samchain/econo-pairs-v1 huggingface dataset:
It is another matter that things may not go quite as quickly and become as widespread as the greatest optimists foresaw just a year or so ago. People in Sweden do not suddenly stop going to shops just because websites make it possible to buy clothes, shoes, cars and food, for example, on the internet. Alternatives in the form of mail order firms, newspaper advertisements and the telephone have been available for many years, yet many people still prefer to do their shopping in the traditional way. But it does seem very probable that computers in various forms will render many production and purchasing processes increasingly efficient as time goes by. The effects of the new technology will occur in various parts of society. It is easy to think of a number of uses. And as the innovations become cheaper and cheaper, there will be growing incentives to  2  BIS Review 90/2001  apply them in many economic activities. The price of computers, for example, has fallen in the past four decades by around 20 per cent a year. In literal terms, that means that a computer which costs 10,000 kronor today would have cost almost 50 million kronor in the early 1960s. So prices have fallen dramatically. Our own history clearly shows that the combination of major technical breakthroughs and a sizeable price fall can lay the foundation for outstanding economic growth.

Neither do I believe that in connection with the ongoing technological breakthrough we can look forward to corporate profit growth being essentially higher than what would follow from an increase in GDP’s potential growth. And even then it would probably not be a matter several percentage points. But smaller figures than that are still sufficient to generate a major improvement in a country’s prosperity after one or two decades. The acceleration of Sweden’s annual GDP growth from 2 per cent around the turn of the nineteenth century to between 3 and 4 per cent for a couple of decades, was crucial for our economic development. Diagram 4:  Sweden: GDP and profits share 6 5 4  Average 3,2%  3  GDP  2 1 0 1870  1880  1890  1900  1910  1920  1930  1940  40  Average 32%  30 20  Profit share  10 0 1870  1880  1890  190 0  1910  1920  1930  194 0  Sources: Östen Johansson and Karl Jungenfelt. Another argument in the same direction is that the new economy refers to the breakthrough for computer and telecom technology. These innovations should make it easier to obtain information and, if anything, make consumers more knowledgeable. If that happens, perhaps such factors as past reputations and brand familiarity will have less influence on purchasing decisions in the future.
Combining multiple objectives into a single one, on the other hand, would only apparently solve the problem by artificially reducing the number of goals, but it would not change the fundamental nature of the control problem facing the policymaker. At the current juncture, only very little research is conducted on the interaction between monetary and macroprudential policies within rigorously microfounded general equilibrium models. The Banque de France staff and I are very admirative of the leadership of Banca  7  See Claudio Borio and Haibin Zhu (2008), “Capital Regulation, Risk-Taking, and Monetary Policy: A Missing Link in the Transmission Mechanism?”, BIS Working Paper n. 268, December 2008. 8  See Yener Altunbas, Leonardo Gambacorta, and David Marqués-Ibáñez (2010), “Does Monetary Policy Affect Bank Risk-Taking?”, ECB Working Paper n. 1166, March 2010. 9  See Vasso Ioannidou, Steven Ongena, and José-Luis Peydró (2008), “Monetary Policy, Risk-Taking and Pricing: Evidence from a Quasi-Natural Experiment”, ECB, mimeo; Matteo Ciccarelli, Angela Maddaloni, and José-Luis Peydró (2009), “Trusting the Bankers: Another Look at the Credit Channel of Monetary Policy”, ECB, mimeo. 10  See Benoit Mojon, Simon Dubecq and Xavier Ragot (2010), “Fuzzy Capital Requirements, Risk Shifting and the Risk Taking Channel of Monetary Policy”, Banque de France mimeo. 11  See Raguram Rajan (2005), “Has Financial Development Made the World Riskier?”, presented at: The Greenspan Era: Lessons for the Future, a symposium sponsored by the Federal Reserve Bank of Kansas City, Jackson Hole, Wyoming, August 25 – 27, 2005.

C.  The need to preserve the stability of the financial system in order to prevent the emergence of “tail risks” to price stability  The best illustration of tail risks to price stability on the downside associated with financial crises comes from the historical experience of the United States during the Great Depression which followed the collapse of the stockmarket and housing bubbles of the second half of the 1920s, and by that of Japan following the collapse of the real estate bubble of the second half of the 1980s. In both cases a dramatic expansion of credit fuelled bubbles which pushed asset prices to dizzying heights. In the case of the 1920s United States, in particular, such credit expansion was associated with a wave of euphoria caused by “new-era” thinking  2  See Richard Dale (2004), The First Crash: Lessons from the South Sea Bubble, Princeton University Press. 3  See Irving Fisher (1933), “The Debt-Deflation Theory of Great Depressions”, Econometrica, Vol. 1(4), pp. 337–357. 2  BIS Review 158/2010  which, in turn, had been ignited by the dramatic wave of technological innovation which swept across the country during that decade. 4 The attempt, on the part of young Federal Reserve, to gently deflate asset prices via interest rates increases backfired, and the result was the 1929 crash, with the associated destruction of a staggering amount of financial wealth, and the injection into the economy of a significant extent of uncertainty.
But there are many factors affecting the  7  See Karabarbounis & Neiman (2014) and Bengtsson & Waldenström (2015). 8  See, for example, Ball (2014). 9  See Kryvtsov and Mendes (2015). BIS central bankers’ speeches  5  exchange rate and an adjustment could take a long time. And during this time Swedish competitiveness could deteriorate. There is also a risk that inflation could vary more if we had a higher target. This could mean that it became more difficult for economic agents to distinguish upturns in the general price level from relative price changes and thus more difficult to make good financial decisions. I have thus described the two factors that determine the nominal interest rate in the longer term. It is now time to put them together. The nominal interest rate in the long run Low interest rates for a long time... The fall in the global real interest rate naturally has consequences for monetary policy. Many central banks have cut their policy rates to historically low levels to stimulate demand and get inflation to rise. In Sweden, the Riksbank emphasises that nominal interest rates will be low for a long time to come. The Riksbank’s forecasts extend two or three years ahead. Figure 2 shows the repo-rate path the Executive Board of the Riksbank decided on at the monetary policy meeting in February.

Henry Ohlsson: Decision today, consequences far into the future Speech by Mr Henry Ohlsson, Deputy Governor of the Sveriges Riksbank, at a breakfast event, organised by Swedbank, Stockholm, 18 March 2016. *  *  *  I would like to thank Bo Enegren, Hanna Köhler, Gustaf Norrefeldt, Cecilia Roos-Isaksson, Marianne Sterner and Ulf Söderström for their help with this speech. Accompanying figures and the table can be found at the end of the speech. Some of the decisions we make only have significance for the here and now. Others may have consequences for many decades to come, in some cases for the rest of our lives. Our choice of education and purchase of a home are examples of decisions that have considerable significance over a long period of time. For a person who puts themselves in debt through decisions with long-term consequences, it is of course important how high the interest rates on the debt are. And this does not concern the interest rates paid now or in the medium term, but also interest rates several decades ahead. In recent years, interest rates have been at their lowest level in modern times. Several other central banks have done as the Riksbank and cut their policy rates below zero, and government bond yields at longer maturities are now at historically low levels. This is partly due to the prolonged recession following the financial crisis.
Firms’ compliance with PPP and supervisory review or firm-by-firm regulatory intervention under Pillar 2 of the Solvency II framework are all important to manage concentration risk. But we should not have to rely on the PPP to compensate for perverse incentives that the quantitative capital rules under Pillar 1 might create. A robust and coherent Pillar 1 needs to play the primary role in incentivising prudent risk management practices in the first instance and to work in concert with Pillar 2 measures. The ongoing work on Solvency II reform plays a part in this. In order to enhance our understanding of the risks and the most appropriate ways to address them, the PRA will engage with insurers and other stakeholders, including international regulatory colleagues. Our own work on concentration risk will examine the need to tighten controls on recognition of reinsurance structures and volumes to mitigate systemic risks to policyholders. Page 9  Undertaken within a robust framework for the management of counterparty concentration and recapture risk, reinsurance can continue to deliver the global diversification that is at the heart of insurance, and which allows the insurance industry to play its part in helping individuals and businesses to navigate a world of uncertainty. Thank you. I am grateful to Wendy Fu, Alwin Luchmaya, Dean Minot, Charles Adam, Hannah Rashid, Alan Sheppard and Miranda Hewkin Smith for their assistance in helping me prepare this speech. 1.

Sam Woods: Prudentist Speech by Mr Sam Woods, Deputy Governor for Prudential Regulation of the Bank of England and Chief Executive of the Prudential Regulation Authority (PRA), at the Mansion House, London, 22 September 2021. * * * I sometimes feel that regulators are a bit like dentists: they are necessary but no one, apart from a few masochists, really enjoys a trip to see them! One of the more surprising things about the last year has been, despite Covid infecting our patients, the extent to which we’ve had to rebuild our toolbox for reasons entirely unrelated to Covid. Some of you may complain that this is because fertile minds within the PRA are always dreaming up unpleasant new types of regulatory drills and toothbrushes, and that we should just stick with the old ones. Others of you may have seen the 1970s movie Marathon Man, in which the hero (played by Dustin Hoffman) is tortured by an evil dentist who keeps asking him: “Is it safe?” Given the PRA’s objective of safety and soundness, and in the spirit of post-Brexit de-regulation, perhaps we could actually just scrap all the rules and adopt this approach with CEOs instead, in the form of an annual visit to the prudential dentist. It might actually be rather effective. But honestly, I think we are just keeping pace with the world around us.
However, a common European response should be considered a necessary but not sufficient condition for ensuring a swifter and stronger recovery of our economy and minimising the structural damage caused by this crisis. To attain these goals, not only must fiscal policy continue to provide adequate support for households and firms in the short term, but the European funds must be allocated to high added-value investment projects, accompanied by a structural reform programme designed to strengthen the economy’s long-term growth. Indeed, the European funds should also be used to finance the structural improvements required by the Spanish economy. Thank you very much for your attention. 11

Why does financial literacy matter? It is more than clear that the absence of understanding of the basic financial concepts erodes our capability to make proper and well-informed choices in terms of savings, investment, and borrowing. The costs of these choices are not confined only to individuals, but they can have systemic implications, eroding the overall financial stability. The translation of these misinformed decisions into systemic risks is exactly one of the main reasons why financial literacy became the mainstream in the past decade. The pre-crisis credit boom was supported by irrational exuberance and overconfidence of “never ending” rise in assets prices and low financing costs. The credit boom turned into credit bust, and the consequences of the “bubble – burst” are still with us. According to the latest IMF map of weak spots, heavily indebted households are still the main source of vulnerability in many systemically important advanced and emerging economies, and potential source of next financial crisis. Apparently, being financially literate and informed, can help in preventing, or at least mitigating the occurrence of such “weak spots”. To bring the issue closer to the regional context, let me remind us of the “episode” of excessive borrowing in Swiss francs that occurred in several countries in the region (Hungary, Croatia, Serbia, Poland), amidst low interest rates and assumed stability of the exchange rate. Hence, the last crisis clearly demonstrated that many agents are not fully aware of the consequences of their financial decisions.
In operational terms, this means that, in the conduct of their duties, neither the European Central Bank nor the national central banks of the Eurosystem may request or take instructions from the Community institutions, national governments or any other body. They are entirely institutionally, operationally and financially independent. Transparency and accountability are also essential for gaining credibility Naturally, the independence of these institutions requires transparency in their decisionmaking processes and accountability vis-à-vis the general public and their representatives. As regards new institutions such as the ECB, transparency is even more important for gaining credibility and building up economic agents’ confidence in the new currency. In order to establish this credibility and gain the confidence of agents, it is imperative to be understood, which in turn calls for transparency. For the sake of transparency, the Governing Council has specified and quantified its definition of price stability (inflation below but close to 2% over the medium-term). Second, the ECB has gone beyond the accountability requirements laid down by the Treaty by instituting regular testimonies by the President of the ECB before the European Parliament and regular informal meetings with the Eurogroup of Finance ministers. Another channel for transparency is constituted by the regular publication of reports on economic developments and Central Bank analysis, of the Eurosystem’s and ECB’s staff projections exercises, most prominently in the ECB’s Monthly Bulletin.

Taking account of this uncertainty is particularly important in the case of the euro area, whose “deep structural parameters” are somewhat uncertain to the extent that the inception of the euro may have been associated with a “regime shift”. More prosaically, this medium-term orientation of the single monetary policy recognises that it is impossible for a central bank to control price developments with accuracy over the short-term. The second implication is that the relevant indicators for monetary policy must reflect, almost exhaustively, the main sources of both short and long-term inflation. In the light of this, the monetary policy strategy seeks, as far as possible, to rely on a “full information approach”. This is what the concepts economic analysis and monetary analysis – also known as the two-pillar approach – used notably at the press conferences given by the ECB President following monetary policy decisions, reflect: -  the economic analysis examines cyclical, economic and financial indicators related to the main determinants of short-term inflation;  -  the monetary analysis, is based on a monetary explanation of the low frequency movement of inflation. -  The medium-term orientation of the single monetary policy makes necessary the crosschecking of these two complementary approaches. From this point of view, the ECB’s monetary policy strategy is more comprehensive than pure inflation or monetary targeting strategies.
Lee Hsien Loong: Financial sector liberalisation - going global  Speech by Mr Lee Hsien Loong, Chairman of the Board of Directors of The Monetary Authority of Singapore and Deputy Prime Minister, at the Monetary Authority of Singapore Work Plan Seminar, held in Singapore on 3 April 2000. * 1. *  *  Introduction  Since 1997, while the Asian region was undergoing a traumatic crisis followed by a sharp recovery, the international financial scene has not stood still. Financial innovation has continued unabated, institutions are rationalising and consolidating, and transactions and services are rapidly going electronic and online. Singapore has been directly affected by these global trends. It is as well that we pressed on with our financial liberalisation programme despite the crisis. MAS and the industry have had a busy two years. It is timely now to take stock of what has been achieved, and map out the tasks ahead. Our objective has been to open up the financial sector, progressively but decisively. We have aimed to allow market forces greater free play, get investors to take full responsibility for their decisions along with the outcomes, and shift MAS’ emphasis to setting the framework and upholding standards of integrity and supervision. Ultimately, we aim to become a vibrant and dynamic global financial hub. How much of this vision have we so far realised? 2. Financial sector reform - concrete changes  We have made many concrete changes across the financial services industry.

In contrast, there are also concerns about the effects of continuing easy monetary conditions within Hong Kong. During the past few months, economic recovery has resulted in inflows of funds into the Hong Kong dollar to the extent that the Aggregate Balance of the banking system has become  BIS Review 37/2004  1  extraordinarily high (despite some outflows recently associated with the corrections in the financial markets). As you know, under the Currency Board system there is not much that we can do to dampen easy monetary conditions: this is a question that the Sub-Committee on Currency Board Operations of the Exchange Fund Advisory Committee has given a great deal of thought to. If there continue to be capital inflows on the back of sustained growth and confidence in Hong Kong’s prospects, the current account surplus and continuing talks about a possible revaluation of the renminbi, the risk of overheating in the economy and in asset markets will increase. I am not suggesting that this will happen soon, or making a warning. But banks in particular will need to keep the situation under close watch and adopt appropriate risk mitigation measures if the market situation warrants it. Overheating is, after all, something of an unfamiliar risk after such a long period of economic difficulty, and we do not wish to be caught off our guard. Longer-term risks So much for the more immediate risks and potential risks, which both you as banks and we as supervisor must pay attention to.
Our risk-based Minimum Liquid Assets framework requires every bank to hold a minimum percentage of its qualifying liabilities in liquid assets. We are now looking to adopt the Basel III LCR rules, with some enhancements to suit domestic conditions. •  Although Basel III applies the LCR framework only to internationally active banks, we propose to extend the LCR requirement to all banks in Singapore in the first instance and grant various reliefs on the basis of risk-mitigating circumstances. •  We will also have a tighter definition of what qualifies as eligible liquid assets and not recognise equities and mortgage-backed securities. MAS has issued a consultation paper on the implementation of the LCR framework and will carefully consider industry feedback. Constraining leverage The third important area of reform is in constraining the build up of excessive leverage. At the height of the crisis in 2008, the banking industry was forced by markets to reduce leverage in a manner that led to downward pressure on asset prices, which in turn led to losses, declines in bank capital, and contraction in credit. Even banks with high risk-based capital adequacy ratios were found to be excessively leveraged. Basel III’s leverage ratio seeks to set a 3% floor for the amount of Tier 1 capital that a bank needs to hold relative to its total exposure. The ratio is designed as a non-risk based measure to complement the risk-sensitive capital adequacy ratios.

Financial institutions also have a strong starting position in this regard, having amassed a great deal of information on their customers over the years. Evidently, they need to retain access to these data, while always observing high standards of compliance with privacy and data management rules and best practices. Yet it is not merely a question of having this information, but also of having the capacity to take full advantage of it. In other words, being able to process it so as to measure risks properly, analyse profitability and costs on a case-by-case basis, offer quality services and compete on equal terms with the new players. Banks’ position has so far gone unscathed by the entry of competitors. However, this may change with PSD2. Specifically, authorised third parties have access to customers’ bank data, yet banks are not afforded similar treatment. Indeed, rather than banking business opportunities per se, these new operators are more interested in the data. The report rightly states that in order to compete with BigTech on equal terms, a broad exchange of data – and not just financial data – is required. In this connection, the European Commission has already started on various lines of work that seek to improve the re-utilisation of information in the market. Also, proposals such as the Digital Market Act may somewhat mitigate some of the undesired consequences of BigTech’s advantages stemming from anti-competitive conduct.