samchain/econo-pairs-v1 huggingface dataset:
The Walker Report recommends a set of guidelines for disclosure and transparency by private equity funds, including the publication of regular information on their financing, ownership and prospects. 4  BIS Review 31/2008  Sovereign wealth funds and global imbalances However, the emphasis on transparency and the politics of SWFs risks missing a bigger policy issue: the recent rapid growth in SWFs reflects large and persistent global imbalances which are a continuing threat to the stability of the world financial system and the global economy. Global imbalances and financial crises While there are many examples of countries which have run deficits for many years such as Australia and New Zealand, history also shows how painful the eventual adjustment can be. There are many examples in which capital flight has resulted in a huge fall in GDP growth and broader financial crises – for example in Latin America in the early 1980s, in the Nordic countries in the early 1990s and the east Asian economies a decade ago – which, in turn, weakened global GDP growth or global financial institutions. Countries with large deficits are vulnerable to a rapid reversal of capital flows. If investors are no longer willing to finance the deficit, domestic spending will need to be cut relative to output through a combination of reducing spending and switching production to the tradable sector. A recent IMF study reviewed 42 episodes of large reductions in current account deficits in developed countries over the past 40 years.

That has been the story of the UK economy over the last 150 years. We ran continuous surpluses in the 50 years before the first world war (Chart 1) and built up a large stock of foreign assets. Partly as a result of that, we benefited from a surplus on our investment account for most of the period since the 1870s. There are two key differences between that period of the UK’s investment abroad and the situation today. 100 years ago the developed countries were investing in emerging markets (at the time in the Americas and Australia) which had abundant land and natural resources but scarce capital and so the returns were high. Currently, capital is flowing “uphill” from emerging to mature economies. Secondly, the investors before were mainly in the private sector and were seeking out the best returns on capital. Today the investors are mainly EME central banks and governments and the build up of foreign assets reflects their policy choices. 1  There is some fuzziness at the edges of this definition. Central bank reserves in some countries, which traditionally have been invested mainly in liquid and safe instruments, are increasingly being switched into riskier assets. Also, in some countries, state-owned banks and companies invest in foreign assets where some of the policy issues are the same as for sovereign wealth funds.
I also encourage the private sector to learn more about the complexity and risks of various financial products to be able to use them effectively for their businesses. This will help businesses to reduce cost and increase competitiveness, as well as allow the financial sector to play a bigger supporting role for the real sector. For the financial sector, strengthening internal organization and promoting financial system efficiency will be the main factors that allow financial institutions to become more competitive. This will also increase the efficiency of business transactions as well as confidence in the financial system. Policy address Like all policymakers, the BOT faces not only the challenge of policy making but also that of communicating the policy choice to the general public. It is often the case that there is a gap between public expectation of near-term results and what the BOT aims to deliver: a firm foundation for the long-term, the results of which may not be seen for years to come. Upon assessing the changing global environment, risks and social dynamics together, the BOT  2  BIS central bankers’ speeches  remains resolute in our commitment to preserve Thailand’s economic resiliency and sustainable growth path. This can only be possible through a common vision among all stakeholders, for that would allow for policy integration and the creation of financial environment that would foster equitable progress and welfare.

Policy implementation in 2011 Looking back at 2011, the BOT implemented our monetary policy to ensure stability against the backdrop of robust economic expansion in the first three quarters of the year. Thus, we continued to normalize the policy rate, as I had stated in last year’s policy statement. After the economy was hit hard by the flood crisis amid the stagnating global economy in the final quarter, the BOT policy was adapted to the changing circumstances, evidenced by the Monetary Policy Committee’s (MPC) decision to lower the policy rate in the last meeting of the year. Throughout last year, the BOT also paid particular attention to policies that facilitate businesses in normal times and in crisis times. These included policies that ensure the exchange rate movements consistent with the underlying economic fundamentals and that its volatility remained manageable by Thai businesses. Moreover, our policy on financial sector regulation and supervision has ensured that Thai financial institutions maintain their status as a credible and efficient financial intermediary and able to meet private sector demands. These efforts included encouraging financial institutions to rationalize their transaction fees structure, introducing digital cheque-imaging system, and relaxing certain measures related to financial institutions to alleviate financial burdens of flood-affected victims. Economic conditions and challenges for 2012 The path towards the future is not a smooth one. Ongoing challenges from the past and new challenges will increase obstacles for the Thai economy. Domestic issues still remain an important hurdle while emerging external issues have created new challenges.
Inflation has been expected to pick up for some time. Since summer 2005, the key policy rate has been raised by 3.5 percentage points to 5.25 per cent. Norges Bank’s interest rate setting is based on two main criteria for future interest rate developments. First, the interest rate is set with a view to stabilising inflation close to the target in the medium term. The horizon will depend on disturbances to which the economy is exposed and their effects on prospects for the path for inflation and the real economy. Second, the interest rate should provide a reasonable balance between the path for inflation and the path for capacity utilisation. In the assessment, potential effects of property prices and the krone exchange rate on the prospects for output, employment and inflation are also taken into account. The various factors that influence interest rate prospects are now pointing in different directions. As a result of the financial market turbulence and uncertainty about developments in the US, market expectations concerning economic growth and central bank key rates have fallen, in both the short and long term. The Federal Reserve has reduced its key rate by 3 percentage points since September 2007 and interest rates are again moving down in the US and a number of other countries. Interest rates are being cut to address weaker economic growth prospects.

Compared with other countries, productivity gains have been particularly strong in the banking industry and other service sectors. The business sector has been quick to adapt and change, and to make use of new technology that is available in an international market. This is probably due the modernisation of the functioning of the economy through the 1980s and 1990s, which resulted in more efficient markets. Turbulence in financial markets The financial market turbulence may result in a reversal of some of the positive driving forces in the Norwegian economy. The turbulence was probably triggered by falling house prices in the US. There were reports of an increase in defaults on subprime mortgages from the second half of 2006. Securities portfolios had been developed around these mortgages. Uncertainty arose among bankers and investors who directly or indirectly were exposed to losses on these mortgages. This resulted in a sharp decline in prices for these securities, which then spread to a range of mortgage-backed instruments. In the course of summer 2007, it became clear that the losses had spread to banks, funds and financial establishments in Europe, Asia and the US. The turbulence also spread to other financial market segments. Few knew who was exposed to losses, and financial market participants started to question counterparties’ financial situation, and held on to their money. Many banks have sustained substantial losses on their own investments related to these markets, but have also had to bring back onto their books loans from companies they had established.
BIS central bankers’ speeches  3  When the government assumes a substantial portion of bank risk in this way, a problem arises that we economists refer to as moral hazard: If there is a widespread perception that the authorities in reality stand behind banks, banks may take insufficient account of the risk of losses when making decisions. In particular, the risk that things can go horribly wrong may be underestimated, because banks do not have to bear the consequences of a crisis. By bailing out banks, we in turn reduce the motivation of banks’ owners and creditors to take full account of the risk associated with their activities. The pricing of risk is easily set too low. Banks may therefore end up taking excessive risk. Now, the authorities that bail out banks will often require that the former owners forfeit their equity. This means that bank owners should, at the outset, have incentives to hedge against the risk of large losses. But owners’ risk is limited. It does not cover losses beyond paid-in capital. Owners’ motivation to avoid risk may therefore be weakened at a bank with little equity. The lower the equity capital is, the more serious the problem of moral hazard becomes. An interesting feature of the financial crisis was precisely banks’ low pre-crisis equity ratios. Many large international banks operated with equity of around three percent of their total portfolios. 8 This means that for every dollar or euro the banks owned they invested thirty.

A little bit of stodginess? Speech given by Sir Jon Cunliffe, Deputy Governor Financial Stability, Member of the Monetary Policy Committee, Member of the Financial Policy Committee and Member of the Prudential Regulation Committee  Cumbria Chambers of Commerce, Kendal Friday 13 July 2018  1  All speeches are available online at www.bankofengland.co.uk/speeches  “In my view both as a citizen and as a policymaker, a little stodginess at the central bank is entirely 1  appropriate”  Alan Blinder’s 1999 advice to central bankers, quoted above, was not, I am pleased to say in these fitness conscious times, an injunction on the appropriate nutrition for monetary policy makers. Rather, it was advice on how to respond to uncertainty or, to be precise, the need for caution when faced with a particular type of uncertainty – uncertainty about the impact of monetary policy on the key variables in the economy it seeks to influence. But I would like today to look at the case for ‘stodginess’ when faced with uncertainty more generally about possible changes in how the economy works and the ‘model’ of the economy that policymakers necessarily have in their minds. Uncertainty, as I have noted before is the natural environment of monetary policy. There is a large academic literature on the optimal way for policy to deal with different types of uncertainty. But I would like to look at these issues first in the context of my time on the MPC and then in relation UK monetary policy going forward.
Realization of these commitments requires long-term funding at reasonable cost from the financial sector. Therefore, the roles of the financial sector should be highlighted. The ambition can be likened to the destination of our journey. What is our destination? It is to have a banking system that is responsive to changes in the real economy and able to meet its ever-changing needs. With this destination in mind, milestones are set at different stages with signposts to prevent us from getting lost or sidetracked along the way. For the banking system, these milestones and signposts are laid out in the Financial Sector Master Plans. We have come a long way since the 1997 financial crisis and have put in place foundations which shaped the country’s core financial system. In our first milestone of structural improvements, the number of financial institutions was consolidated from above 100 to about 30 today. International standards and best practices on risk management were adopted, built upon necessary infrastructures including the core payment system, the Deposit Insurance Scheme and National Credit Bureau. With our second milestone to enhance efficiency, new qualified foreign entries with sufficient capitals and well-designed business model brought meaningful competition. With these reforms, the banking system has become more robust and competitive with good risk management and governance, sufficiently capitalized according to Basel III and show notable growth. Nonetheless, I believe that efficiency can be further enhanced through improvement in IT systems, data development, and utility sharing.

Just as when we travel on a journey, we need not only reliable vehicles, but also skilled drivers and passengers that are cautious explorers, and enforceable driving laws to ensure that we arrive at our next destination safely. The fact that the Thai banking system has been able to withstand many incidents in the past years, including the great flood, the subprime crisis, and the economic slowdown, testifies to the fact that we have been on the right path on sustainability. But again, complacency must be avoided. In this context, our banking system needs experienced bankers with good governance, excellent risk management practices and banking regulations to ensure safety and soundness, as well as financially literate customers. In my opinion, banks, as the first touchpoint to the customers, play a central role in promoting financial literacy and usage of new channels such as digital banking. More convenience does not mean a compromise on security and reliability of financial services, critical for customer’s confidence in the usage of digital channels. As QABs are increasingly interlinked with more cross-border transactions, it also calls for closer cooperation on the part of home and host supervisors in line with the global regulatory reforms to ensure stability of the financial system, similar to enforceable international driving laws. Last but not least, human resources are another key aspect that needs to be continually improved as without sufficient talent pool, the above milestones may not be achieved.
Lending and the building up buffers among both lenders and borrowers then stabilises over time. I would like to emphasise that this is a highly simplified description of financial stability, which to a certain extent disregards the structural aspects of systemic risk such as resilience and risks in financial infrastructure on the one hand, and such factors that trigger financial crises on the other. However, even the simplified picture gives important insights. The new tools being developed and the old tools which can be used for a new purpose are crucial to the success of macroprudential policy. Allow me therefore to discuss macroprudential policy tools and how they are intended to function. Macroprudential policy tools and how they fit in with monetary policy Typical macroprudential policy tools are capital and liquidity requirements chiefly focused on banks and the supply of credit. However, it’s also about measures to limit demand, such as the mortgage cap, or the regulation of exposures and haircuts with the purpose of limiting the contagion risk in the financial infrastructure. The various tools can be divided into static and time-varying tools. Using my simple lending rate formula, I will illustrate how, in different ways, these tools affect lending rates and credit terms. That is, after all, partly their purpose. However, this also has consequences for monetary policy.

However, such time-varying regulation also contributes to stability by increasing the costs of borrowing when credit growth and other financial variables suggest that systemic risk has increased, and reducing the interest rate margin in financial crisis situations when the buffer can be used. We can illustrate the time-varying part by adding a time index also for the regulation variable ( z ):  itlending  it   t ( zt ) . If time-varying regulation is introduced, the variations of the interest rate margin will be different over time, which can affect the monetary policy transmission mechanism. At the same time, a central bank must, irrespective of macroprudential policy, understand how the financial sector determines various financial prices in order to understand how monetary policy affects the economy through the lending rate. Credit markets are often not entirely homogeneous, but consist of several different segments or sectors. The development within different sectors can vary tremendously. Although many other factors affecting the lending rate and other credit terms are of an aggregate nature, sector-specific factors are often important too. It is therefore important to have a macroprudential policy tool focusing on individual sectors. This is not least important in attempting to reduce the costs of leaning into the wind.
Machine would, in effect, replace man (and the odd woman). Other things equal, this greater transparency would tend to increase the degree of accountability of, and trust in, the central bank among the general public. But other things are rarely equal. The downsides of slavish adherence to a fixed rule are also wellunderstood. 77  They include the fact that rules can sometimes be fragile and fallible, particularly at times of  structural change. If blind adherence to an algorithm sent policy and the economy into a tailspin, that is unlikely to enhance trust in central banks among the wider public. That does not mean, of course, that rules cannot play a useful informational role in setting policy, as is the case in a number of central banks. 76 77 78  78  Meltzer (2009), Taylor (2011, 2012). Williams (2015, 2016b), Haldane and Radia (2016), Yellen (2017). Williams (2014), Yellen (2017). 25  All speeches are available online at www.bankofengland.co.uk/speeches  25  An alternative way of making monetary policy more accountable would be to canvass the views of the general public directly. 79  Digital technology means this option is feasible. But would it be desirable? Public  referenda are hardly infallible. You may have heard there was an important referendum in the UK last year. The result came as a surprise to many. For some, it was a shameful example of the perils of populism.

27  All speeches are available online at www.bankofengland.co.uk/speeches  27  Annex  Chart 1: Number of central banks Number of central banks 200 ECB  150  100  Sveriges Riksbank  Bank of England  50  Bank of Japan  Banque de France  US Federal Reserve 2016  2004  1992  1980  1968  1956  1944  1932  1920  1908  1896  1884  1872  1860  1848  1836  1824  1812  1800  1788  1776  1764  1752  1740  1728  1716  1704  1692  1680  1668  0  Source: Central Banking Directory  Chart 2: Percentage of independent central banks  Monetary policy objectives  Percentages of central banks 100  All aspects  90 80 70 60 50 40 30 20 10 2012  2010  2008  2006  2004  2002  2000  1998  1996  1994  1992  1990  1988  1986  1984  1982  1980  1978  1976  1974  1972  1970  0  Source: Garriga (2016) using index of Cukierman et al (1992). Notes: Central banks with values greater or equal to 0.4 on the index are defined as independent. ‘Monetary policy objectives’ measures whether the central bank’s objective is focused on price stability. ‘All aspects’ also includes variables related to the appointment of the CEO/Governor; policy formulation; and limitations on lending to the government.
It is against this background that the measures adopted to soften the economic and social consequences of the war must be assessed. The National Plan to respond to the economic and social fallout of the war in Ukraine, approved by the Spanish Cabinet on 29 March,5 includes measures that will come at a direct cost of € billion in 2022, according to Government estimates.67 One area of fiscal policy where more resolute action would be desirable is the formulation of a credible commitment to budgetary stability over the medium term. This would help limit the risks of financial market tensions that could be fuelled by the current climate of high uncertainty. This commitment should take the form of a gradual fiscal consolidation programme, to be implemented once the recovery takes hold. A gradual adjustment process minimises the possibility of any abrupt changes in the budgetary policy stance that might hamper the recovery under way. Increasing the economy’s potential output would also help reduce the high level of government debt. This would require reforms that address the economy’s structural shortcomings. NGEU funds could also be particularly useful in implementing these reforms and the investments required to support the changes. 5  See Real Decreto-ley 6/2022 (available in Spanish only). 6  In addition to this amount, there is a contingent liability of € billion linked to the new ICO guarantee facility approved as part of the raft of measures to support business liquidity needs stemming from the temporary increase in energy and fuel costs.

If we glance back in time, we can conclude that underlying inflation (UND1X) has on average remained close to the target since its introduction. Inflation also came down towards the target level much more quickly than most analysts had believed when we announced our target in January 1993. My opinion is that one factor contributing to this was the determined defence of the fixed exchange rate through both interest rate policy and through the political system rallying to show willingness to change fiscal policy to contribute to price stability. The fiscal policy consolidation implemented later during the 1990s also contributed significantly to enabling price stability to be maintained. As the Riksbank's monetary policy is guided by the development of inflation one to two years' ahead, the inflation rate is sometimes allowed to deviate from the target in the short term. If monetary policy were aimed at continuously minimising these deviations, it could require major adjustments in the steering interest rate, which would in turn lead to large fluctuations in production and employment. This was the reason behind the decision not to try to achieve the inflation target of 2 per cent as early as 1993 and 1994. We chose instead to allow the first effect of the increase in import prices that followed in the wake of the floating krona to have an impact on the system first and to accept a temporary and limited rise in the inflation rate. What we wanted to avoid was the second round of effects.