samchain/econo-pairs-v1 huggingface dataset:
First, given the length of the foreclosure process, realised losses on the sub-prime mortgages which underpin securities may not total much more than $ billion so far. Second, if projecting forward the rate at which delinquencies are cumulating on recent vintages of subprime mortgages, we can estimate that losses on the securitised loans might ultimately exceed $ billion. Thirdly, using the sub-prime ABX indices to “mark-tomarket” sub-prime securities, can produce figures of $ to 400 billion. Against these figures, international banks have so far announced writedowns (net of hedging) of $ to $ billion. •  Although these are huge numbers, they amount to less than 1% of the total assets of the Large Complex Financial Institutions (LCFIs) in the US and Europe. In relation  2  BIS Review 24/2008  to GDP, even the higher estimates would be comparable to the losses in the Savings and Loans crisis. 2 •  But the securitisation model has not just made it difficult to scale the problem; it has added a large measure of uncertainty and opacity to the distribution of losses and that is a key factor in the continued reluctance to lend and the closure of most ABS markets. The current worries on the future of the monoline bond insurers reflected in their CDS prices in Chart 6 are exacerbating the uncertainties about individual banks’ exposures. The third factor is the dislocation of the investor base for ABS. Since the summer many of the main buyers of ABS have withdrawn from the market.

At the macro level it is hard to assess what is a warranted rise in asset prices and what an unsustainable boom; in regulation it has proved hard to design systems which adjust appropriately for the cycle, never mind which effectively lean against it; and at the micro level firms find it difficult to measure the risks in their strategies and to base their targets and incentive systems on risk adjusted returns. We must try to align incentives between actual risk and return by improving risk management practices (for example on off-balance sheet activities) and rectifying the revealed weaknesses in the originate-to-distribute model whether in the US mortgage market, in valuation practices or in the use of rating agencies. But we know that many of the incentive problems are deeply embedded – after all, asymmetry is inherent in any limited liability arrangement. The protection of depositors is well established. And it is hard for firms to take account of the collective implications for the credit cycle of their individual behaviours. Of course there is a role for monetary policy in smoothing the cycle but it has to address the whole economy and not just the financial sector. So we need also to consider again how far we can make our regulatory regime for capital and liquidity counter cyclical – that is create a system which raises requirements as the boom gathers pace in order to dampen the upswing and create additional headroom for losses as the cycle turns.
Financial conditions include the level of the stock prices, the level of short- and long-term interest rates, the size of credit spreads, the foreign exchange value of the dollar and factors that weigh on the availability of credit. If the linkage between financial conditions and the short-term interest rate controlled by the Federal Reserve were stable and predictable, then there would be no need to also monitor financial conditions. But the linkage is not stable and predictable. Sometimes financial conditions loosen or tighten in response to economic developments independent of our monetary policy decisions. At other times, the response of financial conditions can be much larger or smaller than anticipated for a given change in interest rates. Several examples will help me make these points. During 2004 to 2007, the FOMC raised the federal funds rate target 17 meetings in a row, lifting the federal funds to 5.25 percent from 1.0 percent. Yet, during this period, financial conditions eased, as evidenced by the fact that the stock market rose, bond yields fell and credit availability – especially to housing – eased substantially. In hindsight, perhaps monetary policy should have been tightened more aggressively. In contrast, during the Fall of 2008, financial conditions tightened substantially even as the FOMC was cutting short-term rates. Again, in hindsight, perhaps monetary policy should have been eased more aggressively. How financial conditions evolve and how markets respond to our actions are important in influencing the economic outlook, and we need to take that into consideration in our monetary policy decision-making.

If the economy continues to grow at an above-trend pace, then I think worries about inflation remaining too low should begin to recede. After all, headline inflation on a year-over-year basis is likely to rise early next year as much of the past year’s decline in energy prices falls out of the year-over-year inflation rate calculations. Also, some of the factors holding down headline and core inflation are likely to be transitory. Energy prices will not go down forever and, as the dollar stabilizes, import prices will likely stop falling. In addition, despite these BIS central bankers’ speeches  3  factors that are weighing on core inflation, the recent trend of core inflation has been very steady, with the 12-month change in the core PCE deflator in a tight range of 1.2 to 1.7 percent since the beginning of 2013. This suggests that core inflation should rise once these transitory factors dissipate. Finally, I take some signal from the fact that the spread between the core services inflation rate and core goods inflation rate is wider than normal. Core services likely better reflect the underlying trend, while core goods prices are more sensitive to external factors such as the drop in commodity prices and import prices. So what does this imply for monetary policy and the likely timing and pace of interest rate normalization?
Diligent observers reading the minutes of the Executive Board meetings have also been able to see that assessments have varied somewhat between the different members of the Executive Board. 1. Deregulation  The first question concerns how monetary policy should deal with the effects on inflation caused by deregulation and by other changes in price developments, which can be considered to be of a temporary nature. The background to this debate was that during the latter part of the 1990s and also during last year, Sweden had a very low inflation rate. This was partly the result of deregulation and increased international competition. Added to this was the fact that import prices fell strongly in the wake of the Asian crisis. The question is, therefore, whether deregulation hid excess inflation in other areas, and whether monetary policy was too passive. This is not a simple question to answer, either in practice or in theory. The effects of deregulation and other structural changes on inflation are difficult to assess in retrospect. Nevertheless the Riksbank 1  Minutes of the Executive Board meeting on 4 February 1999. The clarification is also presented in Heikensten, L. (1999), The Riksbank's inflation target - clarifications and evaluation, Quarterly Review 1, Sveriges Riksbank. 2  Heikensten, L. Six monetary policy issues. Speech at Umeå School of Business and Economics, 7 November 2000. BIS Review 38/2001  1  must make assessments, which are presented in its Inflation Reports.

This has allowed sharper and more specific criticism from outside, something on which we thrive. In addition, I think that decision making should be made in a way which contributes to insight and which gives good possibilities for evaluation and requires responsibility. I think that this is something the Swedish people should expect from an institution which has been given such a strong and independent position as the Riksbank now enjoys. BIS Review 38/2001  5
4  BIS Review 74/2001  The value of the Norwegian krone will vary, as exchange rates do in most countries. There are many 3 reasons for fluctuations in the exchange rate. Changes in the exchange rate are often due to disturbances to the economy. One example is a change in the terms of trade, which measure prices for exported goods and services in relation to prices for imported goods and services. Commodities account for a substantial share of Norwegian exports. Prices fluctuate widely. As a result, Norway is exposed to fairly large variations in its terms of trade. A decline in commodity prices results in less favourable terms of trade. This reduces our source of revenues and experience shows that the exchange rate will weaken. On the other hand, an increase in commodity prices improves terms of trade and often results in a strengthening of the exchange rate. It is desirable for the krone exchange rate to fluctuate in pace with developments in the terms of trade or demand for Norwegian products. If prices for our export products decline, a weakening of the exchange rate will dampen the income loss for internationally exposed industries. The exchange rate can therefore be seen as an automatic stabiliser, or buffer, that shelters the economy to some extent from changes in the terms of trade. Oil and gas are the commodities that account for the largest share of Norwegian exports.

Malaysia is well positioned to realise this growth potential in renminbi bond and sukuk, given our market size and supporting infrastructure. Malaysia not only has the largest debt securities market in Southeast Asia, but it is also a leading international centre for sukuk issuance. Both markets are evolving as a multi-currency bond and sukuk market. As the renminbi market expands, more information would be needed to provide awareness on market developments. As we transition to using other currencies for trade settlement it will also require businesses to gain new expertise, develop new arrangements and to build new networks. Let me now conclude my remarks. As Asia, and in particular, China’s greater prominence in the global economy, a dynamic response is required in this new operating environment that is now upon us. One of the changes that will shape the international financial system in the years to come is the wider role of the renminbi in trade and finance. While existing international reserve currencies will remain to be important, this will represent an additional currency in the international financial system. This is an expected development as the world economy becomes increasingly multi-polar. In a more complex and more challenging economic and financial environment that is prone to greater volatility and increased uncertainty, there will be a greater trend to diversify risks. This will also contribute to overall global stability in the international financial system.
Once the private sector backed away from AIG, the Fed, with the full support of the Treasury, was called upon to do something extraordinary and lend to AIG. The Federal Reserve had no oversight authority over this institution whatsoever, but it stepped into the breach and lent to AIG to prevent a catastrophic collapse of the financial system and to protect the public from the fallout that would have resulted. There has also been a lot of criticism – in the recent SIGTARP report and elsewhere – that the Federal Reserve should have forced AIG’s major counterparties to take haircuts in conjunction with setting up Maiden Lane III. The reasons for the Fed’s actions in this situation are straightforward. From the moment the U.S. government made it clear that its goal was to prevent AIG’s bankruptcy in order to stem a broader collapse of the financial system, this undercut the ability to obtain concessions from AIG’s counterparties. To put it starkly, power in a negotiation comes either from being able to issue a credible threat or from coercion. Bankruptcy at that point for AIG was simply not credible in the context of the actions taken to rescue the firm in the first place, and threatening bankruptcy would have been at cross purposes to the broader goal of stabilizing the financial system. Using our supervisory power in a coercive manner would have been an abuse of that supervisory power.

Some infamous examples include the Bangladesh Bank incident, the hacking of ATMs in Taiwan and various other countries, Target’s credit card data breach which resulted in data of  1  over 70 million credit cards stolen, Equifax’s data leakage in which the company was fined 700 million USD, and more recently the case of Capital One Bank in which over 100 million customers’ data were leaked. Thailand is also not immune to these cyber threats. A state bank’s ATMs were hacked, customers’ data from 2 large banks were leaked on the Dark Web, and the WannaCry ransomware outbreak. In addition to attacks on financial institutions, customers’ behavior and lack of cyber threat awareness also pose significant cyber risks as well. Social media scams through LINE or Facebook Messenger in which attackers pretend to be the victim’s acquaintance, asking for a favor to transfer money; or users’ submitting their bank account information to questionable, illegal gambling website from which their data eventually got leaked a few weeks prior are some examples of cyber-attacks that hinge on the user’s inexperience or lack of awareness of online threats. As such, I don’t think it is an over exaggeration to say that cyber threats have kept many bank executives and regulators awake at night given the nature of these threats that can occur anytime and anywhere without warning, and the significant damage they could cause.
As the structures and institutions in the Swedish labour market resemble those in the rest of Western Europe in many respects, it is reasonable to suppose that the same forces have been at work in our country but that their impact and importance were concealed for a long time by an expansionary economic policy that was ultimately unsustainable. High and more or less permanent unemployment, or high equilibrium unemployment, is a sign that the labour market is functioning poorly. These problems are rooted in turn in wage developments because it is price formation which is the central market mechanism. Conclusion The best way in which monetary policy can contribute to an economy that functions better economy with employment and growth is by keeping inflation low and stable. 8  Björklund, A., Edin, P-A., Holmlund B. & Wadensjö, E. (1996), Arbetsmarknaden (The Labour Market), SNS förlag, Stockholm. 9 Examples of an explanation of persistence theories are given in Lindbeck (1993), Unemployment and Macroeconomics, MIT Press, and in Snower (1994), "Commentary: The Extent of High Unemployment in OECD Countries" in Reducing Unemployment: Current Issues and Policy Options, Federal Reserve Bank of Kansas City. BIS Review 38/1997  - 11 -  The economy can then expand along its long-term growth trend. If this path, which is determined by structural factors, permits a rapid increase in output, growth will then be high. If potential output rises slowly, on the other hand, economic growth will be weak even if monetary policy were to be very expansionary.

Calculated in the same way, halving registered unemployment from 8 to 4 per cent, for example, would confer an estimated long-term gain in production of 4 per cent of GDP and strengthen government finance by as much as over SKr 50 billion a year. Simple calculations of this type are obviously uncertain but they do serve to illustrate the sort of economic benefits that may be reaped from an appreciable fall in unemployment. What can the Riksbank and monetary policy do? There was a time when many people believed that the problem of very high unemployment could be tackled with a generally expansionary economic policy. Lower interest rates, devaluations or fiscal stimuli were seen as instruments for boosting demand, raising production, improving employment and thereby lowering unemployment. Even today, advocates of similar views are not uncommon. As the consolidation of the budget places constraints on fiscal policy, attention concentrates on monetary policy. Representatives of this line argue that the problem of unemployment could be solved if only the Riksbank had a wider objective than combating inflation. Some say that the Riksbank ought therefore also to have explicit goals for growth, employment and unemployment, goals that should be as important as keeping inflation under control. You will hardly be surprised to hear that I do not share such opinions. The current situation in the labour market is more complicated than that.
The corollary is clear: central banks should employ the full set of instruments available to them to fulfill their mandates. Central banks are entrusted with the fulfilment of a precise set of objectives and, to do this, they are given the powerful tool of independent statutes. But trust must be earned daily and backed by hard evidence (on our effectiveness), and not based on faith or belief. 3. The extension of independence to other economic policy functions Third, we should bear in mind that the time-inconsistency argument for an independent monetary authority is also relevant – and thus, may also be applied – to the need for an independent financial supervisor, as short-term incentives to relax supervisory policies may have important consequences over financial stability in the long run. In turn, this may also influence monetary policy-making. And this argument applies both for micro-prudential and macro-prudential supervision. 4  See article 130 (ex-article 108 TEC) of the Consolidated Versions of the Treaty on European Union and the Treaty on the Functioning of the European Union (2016/C 202/01): When exercising the powers and carrying out the tasks and duties conferred upon them by the Treaties and the Statute of the ESCB and of the ECB, neither the European Central Bank, nor a national central bank, nor any member of their decision-making bodies shall seek or take instructions from Union institutions, bodies, offices or agencies, from any government of a Member State or from any other body.

– https://www.ecb.europa.eu/press/key/date/2019/html/ecb.sp191112_1~f304b47e14.en.html  3/9  Mechanism (SSM) in 2014, the Banco de España’s supervisory role was integrated into a new institutional framework with the European Central Bank at its core. I will come back to this function later on. Some lessons on central bank independence Let me share with you some reflections about central bank independence nowadays. This will be in the form of five lessons which, in my view, should be kept in mind when thinking about central bank independence, particularly at the current juncture of seemingly tamed inflation but with difficulties in achieving price stability objectives in some advanced economies. 1. Institutional settings matter First, I would state that independence, to be effective, must rest on a robust legal and institutional framework. Independence must be formally recognised in all of its relevant dimensions: namely, at the institutional, functional, personal and financial levels. This is the case in the euro area, where the Maastricht Treaty4 provided the appropriate framework; but unfortunately it is not the case in other regions, thus making the task of central banks much more complicated. 2. The need to deliver Second, the main reason for central bank independence is a utilitarian one: independence is an instrument to enhance effectiveness in order to achieve agreed objectives in the general interest, such as price or financial stability. The social value of central bank independence is thus inextricably linked to the effectiveness of its policies.
Accordingly, any policy wishing to be effective in enhancing productivity must be underpinned by incentives to save and the lifting of any related institutional obstacles, something which is also connected to the reforms that boost competitiveness and legal certainty. Spain must persist with reform policy geared to these objectives. Thank you. 4  BIS central bankers’ speeches

To meet its stability objectives in periods of financial instability, the monetary policymaker must probably put more emphasis on high-frequency financial markets information than he would otherwise do, because in normal times regular flows of macroeconomic statistics more or less suffice to form a correct assessment of the outlook. Special communication efforts are also required. One big challenge for communication in times of stress is to make the public understand that short-term liquidity management can be completely separate from the definition of the monetary policy stance with a medium-term perspective. As I have already pointed out 1 , a standard result in economic theory (William Poole’s paper from 1970) states that, when demand for central bank money is uncertain, then it is optimal to stabilise the short-term interest rate, letting money supply adjust endogenously. That is precisely what has happened in the euro area over the last half year. Indeed, the bulk of liquidity injections since last August was merely an attempt to align the  1  Cf. C. Noyer, “No moral hazard: the banks are doing their job”, Financial Times, 18 September 2007. BIS Review 15/2008  3  timing and maturity of the liquidity supply with a changing demand within the reserve maintenance periods, in order to stabilize the very short-term interest rate on the interbank market.