samchain/econo-pairs-v1 huggingface dataset:
I am not sure that advanced economies in general will find it easy to get out of their current predicament without creditors acknowledging further likely losses, a significant writing down of asset values and recapitalisation of their financial systems. Only then will it be possible to return to a more normal provision of the vital banking services so crucial to an economic recovery. In the 1930s, faced with problems of sovereign and other debt similar to those of today, the pretence that debts could be repaid was maintained for far too long. We must not repeat that mistake. Over the past three years, the Bank of England has bought £ billion of government bonds – gilts – from the private sector to create a lot of new money. Many – perhaps some of you – are understandably concerned about the use of such an unusual and unfamiliar policy. Some people talk about the dangers of money creation. I want to explain why it is important to distinguish between “good” and “bad” money creation. In essence, the argument is very simple. “Good” money creation is where an independent central bank creates enough money in the economy to achieve price stability. “Bad” money creation is where the government chooses the amount of money that is created in order to finance its expenditure. Insufficient money creation can lead to a contraction of the money supply and a depression. We saw that in the United States during the Great Depression and we see it today in Greece.

According to the latest IMF projections output will fall this year in no fewer than 10 European economies. And the IMF recently lowered its forecast for growth in the advanced economies next year. Ours may be a sceptred isle, with its own currency and control of monetary policy, but we cannot insulate ourselves from these events. So this precious stone set in the silver sea seems more like a storm-tossed vessel. Despite the probable rise in output in the third quarter, the big picture is that GDP is barely higher than two years ago, and remains some 15% below where steady growth since 2007 would have taken us. Total exports have risen sharply in the wake of sterling’s depreciation, but manufactured exports to Europe are falling. Recovery and rebalancing of our economy remain the main challenges for economic policy. Here in Wales, despite impressive improvements to the infrastructure – not least the remarkable regeneration of Cardiff Bay and the magnificent monument to Welsh culture in this Millennium Centre – your economy too is suffering with total production well below its peak in 2007. In combating the downturn, monetary policy has played its part. Bank Rate has been cut to its lowest level ever and the Bank has purchased £ billion of assets in order to inject money into the economy. Although this unprecedented degree of monetary loosening has prevented a depression, it has caused pain to those dependent on interest income. And we have not been able to avoid a sharp rise in youth unemployment.
Some people claim that the regulatory and oversight authorities' objective of promoting the stability of the financial system hides an undue interventionist activism. Well, such claims are besides the mark. Financial stability depends on how we deal with imperfections in the financial system. Thus we should not waste our time discussing whether such an intervention is necessary or not. We should rather focus on how the authorities should shape the process. The challenges regulators and overseers face in the area of CSDs, ICSDs and CCPs are numerous and, I dare say, well known if we consider the avalanche of standards and recommendations that have been published over the last three years. The CPSS-IOSCO Recommendations for Securities Settlements Systems, the Report of the Wise Men, the G-30 Report on Global Clearing and Settlement and both Giovannini reports provide indeed an excellent view on what and how improvements should be achieved in the area of securities clearing and settlement systems. I also strongly believe that a co-operative approach among the financial intermediaries, the service providers and the regulators is the right way to achieve efficiency gains and risk reduction. There is no sense in pursuing the complex goals of market efficiency in a financial system independently. As I mentioned before, clearing and settlement institutions are by their very nature meant to overcome market imperfections. This task is huge, however. Support from public authorities sometimes comes in handily; sometimes it is the sine qua non for the success of a financial system.

The ABF Hong Kong Bond Index Fund made history by being the first bond exchange-traded fund launched in Asia. The PAIF has also set two records. It is the first listed Asian bond fund to invest in as many as eight bond markets in the region. As a listed fund, it allows easy access by both institutional and retail investors who wish to have exposure to the Asian bond markets in a cost-effective and convenient manner. Secondly, the PAIF is the first foreign institutional investor that has access to the interbank bond market of Mainland China. This is an important step in the opening up of China’s bond market to foreign participants. I am glad to see that the PAIF has played a catalytic role in development not only in China but also in all the markets in which the fund invests. 4. I take this opportunity to thank State Street Global Advisors (SSgA), the fund manager of the PAIF, for their commitment and dedication to the development of this innovative product and to the idea of an Asian bond market. We have seen a favourable response to the ABF Hong Kong Fund, and I hope that the PAIF, with its broader investor base, will also be well received by markets. I wish you every success in promoting the PAIF. Thank you. BIS Review 50/2005  1
This is a common experience of all countries that have liberalised cross-border capital movements, which was also shared by the Central Bank of Iceland when it tried to stem the depreciation of the króna from mid 2000 until autumn 2001. An interesting article on this topic by two Central Bank employees, Gerdur Ísberg and Thórarinn G. Pétursson, was published in the February 2003 edition of Monetary Bulletin, which traces the history of Central Bank interventions in the foreign exchange market over this period and evaluates their impact. The article concludes definitively that at best the intervention had only a short-term effect in each case and the market soon returned to its previous situation. In other words, their conclusion is that intervention on the foreign exchange market against strong prevailing currents has precious little effect. This is in full accord with the experience in other countries. Calls for the Central Bank to set an exchange rate target are therefore unrealistic. The only way to fix the exchange rate while still retaining an independent currency is to return to the old regime and introduce currency controls, but obviously no one wants to return to such an arrangement. Exchange rate volatility is best prevented with economic policies which promote economic stability, but this does not only depend on the Central Bank. It is essential to take a long-term perspective. However, it should be noted that since September last year the Central Bank has been regularly purchasing currency in the foreign exchange market in order to boost its external reserve.

Broadly speaking, economic and monetary developments and prospects provide growing signs of an ongoing recovery, mostly indicating that the upswing will gain momentum during the coming winter. Some slack still exists in the economy, however. There are no clear signs of a turnaround in the labour market and seasonally adjusted unemployment has still not decreased. Leading indicators such as credit growth, business surveys of labour demand, and growing turnover and imports nonetheless strongly suggest that demand will rise in the near future. Boosted by increased quotas during the  4  BIS Review 45/2003  coming fishing year, more public sector construction projects and aluminium industry investments, a reasonable level of output growth can be expected this year. However, since the growth rate is below estimated potential, the slack in the economy will increase slightly compared with 2002. The growth rate in 2004 is expected to exceed estimated potential at 3½%, meaning that the output gap could turn positive next year. Inflation will nonetheless remain below the Central Bank’s target until the final quarter of 2004, according to the forecast. This is explained by the low current rate of inflation and excess output potential. Two years ahead, inflation is forecast to creep above the target. On the whole the future looks fairly bright, but as always we should not allow the celebrations to get out of hand. BIS Review 45/2003  5
These costs are significant, though still modest compared to the output falls during the recession of around 8 per cent in the United States and over 10 per cent in the United Kingdom, relative to a continuation of pre-crisis trends. So this could be an insurance premium worth paying if there was a reasonable chance that it could have prevented these falls. (The regression model obviously does not capture the inherently nonlinear link between the earlier credit/house-price boom and the subsequent near-collapse of the banking system and associated contraction in output; any gain from this more restrictive policy in terms of reducing the likelihood of a future bust is therefore absent – that is why the extent of the downturn in 2008–9 is largely unaffected.) Although the impact on house prices is quantitatively significant, the limited impact on credit – arguably the more important variable in determining the vulnerability of the system – as well as the plethora of other factors at work in creating the crisis, makes us reluctant to conclude that it would have had a major impact on the probability of a crisis materialising. But ultimately this is very much in the eye of the beholder, as we cannot be sure what would have happened under the alternative policy. There may nevertheless be times when a well-judged monetary policy intervention is particularly effective in curbing financial excesses.

Changes in bank profits, in turn, reflect the average spread between the loan rate and the deposit rate on changes on the deposit base, the average return on lending on changes in bank capital, positive shocks to the rate of return on current lending and negative shocks to the deposit rate. We assume that policy makers seek to minimise a loss function:   13)      L    j  t2 j   y yt  j  yt* j j 0     k 2  l  t j   k t* j   2  The addition of the arguments in kt is designed to reflect financial stability concerns. We assume equal weights of 1 on inflation and 0.01 on the output gap and capital gap. The starred variables are the levels of output and lending which would hold in a frictionless economy. Policymakers are set the nominal interest rate and the bank levy/subsidy. The model was calibrated with standard parameter values at a quarterly frequency (see, for example, Bernanke, Gertler and Gilchrist, 1999). Bank leverage was set at 10 in the steady state and the steady-state spread between the return on capital and the deposit rate is 1 percent.
A direct consequence of this growth was that the short-term liabilities associated with the shadow banking system – repos and commercial paper – exceeded the level of demand deposits as seen in Chart 3. Despite this rapid transformation of the financial system, the liquidity protections put in place for demand deposits (deposit insurance and access to the Fed’s discount window) were not available to these new funding sources. This lack of liquidity protection was a source of systemic risk that was building in the financial system – akin to underbrush that builds up in a forest over time increasing the risk of a major fire. The Panic of 2007, however, required a trigger – a spark to ignite the fire. As I will describe in more detail in a moment, subprime mortgages provided the spark. Once the fire was started, the Fed was confronted with fighting the fire using a set of tools designed for a 20th century banking crisis – not a 21st century shadow banking crisis. As a result, the Fed had to improvise and design new tools as it battled the financial blaze. Another choice would have been to let the fire burn on the theory that this is the best way to clear away the underbrush that has built up over time. The great risk with this strategy is that the fire burns out of control creating considerable collateral damage in the process.

Joseph S Tracy: What the Fed did and why Remarks by Mr Joseph S Tracy, Executive Vice President of the Federal Reserve Bank of New York, at the Westchester County Bankers Association, Tarrytown, New York, 25 June 2010. *  *  *  In my remarks this morning, I would like to look back over the events of the past several years and offer my perspective on what were the essential drivers of the financial crisis and the Federal Reserve’s interventions. 1 I will review the changes that have been taking place in the U.S. financial system and how these changes created the conditions conducive to the crisis. I will then discuss the developments in residential real estate financing that provided the catalyst for the crisis. With this background, I will outline the interventions that were carried out to mitigate the crisis, focusing on those conducted by the Federal Reserve. I will direct my remarks to the facilities that were created rather than to the actions taken for individual institutions since these have been discussed extensively elsewhere. The lessons learned from the crisis are important for the design of the policy response aimed at reducing the likelihood that the U.S. economy ever again experiences this degree of trauma. I begin with the simple exercise of what name we should assign to this past crisis. At first blush, this may not seem like a useful exercise. But, as Shakespeare reminded us, names are important as they convey a sense of our understanding of the event.
The 1992 tax reform streamlined the tax system and tax rates were substantially reduced. It became easier for investors to find projects that yielded high returns. State-ownership policy in Norway was changed to introduce a clearer division of roles and healthier commercial principles. And not least, the EEA Agreement provided access to the European Single Market for most of the Norwegian business sector. When oil prices fell again in 2014, Norway was better prepared. But as a nation, our income has nonetheless been reduced by the fall in oil prices and we should be cautious about introducing measures that will increase consumption. Reasonable measures in a period of restructuring are those that promote economic growth over time, without crowding out private enterprise. Monetary policy can facilitate restructuring. And it is able to do so because there is confidence that inflation will remain low and stable. With low and stable inflation, a weaker krone and higher import prices will not pass through to wage growth and inflation, as was the case after the fall in oil prices in 1986. On the contrary, the depreciation of the krone over the past couple of years has compensated for more than a decade of high cost inflation. This has improved the competitiveness of Norwegian firms – in foreign and domestic markets. In addition, lower interest expenses are easing the burden for many households and firms. There is still room for manoeuvre in monetary policy.

With China now a member of the WTO, the global labour force expanded considerably. Low wages and cheap goods from China exerted downward pressure on goods prices. As China’s substantial savings surplus continued to grow, large amounts of savings were exported to the West. Inflation slowed in the decade following the turn of the millennium, in spite of high growth and falling unemployment. Combined with China’s savings surplus, this resulted in persistently low interest rates. Low interest rates coincided with weaker regulation of the banking and financial sectors, particularly in the US, but also in Europe. That proved to be a dangerous cocktail. Banks took more risk and levels of equity capital were too low. Household debt rose substantially. In many European countries, government debt ballooned in the shadow of low interest rates. When the crisis erupted in 2008, many were ill-prepared. 1  Chap. 8 and 9 in Lie, Einar and Christian Venneslan (2010), Over Evne: Finansdepartementet 1965 – 1992, Pax, Oslo (Norwegian only). 2  The expression “counterstructural policy” was used by Hermod Skånland in autumn 1977 when he wrote “The countercyclical policy conducted in Norway has to some extent also become a counterstructural policy”. Skånland (1977): “Konjunkturperspektiver og norsk næringsliv” in Sosialøkonomen 10/1977, p.10 (Norwegian only). 2  BIS central bankers’ speeches  Two aftershocks – China and Europe The global economy is still struggling with the repercussions of the crisis, with record-low interest rates and overcapacity. Growth is low.
The result has been a sharp and synchronised contraction in economic activity across the globe and an unprecedented collapse in world trade. In the twelve months following the onset of the crisis, it seemed natural to expect those countries where the build-up in debt had been greatest, such as the United States and the United Kingdom, and those sectors that seemed most exposed, particularly financial services and construction, to be the hardest hit. But that is not how it turned out. The fall in UK GDP of nearly 3½% over the final quarter of last year and the first quarter of 2009 represents the largest half-yearly decline since records began in 1955. But that is comparatively mild seen alongside falls of almost 6% in Germany and nearly 8% in Japan, both countries running consistent current account surpluses. Moreover, as most of you will be only too aware, the downturn has hit manufacturing especially hard, with output in that sector down over 10% in the UK, 20% in Germany and 30% in Japan, reflecting the sharp decline in the demand for consumer durables and capital equipment that followed the loss in confidence and reduction in the availability of credit. Rigorous inventory control then propagated the fall in demand rapidly along globalised supply chains. Now producers cannot run down inventories indefinitely, so the rate of contraction should start to ease as de-stocking slows.

By promoting digitization, both for banks’ own internal operations and for 2  BIS central bankers’ speeches  customers’ experience, the cost for both parties would be lowered. Additionally, we may set up and promote more usage of common utilities such as banknote handling centers or common Point of Sales (POS). From the policy perspective, standards and ecosystem should be developed to ensure compatibility, interoperability, security and confidence. Moreover, competition in market segments with low competition, particularly payment services, will be promoted in the third Financial Sector Master Plan. On inclusiveness, merely upgrading the technology would not be sufficient. Following our earlier analogy of driving a car on a journey, we must take into account the needs of all the passengers. In this case, our next milestone is to achieve a more inclusive banking system that serves all groups of customers, particularly household and SMEs, many of whom have been left on the side of the road while others are driving by on the journey. For individuals and households, they should be able to more easily access financial services and at a more reasonable cost. I am not merely talking about loans, but also basic services such as deposits and fund transfers. The latest financial access survey indicates that lack of access is partly because of the distance to nearest service providers is too far and the cost is too high. This is where technology and collaboration such as the use of agents can help.
The European Central Bank is one of the main initiators and active supporters of the idea of SEPA and related projects. The ECB participates as an observer in the works of the EPC Plenary, thus exercising some kind of “supervision” over the works on SEPA. Independently of the above, the ECB cooperates with the banking community through other SEPArelated initiatives, e.g. through COGEPS (Contact Group on Euro Payments Strategy). Moreover, ECB representatives participate in meetings of the EPC working groups as observers. Until last year, the Eurosystem’s central banks were less active in this respect. However, as the time goes by and the risk of failure of SEPA keeps growing, central banks have decided to become more involved and to act as a catalyst that could lead to the implementation of the vision of SEPA in Europe. You should also remember that most decisions on payment systems in the euro area are taken by the Eurosystem’s central banks, which means that the National Bank of Poland and other central banks from beyond the Eurosystem have had limited access to information and little influence on the works on SEPA. According to the NBP, the representatives of the Polish banking system and other institutions that participate in the works on SEPA should continue their activities taken to prepare and work out SEPA standards and mechanisms for their implementation. It is thus crucial that the above mentioned persons present views agreed upon in Poland when stating their stance before authorities responsible for decisions regarding SEPA.

Ladies and Gentlemen, the implementation of SEPA is a huge challenge for the Polish banking system, for companies that make up the Polish payment infrastructure and for many large clients of banks, including clients from the public finance sector. Such a huge challenge requires the creation of the vision of SEPA, the vision that will unite activities of all stakeholders of this process – from banks, through its clients up to infrastructural and telecom companies. The vision should treat the interests of the clients of the Polish and European payment infrastructure as a priority. All stakeholders should remember that only those companies will be successful in the global economy of the 21st century that deliver value to their clients. Companies that use cyclical market trends to gain benefits at the expense of their clients are doomed to fail. I would like to call on all those who develop the vision of SEPA Poland to analyse the functioning of payment systems in the most advanced parts of the world and to benefit from the experience of such countries as Singapore, as expressed in the vision entitled 4 “Intelligent Nation 2015” . Let us use the SEPA Poland process to create a payment system for the 21st century. Let us inspire others, including public administration, to act and implement eadministration and e-economy so that Poland and Europe can be successful in the global economy of the 21st century. Thank you very much for your attention. 4  4  See www.iN2015.sg  BIS Review 97/2006