samchain/econo-pairs-v1 huggingface dataset:
This contagion may not be fully in any individual firm's interests - or powers - to resolve, and it is this 'gap in the market' which creates the need for public involvement via central banks. Fortunately, banking crises do not occur every day of the week. But they do happen: an IMF study counted 54 across the world between 1975 and 1997, of which 12 were in developed countries. Such crises can have enormously harmful effects: recent Bank of England analysis suggested that, over the past quarter century, total output losses during banking crises have averaged around 15-20% of GDP in the countries in which they occurred. Whilst the Bank has responsibility for maintaining systemic stability, the day-to-day supervision of individual banks and other financial firms in the UK has been the responsibility of the Financial Services Authority (FSA) since 1997. Co-ordinating our system-wide perspective with the FSA's supervision of individual institutions and the Treasury's legislative responsibilities is essential to the smooth functioning of the new arrangements. A Memorandum of Understanding, signed by the Bank, the FSA and the Treasury in October 1997, sets out our respective responsibilities, both in 'normal' times, and in a crisis. And we work hard to foster these relationships, helped by the fact that I am a member of the FSA Board and Howard Davies is a non-executive director of the Bank. The three institutions also get together each month in the so-called 'tripartite Standing Committee' to exchange information and discuss current threats to financial stability.

But care is needed, not least because these models tend to be least robust in precisely the circumstances of most interest - ie those rather rare cases in which losses are very large, hidden away in the lowest parts of the bottom tail of the probability distributions. The evidence suggests that such events are not well captured by the normal distributions typically used in standard risk models. Markets tend to behave in highly non-linear ways - moving within relatively narrow ranges for long periods, but then adjusting quite sharply. Sometimes these adjustments can be related to clear external events - such as the World Trade Centre attack. But often there is no such trigger. The types of circumstances that generate these outcomes are not particularly well understood. This is, I believe, a central theme of the recent work of some of your founder members, and it is one with significant operational as well as theoretical implications. I noted a few minutes ago that the original Basel Accord had given rise to a number of distortions between economic and regulatory capital. This problem came to a head during the course of 1990s as banks increasingly engaged in so-called 'regulatory arbitrage'. Better credits, over-weighted by the Accord, were progressively being securitised, leaving relatively poorer credits on the banks' balance sheets. And banks were getting little allowance for risk reductions achieved through portfolio diversification and the use of risk mitigation instruments.
Nothing could stem the tide of changes in technology and in tastes for new lighter - foreign beers, and attempts by government through higher excise duties to reduce the consumption of beer. A willingness to adapt and embrace, rather than resist, change is the key to greater prosperity. That road may at times be hard going - as I know many of you will have experienced in your own businesses but it leads ultimately to a more prosperous destination. To follow the right road we need signposts. In a market economy those signposts are movements in prices. If a particular product becomes more abundant or less in demand, its price will fall relative to the prices of other products. That relative price change is the signal which encourages consumers to buy more or producers to supply less. Over recent years, three new signposts have appeared. They mark a process that has transformed demand and supply conditions across the globe: the integration of China, India and other emerging market economies into the world trading system. The first signpost shows that prices of labour-intensive manufactured goods have fallen. China, India and the former Soviet Union between them have massively increased the supply of labour available to industry around the world. As labour-intensive goods have become more abundant, they have also become cheaper. The signpost points us in a familiar direction: the need to change what we produce.

However, it is not excluded that some of the existing banks will not survive the wave of technology-enabled disruption and are replaced by new technologydriven banks founded by FinTech and BigTech companies. In a more extreme scenario, which is not likely nowadays but may be viable in the very long run, banks are displaced by FinTech and BigTech companies and are no longer significant players on the market. In order to establish Open Banking in Macedonia, it is necessary to implement the best practices and regulations from European countries. Although our regulation is still in drafting process, our Banks are not passive in this field and are already undertaking activities for opening their IT systems with new interfaces and modules for interacting with customers and external companies. The biggest challenge that can endanger this process are digital space attacks (cyberattacks) in this domain, which are a relevant threat with a high probability of happening. The National Bank as a regulator is in charge of defining the framework for information security in our financial system. The task of our banks is to implement concrete safeguards on the technical, administrative and physical level based on performed analysis of risks from 3/5  BIS central bankers' speeches  introduction and use of new services, which includes the risks of digital attacks.
[17] The experience from these two crisis episodes shows that central bank liquidity provision can stimulate market functioning and lower money market rate dispersion. [18] During the pandemic, this was also clearly visible, as exemplified by the impact of our measures on term money market and commercial paper rates. [19]  After 2015, excess liquidity was primarily driven by the Eurosystem’s large-scale asset purchases. Although excess liquidity reached new highs with the implementation of asset purchases and financial stress remained at relatively low levels, the dispersion index rose substantially in 2015 and 2016. One factor that could cause such a rise is an uneven distribution of excess liquidity across countries or across banks and non-banks, similar to what had happened in US money markets in September 2019. [20] However, in recent years, the divergence across overnight money market rates was primarily driven by repo rates secured by high-quality collateral. Research suggests that this increase in the dispersion index can be linked to scarcity effects, as asset purchases and the increased regulatory demand for safe government bonds withdrew collateral assets from the financial system. [21] To alleviate these scarcity effects, the Eurosystem introduced the securities lending programme in April 2015. However, the programme was initially only sparsely used. Only when the ECB introduced the cashcollateral option in December 2016, securities lending increased and contributed to lowering the dispersion of money market rates, thus supporting monetary policy transmission (Slide 7).

First, the availability of collateral in secured markets will remain decisive for market functioning, particularly against the backdrop of ongoing central bank asset purchases, even if collateral scarcity is mitigated by the broad fiscal policy response to the COVID-19 pandemic. Second, a high level of excess liquidity may further reduce cash-driven activity in some market segments, potentially raising challenges for setting money market benchmark rates. And third, non-bank financial institutions play an increasingly important role in money markets. Their market activity has a bearing on the formation of some money market rates, including the € Unlike banks, these market participants often do not have access to central bank operations. Were the transmission across money market rates to weaken, or rates to decouple from policy intentions, this could have implications for monetary policy implementation in the future. Understanding the changing forces that affect money market activity is essential for policy makers. To foster an improved understanding of recent trends in money markets, this conference brings together some of the best academics, central bankers and practitioners. I look forward to many insightful discussions over the next two days. Thank you very much for your attention. https://www.ecb.europa.eu/press/key/date/2020/html/ecb.sp201123~8d9573b1b1.en.html  5/7  24/11/2020  Shifting tides in euro area money markets: from the global financial crisis to the COVID-19 pandemic  [1] I would like to thank Marie Hoerova for her contributions to this speech.
This expansion is a requirement of our business needs given the current size of our balance sheet, specifically the need to maintain appropriate control of short-term interest rates with abundant excess reserves in the  6  BIS central bankers’ speeches  banking system.13 Primary dealers, and entities of the type that are currently eligible to be primary dealers, which typically exhibit structural demand for cash financing to support inventories, are unlikely to satisfy this requirement. To the extent that the ongoing evolution of the structure of the Treasury market, including technological advancements and changing investor behavior, affects the role of primary dealers as market makers, it is important to analyze the implications for the Fed’s ability to meet its objectives. The primary dealer system has proven to be very effective for both the conduct of monetary policy and the issuance of Treasury debt. I am very confident that the existing counterparty framework – continuing to utilize primary dealers for traditional domestic policy open market operations, expanding to new counterparty types, as appropriate, for targeted operations to increase the effectiveness of domestic policy implementation, and maintaining relationships with a sufficient number of large market participants in the relevant foreign exchange markets for possible foreign exchange policy and investment operations – provides enormous capacity to implement a wide range of monetary policies. Moreover, we have demonstrated a commitment throughout our history to make any adjustments necessary to ensure a robust and effective operational framework.

However, one welcome outcome from this experience is the consolidation of the banking sector, which is much more aware of the constant need for prudent risk management and good corporate governance. From our end, the Bank has also undergone a significant re-orientation of its supervisory techniques and approaches. These are now largely in line with international best practices and also constitute a platform on which we shall meet the future challenges facing the financial sector in the 21st Century. Ladies and Gentlemen, from time to time developments are associated with setbacks and the Bank of Zambia is no exception. Here I am referring to the issue of polymer notes which were introduced sometime last year. The introduction of these notes as we have explained at several fora was meant and is still meant to have cleaner notes in the economy and more importantly to have notes with a relatively longer life-span before replacement, than the traditional paper notes. With a relatively longer life-span, the nation would save resources because the frequency of replacing the notes would greatly be reduced. However, due to technical problems experienced by the printer, most of the notes have been fading faster than expected. May I re-assure the nation that we have continued to work with the printer and a solution is being worked out in the quickest time possible. Needless to say that this problem has posed a big challenge for all of us at the Bank of Zambia.
One problem with this story, if experience prior to the Industrial Revolution is anything to go by, is that it could be a long wait for that next big wave. A second is that this story is far from the only possible reading of the historical runes. There is an alternative set of economic theories, and empirical facts, which paint a different picture of the genesis of growth either side of the Industrial Revolution. This alternative account might loosely be called “endogenous” growth theory. 23 The factors driving growth are multiple, not singular. They are as much sociological as technological – skills and education, culture and cooperation, institutions and infrastructure. These factors are mutually-supporting, not exogenous and idiosyncratic. And they build in a cumulative, evolutionary fashion, rather than spontaneously combusting. One way of accommodating these broader factors is to widen the definition of “capital”: physical capital (such as plant and machinery); human capital (such as skills and expertise); social capital (such as cooperation and trust); intellectual capital (such as ideas and technologies); and infrastructural capital (such as transport networks and legal systems). 24 Growth results from the cumulative accretion of multiple sources of capital. To take a simple example, the success of the railways relied not just on the invention of the steam engine (intellectual capital), but on the materials (physical capital) and skills (human capital) to build locomotives and track. And to become a GPT, railways needed in addition a network (infrastructure capital) and the cooperation and trust of the general public (social capital).

That suggests inequality could have been a drag on past US growth of almost one percentage point each year. In an era of low growth, that is a strikingly strong headwind from lower levels of social capital. And looking ahead, it is possible that sociological headwind could strengthen. One of the causes of rising inequality in advanced economies is believed to be the loss of middle-skill jobs, at least relative to high and low-skill jobs. There has been a “hollowing out” in employment. 55 Technological advance – the mechanisation of middle-skill tasks – is believed to have contributed importantly to these trends. The second machine age could intensify, possibly broaden, these trends. 56 Intelligent robots could substitute for lower-skilled tasks. If the capacity of the machine brain approached, or surpassed, the human brain, higher-skilled jobs could also be at risk. Where this leaves trends in employment, inequality and social capital is unclear. But, most likely, this would be far from blissful ignorance. 50  Nordhaus (2014). Note the world’s fastest super computer is currently NUDT in China, which is able to 16 process 3x10^ floating operations per second (or 30 Petaflops). 51  Berglas (2012), Nordhaus (2014). 52  Gordon (2012). 53  For example, Piketty (2014). 54  IMF (2014), OECD (2014). 55  Haldane (2014), Frey and Osbourne (2013). 56  Brynjolfsson and McAfee (2014). BIS central bankers’ speeches  11  A second secular headwind, closely related to rising inequality, concerns human capital.
Revolutionary as they were for the public, these changes didn’t transform the banking business substantially. Banks kept taking short-term deposits to on-lend at longer maturities. They kept clearing funds and settling balances with one another and with the central bank to meet liquidity and reserve requirements. The main change for monetary policy in most countries was to switch from the control of monetary aggregates to the fixing of the policy rate for overnight liquidity operations. Technology is now creating opportunities for changes in financial services that are more farreaching, both for the public, financial institutions and central banks. Information technologies are doing this because finance is an information and record keeping business. By challenging the conventional centralized, multi-layered settlement and clearing system, distributed ledgers, supplemented by a number of other technological developments, create the possibility of an unbundling of financial services that question the very notion of a bank. These are exciting times not only for financial start-ups and the public, but also for leaders of developing countries, that see in these technological developments the opportunity to leapfrog financial development and remove one major roadblock to inclusive economic growth. To materialize this, however, policy makers—including central banks—need to make sure that they are not exposing people to greater risk, especially when they are using financial services for the first 18  Central Bank of Chile 29 June, 2017  time. Moreover, they may want enhanced access to financial services to facilitate formalization of economic activity rather than grow the shadow economy further.

(2017), “Hitting Stride - The 2nd Americas Alternative Finance Industry Report,” Cambridge Centre for Alternative Finance, June 2017. [SLIDE 19] This coexists with a rather large, diversified and deep market for conventional financial services. Under this framework firms can get financing from several sources including banks and bond market among others. In recent years, an increase of external financing is consistent with lower cost and the size of the operations of those sources. Firms used those external resources mainly for two purposes: (i) financing operations in the country or abroad and (ii) refinancing other 5  According to the Report “Breaking New Grounds” by the Cambridge Centre for Alternative Finance, Chile accounts for half of Latin America’s alternative financing industry. 15  Central Bank of Chile 29 June, 2017  debts. [SLIDE 20] Further, granular data confirm that currency risks are relative low from a historical perspective, which is possible due to availability of FX derivatives and flows from investments abroad. It should be noted that about a third of the total debt of the corporate sector is holding by firms which get financing only with local sources and do not report to local supervisor (SVS). Most of that local financing is provided by commercial banks which cover those loans with collaterals and provisions.
But even for exports of processed metal goods and machinery does Switzerland have higher export unit values than, for instance, the EU. 15  Looking at developments over the last 20 years, it is primarily the prices of watch exports that have risen considerably. 16  Ireland also exports a lot of chemical and pharmaceutical products. Besides, the unit values of its exports of electronic products are also very high. 6  BIS Review 157/2010  Chart 3  Source: Eurostat. Overall, the results from a unit value analysis support the assessment that Switzerland is specialised in the production of high quality products. This is in line with previous studies. These show that Swiss export products largely compete on quality, rather than on price. 17 Given the level of know-how in Switzerland, this ought to be the case in the future as well, assuming that Swiss products can continue to fulfil the ever-growing demands on quality. To what extent could this have had a positive influence on the way in which exports developed in the most recent crisis? For the short term, at least, it can be assumed that higher quality products are more difficult to substitute than relatively homogenous goods. This applies not only to pharmaceuticals, but also to highly specialised products such as precision instruments. And this was indeed the case during the most recent crisis – Swiss exports of precision instruments receded only slightly, and have since risen to such an extent that they now already exceed their pre-crisis level.

In the Annales, he wrote: “The destruction of private wealth precipitated the fall of rank and reputation. At last, the emperor interposed his aid by distributing throughout the banks a hundred million sesterces, and allowing freedom to borrow without interest for three years, provided the borrower gave security to the State in land to double the amount. Credit was thus restored, and gradually private lenders were found.” 1 Replace “emperor” with “governments and central banks”, “sesterces” with “dollars” or “euro”, “security” with “collateral”: this two thousand year old quotation could sound surprisingly familiar. Yet, even though two thousand years have passed, with many financial debacles in between, I think it is fair to say that we entered the current crisis less than ideally prepared. First, we had to improvise with an economic interpretation of the causes that led to those unprecedented market disruptions. The dramatic fall in confidence revealed a source of risk that macroeconomists had not modelled carefully and that had not even been considered relevant by most theorists of finance. Now, the concept of “systemic risk” is almost common knowledge. Second, we had thought that the financial system would act as a shock absorber. Portfolio theory had demonstrated that the dispersion of individual risks would attenuate aggregate risk. But the mispricing of risk multiplied exposures, and the assumption of similar risks by market participants increased the potential for contagion. In the event, we learned that dispersion does not necessarily mean effective diversification.
7  To the side are two further images celebrating Austen’s work: an illustration of Miss Elizabeth Bennet 8  undertaking “The examination of all the letters which Jane had written to her”; and an image of Godmersham Park, home of Austen’s brother, Edward Austen Knight, and believed to be the inspiration for a number of her novels. The central design in the background of the note is inspired by the twelve-sided writing table and writing quills used by Austen at Chawton cottage, where she lived and wrote most of her novels. Also included is a quote from Pride and Prejudice – “I declare after all there is no enjoyment like reading!”  9  As Austen’s final resting place, this building – Winchester Cathedral – is also commemorated in the note, featuring in the foil. The Bank of England is committed to ensuring our banknotes recognise the diversity of their users not only through the characters represented but also through their ease of use. That is why we are introducing a new tactile feature on the £ to help the visually impaired: a series of dots in the upper left-hand corner. These dots join existing features, such as differing colour palettes and raised print, that enable those who are blind and visually impaired to recognise different notes, ensuring the nation’s money is as inclusive as possible. 10  This short video illustrates these and other features of the note.

A £ note may also have had a symbolic meaning to her, as it was the amount she was paid by publishers Crosby and Co. for her first novel, Susan. 2  Just as a £ banknote might have evoked memories for Jane Austen, so does money serve as a collective 3  memory for a country and its people. Our banknotes have cultural as well as economic value. Through the characters on our banknotes, we celebrate the breadth and depth of achievement across the United Kingdom, in fields ranging from literature to the visual arts, science and statecraft. Once she replaces Charles Darwin on the £ banknote this September, Jane Austen will sit alongside Winston Churchill on the new £ Adam Smith on the £ and Boulton and Watt on the £ Around the end of the decade, Smith will be replaced on the £ by JMW Turner. These individuals have advanced British thought, spurred innovation, exerted exceptional leadership, and more generally helped to shape this diverse society and forge our common values. 4  As the “mother of the great tradition of the English novel”, Jane Austen’s place in this august group is assured. Sir Walter Scott’s praise for Austen’s “talent for describing the involvement and feelings and characters of ordinary life which is to me the most wonderful I ever met with” is a sentiment that those reading her work today would recognise and endorse.