samchain/econo-pairs-v1 huggingface dataset:
First, the Eurosystem is developing a securities holdings statistics database. “Securities holdings represent a field where exposures are often concentrated, and a lack of sufficiently comprehensive, consistent and granular information has been identified” (Draghi 2012). Second, more detailed balance sheets information of all financial intermediaries have been developed. Third, a matrix of integrated sector accounts has been devised and is published on a quarterly basis. Fourth, quarterly information on cross-border holdings of financial assets and liabilities by euro area residents is compiled, allowing for monitoring of cross-border exposures. The second lesson of the crisis was that data production should be multipurpose. The granularity of the data means in fact better use of the micro-foundations of the macro statistics. Albeit the need for more granular data primarily came as a result of the requirements of the macro-prudential oversight, their weight for the monetary policy is very large as well. As monetary policy-makers we want to act proactively and this requires identification of the risks in advance, which very often requires “going beyond the aggregates”. Hence, both for monetary policy purposes and financial stability purposes, variety of granular data and indicators are needed, which allows for data “outliers” and “tail risks” to be noticed. It is more natural than to seek for harmonized data collection systems, serving both mandates of central banks, monetary policy and financial stability. Of course this requires extraordinary coordination among the compilers of the data. It is easier when the central bank serves as a supervisor at the same time.

As the economies, markets and institutions are evolving, the pressure on statistics to “keep pace” is increasing. Hence, the occurrence of the so called “information gaps” is inevitable in a rapidly changing world. But, adverse shocks such as the recent crisis reinforce them and make them and their repercussions far more obvious and painful, than in normal times. In times of crisis, these gaps constrain our ability to recognize and react to existing vulnerabilities. Let me quote the IMF at this point of my speech: “Indeed, the recent crisis has reaffirmed an old lesson – good data and good analysis are the lifeblood of effective surveillance and policy responses at both the national and international levels”. I would like to focus the rest of my opening address on the main challenges in the area of statistics, and especially to the ones most relevant for successful fulfillment of the central banks’ mandate. In general terms, the crisis revealed the need for a richer and more streamlined statistics, a mix of statistics that will serve the monetary policy and the macroprudential policy concomitantly as the policies are intertwined. What are the main information gaps, on the backdrop of the crisis? I think the best starting point to discuss these issues are the 2009 recommendations of the IMF and the Financial Stability Board, under the G-20 Data Gaps initiative: 1. The statistics should be devised in a manner to better capture the build-up of risks in the financial sector.
Its importance, however, should not be overstated. Otherwise, rational decision-making is made difficult. It is therefore important to de-emotionalize the discussion and to take decisions based on facts, economic and political common sense rather than on wishful thinking and unrealistic expectations. The introduction of the Euro presents Europe with both opportunities and risks. Let me first dwell on the opportunities. A successful monetary union will contribute to sustainable economic growth in Europe. It will complement the most important part of the EU, which is the single market. The free movement of capital, labor, goods and services will be made easier when only one currency exists. The allocation of resources will reflect expectations BIS Review 102/1997  -2-  about the profitability of investments and will not be distorted by unexpected exchange rate movements. Comparing prices of the same goods in different countries will become much easier as they will all be expressed in the same currency. Competition will thus be enhanced. Monetary union will also most likely contribute to lower interest rates in at least those participating countries which now have interest rates above the average. This should further enhance growth prospects. All of these advantages depend of course on the belief that monetary union will be a success. The likelihood of this happening is relatively high. The new ECB will have as its primary statutory goal price stability. In the performance of its task, it will enjoy a high degree of political independence.

in the product, services and labour markets, healthcare and social insurance systems etc. For Estonia the adoption of the euro is the only logical step and the overarching policy priority. In this context, we would like to emphasize that it is in the interest of the whole European Union that the Euro Area enlargement takes place in accordance with the clear set of well known rules while the criteria are applied, in line with the Treaty provisions, on an equal and economically meaningful manner. The countries joining should have a proven track record to fare well under the common monetary policy. This being the case, the Euro Area membership would fasten the catch-up process in these countries and strengthen the countries' ownership in the EU-wide macroeconomic co-operation at large. Macroeconomic stability and economic flexibility are prerequisites for the new Member States to ensure that investment in physical and human capital is sustained and outlays for research and development further increased. Higher growth and stronger policy coordination on the EU level will also strengthen the social dimension of enlargement. BIS Review 60/2006  1
In addition, it is important that economic policy and incentives of public systems promote national saving and that attempts be made to safeguard the current account surplus in the years to come, as this will expedite the resolution of the balance of payments crisis, enhance confidence in Iceland, and reduce the likelihood that Iceland will emerge from the process facing economic imbalances. Because these are irrevocable actions, we have only one chance to settle the estates, not a general lifting of the controls, and therefore it is critical that we do it successfully. But as I have said before, that does not change the fact that the cost of the capital controls rises over time and that it is important for progress and high-quality GDP growth that they be lifted sooner rather than later. It is also important that we learn, from our experience and others’, that unrestricted capital flows are accompanied not only by benefits but also by risks. Appropriate prudential rules and other measures must be in place to address those risks when that step is taken. This speech has centred primarily on two of the Central Bank’s main tasks: monetary policy and financial stability. But the Bank’s functions are actually much broader than this. And many of those functions have grown in scope in the wake of the financial crisis – for instance, the investment and management of larger foreign exchange reserves and a dramatically increased need for legal services.

This is why I welcome the introduction of a legislative bill on a financial stability council, which aims to provide a stronger foundation for systemic risk analysis and response and to guarantee access to the necessary information. Time will tell whether further steps are necessary. On 9 April, the Central Bank will publish its annual Financial Stability report, including a detailed analysis of the financial system and the risks affecting it. I will therefore be brief on that topic. The big picture is this: since Iceland’s outward-oriented banking system collapsed, a great deal has been achieved in terms of building up a financial system with a domestic focus. The banks’ balance sheets have grown stronger, non-performing loans are on the decline, foreign exchange mismatches have been reduced, equity has increased, and liquidity is strong. Corporate and household debt levels are falling. The regulatory framework for banking operations has also been improved based on the experience gained from the financial crisis, both with implementation of international rules deriving from the important cross-border collaboration that developed during the crisis, and with implementation of rules based more Iceland-specific risk. A good example of this is the new liquidity rules adopted by the Central Bank in December, which are based on the Basel III principles but include special ratios for foreign-denominated liquidity.
For example, during the money fund reform period, as money flowed from prime to government funds, prime funds used the facility to become more liquid in advance of redemptions and government funds used it to temporarily absorb new investments.31 Finally, the Treasury General Account (TGA) has grown substantially in recent years as the U.S. Treasury has decided to hold a precautionary buffer of cash generally sufficient to cover five business days of outflows, subject to a minimum balance of $ billion. Given the daily variability of TGA balances, this type of account would be also expensive for the private sector to offer under new regulations. Further, as the buffer has been funded mainly through increased bill issuance, it has increased the supply of money-like assets to the private sector. Conclusion Central banks are uniquely able to produce money-like assets that are viewed as safe during non-normal times. In more normal times, regulation and supervision are the best tools to mitigate risks from the private creation of money-like assets, but there is a role for the central bank to use 7 / 10  BIS central bankers' speeches  its balance sheet to smooth fluctuations in the supply and demand for money-like assets. 1  I would like to thank Marco Cipriani, Gabriele La Spada, Deborah Leonard, and Antoine Martin for their assistance in preparing these remarks.

In the current operating system, Federal Reserve’s non-currency overnight liabilities are substantial and allowed to vary considerably to accommodate supply and demand shocks in the private sector.27  Currently, reserves in the banking system are abundant, with possible benefits for the efficiency and safety of the wholesale payment system.28 The estimates for 2025 indicate an expectation that reserves will decline substantially, but still remain many orders of magnitude above their precrisis level. Market contacts focus on the demand for reserves produced by the LCR as an important driver of this change. Banks that satisfy their LCR requirements with large reserve balances free up other high-quality liquid assets for the rest of the private sector. Overnight reverse repos with foreign central banks—who seek safe and money-like dollar assets to maintain liquid dollar foreign currency reserves—have grown substantially in the last few years. Part of this increase was likely a reflection of latent demand that was relieved as restrictions on these investments were relaxed,29 but part of it also represents new regulations that make it more expensive for the private sector to hold large deposits that are callable at any time. A new category of liability is the ON RRP facility, which is available to nonbanks. 30 In addition to supporting interest rate control, this facility helps the private sector adjust smoothly to various new regulations.
There are several ways that the problems of Long-Term Capital could have been transmitted to cause more widespread financial troubles. Had Long-Term Capital been suddenly put into default, its counterparties would have immediately “closed-out” their positions. If counterparties would have been able to close-out their positions at existing market prices, losses, if any, would have been minimal. However, if many firms had rushed to close-out hundreds of billions of dollars in transactions simultaneously, they would have been unable to liquidate collateral or establish offsetting positions at the previously-existing prices. Markets would have moved sharply and losses would have been exaggerated. Several billion dollars of losses might have been experienced by some of Long-Term Capital’s more than 75 counterparties. These direct effects on Long-Term Capital’s counterparties were not our principal concern. While these losses would have been considerable, and would certainly have adversely affected the firms experiencing them, this was not, in itself, a sufficient reason for us to become involved. Two factors influenced our involvement. First, in the rush of Long-Term Capital’s counterparties to close-out their positions, other market participants - investors who had no dealings with Long-Term Capital - would have been affected as well. Second, as losses spread to other market participants and Long-Term Capital’s counterparties, this would lead to tremendous uncertainty about how far prices would move.

Smith explained that “when the division of labour first began to take place, this power of exchanging must frequently have been very much clogged and embarrassed in its operations.” 13 He was referring to the absence of what economists call a ‘double coincidence of wants’: the hunter wants arrows and the arrowmaker wants meat. Without that double coincidence exchange cannot take place through barter. Promissory notes, or ‘IOUs’, can act as promises to deliver in the future. And they could, in principle, circulate – we could then exchange with people whose own produce we don’t actually want. Imagine Smith’s primitive arrow-maker doesn’t want meat. He can still exchange his arrows for a promise of meat from the hunter. But he will do so only if he is sure that others, whose output he does want, will accept the hunter’s IOU. And that depends on whether the arrow-maker believes that others will trust the hunter’s promise to pay. Once future delivery is part of the exchange, trust is essential. So we need to be able to trust in the promises of others to pay. In large commercial societies, where the ‘I’ is remote from the ‘U’, relying on our own human “sympathy” is unreliable – debtors would be tempted to default with those they have never met. We recognise that we need a social institution. One such is a legal system that can be used to enforce IOUs. But enforcement is costly. These problems encouraged us to build another institution – money.
Persistent mass unemployment, the structural causes  3  BIS Review 55/2000  of which were poorly understood, had for a long time led to the adoption of certain Malthusian attitudes: wariness towards technical progress as it could potentially destroy jobs, the avoidance of productivity-enhancing investments thought to contribute to higher unemployment and, lastly, efforts to reduce the available work force with a view to sharing the same number of jobs between a smaller number of people. Having thus sought to limit technical progress, the available work force and the capital stock, it is not surprising that, despite the considerable progress in recent years, Europe and France have seen that their non-inflationary growth potential was still not as high as would have been desirable. In Europe and in France, we are seeing a profound change in perspective and are moving away from Malthusian attitudes. The Banque de France and the entire Eurosystem can be counted upon to support this change. This is why the Monetary Policy Council continues to make the following recommendations: in the interest of currency and price stability and therefore of robust growth, sustainable because it is non-inflationary and effective in combating unemployment, it is now more than ever the time to: –  invest and ease the constraints on capital. Investment is essential in our economy, in which the capacity utilisation rate currently stands at about 87% and 31% of firms are experiencing production bottlenecks.

Indicator for the trend in unit production costs in the same monetary unit (base 100 in 1987). A fall in the indicator means lower costs and thus better competitiveness. This remarkable trend in our production costs - made possible by long-run low inflation - is a major achievement of the cross-party economic and monetary strategy pursued by the French government and central bank over a long period. It is important for France and the euro area to maintain and consolidate this strong cost-competitiveness position. Since the introduction of the single currency, it is more important than ever that we very closely monitor the indicator for unit production costs as it determines the competitiveness of the goods manufactured in our economy and therefore the current level of employment. This indicator also determines future employment because it dictates the attractiveness of an investment in our economy compared to elsewhere, particularly outside the euro area. Allow me to lastly make a general remark about our strategic approach to growth. Under the notable influence of new information and communication technologies, a change is underway in the overall attitude of Europeans in general and French people in particular concerning the motors of economic growth and job creation.
There are differences in economic, lending and asset price cycles, and there are also differences in economic history, crisis experience and institutional arrangements. The developments in recent years have exacerbated these dissimilarities and perhaps even created new ones. It appears to me that the success in combining the positive aspects of diversity and integration in the Nordic-Baltic region may serve as a model for the European Union. If cooperation and coordination has been possible in this region, there is reason to hope for the same in the European Union as a whole. Cooperation between the institutions responsible for financial stability in the region has a history of over 10 years. This cooperation has become considerably closer since the outbreak of the global financial crisis and the reversal of capital flows in our countries. Routine work is done in supervisory colleges, and there are high-level multilateral groups for coordinating macro-prudential supervision and crisis management. It has been very important that trust and open communication as well as mutual support and a willingness to take responsibility have remained in place when the financial stability of a Nordic-Baltic country is really at stake. A shared understanding of the need to deal with macroeconomic and financial stability risks at a national level has provided a solid foundation for Nordic-Baltic cooperation. 2014 will bring new challenges for Europe The year 2014 will bring new challenges.

Coordination and cooperation among ASEAN countries must be further enhanced to ensure that prompt remedial actions can be put in place should a crisis occur. Ladies and Gentlemen, In closing, I would like to reiterate that it is important for ASEAN’s economic and financial stability that ASEAN central banks continue, individually and collectively, to increase the effectiveness of their policy instruments through domestic reforms of markets and financial systems as well as communication efforts with markets and one another. In this spirit, I am reminded of how ASEAN has risen over the years to common challenges. History has recorded ASEAN as an exciting region second to none. While rich in diversity, ASEAN has always been united in bringing about successful solution to tackle our common challenges. ASEAN, itself, was formed forty years ago against the backdrop of political and security threats to the region. In addition, ASEAN Free Trade Area, or better known as AFTA, was created sixteen years ago to ensure that ASEAN together reap benefits from greater trade liberalization under the WTO. Going forward, with sustainable growth and development of ASEAN at stake, I have no doubt that we will be able to jointly find ways to overcome the present difficult global environment and together continue to prosper. Thank you. BIS Review 134/2008  3
This might in part be due to low inflation and nominal interest rates that have helped to keep the cost of debt payments down particularly in interest terms [Chart 4], while greater macroeconomic stability and low unemployment have given households the confidence to borrow and lowered the risk to lenders. There has also been a decline in real interest rates that has reflected many factors, including to some degree the accomodatory actions of monetary policymakers. And the rise in house prices has led to a natural increase in debt as people need to borrow more money to finance the purchase of a house. Chart 4: Aggregate income gearing Per cent 18  Interest and mortgage principal repayments  16 14  Interest only  12 10 8 6 4 2 0 87  89  91  93  95  97  99  01  03  05  Source: ONS and Bank of England As far as debt levels are concerned, for me the key issue for monetary policy is that the more capital gearing or leverage increases the greater the vulnerability to shocks and the consequent adjustment to consumption behaviour. I think this is true for individuals and for the economy at large. Let me explain why it might matter if capital gearing rises. Imagine two states of the world. In the first an individual has assets of £ million, and debt of £ In the second an individual has assets of £ and debt of zero.

It can be said that Iceland is a step ahead of many other countries in this regard, as the events of the past year show that there is ever-increasing interest in setting even clearer liquidity requirements for banks. The operational climate for banks is difficult all over the world. Under current conditions, Iceland’s banks – and many others – have no other option but to furl their sails, and they have already begun to do so. They must implement stringent cost control and direct their attentions toward their core operations and the areas where they can truly compete. They might also have to sell off some assets. It is important that the banks continue to disclose information on their position, and where transparency is lacking, they must enhance it. The conditions that have developed in the global financial markets were foreseen by very few, and they are virtually unprecedented. However, I would like to mention that the Central Bank of Iceland stated the following in its Financial Stability 2007 publication last April: “The Central Bank underlines that global market conditions can take a sudden turn for the worse and it is important to be on the alert and prepared for such a contingency. The current episode of ample liquidity and lower interest rates which has been ideal for risk-seeking investors may change unexpectedly.” Even though conditions will eventually improve, they are unlikely to improve much in the near future.