samchain/econo-pairs-v1 huggingface dataset:
They are initially aware of the limitations, but after a while they tend to forget them and start to regard highly stylised models as a correct and complete presentation of the economy. What is not included in the model ceases to matter to them. I am thinking here in particular of the banking sector, capital markets and real estate, which in most countries is a key investment asset. Fiscal policy has also been marginalised. Neglecting important factors increases the likelihood of systematic economic policy mistakes. How can this be avoided? Seemingly simply – it is important to recognise that putting all your eggs in one basket is not appropriate when considering macroeconomic dynamics and the effects of monetary policy. We should not forget that there are many different stories playing out in the economy at any given time. Some are fast-moving and some slow; some are strong at a given moment but later fizzle out; some prevail over time, even if no one would have put a brass farthing on them at first. I would liken it to a symphonic orchestra in which different instruments play very different music at different times in terms of number of notes and volume. But in an economy, no sheet music is handed out – it's a socio-political system that creates its own endogenous dynamics, that is, it rewrites the score itself, and in quite different ways each time.

B. Fostering “co-opetition” between established players and new entrants Innovation is often associated with FinTech firms and challengers, such as the start-ups that build success from an ability to focus their business and cut costs for a specific service or link in the payment chain. Yet commercial banks, which have traditionally been a major force in payments, also play a key role in innovation. Likewise, the main card schemes helped to drive the emergence of new payment methods, such as contactless payments and mobile payment terminals. Through partnerships, acquisitions and incubation projects, but also by harnessing in house R&D, established participants have expanded their service offerings to add new solutions, while developing competition and cooperation with new entrants. “Co-opetition” relationships are a  deep-rooted feature of the payment industry and are proven to generate value. The challenge now is to nurture them over the long run, taking care to ensure that relationships with BigTech firms are included. This is because the potential network effects enjoyed by BigTech payment solutions and the upstream payment chain positions of these firms could create risks of competitive distortion, particularly in situations where these participants also provide hardware or software components. Users could find themselves effectively captives of an ecosystem and left with no choice in terms of payment service, or at least be influenced by BigTech firms to use their services at the expense of competitors.
Mervyn King: Monetary policy developments Speech by Mr Mervyn King, Governor of the Bank of England, at the University of Exeter, Exeter, 19 January 2010. *  *  *  Some dates are easier to remember than others. 1789 and the French Revolution, 1989 and the fall of the Berlin Wall, 1929 and the Wall Street Crash are easily recalled. How will 2009 be remembered: as the year when the world economy fell off a cliff but was rescued by government and central bank intervention around the world? Or the year when we finally recognised that genuine reform to the international monetary and banking system was essential to restore prosperity? Time will tell. The world economy is now coming out of recession. But the cost of the banking crisis has been high. After an unprecedented period of sustained growth, total output in the United Kingdom has now fallen for six consecutive quarters. It contracted last year by around 5%, the largest fall in output since 1931. National income is around 10% below the level it would have reached in the absence of the financial crisis. Around the world, governments and central banks put a massive sticking plaster on the wounds in the form of an extraordinary degree of monetary and fiscal stimulus. As a result, business confidence, orders and output, which all collapsed at the end of 2008, are gradually recovering. But there is a long period of healing ahead.

Although openness alone cannot provide growth, one fact is clear there are no countries that have achieved wealth through autarchy and isolation from the rest of the world. Openness is thus a necessary condition, but not sufficient in itself, for achieving wealth. Many other policy elements are required, including macroeconomic stability, a good standard of education, legal security, efficient bureaucracy and protection of private property, to create good conditions for broad growth in a market economy. The Peruvian economist Hernando de Soto was a pioneer in the study of practical bureaucracy in some developing countries. His view was that it was not primarily a lack of property that made people poor, but rather a lack of legal property. The problem is that many poor people have no paper to prove ownership of their property, because it is so expensive and complicated to obtain in most developing countries. De Soto showed that, for instance, in Lima, Peru, it took six years and eleven months going through 207 legal stages among 52 different public authority offices to obtain permission to build a house. Obtaining legal permission to start a small company required six hours work a day for 289 days to follow the various bureaucratic steps, and it cost 31 times as much as the monthly minimum wage applying at the time. The fact that poor people therefore cannot formally own their houses or businesses means that they can have them stolen from them at any time, without the guilty parties being punished.
Second, the banking sector’s resilience during the crisis has benefited crucially from the decisive economic policy response (monetary, fiscal and prudential), which has substantially alleviated the impact of the crisis on the financial position of households and non-financial corporations, thus lessening the effect on financial institutions’ balance sheet quality. The decisions taken by macro- and microprudential authorities have also allowed the banks’ capital positions to improve during the crisis, and have authorised the use of buffers to help smooth the provision of financing to other economic agents, as a complement to the fiscal and monetary measures. 1  Although banking was among the hardest-hit sectors – in terms of stock market valuations – during the initial stages of the crisis, its share price valuations have recovered significantly on international financial markets after the development of vaccines was announced in November 2020. This reflects the fact that, thus far, the crisis has largely been prevented from developing a relevant financial component. Some examples will suffice to illustrate the banking sector’s resilience during the crisis and the role played by economic policies in maintaining it. 2  The resilience and role of the banking sector during the crisis  First, let us look at the indicator reflecting credit developments. For the first time since the global financial crisis, the volume of bank lending to the resident private sector in Spain increased in 2020 (by 3.5%).

In the future, given the uncertainties associated with the impact of the crisis on firms’ and households’ credit quality and with the repercussions of gradually withdrawing the support measures, we must be alert to indications of latent credit risk and ensure an appropriate and timely coverage of such risk, in keeping with supervisory guidance. Ensuring suitable 14  risk coverage, while maintaining a flexible prudential approach, may make it easier to prevent any undue contraction in credit that could hamper growth in the new phase of economic recovery that we are entering. The impact of the pandemic has exacerbated some of the pre-existing structural challenges faced by the banking sector. These notably include the challenges associated with the cost of capital exceeding profitability, digitalisation and climate risk management. To address them, it is essential that banks continue to make efficiency gains, by cutting costs and making intensive more use of new technologies. To afford the European banking sector a greater chance of success in adapting to the longterm challenges, it would be highly desirable for the European Union to fully adopt the Basel III accord, complete the Banking Union and further develop the Capital Markets Union. This would enable the European banking sector to explore the synergies and benefits of diversification associated with potential consolidation processes at continental level. Thank you. 15
The current scale of the international financial crisis, with credit institutions having an enormous difficulty for recapitalising without public intervention, has revived the interest on procyclicality of accounting standards and capital requirements. The topic has sprung from the academic arena, to which it was confined until very recently, to the forefront of regulatory and financial policy discussions. The Financial Stability Forum, the International Monetary Fund, the Basel Committee on Banking Supervision and certain central banks have, among others, highlighted the need for an in-depth discussion of procyclicality and regulatory mechanisms that may help reduce it. I believe that the Spanish experience of dynamic provisioning can serve as the starting point for this discussion. I am convinced that these provisions have significantly strengthened the solvency and stability of the Spanish banking system, both on aggregate and at the level of each institution. Clearly, this provision did not insulate Spanish institutions from the global financial crisis, but it had certainly positioned them better to withstand it. Let me conclude with three thoughts. First, I would like to see the standard-setting agencies, and the IASB in particular, as European law is one of the first to have adopted its guidelines, acting with greater subtlety when setting these standards, and also in their dialogue with other regulators. The present serious financial crisis has shown that fair value is an accounting concept and doctrine that has no better alternative, but that also should not be inappropriately applied.

Central banks can help reduce the negative effects of an excess of credit growth if they apply a monetary policy that is oriented to maintain price stability in an horizon long enough as to account for this cyclical behaviour of debt, thereby ensuring that the effects of the crisis are not so devastating for households and firms. Indeed, this should be of particular concern since we know that a monetary policy successful in containing inflation can also contribute to increase household and corporate leverage. A successful inflation fighting monetary policy manages to anchor agents' inflation expectations. In such a setting, the demand-side excesses that tend to be generated during cyclical upturns do not translate – or do so only very slowly – into inflationary pressures. Consequently, central bankers do not consider it necessary to tighten monetary policy, so that interest rates remain very low and continue to fuel the cycle and the consequent expansion of credit and debt. White (Weiβ in German), which is not only a type of wine but also the name of the chief economist of the BIS who retired last summer, has been calling in recent years for the introduction of financial stability considerations into monetary policy design and implementation. And we should acknowledge that the latest events have shown the validity of his proposals. In short, he recommends that central banks act against the build-up of financial imbalances even in the absence of inflationary pressures at the usual reference horizons.
Luis M Linde: “The New Hegemon or Last Country Still Standing” Speech by Mr Luis M Linde, Governor of the Bank of Spain, at the Frankfurt Finance Summit 2014, Panel IV: The New Hegemon or Last Country Still Standing, Frankfurt am Main, 20 May 2014. *  *  *  As a result of the crisis, the institutional and intellectual setup of European Monetary Union is being deeply revised. Fresh views on the role of stability across several dimensions – including fiscal and macro-financial – have emerged and taken over the old approach of the Maastricht Treaty. Several players, including, indeed, the ECB, are contributing to this overhaul. I would like to review the main elements of the old institutional setup, the weaknesses revealed by the crisis and the way a reinforced culture of stability is contributing to their repair. The monetary union designed in Maastricht included, in addition to the ECB and the single monetary policy, a relatively loose governance framework for the euro area based, first, on a fiscal discipline device – the Stability and Growth Pact – and, second, on coordination for the remaining economic policies – the Broad Economic Policy Guidelines –. The setup also relied on governments, households and firms being able to internalise the stability patterns required within a monetary union and counted on financial markets penalising those who would not do so.

In the case of Thailand, BOT takes an active role in meeting regularly with financial institutions and IT companies to exchange views and experiences on the development of the businesses and IT environment. -  In the process of drafting policies, we often seek out the view from our fellow regulators to ensure that our policy are in line with market and international practices, as well as to help us anticipate problems that may arise in implementation. -  The final drafts of policies are sent out for comments from key stakeholders in and outside the Bank of Thailand, especially the industry, to ensure that the policies are practical and not posing any undue burden on financial institutions. -  We also make sure that revision of regulations and guidelines is conducted regularly to ensure that e-banking policies are keeping with demand from the financial community as well as with market innovation and international best practices. -  To maintain proactive supervision, the IT risk-based supervision is conducted continuously, updating each of bank's IT risk profile on a regular basis and performed overall assessment in certain areas. In case of getting a report of any incidents, we have to thoroughly analyze the impact on the financial institution system and consumer. And, to prevent recurrence of such incidents, we may urgently issue notification to financial institutions to provide preventive, detective and corrective control measures in self and customer protections.
These geopolitical risks leave an imprint on the economy as businesses put off hiring and investment decisions until the air has cleared. Moving away from the global context, back to the United States, the tightening of financial conditions that occurred late last year will likely restrain consumer and business spending this year. In fact, we have already seen a sustained slowing in housing construction, in part reflecting less favorable financing costs. Now, I know this talk of slowing growth is causing uncertainty, some hand-wringing, and even fear of recession. But slower growth shouldn’t necessarily come as a surprise. For quite some time, the economic fundamentals have pointed to GDP growth much lower than what we saw in the 1990s, for example. In fact, my 2 percent growth forecast is right in line with g-star. That means slower growth isn’t necessarily cause for alarm. Instead, it’s the “new normal” we should expect. And, it’s important to remember that this is happening at a time when the labor market is very strong. From the perspective of monetary policy, the overall picture of the economy is about as good as it gets: very low unemployment, sustainable growth, and inflation just about at our 2 percent goal. 2/4  BIS central bankers' speeches  Given this favorable situation, when you look at monetary policy, things are looking pretty normal as well.

Given that this research was originally focused on the reasons r-star had risen, it’s ironic that I and others have ultimately dedicated much more of our careers to understanding why it’s dropped. In recent years, r-star has been averaging well below 1 percent. And it’s actually now lower than at any time before the Great Recession. One of the reasons for this dramatic decline in r-star lies in changes to the major factors determining potential growth: labor force growth and productivity growth. Baby boomers are retiring and fertility rates have come down. Both of these demographic shifts have significantly slowed labor force growth relative to past decades. Productivity growth has also fallen considerably from the boom years of the late 1990s and early 2000s. All the rapid changes in technology that we see around us every day may make this seem 1/4  BIS central bankers' speeches  counterintuitive. But for the moment, being able to order a Nintendo Switch and have it arrive the same day is, shockingly, not increasing productivity in a meaningful way. I could go on for quite some time on this topic, but will leave it to another day! I should note that these demographic and productivity trends are not unique to the United States. In fact, we’ve seen similar slowdowns in growth and sharp declines in r-star in other advanced economies.1 So why did I take you back to simple days of the millennium bug, when you were playing Snake on your phone and ordering takeout from a paper menu?
5  The sum of households’ net financial and gross housing wealth has declined by over 10% since the start of the crisis. In contrast, external estimates of the loss of supply capacity as a result of the recession, to which the fall in human capital is likely to be closely related, are around the 4-5% range. See, for example, HMT (2009) and IMF (2009). 4  BIS Review 114/2009  None of this is to deny that households’ balance sheets have been affected by recent falls in wealth. But the extent of that deterioration and hence the pressure on households to repair their balance sheets might be exaggerated by failing to take a more comprehensive view of their assets and liabilities. Nevertheless, it is clear that, even putting balance sheets to one side, the financial crisis has affected households and families in ways that have caused them to spend less. Most directly, the recession has led to a pronounced weakening of the labour market, with employment falling and incomes squeezed. The recession and the sharp rise in unemployment may also have led households to revise their beliefs about the stability of the economy and with it the predictability of their own incomes. The period from the early 1990s up to the financial crisis has been dubbed by economists as the Great Moderation. The UK economy enjoyed over 60 consecutive quarters of positive economic growth accompanied by low and stable inflation.

My own judgment was that the uncertainty surrounding both the economic outlook and the effects of asset purchases made it difficult to have a strong view as to the relative merits of increasing the asset purchase programme to £ billion or £ billion. Indeed, the inflation projection that was published in the August Inflation Report suggested that either policy was consistent with hitting the inflation target, depending on the future path of interest rates. For me, the decision came down to an assessment of the risks of doing too much versus the risks of doing too little. With regard to the potential risks of doing too little, my main concern was that nominal demand would not recover to a level consistent with hitting the inflation target. My main worry with doing too much stemmed from the uncertainty associated with using asset purchases as a policy instrument. We do not have much experience of conducting monetary policy via asset purchases and there is a risk that their effects will be transmitted through the economy in ways we do not predict and do not want. For example, the substantial injections of liquidity might result in unwarranted increases in some asset prices that could prove costly to rectify. I placed considerable weight on both risks and thought that they were best balanced by an expansion of the programme to £ billion. 6  BIS Review 114/2009  I am hopeful that we have started along the road to recovery.
Stefan Ingves: Basel III is simpler and stronger Op-ed by Mr Stefan Ingves, Governor of the Sveriges Riksbank and Chairman of the Basel Committee on Banking Supervision, published in the Wall Street Journal, 15 October 2012. *  *  *  The economic cost of the global financial crisis during the past five years has been frighteningly large. One clear lesson from the crisis is that regulatory capital requirements for the banking system were too low. Or in other words, leverage was too high. Under the pre-crisis rules, banks were allowed to increase their leverage to unprecedented levels. This increased risk in the financial system and when the crisis hit, the implicit guarantees resulted in massive public bailouts around the globe. The Basel Committee’s capital reforms, known as Basel III, substantially raise capital requirements from pre-crisis levels to reduce the probability of bank failures and the associated risks to taxpayers and to financial stability. Recently, much has been made of the perceived shortcomings of Basel III. Some argue that Basel III, which comes into effect next year, is not enough. Others argue that Basel III is too complex and should be replaced by a simple leverage ratio, calculated as tangible equity to non-risk weighted assets. In my view, the Basel III agreement fundamentally enhances national and global financial stability by both raising the level of capital required by banks, and by simplifying the regulatory framework. It is no small task to reach a global consensus on these often quite technical matters.

Part of the consensus is that Basel III should be seen as a set of minimum requirements. Hence, countries are free to impose more stringent rules if they wish. But we should not underestimate how Basel III strengthens bank-capital adequacy rules. A fundamental feature of the new framework is the significant increase in required minimum capital levels. All banks must hold common-equity capital of at least 7% of their risk-based assets, compared with only 2% previously. In the event of a credit boom, banks under Basel III would potentially need to hold a further 2.5% in common equity, bringing the total to 9.5%. Finally, the most systemically important banks must hold up to 2.5% in additional common equity. That is a total of 12%, a sixfold increase from pre-crisis levels for these institutions. The Basel Committee supports a regulatory framework that is both prudent and as simple as possible. Hence the Basel III agreement introduces several simplifying changes to the regulatory framework. For instance, the definition of capital now focuses on tangible common equity, the truest form of loss-absorbing capital. Moreover, all components of the capital base and associated deductions such as goodwill or deferred tax assets must be disclosed in a fully comparable manner. By standardising and simplifying the measure of capital, Basel III makes the regulatory framework easier to understand, and will enable market discipline to work better. Another important step has been the introduction of a non-risk based leverage ratio as a supplement to the risk-based requirement.