samchain/econo-pairs-v1 huggingface dataset:
And so, as you battle against the incoming surge while you try to exit the MTR train (probably beneath a poster exhorting courtesy); as you are almost decapitated entering the lift by the person with his finger permanently on the doors-close button; as you are tripped over by the ubiquitous Hong Kong trolley being raced in and out of the pedestrian crowd; as your boss explains that, although vacation leave is of course an entitlement, it would be rather inconsiderate of you actually to take any; as the waiter throws you into a seat at Mr Wong's table, thrusts the napkin onto your lap and demands rather than enquires whether you'd like a drink - all before you've had a chance to explain that it is not in fact Mr Wong whom you have come to join; as the taxi appears deliberately to accelerate through the large puddle right by where you are standing; as your lunch guest spends the entire meal fiddling with his mobile phone, making it quite clear that he resents having been invited to a restaurant where he is not allowed actually to talk into it; as you discover that the dignitary who has agreed to propose the toast at your modest office-opening ceremony can in fact stay for only five minutes because he or she has to hasten along to your main competitor's gala dinner; if you are feeling increasingly stressed by all of this, just relax and console yourself that this is Hong Kong, and Hong Kong wouldn't be where it is if people had never been in a hurry to get on with things.

BIS Review 33/2001  3
The other big step in this space will be a Liquidity Accord from Basel. This will be a new Accord. It is a quarter of a century late, as the need for an agreed international approach to the regulation of liquidity was first discussed in the mid-1980s. There remains a great deal of work to be done on this front but no-one should underestimate its importance. This is a package that is likely to change the shape of capital markets by effectively charging banks for the liquidity lines they provide to other parts of the financial system. For that reason there  BIS Review 145/2010  1  will be what the Governors and Head of Supervision call an Observation Period. But some change will be acceptable, as it won’t do for parts of the financial system to subsist on the basis of liquidity lines from commercial banks against which the banking system itself does not actually hold any liquidity buffer. That is not a bad definition of an unsound financial structure. Beyond that staple diet, I want to pick out four things – two of which are central to what has been going on already at the G20 Financial Stability Board work programme, and two of which lie a little bit ahead. The first two are the work on systemically important financial institutions (SIFIs) and on capital markets.

Whatever our national or regional approaches, we have to be part of that global agenda. Capital and liquidity We’ve got our first landmark: the new Basel Capital Accord. The UK, the Bank of England, would have liked it to be more rigorous in some respects, but we most certainly think that it is an Accord worth having. It is a significant stiffening of the regime which has prevailed up to now – perhaps more in some respects than commentators immediately appreciated. It remedies problems not spotted in Basel I. Finding remedies for some of the problems with Basel II remains work in progress. The BCBS’s “fundamental review” of capital requirements for trading book positions will be one of the most important endeavours of 2011. Its main objective must be to tackle two things. The venal regulatory arbitrage that existed between the “banking book” and the “trading book”. And requiring capital to be held against the risks of violent swings in liquidity premia for instruments that are not resiliently liquid. That was how the drying up of liquidity in ABS markets undermined the (accounting) solvency of many trading books. Speaking in the USA, I should stress that it is tremendously important that the US, as well as Europe and Asia, do implement the Basel Accord faithfully and promptly. It is also important that the EU Directive implementing Basel leaves flexibility for supervisors to apply supplementary requirements based on the condition of individual institutions and, separately, taking into account cyclical circumstances.
But this isn’t a speech about the need to reform the “rules of the game” for finance. However levered – and the financial system was obviously horribly over-levered – typically the house of cards collapses only when some over-indebted end-borrowers either default or look like defaulting on their obligations. The balance sheets of borrowers matter too! Which poses a big question of whether there were common, macroeconomic drivers. Was the problem sourced in global savings imbalances? Did monetary policy play a part? International macro drivers of the crisis The role of net savings global imbalances The leading explanation for the macro drivers of the crisis starts with the lessons about national-balance-sheet management drawn by Asian countries in the wake of their crisis in the 1990s. Many decided that they should accumulate foreign exchange reserves in order to guard against external shocks; ie self-insurance rather than third-party IMF insurance with conditionality. National saving rose. One view4 is that, together with surpluses in resource-rich economies as global demand for commodities increased, this drove a lot of what followed. Given that domestic investment in Asia could not keep up with burgeoning savings, global saving and investment were brought into equilibrium through a fall in world real interest rates, across the yield curve (Chart 4). As the risk-free discount rate declined, asset prices rose, including property prices in much of the West. Borrowing for house purchases rose accordingly; and, buttressed by higher collateral values, equity withdrawal and other borrowing for consumption accelerated too.

While the global economy is adjusting toward a new equilibrium, solid macro-prudential long run policies should replace current stimulating efforts. Therefore the challenge for our economies in the long run is to address current problems and the inherited ones based on a new model of growth, based on: (i) higher savings and investments, aiming toward a contained consumption matched by domestic production; (ii) persistent FDI inflows oriented toward tradable sectors; (iii) regional cooperation. BIS Review 164/2009  1  Let me briefly share with you some of my thoughts on the importance of this last remark, namely regional cooperation. Following arguments illustrate the benefits of cooperation, at several levels: •  From a development point of view, increased cooperation and integration on a regional level creates a greater scope for economies of scale. This would increase incentives for local and foreign investors to undertake big investment project that would not be profitable otherwise. A related advantage would be increased specialization of our economies, leading to a higher economic performance. •  On a policy level, coordinated macroeconomic policies, legal and prudential frameworks, would tend to improve the allocation of resources and to prevent beggar-thy-neighbor policies. This race to the bottom type of philosophy would not benefit the region as a whole. •  From a strategic point of view, our region is in competition with several emerging regions on a global scale.
Fiscal uncertainty has, however, emerged as the clear and present danger facing the US economy. The partial deal in Congress earlier this month has prevented the economy from falling over the fiscal cliff. But three inter-related fiscal challenges remain. •  First, the deferred budget sequester or spending cuts that kick in from March this year. •  Second, the debt ceiling that needs to be raised, beyond just the next six months. •  Third, and most important, a medium-term deficit reduction deal. 4. As it is, the partial expiry of previous tax cuts and exemptions could already be causing a fiscal withdrawal of about 1–1½ percentage points of GDP. If Congress fails to reach an agreement, the automatic spending cuts could impose an additional drag of 0.4% of GDP. Europe: strengthening the fiscal union while fighting a crisis 5. Europe has fared less well. As of 2012, the Eurozone economies have recovered less than 60% of the output lost during the crisis. For the last two years, the Eurozone has been caught in a vicious cycle between weak sovereigns and weak banks. The crisis has exposed basic design flaws in the architecture of the European Monetary Union, chiefly the absence of a fiscal union. 6. The challenges facing European policymakers are not trivial. They have to put in place the structures and policies necessary to address the design flaws of the currency union, while at the same time fight a recurrent crisis of confidence in the financial markets.

This is somewhat comforting, because it means that a huge part of the ethical challenge can be addressed without the need to reform people from within. The problem of “bad apples”, it seems, can be largely solved by focusing on cleaning up the “bad barrels”. However, the element of “people” remains relevant in determining behavioural outcomes – even if to a lesser extent. Again, this is a very wide and complex subject, but I wish to briefly mention two key points. First – we must remember that the financial sector, like human society, is made up of moral creatures. We cannot live, much less flourish, unless we recognise this and begin to employ the language of ethics in business. The language of business must align with what most people feel about how to live well: be honest; give trust; create lasting values; be reliable; and take pride in your work. The evidence reveals that employees are much more productive, and feel more fulfilled, when they believe that they share the same values as the organisation they work for. My point is simple – we must not shy away from the language of morality and objectivity in finance. Yes, there are many ambiguous areas. But some things are right, and some things are wrong; and as moral creatures, we should engage on these terms, even in business. Morality does not 4/5  BIS central bankers' speeches  cease to exist when we go to work.
But at the same time, this may be a strength compared with the regulations, simply because it is difficult to “circumvent” an interest rate increase. BIS Review 164/2010  7  Another reason why monetary policy may in some cases be needed as a complement is that there will probably be quite considerable resistance to using regulation to prevent a creditdriven bubble. Banks and other financial market participants may perceive regulation to be a larger intervention than an interest rate increase, and consider it to be aimed only at them. In addition, things often look very good just as a bubble is inflating, so resistance would probably be particularly strong when measures are needed the most. The political and psychological pressure on those pulling on the regulation lever could thus be substantial. Important with a good allocation of responsibility I thereby come to an issue that is just as important as how regulations should be designed; namely, who should pull on the regulation lever and when. Lessons can be learned from monetary policy when it comes to responsibility and mandate. If an authority has a sufficient degree of independence it can more easily withstand external pressure. And if it also has clear and specific objectives, it has greater opportunity to do a good job, while at the same time it is easier for society to evaluate it.

BIS central bankers’ speeches  9  Table 1 International baseline scenario assumptions 2012 GDP growth Trading partners' GDP World GDP at PPP  2013 (f) IPoM Jun. 14  2014 (f) IPoM Mar. 13  3.4 3.1  3.3 3.0  2015 (f) IPoM IPoM IPoM IPoM IPoM IPoM Dec. 13 Mar. 14 Jun. 14 Dec. 13 Mar. 14 Jun. 14 (annual change, percent) 4.2 3.6 3.7 3.6 3.8 3.9 3.9 3.9 3.5 3.5 3.3 3.7 3.8 3.7  United States Eurozone Japan China India Rest of Asia (excl. Japan, China and India) Latin America (excl. Chile)  2.8 -0.6 1.9 7.7 5.1 3.8 2.7  1.9 -0.4 1.5 7.7 4.6 3.9 2.2  2.5 1.3 1.3 8.2 6.4 4.7 3.7  LME copper price $ Brent oil price $  361 112  332 109  Terms of trade  -4.1  -3.2  2.6 2.7 2.4 1.0 1.2 1.0 1.3 1.5 1.6 7.4 7.3 7.3 5.3 5.4 5.4 4.0 4.1 4.1 2.9 2.3 2.0 (levels) 340 310 300 310 101 106 106 108 (annual change, percent) -1.6 0.2 -0.9 -0.5  2.7 1.4 1.0 7.2 6.3 4.5 3.4  2.9 1.5 1.1 7.2 6.3 4.5 3.4  3.1 1.7 1.0 7.2 6.2 4.4 3.0  290 100  285 101  290 103  -1.5  -1.1  -1.5  (f) Forecast. Sources: Central Bank of Chile based on a sample of investment banks, Consensus Forecasts, the IMF and statistics bureaus of respective countries.
That said, given the severity and duration of the recent crisis, this trend does not deviate particularly from the empirical regularities observed for previous economic cycles. Third, the survey on SMEs indicates that, despite having been less successful than large companies as regards their applications for bank loans in the first half of 2009, the majority of SMEs received some or all of the amount applied for. Fourth, it is probable that loans to non-financial corporations will remain modest over the coming months; this would be in line with past evidence, which suggests that the trend of such loans tends to lag developments in GDP by a few quarters. Fifth, the ECB has introduced numerous measures, both ordinary and extraordinary, to support the euro area economy in general and the banking sector in particular. It would be difficult to do more. It is now time for the banking sector to implement the necessary process of recapitalisation in order to restore confidence and support growth. The importance of SMEs in the euro area Let me start by pointing out the importance of SMEs in the euro area. SMEs – which are usually defined as firms with less than 250 employees – play a very important role: over 99% of firms are SMEs and, in the non-financial corporate sector, they produce 60% of total turnover and employ 70% of employees. Their activities are essential to fostering entrepreneurship, competition, innovation and growth.

This behaviour is in sharp contrast to the intense accumulation of financial assets observed previously and reflects the adjustment of banks’ balance sheets in the context of the general deleveraging process. The decline in the annual growth rates of assets has been most visible in short-term loans and deposits as well as in liquid assets, such as equities and mutual fund shares. The sharp contraction in interbank deposits has mainly reflected the freezing of the interbank market following the onset of the financial turmoil, in the context of which euro area monetary financial institutions (MFIs) withdrew their short-term deposits placed at banks. In addition, euro area banks have scaled down their deposits with other counterparts outside the euro area. As well as downsizing their external assets, banks initially scaled down their investment in marketable assets. By contrast, partly related to “relationship banking”, the growth rates of long-term loans have held up. Banks’ investment in long-term debt securities even accelerated in early 2009; indeed, MFIs stepped up their purchases of government debt securities, reflecting the generous liquidity situation in an environment of heightened risk aversion. While the slowdown in the growth rate of assets in principle limits the earning capacity of banks, other factors contributed in the first half of 2009 to a marked improvement in the profitability of large banking groups in the euro area. Net interest income was the main factor behind this improvement, owing to the positive slope of the yield curve and wider operating margins.
This may indeed require liquidation of long-term and illiquid assets, imposing externalities on other banks through a fire sales spiral and various forms of financial contagion. In addition, the failure of a bank that occupies a critical size or position in a market could have immediate systemic implications: some segments of financial markets might just cease to operate, and its disorderly collapse would lead to  1  Gorton and Metrick (2012) document a full-scale “run” on repo; see G. Gorton and A. Metrick, “Securitised banking and the run on repo”, Journal of Financial Economics, forthcoming. However, Krishnamurthy et al. (2012) document that a “run” on repo didn’t seem to have occurred in some repo segments; see A. Krishnamurthy, S. Nagel and D. Orlov, “Sizing up repo”, NBER Working Paper No. 17768, 2012. 2  As in D. Diamond and P. Dybvig, “Bank runs, deposit insurance, and liquidity”, Journal of Political Economy 91, 1983. 3  Calomiris, Heider, and Hoerova (2013) highlight the potential benefits of bank liquidity requirements in comparison with capital; see. C. Calomiris, F. Heider and M. Hoerova, “A theory of bank liquidity requirements”, mimeo, European Central Bank, 2013. 4  See S. Myers and R. Rajan (1998), “The paradox of liquidity”, Quarterly Journal of Economics, Vol. 113, pp. 733–771.

figures 2 and 3 in Frankel, Jeffrey A., Carlos Végh and Guillermo Vuletin (2011): “On graduation from fiscal procyclicality”, NBER Working Paper 17619. 6  Chen, Yu-Chin. and Kenneth S. Rogoff (2003): “Commodity Currencies”, Journal of International Economics 60, 133–169, documents that commodity exports have a strong and stable influence on the floating (real) exchange rates of Australia, Canada and New Zealand. Ferraro, Domenico, Barbara Rossi and Kenneth. S. Rogoff (2012): “Can Oil Prices Forecast Exchange rates?” NBER Working Paper 17998 extends the analysis to higher frequency data and out-of-sample forecasting and finds that both contemporaneous and lagged oil prices have significant predictive ability for the NOK/USD-exchange rate and oil prices. BIS central bankers’ speeches  3  Inflation targeting with interest rate forecasting Chart: Inflation When the fiscal rule was introduced in 2001, Norges Bank was charged with the task of keeping consumer price inflation low and stable. The value of the krone exchange rate was allowed to float freely. The operational target of monetary policy is annual consumer price inflation of close to 2.5 percent over time, under a regime of flexible inflation targeting. In the conduct of monetary policy, the aim of reaching the inflation target is balanced against the aim of stabilising output and employment. In addition, monetary policy should be robust by seeking to mitigate the risk of a build-up of financial imbalances. Over the past ten years, average inflation in Norway has been somewhat below, but close to, 2.5 percent.
The things that set great risk managers apart, like great navigators, are their ability to work with their captain and crew as a unit, their skills at employing the tools at their disposal to deal with risks at hand, and their attention to their surroundings for signs of impending threats. With that, I wish you all a smooth-sailing journey ahead and a productive and fruitful conference over the next two days. Thank you. 5/5  BIS central bankers' speeches

Ardian Fullani: Overview of Albania’s latest economic and financial developments Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the joint press conference of the IMF mission, Albanian Ministry of Finance and Bank of Albania, Tirana, 2 October 2012. *  *  *  Dear journalists, During the last two weeks, intensive discussions have taken place between the IMF mission and Albanian authorities. As a key player in drafting and implementing macroeconomic policies, the Bank of Albania has been active in these discussions, sharing its vision on current and expected developments in the Albanian economy and concerns surrounding it, as well as optimum measures to address them. The Albanian economy is increasingly facing the economic growth challenge. While the Albanian economy enjoys consolidated macroeconomic stability and sound financial foundations, aggregate demand has been weak during the first nine months of 2012. Both domestic demand and foreign one suffer from high uncertainty, relatively tight lending standards, and limited space for discretionary and stimulating policies. In the global context, the Albanian economy encountered a difficult setting, characterised by economic growth problems, high risk premiums in financial markets and decreased appetite of these markets to invest in emerging economies. In the domestic context, the economy continues to face relatively low consumption and private investments, as well as an absent stimulus by the public sector as a result of the increasing orientation of the fiscal policy towards maintaining long-term stability of the public debt.
In that case, an instrument more directly targeted at the microeconomic distortion would be to increase the risk-weights attached to such lending when computing banks’ required capital. And, as we have seen in the present crisis, much of the action may take place outside the regulated banking system in the wider credit markets. In that case, varying margin requirements might be a more appropriate instrument for dealing with vulnerabilities building up in the capital markets more generally. Finally, there is the option of introducing direct constraints on the terms or availability of credit, for instance imposing maximum loan-to-value ratios in the mortgage market. The best approach seems likely to involve a portfolio of instruments. And while experience of the use of these tools may be limited, it is not entirely a tabula rasa. In particular, a number of developing and emerging economies have experience in applying some of these instruments, while there are also lessons to be drawn from the past experience of some advanced economies too. Our aim here, though, is not to analyse the optimal design of the macro-prudential policy toolkit, but rather to consider how the deployment of such instruments might affect the conduct of monetary policy. As yet, there has been relatively little analysis of how the operation of macro-prudential policy might interact with monetary policy. We explore two related issues. First, both monetary policy and macro-prudential policy are likely to affect both aggregate demand and supply on the one hand and conditions in the banking sector on the other.

Svensson has argued in favour of this point of view in several papers and commentaries (for example Svensson 2013a). 12  It is difficult to quantify how much higher unemployment becomes when inflation is low. According to Svensson (2013b), unemployment was on average 0.8 percentage points higher during 1997–2011 than it  6  BIS central bankers’ speeches  But wage formation will probably deteriorate even if the low inflation is entirely anticipated. This is because it is difficult to reduce nominal wages. If inflation is low, it will be more difficult to adjust real wages between different sectors and between the individuals in a company. This could also mean that average real wages increase faster than is justified by the growth in productivity, particularly if the rate of inflation is very low or negative. Both problems in adjusting relative wages and unjustifiably high real wages would lead to a rise in unemployment. Repo rate has a lower bound A low inflation rate can also make it difficult for monetary policy to be sufficiently expansionary. The economy’s real interest rate is comprised of the nominal interest rate minus the (expected) inflation rate. As the nominal interest rate has a natural floor somewhere around zero per cent, a lower (expected) inflation rate will raise the lowest level that can be attained for the real interest rate. After the financial crisis, many central banks have long been limited by the lower bound for their policy rates.13 The problem has, however, not been as acute in Sweden.