samchain/econo-pairs-v1 huggingface dataset:
One of those different lenses comes from mapping the economy bottom-up, rather than top-down, aggregating microscopic experiences into a macroscopic view. In medicine, we use a variety of different tools, at different resolutions, to diagnose problems and when prescribing solutions: thermometers, blood pressure monitors, X-rays, CT scans, ultrasound and blood tests. Rarely does one of these measures provide all of the diagnostic answers. Using them in combination can, however, help reach robust clinical conclusions. And that “micro-to-macro” approach is commonplace when understanding other complex adaptive systems like the body, natural, physical and social. 3  Rajan (2019). Coyle (2014). For example, Helliwell, Layard and Sachs (2019), Ngamaba (2017) and Commission on the Measurement of Economic Performance and Social Progress. 4 5  3  All speeches are available online at www.bankofengland.co.uk/speeches  3  Like our bodies, the economy is also a complex, adaptive system. As in medicine, it can be measured using different tools at different resolutions. There are various metrics of societal health, in addition to GDP. For example, there has been increasing interest recently in measures of physical and mental health.6 A number of statistical agencies, including in the UK, now gather direct and indirect metrics of people’s well-being. Here we map a selection of those alternative metrics, based around health, wealth and happiness. A different sort of lens comes from viewing these metrics at different spatial resolutions – regional, local authority, postcode even. This allows a “micro-to-macro” jigsaw of the economy to be pieced together, as with other complex systems.

There have recently been a number of discussions regarding whether the low policy rate we have had since last summer increases the risk of a Swedish housing market crash further ahead. My personal assessment is that extremely low interest rates lead to some increase in the risk that housing prices will be pushed up to unsustainable levels. But this increased risk must be weighed against the risk of higher interest rates hampering the recovery in the economy. However, without properly quantifying these risks the decision-makers have to rely on their gut feeling in their deliberations. There are many reasons why gut feeling may be a poor guide with regard to making this type of decision. In the field of cognitive research, for instance, one speaks of the neglect of probability bias, that is, a tendency to entirely disregard the probability of various scenarios actually occurring when people make decisions under conditions of uncertainty. It is common to entirely disregard the fact that the scenario may never occur or that one is completely over-estimating the probability of the scenario. This is far from the only cognitive bias that decision-makers might be affected by. But it is one that can be reduced by systematically trying to evaluate the probability of various scenarios occurring. It is also important to try to illustrate how the decision that is to be taken will increase or decrease the probability of these scenarios.
What if capital requirements had not been tightened? The results in this scenario are indicated by the blue lines in the chart. Without higher capital requirements, banks’ lending margins would have been more stable. 6  For a more detailed description of the improved version of NEMO, see Brubakk, L. and P. Gelain (2013): “NEMO – A monetary business cycle model with financial frictions”. Forthcoming in the Norges Bank Staff Memo series. 7  See for example Bernanke, B., M. Gertler and S. Gilchrist (1999): “The Financial Accelerator in a Quantitative Business Cycle Framework.” Handbook of Macroeconomics, Elsevier, pp. 1341–1993. BIS central bankers’ speeches  5  Lower interest rates abroad suggest a reduction in the key policy rate. Bank lending rates largely track the key policy rate. This leads to higher demand and output and accelerating debt growth. These factors suggest that the reduction in the key policy rate should now be smaller than in the scenario involving increased capital requirements and higher lending margins. As a result, the appreciation of the krone is more marked, and inflation will deviate more widely from the target. The effects on capacity utilisation and credit growth are also slightly more pronounced. In simplified terms, it can be said that without higher capital requirements, monetary policy trade-offs become more demanding and economic developments somewhat less balanced. The model example illustrates a general point. When several instruments are available in economic policy, several goals can be achieved at the same time.

These are startling facts and should certainly get your attention! As prudent policymakers, we would be remiss if we failed to carefully assess potential risks that might arise from these unusual and extraordinary policies. As the FOMC’s communications indicate, the Committee has fully reviewed the potential costs of its policies and it reassesses them regularly. I think that the benefits of our policy choices continue to far outweigh the potential risks. However, we must repeatedly think long and hard about two risks that are mentioned often – namely, that our expanded balance sheet and the prolonged period of low rates raise 1) the risk of higher inflation; and 2) the risk of financial instability. What can go wrong? Do we have the appropriate infrastructure and tools to adequately assess and manage these risks? To address these questions, we must evaluate these risks within the context of the goals of monetary policy and the current state of the economy and financial markets. Inflation risks Let me start with the risk of high inflation. As far back as mid-2009, Fed critics warned that our near-zero policy rate and trillions of dollars in asset purchases risk generating very high inflation. On several occasions, to underscore this risk, I have been presented with a gift of a Zimbabwe 100 trillion dollar note. As someone who is subject to a 20 U.S. dollar limit on gifts, I can assure you it is within the guidelines to accept one of these notes.
Kristina Persson: The impact of the euro Speech by Ms Kristina Persson, Deputy Governor of Sveriges Riksbank, at the Women’s Economic Round Table, New York, 29 October 2003. *  *  *  Allow me first to extend special thanks for this invitation. It is particularly important for me personally as well as for the Riksbank to be given this opportunity to meet women economists and discuss current economic issues. I am privileged to be one of three women on the Riksbank’s Executive Board, which has a total of six members. At the Riksbank we strive to attain an even distribution of men and women at all levels. This is a deliberate policy but also reflects the sharp rise in the proportion of women among qualified economists entering the Swedish business sector in recent decades. If this trend is to continue, and more women are to take the chance of achieving success in this traditionally male profession, we will need more role models like you here today. The subject of my speech is “The impact of the euro”, a topic that was decided before 14 September 2003, when Sweden held a referendum on introducing the single currency. Personally I am convinced for many reasons that Sweden should introduce the euro, and made no secret of that. However, as many of you know, the result was a clear ‘no’ to the euro. The question of the economic advantages and disadvantages of the euro often resembles a tug-of-war between the short- and long-term perspectives.

The experiences of many countries, including Sweden at the beginning of the 1990s, show that the foreign exchange market should not be deregulated until the banking system has been reformed. Could China not revalue then and adapt the exchange rate to its trade surplus without floating its currency? In my opinion, this would not be such a wise decision either. It is wrong to attribute China’s trade surplus with the US to the currency issue. The surplus is probably best explained by the cost advantages enjoyed by Chinese producers in labour-intensive goods compared with the US. China’s trade surplus can be seen as a natural consequence of the division of labour within the Pacific region where China’s position as supplier and sub-supplier of low value-added goods is highly favourable for US productivity. This is a segment in which the Chinese compete with very few US producers, which is why an exchange rate adjustment would have only a marginal impact. In actual fact, an excessively large one-off adjustment would be required to have any effect at all on the US-Chinese trade balance. Such a large correction would in turn give rise to problems for Chinese trade elsewhere. It is with the US that China enjoys a large surplus, while the trade balance is close to zero or is negative with many other areas, including the euro area. This picture is confirmed by many fundamental analyses of an equilibrium exchange rate for China, which come relatively close to China’s fixed exchange rate today.
Mervyn King: Changes in the UK economy and the role the Bank of England can play in supporting them Speech by Mr Mervyn King, Governor of the Bank of England, at the Black Country Chamber of Commerce, West Midlands, 19 October 2010. *  *  *  Ladies and Gentlemen, It is good to be back in the heart of Britain – in the Black Country – because the Bank of England has strong connections with the area. Both I and Deputy Governor Paul Tucker hail from Wolverhampton. And I am delighted that all nine members of the Bank’s Monetary Policy Committee are in the West Midlands this week on an MPC road-show to see for themselves the state of business in the region. The Black Country is the home of the original Industrial Revolution. Too often those historic events are painted as just that – past glories of little relevance today. But there is no better place to see evidence of how the British economy can adapt than in the Black Country. Indeed, one example can be found behind this building. Dudley Canal No. 1 was part of a network of canals, central to the Industrial Revolution, along which the products made here – especially iron and steel – were transported throughout the country. At its peak, there were 5,000 miles of canals in Britain. Of course, the importance of canals as the arteries of industry later declined and by the late 1960s only 2,775 miles were navigable.

At the G7 meeting in October 2008, I was part of the group of ministers and central bank governors who threw away the prepared communiqué, and replaced it by a bold short statement of our determination to work together. That spirit, so strong then, has ebbed away. Current exchange rate tensions illustrate the resistance to the relative price changes that are necessary for a successful rebalancing. The need to act in the collective interest has yet to be recognised, and, unless it is, it will be only a matter of time before one or more countries resort to trade protectionism as the only domestic instrument to support a necessary rebalancing. That could, as it did in the 1930s, lead to a disastrous collapse in activity around the world. Every country would suffer ruinous consequences – including our own. But, to borrow a phrase, in order to be tough on protectionism, we need also to be tough on the causes of protectionism. So what needs to be done? Let me suggest two principles for the way ahead. First, focus discussion on the underlying disagreement about the right speed of adjustment to the real pattern of spending. Without agreement on this, policies will inevitably conflict. Once broad agreement is reached, it should be easier to agree on the instruments of policy. Second, in terms of policy instruments, put on the table many potential policy measures – not just the single issue of exchange rates.
5 Banks differ from other firms in that they fund their activities through deposits from customers who do not know the extent of risk taken by banks. Since a collapse in the banking system would have very severe consequences, the authorities have a strong interest in ensuring that banks operate in a responsible manner. Banks are therefore subject to stricter regulation than other companies and are supervised by the authorities. In principle, banks diversify risk by extending many small loans to firms, local government and households. In isolation, this implies that banks can operate with far lower equity capital  5  For a discussion of the role of banks in the economy, see King, Mervyn (2009): “Finance: A Return from Risk”, Bank of England, speech to the Worshipful Company of International Bankers, Mansion House. 4  BIS Review 131/2009  than other companies. When times are good, banks will have the incentive to deplete their capital base and take higher risk in order to “put equity capital to work”. Banks are therefore required to hold capital in proportion to their risk-taking, the so-called minimum Tier 1 capital requirement. Tier 1 capital is composed of equity capital and other capital that can be used to absorb losses on a going-concern basis. Risk-weighted assets, i.e. the calculation basis for the Tier 1 capital requirement, must reflect the risk the bank exposes itself to. A bank’s exposures are therefore assigned different risk weights.

Arthur Yuen: Promoting economic and social development in Asia Welcome remarks by Mr Arthur Yuen, Deputy Chief Executive of the Hong Kong Monetary Authority (on behalf of Mr Norman Chan, Chief Executive of the Hong Kong Monetary Authority), at the seminar on "President Jin Liqun on the Asian Infrastructure Investment Bank’s Operations and Projects", Hong Kong, 8 November 2016. * * * President Jin, distinguished guests, ladies and gentlemen, Good morning. It is my pleasure to welcome you to this seminar on the Asian Infrastructure Investment Bank (AIIB)’s Operations and Projects, organised by the HKMA Infrastructure Financing Facilitation Office (IFFO). On behalf of the HKMA, I’m honoured to welcome President Jin to Hong Kong to meet with leaders from the financial and business sectors who have an interest in infrastructure project planning and management. I am delighted to see the strong level of interest and the diversity of business leaders represented in the field. AIIB is an important establishment in promoting economic and social development in Asia. Boasting an initial capital of $ billion and a founding membership of 57 countries, AIIB came into operation in January 2016 with a mandate in the development of infrastructure and other productive sectors in Asia, including energy and power, transportation and telecommunications, rural infrastructure and agriculture development, water supply and sanitation, environmental protection, urban development and logistics. As we are all aware, President Jin has played an instrumental role in shaping up the formation and the guiding principles of AIIB.
The subsequent market movements as investors withdrew funds from EME investments were an abrupt shock for EMEs generally, especially after the long earlier period of abundant liquidity and ample inflows. From one perspective, the unconventional nature of recent U.S. monetary policy adds little that is fundamentally new to the challenges now facing EMEs. These policies simply represent a way of easing, driven by our coming up against the zero lower bound. Central bankers have managed differences across countries in cyclical positions and policy stances many times in the past. But, from another perspective, we have less experience operating with unconventional monetary policy and this creates more potential uncertainties. This puts a premium on continued dialogue among central bankers, between central bankers and the market, and keen listening skills on our part. In my view, the fact that our large scale asset purchase programs affect the size of term risk premia globally is important. This set of monetary policies affects financial asset prices in a different way compared to changes in short-term interest rates, and we should be humble about what we claim about understanding the importance of this distinction. For the period ahead, it seems likely that markets will remain focused on vulnerabilities they might have ignored a year ago. The greater premium on strong fundamentals, policy coherence and predictability will likely remain. There will be no one right answer in managing the trade-offs that come with the changed environment, and adjustment will sometimes be difficult. Moreover, we will undoubtedly experience further bumps in the road.

Recession or instability at home is often quickly exported. Equally important, growth and stability abroad makes all our jobs easier. This means that there are externalities in the work we do, so that more effective fulfillment of our domestic mandates helps to bring us to a better place collectively. Ensuring global growth and stability is and will remain our joint and common endeavor. This is what Terry Checki has worked for over his distinguished career. We have been very fortunate for his service and must carry the mantle forward. 4  BIS central bankers’ speeches
Widening adoption of automotive process could lead to work displacement; a large number of individuals, especially those in mid-career, will need to be re-trained and equipped with new skill sets. These changes in business and labor market conditions will have considerable impacts on central bank policies and how central banks operate, including those in macroeconomic analysis, payment systems, and financial supervision. Moreover, growing interconnectedness in trade, finance, and supply-chains have resulted in increased real and financial spillovers and globalized price-level, thus complicating central banks’ job of maintaining price and financial stability. 1/4  Many powerful developments are taking place today, from the growing influence of FinTechs and BigTechs to introduction of cryptocurrencies and electronic payment technologies. For many of us, central bankers, when dealing with new developments that can transform our financial system and how we conduct our policies, several key policy questions are often brought up: What are the risks and rewards of these developments? Should we regulate them? If so, how best to regulate them? How can we make use of these digital developments in our policy setting? And, what roles could central banks play in promoting new technologies and new digital platforms? To begin approaching these questions, we first have to admit that the boundary for new innovations or technologies is limitless and their potential impacts, at current juncture, may not be fully uncovered. There are things that we know and things that we don’t.

And even what we know and can identify today, our perceptions may be obscured by our perceived understanding based on past world views. There is a fine line between the knowns and the unknowns. Navigating through these will require striking the right balance between having an open mindset to allow innovations to prosper while ensuring that key risks can be contained. For the “known territory,” essentially developments that we have begun to identify use cases, can control the risks, and believe that the benefits will outweigh the costs, we must continue to refine our understanding, expand our knowledge, and find ways to streamline them into our policymaking process. This is so that the perception or the extent of what we know becomes clearer. For instance, growing popularity of internet-of-things—from usage of smartphones to various data-transmitting devices—has created massive amount of individual-level and transaction-level data. These “big data” can help unlock our understanding of the behavioral patterns, perhaps, not even realized by individual data owners. At the Bank of Thailand, we have begun employing big data analysis in macroeconomic, banking sector, and financial market assessments to complement our policymaking process. This has helped ensure that our policy actions are evidence-based and timely. At the same time, necessary steps are taken to validate the integrity and quality of data used as well as to safeguard data privacy. We are just scratching the surface of the potential usage of big data and much more work will be done in this area in the years to come.
I would like to take the opportunity this morning to talk about some of the measures that Bank Negara Malaysia is taking to support growth in the financial services sector, encourage innovation and strengthen resilience. My remarks will touch on the areas of regional financial integration, fintech development, systemic focus on regulation, governance and the role of banks in ensuring an inclusive financial system. Advancing regional financial integration The ASEAN Banking Integration Framework (or ABIF) that was finalised last year was a significant milestone towards greater ASEAN integration. An agreement forged between 10 key economies at different stages of economic and financial systems development is in itself a remarkable achievement. This is in sharp contrast with recent global trends. In the decades leading up to the 2007 financial crisis, global financial integration took unprecedented strides forward as capital markets and banking systems expanded and diversified, increasing the mobility of capital. But of late, there has been a reversal of this trend. A recent study by McKinsey found that following the crisis, banks globally have shed $ billion in assets and operations, of which almost half were foreign-based. Cross-border flows have also declined significantly, remaining at 60% of pre-crisis levels. To some extent, this is expected as markets undergo corrections and new regulations were introduced to address weaknesses in existing models for integration.

Our new assumption for the repo rate has given rise to quite a few questions, including questions about the way in which it is used as a basis for monetary policy decisions. It has been argued by some in the discussion that our new interest rate assumption has made it more difficult to anticipate our interest rate decisions. Personally, I believe it should make it easier to understand monetary policy, and I will therefore devote part of my speech to this issue. I will also discuss the significance of our new interest rate assumption for future monetary policy. We can influence the general public’s expectations of future interest rates by being clear about our view of economic development. Our ambition is to make it easier for the general public to gain a reasonable idea of future interest rate developments. At the same time, there is, of course, considerable uncertainty about this, in particular in the longer term, which is quite simply due to the uncertainty associated with the future development of the economy. Knowledge about this uncertainty is in itself relevant for firms, households and other market participants when they obtain an idea of what will happen with monetary policy in the future. This uncertainty also means that the Riksbank cannot bind monetary policy in advance to a particular path for the repo rate. It is important that the Riksbank makes this clear in various ways.