECD International Network on Financial Education, Distinguished Guests, Honorable Speakers, Ladies and Gentlemen, Good morning, I would like to start by welcoming you all to Bangkok. It is a great honor for the Bank of Thailand to co-host the OECD Seminar on Financial Inclusion and Financial Literacy in Asia with our partner, the Securities and Exchange Commission of Thailand. And, it is my great pleasure to deliver the keynote speech at this very important event. Many of you might question why the Central Bank Governor is here at this forum on financial inclusion and financial literacy, as the Governor should be more worried about the slowdown of growth in major economic sectors or macro-economic policies aimed at stimulating Thailand’s GDP at this very challenging period in our country. The reason I am here today is that financial inclusion and financial literacy are the pre-requisites for solid development of the national economy and a sound financial system. Ladies and Gentlemen, the ultimate goal of the Bank of Thailand, as well as of other central banks, is to ensure sustainable economic growth which will enhance the well-being of our people.

Lastly, I must add ignorance as another essential cause of improper financial behavior. Even with a well-designed financial education program with meaningful messages and effective delivery channels, financial literacy cannot be achieved if consumers neglect the necessity and benefits of appropriate personal financial management. All in all, desirable financial behavior is sometimes well known, but less likely to be implemented by consumers themselves. It is similar to living a healthy lifestyle. We know that healthy food and exercise are good for us, but we don’t do it. Hence, a solution to the improvement in financial behavior remains a challenging puzzle for many of the policy makers and practitioners to find the right solutions for various groups of people. Ladies and Gentlemen, I truly believe that this seminar would allow an invaluable opportunity for us to learn how to solve these puzzles from honorable speakers who have come a long way to share with us their enriching experiences and lessons-learnt. The achievement of effective financial education and behavioral change would eventually drive the global community towards a more financial- literate and disciplined population who would help ensure sustainable growth and equality in our society. Lastly, I wish the seminar a great success. I also wish to express my sincere appreciation for all of your endless efforts in promoting financial inclusion and financial literacy. Thank you. 2  BIS central bankers’ speeches
This is low in relation to other countries and makes households vulnerable to an interest rate increase that is higher than currently expected. Compared with losses on loans to the enterprise sector, losses on loans to the household sector were low during the banking crisis at the end of the 1980s. Despite high real interest rates and a decline in income, households were largely able to service their debt. High interest expenses and a decline in income, however, forced households to reduce consumption. This led subsequently to lower turnover in enterprises and weakened profitability and debt-servicing capacity. In this way, households contributed to an increase in banks’ losses on loans to the enterprise sector. The higher the household debt burden, the stronger the potential spillover effect from the household sector to the enterprise sector. The effects of weak economic developments and/or a change in interest rates on financial stability will depend both on the initial situation in households and enterprises and on banks’ ability to absorb losses. An analysis presented in Financial Stability 1/04 showed that a sharp increase in interest rates and a subsequent fall in house prices may increase banks’ losses to 2.5 per cent of gross lending. This is roughly half of what losses were at the beginning of the 1990s. The moderate increase in loan losses is due primarily to an improved financial situation in the enterprise sector. Banks’ capacity to absorb loan losses depends on their results and their capital adequacy.

The debt burden for households with the highest income (decile 10) has fallen markedly since the banking crisis. This is partly due to changes in the tax system at the end of the 1980s which led to a reduction in tax deductions for interest expenses, especially for high-income groups, and changes in the tax system in 1992. Debt is also unevenly distributed by age. In recent years, the debt burden has increased substantially in the younger age groups. The debt burden for the age group 25-34 is approaching the level prevailing at the time of the banking crisis. The rise in the debt burden must be seen in connection with the fact that they are in the start-up phase and with the rise in house prices. The high debt burden makes these groups vulnerable in the event of an interest rate increase. III. Consumer credit  Banks’ and finance companies’ exposures to household loans depend in part on whether loans are secured. Good collateral provides a buffer against losses and is therefore advantageous for a robust financial system. Mortgage loans account for the majority of household borrowing. The share of housing loans has increased since 1996, whereas the share of other repayment loans, which may be unsecured or secured with collateral in the form of a car or boat, has declined. Other loans include construction loans, bank overdrafts, operating credit, leasing and factoring. Their share is virtually unchanged. Norges Bank’s statistics do not provide the basis for estimating the total scope of unsecured loans.
The obvious solution to speculation against the upper band is to reach an agreement in ERM II to revalue. But this is often difficult in practice. When political decision-makers are forced to choose between the inflation and exchange rate targets, it takes courage - and good analyses - to give priority to low inflation and opt for revaluation. As the case of Ireland has demonstrated, this does not exclusively apply to acceding countries. In the end, the result can be inflationary pressures once inside the euro area. However, the most acute risk with ERM II is probably when the exchange rate is in the lower part of the band. Virtually all the currency crises that we have experienced in recent decades have been due to speculation against weak currencies. ERM II, of course, is different from these previous failed regimes of pegged exchange rates in the sense that it has a clear exit strategy with regard to euro adoption. But this does not mean that ERM II is immune to large fluctuations in short-term financial flows. I do not think this should be a big problem for the currency board regimes or the so-called hard pegs in the new Baltic member states. In their case, ERM II membership would merely be confirmation of a credible regime that has been successfully maintained for nearly a decade, even when confronted with severe shocks such as the Russian crisis.

Then you will have the best possible guarantee to reap the full benefits of monetary union. Thank you. BIS Review 53/2003  3  Fig. 1 (forecasts) selected acceding countries 20022004 0,0 -1,0 -2,0 -3,0 -4,0 -5,0 -6,0 -7,0 -8,0 -9,0 -10,0 2002 2003* 2004* Poland * according to budget draft for 2004  2002 2003 2004 Czech Republic public sector deficit  2002 2003 2004 Hungary  2002 2003 2004 Slovakia  cyclically adjusted deficit Source: Pre-accession Economic Programmes 2003 update  4  BIS Review 53/2003
The new Law replaces the standard insolvency proceedings of a bank with the resolution undertaken by the relevant authority. Banks’ failures and financial crises may be common events. They are very costly, as well, which, in some cases, can be as high as 40–60% of the Gross Domestic Product. This includes losses in deposits, weakening of access to finance and loss of public confidence in the financial system, which, in turn, reduces its capacity to support economic growth and decrease poverty. Also, standard insolvency 1/5  BIS central bankers' speeches  proceedings for failing banks proved inadequate in times of crisis because they did not address systemic risk nor ensured the continuity of critical functions; moreover, they did not protect depositors. These procedures require time, long negotiations as well as complex arrangements with creditors, which may damage and further diminish the asset value of the distressed bank, hence causing severe consequences for the real economy. For this purpose, the new Recovery and Resolution Law provides the Supervisory and Resolution Authorities with the legal capacity and the necessary instruments for restructuring bank operations, in the event its possible failure jeopardizes financial stability or undermines other objectives of the regulator. The aim is clear: on the one hand, we have the public interest on financial stability, while, on the other hand, remain the shareholders of the bank, who have voluntarily undertaken the risk by investing in the bank.

If the shareholders rely on the possibility of an implied state guarantee for banks, this constitutes a moral hazard on their part, therefore increasing their risk appetite. The implementation of the Resolution Law formally eliminates the basis for the expectation for any such guarantee. Among the costs caused by the failure of a bank, contagion is probably the highest, since it turns the problem of a single bank into a problem for the entire banking sector. It may happen for two reasons: due to the spillover effect of a bank’s exposure towards another, as well as due to public panic, that causes eventual massive bank runs. This channel is particularly pronounced for developing economies, where contagion is faster due to their weak financial literacy, the historical lack of bank failures, and the presence of weaker institutions. In this context, the resolution regime serves as a tool for restoring market discipline and avoiding the risk of contagion. In essence, resolution is an integral part of banking supervision applied to the final stage of a bank’s life, should measures taken during the standard or intensive supervision stages fail to improve the situation of a distressed bank. The drafting of the resolution regime was accompanied by the strengthening of the supervision regulatory requirements, which aim to increase the resilience of the bank and strengthen the financial market structure to avoid the moral hazard.
Taking into account price changes, the January retail sales data were reasonably strong. Consumer spending, particularly for durable goods such as motor vehicles, has clearly strengthened. Light-weight motor vehicle sales in January were well above the average pace of the first quarter of 2012. This stronger durable goods spending reflects some improvements in labor market conditions, consumer confidence, household balance sheets and access to credit. Another major plus for the economy entering 2013 is the housing market, with upward trends evident in housing starts, home sales and home prices. To see why this is so important, in 2009 residential investment was a 0.4 percentage point drag on growth of GDP, while in 2013 it is likely to provide a boost to growth on the order of 0.5 percentage point – a swing of nearly a full percentage point. Business investment in equipment and software, another component of private final demand, strengthened in the fourth quarter, and orders for nondefense capital goods have moved higher in recent months. Indicators of the U.S. manufacturing sector have begun to look a bit brighter as well, with the ISM manufacturing index at its highest level since last April. Survey-based indicators of manufacturing activity also have begun to improve in several other major economies around the world. Of course the quickening pace of auto, home, and capital goods sales and orders, all interest-sensitive goods, is consistent with the highly accommodative stance of monetary policy, which not only lowers interest rates but enhances credit availability as well.

After falling by 3.1 percent in 2009, growth in real GDP averaged 2.4 percent in 2010, 1.8 percent in 2011 and 2.2 percent in 2012, a consistent but sluggish pace. This sluggishness has been quite evident in the labor market. After falling by 421,000 per month in 2009, payroll employment grew by 85,000 per month in 2010, 175,000 per month in 2011, and 181,000 in 2012. To put these numbers in perspective, the trend rate of growth of the civilian non-institutional population is around 200,000 per month. The unemployment rate has declined from a peak of 10 percent in October of 2009 to just under 8 percent recently, due largely to the fact that the labor force participation rate has declined by considerably more than would be suggested by underlying demographic trends. Fortunately, long-term unemployment, defined as those unemployed for 15 weeks or longer, has declined from nearly 9 million in the first quarter of 2010 to about 6.6 million in recent months – a decline of 28 percent. The median duration of unemployment has declined from 23 weeks in the second quarter of 2010 to 16 weeks recently. Nonetheless, as of January there were still about 3.2 million fewer jobs than at the end of 2007. The unemployment rate remains elevated, despite a significant decline of the labor force participation rate. And the ratio of employment to population in January was lower than it was at the end of the recession, indicating that employment growth has not kept pace with population growth.