samchain/econo-pairs-v1 huggingface dataset:
It thus appears that the euro area has yet to harness fully the benefits arising from economic integration and the introduction of the single currency. The emergence of difficulties in furthering European economic integration has recently been discerned. Cases in point are the problems affecting the fiscal discipline framework, the delays in meeting the targets of the Lisbon Agenda and the obstacles still blocking, in certain industries, the development of the single European market. At the March 2005 European Council, the authorities attempted to correct the lack of ambition behind the structural reforms and the scant consistency of budgetary policies with the disciplinary rules set by adjusting some of the policy co-ordination mechanisms. However, only clear resolve on the part of the authorities to fulfil their commitments would dispel the scepticism some of these proposals evoke. In the fiscal policy realm, the European Council approved a reform of the Stability and Growth Pact. Among other changes, provisions were made to pay greater attention to the particular situation of each country when evaluating its budgetary position and to make the application of the corrective measures  BIS Review 45/2005  3  envisaged in the Treaty more flexible. As a result of these changes, the economic rationality of certain components of the Pact has perhaps been enhanced, though its complexity and the margin available for discretion in its application have also undoubtedly increased.

Funds raised in the US from money market funds were round-tripped back into the US through the purchase of asset-backed securities by European banks. When US money funds withdrew their dollar funding, this chain went into reverse gear causing a dollar funding problem. Understanding those links in the cross-border financing chain is impossible without detailed sectoral data. That is now in train. Yet there remain significant data constraints on our ability to map the macro-financial system of systems in the detail necessary to capture accurately interactions within and across subsystems. Even among the world’s largest banks, data on their bilateral exposures to one another remains partial and patchy, especially for off balance sheet positions and securities holdings. That means large parts of the core of the international banking map remain, essentially, uncharted territory. 10  BIS central bankers’ speeches  These data gaps are even more acute when moving beyond the banking system. Large parts of the non-bank sector remain in the shadows from a data perspective. For example, reliable measures of the aggregate and/or individual leverage, maturity and foreign currency mismatch positions of non-bank intermediaries – some of the key vulnerability metrics – are thin on the ground. The FSB has an agenda to fill these data gaps. More broadly, flows of funds data, both within the financial sector and between it and the wider economy, domestically and internationally, is at present partial.
The quick and resolute privatisation of former state-owned companies in the beginning of 1990s was a decisive factor in the establishment of a sound and strong customer base. Due to that Estonian banks have been able to extend credit to the strong private  BIS Review 51/2002  1  sector, in particular. Thus we managed to avoid the situation that many former socialist economies were forced to experience - floating of problem loans directly or indirectly to state-controlled, often corrupt industry. In the course of the reorganisation of the financial sector in the early 1990s we did not hesitate to liquidate badly-managed, insolvent banks in the first half of 1990s. Neither did the government hesitate when it was necessary to liquidate badly-managed, insolvent enterprises that were manufacturing for stock. Privatisation of state-owned companies for real money to core investors, and, if necessary, liquidation of state enterprises that were operating in the red, created a good basis for the emergence of a strong and free competition-driven business sector. Without it the real wages in Estonia would not have increased by almost one-third in the second half of 1990s, without it we would not be approaching the finish line in our EU accession process. Steps taken ten years ago for the demolition of the old, impotent and perspective-lacking system and for the building up of a new, viable and future-oriented economy are now bearing fruit. The basis of the economic reforms undertaken by the government in the early 1990s was a strong fiscal policy.

We value highly human and civil rights ranging from gender equality, data protection, to the condemnation of torture, including the rejection of capital punishment. The protection of these values and rights relies on the vigilance of the legal professionals here in this room and elsewhere. This is even more important vis-à-vis a reality of extreme and obsessive forms of nationalism. The EU has also increased personal choices. The ability to travel, work and live across borders has been enhanced. The European Health Insurance Card permits European citizens to obtain healthcare wherever they are. 1.5 million people, perhaps including some of you here today,  BIS central bankers’ speeches  1  have completed part of their studies in another member state as part of the Erasmus programme. More than 15 million EU citizens have moved to other EU countries to work or to enjoy their retirement. This wider range of options increases people’s wellbeing. These reasons, and the other positive aspects of membership, have been drowned out in debate by concerns over migration and the large wave of refugees from troubles in the Middle East and elsewhere, the impact of the crisis, disaffection with high levels of unemployment – especially youth unemployment, and a perceived lack of accountability and legitimacy of the EU institutions. I fully recognise that Europe in its current state is not perfect. The crisis has shown that Economic and Monetary Union is incomplete, and further work is required, particularly in the areas of banking and credit markets.
Last but not least, the HKMA launched the Fintech Supervisory Sandbox in September in order to create a regulatory environment that is conducive to fintech development. The Sandbox enables banks to conduct pilot trials of their fintech initiatives in a controlled production environment without the need to achieve full compliance with the HKMA’s usual supervisory requirements. So far, two banks have already made use of the Sandbox to conduct pilot trials of their biometric authentication and securities trading services. A few banks are discussing with us and planning to make use of the Sandbox for conducting their project trials in the coming few months, in areas such as blockchain, artificial intelligence and many more. 10. In parallel to all these fintech projects that the FFO has launched, the HKMA has issued 13 Stored Value Facilities licences in two batches under the newly established regulatory regime. These licensees range from mobile and Internet payment service providers to prepaid card issuers. As payment and SVF operators are important stakeholders in the fintech ecosystem, we have also invited five of the SVF licensees to join today’s event and share their experience in relation to the latest e-payment developments in Hong Kong. 11. In conclusion, ladies and gentlemen, we have lined up a full day’s programme with top fintech experts and regulators as speakers. I am sure that all of you will find today’s discussions fruitful and insightful. Thank you very much. 2/2  BIS central bankers' speeches

Peter Praet: Interview in Knack Interview with Mr Peter Praet, Member of the Executive Board of the European Central Bank, in Knack, conducted by Mr Ewald Pironet and published on 6 January 2016. *  *  *  For over a year now, the European Central Bank (ECB) has been printing heaps of money, pumping it into the economy and pushing interest rates down to almost 0%. When may this policy be deemed a success? You may label that ECB policy a success if inflation, the rise in the cost of living, stays below, but close to, 2% over the medium term. That is our mandate. I admit that our policy has not yet been successful enough: inflation rates in Europe have been at the very low level of almost 0% for quite some time now. That is why we are continuing to take the necessary measures to drive inflation up to 2% over the medium term. However, the point at which we think we will reach 2% is constantly postponed, because all kinds of things are happening that are dampening inflation, such as the decline in oil prices or lower economic performances in the emerging countries. We have decided to maintain our policy until March 2017. But we need to be careful not to jeopardise the ECB’s credibility by shifting that horizon. It is up to the ECB to keep inflation at just below 2%, but it is failing to do so.
Interest rates have risen, but not as far as they have elsewhere: they are currently marginally higher than US dollar interest rates at the short end and at a premium of about 100 basis points for 3-month money. Inflation is declining, not rising. And, where other currencies have seen substantial devaluations, the Hong Kong dollar has remained stable. In fact, it remains the only freely convertible currency in Asia that has not experienced devaluation: the linked exchange rate $ Hong Kong dollars to the U.S. dollar - is as solid as ever. The tenacity and credibility of the link is, in my view, one of the main reasons why Hong Kong has weathered the crisis better than most of its neighbours. We are as committed as we have ever been to preserving the link, and we have demonstrated, throughout the turmoil of the last year, that we have the machinery - in the form of an effective currency board - to enable us to keep the link. BIS Review 98/1998  -2-  We are also committed to maintaining our position as the world’s freest economy. Hong Kong has built its reputation on free market principles. We are proud of this reputation, and we cherish these principles because we know how much our prosperity depends on them.

To the extent that the speculators had to borrow in the interbank market to fund their short Hong Kong dollar positions, the interbank interest rates were high enough to force the currency speculators to abandon the attacks, unwind their short positions, and incur substantial losses. The finely tuned currency board system worked well, but the interest rate volatility was extreme: during one attack, on 23 October 1997, the overnight interest rate shot up to nearly 300%. The stock market took a nosedive, and the HKMA was sharply criticized for relying on this single tool, the interest rate, to defend the Hong Kong dollar. In August the speculators adopted a more sophisticated ploy. They introduced a form of double play aimed at playing off the currency board system against the stock and futures markets. First, to avoid being squeezed by high interest rates, they prefunded themselves in Hong Kong dollars BIS Review 98/1998  -3-  in the debt market, swapping US dollars for Hong Kong dollars with multilateral institutions that have raised Hong Kong dollars through the issue of debt. At the same time, they accumulated large short positions in the stock index futures market. They then sought to engineer extreme conditions in the money market by dumping huge amounts of Hong Kong dollars. This sell-off was intended to cause a sharp interest rate hike, which in turn would have sent the stock market plummeting.
Inflation increased to a level that was tangibly higher than the inflation target, resource utilisation was higher than normal and there was a rapid expansion of credit. Despite this, the repo rate was lower than normal for most of the period leading up to the crisis. A more rapid increase of the repo rate would have been better. We did not foresee the financial crisis, but once it hit the Swedish economy with full force in September 2008 the Riksbank acted quickly and forcefully. This mainly concerned measures to preserve financial stability. However, the expansionary monetary policy conducted by the Riksbank also played an important role in reducing the severity of the downturn that followed in the wake of the financial crisis. Looking forward, I think that the repo rate should be raised at every meeting this year, considering the economic development we envisaged at the last monetary policy meeting. If inflation becomes higher than we had expected, it may be necessary to raise the repo rate to a normal level of around 4 per cent as soon as next year. The average for the repo rate over the last 10 years cannot be taken as a starting point for what the average repo rate should be in the longer term. However, at the same time, I am, of course, prepared to reassess my view of the direction of monetary policy if the external conditions should change significantly, as they did in September 2008. There are those who think that monetary policy is too tight.

This is because the Riksbank only lent money to the banks and did not, like the Fed, the ECB and the Bank of England, purchase bonds and other assets during the crisis.13 If the Riksbank had done so, this could have led to more serious problems when the time came to phase out the support measures. It is of course difficult to estimate the effects of the measures taken by the Riksbank in connection with the crisis as so many other things also had an impact on the course of events, not least fiscal policy and the measures taken by other authorities to preserve  12  The Riksbank also extended the types of collateral that could be approved for loans and provided liquidity assistance to two small banks, Kaupthing and Carnegie. 13  By only lending money, the Riksbank also avoided exposure to a substantial interest rate risk. 6  BIS central bankers’ speeches  financial stability. Nevertheless, it can be noted that the Swedish banks came through the crisis well. Total lending to households and non-financial companies continued to increase throughout the crisis. It can also be noted that the fall in production and employment was less than feared. Domestic demand has been kept up by the expansionary fiscal and monetary policies. Conclusions With hindsight, I think that we can draw two conclusions about the actions taken by the Riksbank in connection with the financial crisis. First, we did not see the crisis coming.
Inadequate and old-fashioned supervision based on rigid regulations will do right the opposite. And supervision is a dynamic concept. The tools and art of supervision must, in all countries, continuously improve along with the development of markets and market technology. BIS Review 66/2000  8

We will benefit greatly from your expertise on the Banknote Advisory Panel. So without further delay, let me hand over to Maggie to give you a scientist’s perspective on the importance of…science. 6  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  6
People understood the conditionality of guidance, as they and the MPC had learnt that there was still considerable spare capacity in the economy. Chart 7: Interest rate volatility has remained low since guidance was provided Standard deviation of option-implied distributions for 3m LIBOR in 12-months’ time Basis points 180  August 2013 guidance issued  160 140  February 2014 guidance issued  120  EU referendum  100 80 60 40 20  2000  2002  2004  2006  2008  2010  2012  2014  2016  2018  0 2020  Sources: Bloomberg Finance L.P., Chicago Mercantile Exchange (CME), Intercontinental Exchange (ICE) and Bank calculations. 9  All speeches are available online at www.bankofengland.co.uk/news/speeches  9  The improved transparency of the inflation targeting framework also promoted this smooth learning process about the supply side that helped maximise economic outcomes. Starting in 2014, the MPC began carrying out a stocktake of the supply side of the economy each year, publishing its best collective judgments on the natural rate of unemployment, the output gap, as well as the expected growth in productivity, labour supply and potential output.9 As part of these exercises, the MPC revised down its (hitherto private) estimate of equilibrium unemployment rate from 6½% in August 2013 to 5½% in August 2014, 10 though it also judged that spare capacity in the UK economy was gradually being used up as demand was growing rapidly while supply growth was still subdued. In short, spring was gradually turning to summer. II.

12  All speeches are available online at www.bankofengland.co.uk/news/speeches  12  b) CPI inflation Per cent 3.5 EU referendum 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Jan 14  Jul 14  Jan 15  Jul 15  Jan 16  Jul 16  Jan 17  Jul 17  -0.5 Jan 18  c) UK and G7 growth Percentage changes on a year earlier 4.0  EU referendum  3.5 3.0  Swathe of other G7 countries  2.5 2.0 1.5 1.0  UK GDP growth  0.5 0.0 2015  2016  2017  -0.5 2018  Sources: Eikon from Refinitiv and Bank calculations. Sterling dropped immediately following the referendum, the biggest recorded single day move, and it subsequently traded around 15 to 20% below its late-2015 peak ahead of the referendum being called. Inflation rose well above the 2% target, eventually peaking at 3.1% in late 2017, an overshoot entirely due to the referendum-induced fall in sterling. UK growth dropped from the fastest to the slowest in the G7. Households trimmed spending, as the effects of sterling’s fall showed up in higher prices in the shops and squeezed their real incomes. Business investment was cut back more markedly, despite supportive financial conditions and (at the time) strong global growth, as companies understandably put projects on hold whilst they waited for greater clarity over the UK’s future trading relationships.
7  http://news.bbc.co.uk/1/hi/entertainment/4214824.stm. 8  https://www.turnercontemporary.org/about/turner. BIS central bankers’ speeches  3  Money is memory. The £ note will soon bear one of the greatest figures in UK history. Not a distant memory but a living one. The past sedimented in the present. An influence which endures. It’s even more fitting that we can celebrate Turner’s continuing influence by having one of our most eminent artists, someone whom Turner has influenced and one of Margate’s own, once Enfant Terrible, today Royal Academician, and master of confessional art, Tracey Emin, to share her thoughts with us now. 4  BIS central bankers’ speeches

Øystein Olsen: Financial economics and the challenges in managing Norway’s Government Pension Fund Introductory remarks by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), at the NBIM (Norges Bank Investment Management) Financial Research Conference, Oslo, 30 August 2011. *  *  *  It is a great pleasure for me to welcome each of you to the first NBIM Financial Research Conference. The objective of today’s conference is to present and discuss a set of papers at the forefront of academic research on financial economics. This event is also part of Norges Bank’s efforts to strengthen ties with the academic community. In addition to some of the best researchers in financial economics, we have in this room some of the top investment professionals in Norway. The opportunities for interesting discussions should be good. At the outset, the intention of this conference was to present leading academic research, without placing weight on its direct relevance to NBIM. However, as this conference will show, there is considerable common ground between the research frontier of financial economics and our challenges in managing the Government Pension Fund. Over the last three decades, researchers have moved a long way from the Capital Asset Pricing Model. One important result of empirical financial research is that expected returns on traded assets vary much more over time and across assets, than was previously thought and implicitly assumed by the CAPM.
From a financial stability perspective, the resulting squeeze on profits could ultimately lead to banks having insufficient reserves with which to increase or maintain their capital levels. This reduces the resilience of the banking system and increases the risks to financial stability. In sum, I can say that particular attention needs to be paid to financial stability in an environment of persistently low interest rates, especially when combined with negative interest rates. Therefore, the slightly slower momentum currently being observed on the mortgage and real estate markets is welcome, but we should nevertheless remain alert. Conclusion In a number of respects, the current situation is unusual for Switzerland and its economy. The significant overvaluation of the Swiss franc and the very low, or even negative, interest rates pose a major challenge for economic agents and authorities – in particular the SNB. Yet, as I have explained, our monetary policy has not changed fundamentally. As a small economy that is strongly interconnected with the rest of the world, Switzerland is heavily dependent on economic developments abroad, and will remain so. These developments can explain the current strength of the Swiss franc, but they are also part of what has driven the exceptionally low interest rates in Switzerland. Neither the strong currency nor low interest rates are new phenomena. Rather, they are traditional characteristics of the Swiss economy, which have had a positive effect on living standards in the past.

Although the borrowing component in investment property financing tends to be lower than in owner-occupied real estate, domestically focused banks are exposed to this segment. One-third of new mortgages are issued for residential investment property, yet the affordability risk for such property owned by private individuals is roughly as high as for owner-occupied real estate. Moreover, a correction in this segment can affect other real estate market segments, via changes in market confidence and expectations (spillover effects). So we need to keep a close watch on the residential investment property segment. A second risk arises due to falling liability margins in an environment of low interest rates. To offset these, a bank essentially has two options – apart from increasing its lending interest rate. Both options are associated with higher interest rate risk, which in turn increases the risks to financial stability. First, it can grant a higher proportion of long-term loans at higher interest rates, as they generate higher interest revenue than short-term loans. However, this also increases the so-called maturity mismatch.6 The greater the maturity mismatch, the higher the interest rate risk, and thus the potential economic losses for the bank in the event of a sudden interest rate rise. This is because the larger the maturity mismatch, the quicker the rise in refinancing costs compared to long-term fixed interest income when interest rates go up. Second, a bank which has hitherto hedged against interest rate risk might be tempted to dispense with such hedging, and the associated costs.