samchain/econo-pairs-v1 huggingface dataset:
Chart 6: Online sales jumped during lockdown  Chart 7: Saving rose and fell sharply during and after the spring lockdown  The share of online retail sales. Source: ONS. Sources: Bank of England, ONS, The Investment Association, and Bank calculations. The blue line includes flows into household deposits with banks, National Savings and Investment  4  I’m not going to distinguish here between consumers’ own inclinations and any additional impact of mandated lockdowns. That the lockdowns have been necessary is clear. While they obviously have an incentive to avoid infection themselves individuals won’t always take fully into account the risk they pose to others, particularly when so many people can apparently be infectious but free of symptoms. In economists’ language there’s a clear “externality” that obligatory lockdowns are seeking to address. For the same reason, it seems very likely that the lockdowns will have had an additional effect on spending, above and beyond those that would’ve resulted from consumers’ own natural caution (although as my colleague Jan Vlieghe recently explained (Vlieghe (2020)), it’s empirically difficult to separate these things in the data because, in most countries, they’ve coincided with each other, both of them responding to swings in infection rates). In the current context you can think of this as a widening in the basket of activities that carry infection risk – and perhaps, more fundamentally, as the result of a model in which individual utility is replaced by some measure of social wellbeing.

However, going out to eat still costs far more than it did, relative to other stuff. So you’ll probably be inclined to go less often. But what do you do with the money you would’ve spent? Do you simply switch it to other things, leaving your aggregate consumption unchanged? Or do you reduce your total spending as well, and instead save a little more? At least for the idealised consumer of simple economic theory, two things turn out to matter for this decision. One is the extent to which there are other, close substitutes for the taxed activity. If you liked cooking at home, or indeed anything else, almost as much as going to a restaurant you’d be more inclined to switch your spending immediately to these other things. Your total consumption wouldn’t change much. In general, a hike in a particular sales tax will have smaller effects on aggregate spending, and result instead in more expenditure-switching, if it’s levied on something for which there are similar (and untaxed) alternatives. The other important factor is how long you expect the policy to last. If he thinks the tax hike is permanent, our idealised consumer of economic theory would substitute his spending straightaway towards other goods or services, regardless of whether they’re close substitutes. If not – if he expects the government to come to its senses at some point, and reverse the policy – he’ll be more inclined to wait until that happens.
And the inability of the money supply to vary in response to demand would likely cause greater volatility in prices and real activity. 17 As the Italian philosopher George Santayana famously observed. 7  All speeches are available online at www.bankofengland.co.uk/speeches  7  In the short run, the fixed supply of Bitcoin has fed a global speculative mania that has encouraged a proliferation of new cryptocurrencies. As my colleague Agustin Carstens has argued, this surge of competitors and the “forking” of Bitcoin echoes the debasement of private monies in the past. 18  Inefficient Media of Exchange The most fundamental reason to be sceptical about the longer term value of cryptocurrencies is that it is not clear the extent to which they will ever become effective media of exchange. Currently, no major high street or online retailer accepts Bitcoin as payment in the UK, and only a handful of the top 500 US online retailers do. For those who can find someone willing to accept payment for goods and services in cryptocurrencies, the speed and cost of the transaction varies but it is generally slower and more expensive than payments in sterling. That’s because the more heavily used cryptocurrencies face severe capacity constraints compared with other payment systems. For example, Visa can process up to 65,000 transactions per second globally against just 7 per second for Bitcoin. And if you use a debit or credit card in the UK, the transaction is completed in seconds and without exchange rate risk.

In contrast, Bitcoin users can face queues of hours. Those wanting to get to the front to make time-pressing payments – for last orders, for example – need to offer up a transaction fee sufficiently large to persuade Bitcoin “miners”, who verify and process transactions, to do so quickly. The fees paid vary through time, but reached £ in late 2017. Fees are currently around £ but even that is expensive relative to cash, cards or online payments which cost the retailer around 1.5 pence, 8 pence and 19 pence respectively. 19  Over time, Bitcoin transaction fees could rise further because the subsidy miners enjoy by being partly paid with rewards of new units of currency, will decline given the total supply of Bitcoin cannot exceed 21 million. 20  Furthermore, the costs of Bitcoin mining are enormous. Its current annual electricity consumption is estimated by some to be up to 52 terawatt hours, double the electricity consumption of Scotland. 21  In  comparison, the global Visa credit card network’s energy use is less than ½ of 1% of that of Bitcoin, despite processing 9000 times more transactions. 22  18  Carstens, A., (2018), “Money in the Digital Age: What Role Central Banks?” See https://www.bis.org/speeches/sp180206.htm Based on the British Retail Consortium’s Payment Survey 2016, which surveys the costs that retailers incur for accepting payments, including bank charges, handling charges, infrastructure costs and write-offs (losses).
But looking forward, given the size of the OTC derivatives markets and the participation of hedge funds in those markets, it is worth reflecting on whether central counterparty clearing arrangements for the more standardized portion of the OTC derivatives market could play a useful role. Certainly, there are many challenges associated with such a project, and its potential to mitigate risks effectively would have to be clearly demonstrated, but surely it is worth looking carefully at whether that or similar efforts could provide meaningful improvements to the core infrastructure of what is undoubtedly a systemically important set of markets. Taken together, these areas of focus are important to ensure that there is adequate capital not just against growing direct exposures to hedge funds, but the indirect exposures that could affect market conditions and firms’ positions in a more stressful environment. We believe that the dealers that act as major counterparties to hedge funds have a collective interest in improving market practice in these areas. This is a good time for them to reassess how practice has evolved against the standards set out by the CRMPG in 1999, and to examine whether the bar established at that time is appropriate for the conditions that exist today. It took a major market event to expose the extent of weaknesses in market practice that prevailed prior to 1998 and to catalyze improvements across the financial community.

Christian Noyer: No moral hazard – the banks are doing their job Comment by Mr Christian Noyer, Governor of the Bank of France, in the Financial Times, 18 September 2007. *  *  *  In recent weeks, Central Banks in Europe and the US have acted repeatedly to provide liquidity to interbank money markets. These interventions have raised some questions. Concerns were expressed that monetary authorities were bailing out speculators, thus creating the same kind of moral hazard that may have led to excesses in the past. There were also concerns as to whether the integrity of monetary policy would be compromised. These are valid questions. On numerous occasions, in the past, we pointed out the potential dangers that mispricing of credit risk posed for financial stability. We may be now seeing some of the consequences. Excessive risks were taken, and losses will have to be accepted. It is important that monetary and financial authorities take no action that would prevent this process from running its course, let alone be seeing to be condoning past or future excesses. However, the logic behind recent interventions is different. Put very simply, financial turbulence and uncertainty have suddenly triggered an upward shift in the demand for Central Bank money. Faced with such a shift, whose direction is apparent but amplitude uncertain, the choice, for monetary authorities, is clear: either accommodate, and provide temporary liquidity; or not, in which case, interest rates would have to rise to restore balance in the interbank market.
Largest portion of the core capital must be consisted of common shares and retained earnings. Appropriate principles will be prepared for the legal entities who are not  BIS Review 127/2009  5  organized as shareholding companies for ensuring high-quality core capital comparable with the quality of the core capital of the shareholding companies. Also, deductive items and prudential filters will be harmonized on an international level and will be applied at the level of a shareholding capital or its equivalent in the case of the legal entities which are not organized as shareholding companies. Moreover, all components of the capital will be fully published. -  Introduction of a leverage ratio as an additional measure of the risk-based Basel 2 framework, in order to include it in the treatment envisaged in the First Pillar in the future, on the basis of an appropriate analysis. So as to provide comparability, the details about the leverage ratio will be harmonized on an international level, with full adjustment of the accounting differences. -  Introduction of a minimum global standard for providing liquidity for the financing needs which cover the compulsory rate of coverage of the liquidity in stressscenarios, backed by a long-term rate of structural liquidity. -  Establishing of counter-cyclical capital buffers above the minimum compulsory level. This framework will include measures for maintaining the capital, such as restrictions on the possibility for allocation of the capital elements.

The implications of the crisis internationally-wide entered primarily through the external sector, and particularly through the transmission channels given below: -  the export-based production registered swift and rapid fall, due to the depreciated global demand, whereas the downward revision of the domestic demand took place  2  BIS Review 127/2009  in a slower pace, leading to some import reduction (particularly in the last quarter of the last year and the first quarter of this year), -  this uneven pace of the fall in the exports and the imports brought about widening the trade gap, whereas the increase in the uncertainty and establishment of bearish expectations caused decrease in the net inflows from private transfers, Reasonably, it led to higher current account deficit in this period,  -  although the syndrome of sudden cessation was not present, the capital inflows went down significantly, making the current account funding fall considerably on the foreign reserves,  -  the perceptions for increasing the macroeconomic risks made the banks accumulating foreign assets, the households converting large amounts of Denars into foreign currencies, thus creating additional pressure on the foreign reserves of the Republic of Macedonia. Accordingly, the consequences of the crisis could not be avoided, which is understandable if the size and the openness of the Macedonian economy are taken into consideration.
As of now such competence resides mostly in big internet platform companies. However, many data subjects have no way to make better use of their own digital footprints, or data about themselves currently scattered in various different platforms, for their own benefit. 12. For example, SMEs are facing the long-standing problem of having limited access to finance. Conventional credit scoring approaches are not particularly favorable to SMEs because they often lack auditable operating data, which large corporates have. This disadvantage hinders not only the growth of SME businesses, but also the stability of our job markets and economic growth. Worse still, the blow of the pandemic has put the survival of many SMEs at stake, and their need for financing is stronger than ever. So is there a way to better empower data subjects to make better use of their own data for their own benefit? 13. With this objective in mind, we are expanding our financial infrastructure to enable data to take the centre stage. Our recently launched initiative, the Commercial Data Interchange (CDI), is a centralized platform which allows data owners to share their digital footprints voluntarily with banks through data providers in an efficient and secure manner. With a more substantial body of up-to-date and authenticated data shared by SMEs (such as monthly or even daily trading and turnover statistics), banks could use data analytics to perform more accurate credit assessments, and then provide more tailored services to SMEs.

The subject of central bank digital currencies (CBDCs), be it wholesale or general purpose, has been high on the agenda of the central banking community. Apart from being a new and trusted digital means of payment, CBDCs could potentially also foster competition and innovation in the payment sector. 7. Here at the HKMA, we have been exploring technologies for both wholesale and general 1/3  BIS central bankers' speeches  purpose CBDCs. At the wholesale level, we see great opportunities for CBDCs to enhance the efficiency of cross-border payments. Two years ago, we conducted a proof of concept with the Bank of Thailand to develop a DLT-based cross-border corridor network. Building on this fruitful collaboration and the experience gained, we are taking a further step to create more synergies with other central banks. 8. Under the auspices of the BISIH Hong Kong Centre, the HKMA, together with the Bank of Thailand, the Central Bank of United Arab Emirates, as well as the Digital Currency Institute of the People’s Bank of China, are embarking on a wholesale CBDC project called Multiple CBDC Bridge (m-CBDC Bridge). We aim to, through this m-CBDC Bridge, foster a collaborative environment for central banks and the private sector to further explore the potentials of DLT to improve the settlement and liquidity management efficiencies in crossborder payments. We are grateful for the participation from the private sector including two securities exchanges, banks, and multi-national corporates in the project.
For my part, I believe that in order to improve financial stability and rebuild the public trust, more compensation in finance needs to be deferred and for longer periods. Also, I think there needs to be a shift in the mix of deferred compensation away from equity and towards debt. The optimal structure of deferred compensation likely differs with respect to the goals of providing incentives to support prudent risk-taking versus encouraging the right culture. For example, consider trades that might appear to be highly profitable on a mark-to-market basis, but take some time to be closed out and for the profits to be realized in fact, not just on paper. In this case, as long as deferred compensation is set at a horizon longer than the life of the trade, this can ensure the firm’s and the trader’s incentives are aligned and the “trader’s option” is effectively mitigated. This component of deferred compensation could take the form of either cash or equity. However, in contrast to the issue of trading risk, unethical and illegal behavior may take a much longer period of time – measured in many years – to surface and to be fully resolved. For this reason, I believe that it is also important to have a component of deferred compensation that does not begin to vest for several years. For example, the deferral period might be five years, with uniform vesting over an additional five years.

2 The pattern of bad behavior did not end with the financial crisis, but continued despite the considerable public sector intervention that was necessary to stabilize the financial system. As a consequence, the financial industry has largely lost the public trust. To illustrate, a 2012 Harris poll found that 42 percent of people responded either “somewhat” or “a lot” to the statement that Wall Street “harms the country”; furthermore, 68 percent disagreed with the statement: “In general, people on Wall Street are as honest and moral as other people.” I reject the narrative that the current state of affairs is simply the result of the actions of isolated rogue traders or a few bad actors within these firms. As James O’Toole and Warren Bennis observed in their Harvard Business Review article about corporate culture: “Ethical problems in organizations originate not with ‘a few bad apples’ but with the ‘barrel makers’.” 3 That is, the problems originate from the culture of the firms, and this culture is largely shaped by the firms’ leadership. This means that the solution needs to originate from within the firms, from their leaders. What do I mean by the culture within a firm? Culture relates to the implicit norms that guide behavior in the absence of regulations or compliance rules – and sometimes despite those explicit restraints. Culture exists within every firm whether it is recognized or ignored, whether it is nurtured or neglected, and whether it is embraced or disavowed. Culture reflects the prevailing attitudes and behaviors within a firm.
The effects of monetary policy on financial market developments, in particular in fostering the subsequent financial bubble, have led to a reassessment regarding the conduct of monetary policy. The debate is under way and concerns various aspects, which I will summarise briefly. The first concerns the tools of monetary policy. Recent experience has shown that the approach followed by most central banks, based on inflation targeting (which involves forecasting inflation on the basis of an economic model and changing interest rates so as to ensure that inflation forecasts are in line with the target), does not sufficiently take into account financial developments, in particular with regard to asset prices, which may affect the stability of the markets and, in time, inflation. It is argued by some that monetary policy should act proactively to avoid the excessive tendencies of the financial markets, known as “leaning against the wind”. 5 In other words, one should be ready to hinder the creation of speculative bubbles, among other things by raising interest rates, before inflationary pressures emerge. This is easier said than done. If it is difficult to forecast inflation, it is even  2  Ben S. Bernanke (2002), “Deflation: Making Sure "It" Doesn't Happen Here”, remarks before the National Economists Club, Washington, D.C., 21 November 2002; Alan Greenspan (2004), “Risk and uncertainty in monetary policy”, remarks at the Meetings of the American Economic Association, San Diego, California, 3 January 2004.

From this perspective, too many have been quick to judge obsolete the meetings attended only by advanced economies, such as the G7, and to consider that only those which also involve emerging economies, such as the G20, have the legitimacy to discuss global problems. As we have seen, there are important questions on which the interests of advanced economies diverge from those of emerging economies. In some cases, such divergences stem from specific characteristics or distortions in international relations created by emerging economies. It is thus essential that the advanced economies find common points of interest to be discussed subsequently in larger fora. This crisis began and developed at the centre of the advanced economic system, and ultimately originates from an objective difficulty among more developed countries to accept the consequences of the process of international integration, which has accelerated in recent years. Such countries, even the larger ones, have become smaller individually, to a greater  6  BIS Review 66/2009  extent affected by, and vulnerable to, the external environment. It is only by strengthening the cooperation between them that they will be able to maintain global leadership. Thank you for your attention. BIS Review 66/2009  7
The exchange rate would be able to move in response to the balance of payments, allowing monetary policy some latitude in reacting to domestic economic developments. In this framework, the real exchange rate appreciation that is a corollary of economic convergence could take place via nominal exchange rate appreciation. However, the introduction of a relatively wide fluctuation band could lead to unprecedented exchange rate volatility. In turn, this could jeopardise the Bank’s price stability objective. It may, therefore, be preferable to enter ERM II without a fluctuation band at all. This exchange rate strategy of course implies that the burden of adjustment to shocks will have to be borne by the real economy. In the first instance this means pursuing a prudent fiscal policy. The current aim of fiscal policy is indeed to reduce the deficit to GDP ratio to around 2.5% by 2004, from 5.3% last year and over 10% in the late 1990s. By restraining domestic absorption, a tighter fiscal stance will enhance the credibility of the exchange rate peg. Moreover, a smaller borrowing requirement will also free up resources for the private sector and contain upward pressure on interest rates, thereby stimulating economic growth. Finally, bringing the budget deficit closer to balance will then give fiscal policy the leeway it lacks today to respond to adverse shocks or cyclical downturns. The response to such disturbances will also depend on the degree of flexibility in the economy as a whole.

Institutional responsibilities are divided between the Malta Financial Services Centre, which is responsible for the regulation and supervision of banking, insurance and investment services; and the Central Bank, which is charged with ensuring the stability of the system as a whole. The Central Bank is also responsible for the domestic payments system, which is being upgraded in line with developments in the euro area. BIS Review 46/2002  3  2  According to a recent background paper prepared by the European Central Bank(ECB) , Malta already has a domestic financial intermediation mechanism that broadly mirrors the composition of different financial market segments in the euro area member states. While there has been considerable growth of non-bank financial intermediaries and development in the money and capital markets, the banks remain the key financial institutions. Total bank assets amount to more than double GDP, whereas the ratio of domestic credit to GDP is broadly in line with the EU average. More importantly, the banking system is generally healthy, enjoying ample liquidity and a broad capital base, with the ratio between own funds and risk-weighted assets standing close to 14% in March of this year. Although there are concerns about the quality of loan portfolios after a recent period of rapid credit expansion, the banks have reinforced their capacity to assess and contain risk. In this regard, the sale of one of Malta’s two large banks to a major foreign banking group in 1999 was particularly important.