samchain/econo-pairs-v1 huggingface dataset:
This risks the collective view being less well-informed, and potentially more polarised, than would be ideal. With degrees of discontent about both the executive and direct democratic models, there has recently been a rekindling of interest in the Athenian, or deliberative democracy, model. This model, at least in principle, offers greater diversity than the executive democratic model. It also offers greater scope for debate and deliberation than the direct democratic model. It is not a third way, as it was in fact the first. But it is a middle way. It is in some ways the institutional incarnation of the “Insight Curve”. Interestingly, a number of countries have over recent years begun experimenting with deliberative democratic processes to debate and resolve some of societies’ most complex problems. Citizens’ panels or juries have been used to tackle such varied issues as voting reform (in Canada), gay rights (Ireland), reconciliation between indigenous and non-indigenous communities (Australia), nuclear power (South Korea), membership of the euro (Denmark) and environmental pollution (United States). 44  Here in Estonia, you have experience of using people’s assemblies to debate key societal issues. In 2013, a people’s assembly (Rahvakogu) was used to debate Estonian electoral laws. Last year, a people’s assembly was used to deliberate on the future of ageing and pension reform. People’s juries have also been 44  See https://cdd.stanford.edu/deliberative-polling-timeline/ 18  All speeches are available online at www.bankofengland.co.uk/speeches  18  used to debate regional issues, including water transportation in the Emajõgi River region of the country.

53  By design, these seek out the views of a wider range of citizens, in a wider range of locations on a  wider range of issues around the economy and financial system than has been the case in the past. These events have established for me that there is wisdom in these crowds when gauging some of the key issues shaping the economy and financial system. The lived experience of everyday people making everyday decisions is what makes the economy tick (and sometimes tock). Tapping that lived experience can add to the Bank’s understanding of the economy and help it when setting policy to keep the economy stable. There is wisdom in crowds of citizens, as there is in crowds of companies. 54  The Bank is now taking a further step towards putting in place an infrastructure to formalise its engagement with citizens. Earlier this year, in response to a recommendation from the RSA, we announced that the Bank would be setting-up a set of Citizens’ Panels across the UK. 55  In the remainder of this year, we will be  running trials of these citizen panels to help us decide how best to organise them, before rolling them out systematically, UK-wide, next year. 53 54 55  See https://www.bankofengland.co.uk/outreach Taylor (2018) also discusses the benefits of deliberative democracy in the RSA’s 2018 Annual Lecture. Haldane (2018b). 23  All speeches are available online at www.bankofengland.co.uk/speeches  23  There are a number of key design questions that need to be answered.
The Rt Hon Sir Edward George GBE: Central bank independence  Speech by The Rt Hon Sir Edward George GBE, Governor of the Bank of England, to the SEANZA Governors’ Symposium in Colombo, Sri Lanka, on 26 August 2000. *  *  *  Governor Jayawardena, fellow central bankers, I am honoured, personally and on behalf of the Bank of England to participate in your celebrations. On behalf of the Bank of England, and, I am sure, of all your guests here this morning, I congratulate you, Mr Governor, on the great contribution that the Central Bank of Sri Lanka has made to the development of your beautiful country in your first fifty years and I wish you continuing success in your task in the years to come. You invite me to speak about Central Bank Independence, which of course I am happy to do - although I should perhaps make clear at the outset that it is a concept which I find somewhat elusive. Like so many other debates, the debate about central bank independence often seems to become unduly polarised. At one extreme it seems that some of those who resist central bank independence as undemocratic - or even some central bankers who favour it - assume that it involves an elite body of individuals, who, once appointed are, by virtue of statute, beyond political influence, with extensive but only generally-defined powers to affect the financial environment - and hence the lives of individuals and businesses throughout their currency area.

While central banks may legitimately advise on the technical implementation of such intervention, and be the agency through which it is carried out, it is far better all round in my view that responsibility for the choices implicit in such policies remains clearly with the Government. Secondly, for a long time after the war in the UK - until well into the 1970’s, majority opinion did not identify a specific role for monetary policy within overall economic policy; nor was there any very clear understanding of the central bank’s role in maintaining systemic financial stability. Economic policy was widely seen as requiring the use of all available policy instruments - monetary policy, overall fiscal policy, direct controls, as I say, even prices and incomes policies - in concert to BIS Review 66/2000  2  achieve an appropriate balance at any particular time between what were seen as the conflicting objectives of growth and employment, on the one hand, and controlling inflation and maintaining reasonable balance of payments equilibrium, on the other. Economic policy overall was in fact directed at managing what was seen as the trade-off between these social objectives. And this again involved intrinsically political rather than technical judgements, though in this context, too, there clearly was a role for the central bank in proffering detached technical and analytical advice.
During this period, we need to find a way to mitigate the risks of “greenwashing” so as to channel funds to where they are most effective. Second, a green taxonomy needs to be complemented by a taxonomy for environmentally harmful activities so that investors can identify transition risks more easily and hence also price risk differentials more effectively. [8] And third, the taxonomy requires granular data for it to be useable. In the absence of corporate-level information, the taxonomy cannot be put into use and many metrics will prove useless. This is clearly visible when looking at environmental ratings for financial products: if available, they are often inconsistent, incomparable and at times unreliable – in many cases reflecting the absence of granular data or the large discretion in the construction of such indicators. Indicators from different sources often display a very low correlation (see figure 8). Figure 8 Financial market pricing of climate risk: correlations of bank environmental scores by Bloomberg and Refinitiv  Source: ECB Financial Stability Review, November 2019 based on Bloomberg, Refinitiv EIKON, S&P Global Market Intelligence and Dealogic. Notes: The Bloomberg and Refinitiv environmental scores give values between 0 and 100, whereby a higher value indicates a better performance in terms of environmental variables. The full unbalanced sample consists of 49 banks and 23 insurers in the EU and the United States.

For example, while policymakers were aware that trade activity had deteriorated during the height of the global financial crisis around October to November 2008, it was not until January 2009 that the extent in which global economic activity had fallen off the cliff was realised. Indeed, as financial conditions are often vulnerable to sudden shifts in sentiments and herd behaviour, the window of opportunity to take decisive policy action is often very small – potentially, just a matter of hours during periods of crisis. This is where availability of statistics on a timely manner does make a difference. The second is the continuous re-evaluation of underlying relationships. Beyond errors in reporting and limitations in aggregation, statistical estimates of economic variables are also subject to movements in relationships amongst variables across time (the so called “structural breaks”). As a consequence, in the words of former Governor Duvvuri Subbarao of the Reserve Bank of India, “the chance of being fooled by randomness is much higher in the assessment of economic events”. Why is this so? It is because, in the field of economics and finance, outcomes are shaped by human behaviour – which, contrary to fundamental assumptions, is not always rational. In addition, economic systems are reflexive, in the sense that beliefs about what will happen often influence what does happen. Going forward, as the global landscape and expectations of economic agents adjust to, as yet, an unknown new normal, the demands on the timeliness and quality of data and analysis will only increase further.
And their co-existence within the Bank of England makes co-ordination of these policies substantially more straightforward. Having supervisors close at hand can also help in the decisions around the provision of lender of last resort facilities. In such a situation, a central bank should not lend to an institution which is insolvent. This means that the Bank will need to make a judgement as to whether or not the entity it is lending to has a viable medium term future, or that the Bank has a credible exit strategy. In practice, distinguishing between illiquidity and insolvency can be difficult. A close understanding of a firm is invaluable in providing the information needed to judge the long term viability of its business model, and in providing short term assessments of its liquidity position. Supervisors are well placed to provide such information and their knowledge of institutions, coupled with our risk managers’ assessment of the collateral made available, greatly enhances our ability to make these judgements. The free flow of such information is of course possible when there is an institutional separation between supervision and the lender of last resort. But my early experience is that having them under one roof greatly enhances our ability to co-ordinate and optimise policy in the public interest. 8  Initially in the form of strengthened FSA liquidity requirements, subsequently the implementation of the Basel III Liquidity Coverage Ratio, which will in turn be supplemented by the Net Stable Funding Ratio. BIS central bankers’ speeches  5  6.

The value stored in money does not disappear when inflation is high; it is transferred from savers to  1/8  BIS - Central bankers' speeches  debtors. So a 20% negative real rate meant that a fifth of Icelanders' savings shifted from depositors to debtors each year, eating quickly into principal. The 1970s saw one of the biggest transfers of wealth in the history of Iceland - from depositors and pension funds to borrowers and debtors, and from the older generation to the younger. This runaway inflation laid the foundations for the 1968 generation's asset formation while eroding elderly Icelanders' assets, even pushing them into poverty, while simultaneously subsidising the operations of many large companies in the country. It was precisely in 1979[, during the tenure of Prime Minister Ólafur Jóhannesson,] that broad-based price indexation of savings and loans was adopted in Iceland with what came to be known as Ólafur's Law, passed by Parliament five months before the publication of the above-cited Reykjavík Letter. In some respects, indexation was a gesture of defeat - it was perhaps more an adaptation to circumstances, in that it enabled the economy to function during an episode of high inflation. It was based on the same fundamental premise as my lambs and my deposits to the co op: the value of money was pegged to actual value. Inflation certainly had yet to rise still further, though. On an annualised basis, it hit an all-time record of 130% in February through May 1983.
According to the most recent forecast, it can be assumed that investment as a share of GDP will be under 14% in 2010, the lowest ratio since the end of the War. Exports can drive GDP growth for a while, but a lasting recovery and stable growth require a reinstatement of investment in value-generating commercial activities. Domestic interest rates have been blamed for the sluggishness of investment activity, and certainly, financing costs are an important factor in investment. Under current circumstances, however, it would be fantasy to maintain that a sizeable interest rate cut would catalyse a turnaround in investment. Considering how strong investment was during the upswing years, the Bank’s surveys show that current investment trends in Iceland are similar to those in other countries that have experienced financial crises. Furthermore, it should be borne in mind that business investment is minimal in most industrial nations at present, even though their interest rates are very low. Risk aversion in the wake of financial crisis and economic recession, together with uncertainty about future demand, are hurdles to investment. The Central Bank’s studies and informal surveys indicate that the same situation prevails here in Iceland. Added to this are heavy indebtedness, uncertainty about companies’ future operational environment, and limited access to foreign credit. Consequently, it will require more than interest rate cuts to stimulate investment.

The third challenge is that of re-establishing confidence abroad in Iceland’s institutional framework, economy, and financial system; repairing the relationship with the international financial market; and ensuring that the Icelandic Government and Icelandic companies have access to foreign credit markets once again. I will touch on these three tasks later, but first I would like to shed some light on where we are in the adjustment period I mentioned earlier, and what the immediate future could have in store. First, the contraction in GDP to date has been less pronounced than was forecast early in 2009. The same can be said of unemployment. On the other hand, the króna depreciated more than expected, and inflation has proven more persistent. The Central Bank’s January forecast assumed that GDP would contract by 10% between 2008 and 2009, while the most recent figures indicate a contraction of 6½%. On average, the króna was some 15% weaker than was forecast at the beginning of the year. For this reason, among others, inflation was higher than projected, or just over 6% in the first quarter of 2010,  BIS Review 39/2010  1  excluding tax effects. The January 2009 forecast assumed that we would already have attained the 2½% inflation target by now. These deviations stem from a variety of sources other than normal forecasting errors. First of all, measures have been taken to support households, and these measures have reduced the contraction in private consumption.
We have designed a stable framework that we believe will stand the test of time. But we have always been clear that some of the details may need to change over time to ensure that they remain relevant to the ongoing evolution in banking markets and risk management practices. Indeed, in the text of the Basel II framework that was published in June 2004, the Committee reiterated its intention to maintain an active dialogue with the industry to ensure that the new framework keeps pace with, and can be applied to, ongoing developments in the financial services sector. The framework itself already provides banks with a great degree of latitude in developing new measures of exposures to risk and new means for addressing them. But supervisors – and banks – are still responsible for evaluating whether the framework addresses risk exposures in a sensible manner and in line with our sense of sound and best practices that are being developed. Status of work on the trading book There are two areas where both banks and supervisors recognised that this work could already commence. One was to find a prudentially sound treatment under Basel II for exposures to “double default,” where the risk of both a borrower and a guarantor defaulting on the same obligation may be substantially lower than the risk of only one of the parties defaulting. The other area concerns the applying Basel II to certain exposures arising from trading activities. This brings me on to my second topic.

I can report informally that I personally am highly satisfied with the progress that the joint Basel Committee and IOSCO working groups have achieved to date, which reflects in no small way the cooperation of the industry in preparing data and responses for the discussions. I expect that the Committee will release a proposal for a six-week period of public comment next month such that the proposals can be released in final form this summer. However, intensive work will continue prior to the discussions at the meetings of the Basel Committee and IOSCO’s Technical Steering Committee toward the end of March and the beginning of April. So I cannot yet comment on the solutions that may be proposed or approved by the Committee and IOSCO. I can tell you that we set, as a guiding principle, a goal to apply Basel II to these exposures in a manner that reflects as best as possible sound practices already in use when those practices appeared to be both prudent and broadly acceptable to many kinds of banks and markets. Some industry representatives have raised concerns that finding ways to apply Basel II to trading book exposures might lead to a revision of the existing “Market Risk Amendment” to the capital framework that was approved in 1995. Understandably, those industry representatives expressed concern that this might disrupt banks’ efforts to prepare for Basel II, which addresses mainly credit and operational risk.
In the past few months, the concerns about the Eurozone have escalated, significantly raising the cost of public financing in some economies like Italy and Spain and, a little less so, France and Germany, among others. The problem has grown to a vicious circle from government’s financing costs to the bank’s financial situation to credit and liquidity conditions to economic growth. The lack of exchange rate adjustment mechanisms inside the Eurozone only aggravates the situation. Policy makers have been facing severe difficulties to implement structural and emergency measures to help contain the effects. The announcements of the European Union early in December are one first step in that direction, but there are elements that must be figured out  BIS central bankers’ speeches  1  and the road to the solution is still uncertain and probably winding. The prospects for the rest of the developed world are not as bad, but not good either. Certainly their problems are not as severe as the Eurozone’s, but they are growing slowly and will not pick up for a long while. Consumers there are still in the process of cutting down their debts and governments need to begin a phase of austerity to try to make their sovereign debts sustainable. The emerging economies, without the problems of their developed counterparts, have been affected via their commercial and financial links with them.

The evidence suggests that, so far, borrowing has not risen above its long-term trend, and the average debt-to-income and debt-to-financial burden ratios are stable. Along the same line, households’ past-due portfolio indicators have tended to stabilize in relatively low levels during the past year (figure 11). In the present scenario, however, we need to continue to closely monitor the evolution of household debt. If it continues to grow at the current pace, it is possible that households’ debt and financial burden will increase significantly in the face of a more severe risk scenario. Finally, and considering the deterioration of the financial indicators of the lowerincome households in the period 2007–2009, they could find themselves in a situation of greater financial vulnerability. Although the volume of debt of these households is fairly limited, it could prove substantial for some credit providers focusing on lower-income segments. Problems in international financial markets have caused a widespread rise in the banks’ external financial cost. Meanwhile, no reduction in volume or maturity of external credit for this sector is observed. (figure 12). The banking system has maintained a looser liquidity position since late 2008 – thanks to increases in longer-term liabilities and greater liquid assets. As stated in our Financial Stability Report, our banking system has the capital levels needed to absorb the materialization of a severe risk scenario.
First, although the central bank will try to be as rational as possible in processing all the relevant information, it may well itself use a range of heuristics. For example, in normal circumstances the heuristic “set interest rates such that expected inflation two years ahead is equal to the target” might serve the Monetary Policy committee well. But in other circumstances, say following a large shock, the heuristic might be “bring inflation back to target over a period of more than two years and explain carefully why the heuristic has changed”. The central bank can adapt its particular policy-setting heuristic to changing circumstances and evolving knowledge, so that the policy regime as a whole is robust to changing views about how the economy works. Second, we do not know whether – and, if so, to what extent – people use heuristics to make real economic decisions. But a central bank should be alert to the possibility of their doing so. Given the importance of expectations, the more the central bank can do to behave in a way that makes it easy for the private sector to adopt a simple heuristic to guide expectations the better. A good heuristic from that point of view would be "expect inflation to be equal to target". A bad heuristic would be "if inflation is well away from target expect it to deviate further". We can encourage people to use the first by announcing targets that are quantitative and useful.

Similar tendencies are to be found in other industrialised countries. So it is not just in Sweden that saving has moved away from traditional bank deposits. One underlying factor is probably demographic. People traditionally tend to save more in the phase of life when their children are old enough to leave home. In that the large birth cohorts from the 1940s reached that age during the 1980s, there was no doubt an increase in the propensity to save for the longer term. Moreover, people today live longer on average than before, which means that they work for a shorter proportion of their lives, so the higher return that often results from long-term saving comes in handy to maintain their standard of living. Changes in tax, transfer and pensions systems also tend to move in the same direction. The fact that rising standards of living and a better yield have boosted households’ financial wealth may also have raised the propensity to take risks. Additional factors may be decreased transaction costs, more access to information and the simpler procedures for share dealing compared with the situation twenty to thirty years ago. Many of these changes have occurred as a result of technical innovations, not least the advent of the internet. Long-term saving requires an ability to manage the associated risks. Share prices fluctuate widely, in marked contrast to the stability of bank deposits.