samchain/econo-pairs-v1 huggingface dataset:
So, this must be good news – apart from the inconvenient questions one asks from time to time about “How long will it last?” or “Is it sustainable?” For Emerging Market Economies, we have all witnessed the inflow of capital at the initial stages of the QEs, which drove up asset prices and inflationary pressure. This is not surprising as investors have no choice but to take aggressive steps to search for yields globally. This results in a misallocation of resources, as the abnormally low interest rates distort investment decisions by allocating capital away from productive real investment into risky assets that yield higher returns. The lack of real investment in turn reduces medium-term potential growth. Indeed, business investment growth in the US has been lacklustre since the economy recovered from the global financial crisis. The misallocation of resources aside, the search for yield behaviour also leads to a mispricing of risks across a wide spectrum of asset classes. In the US, junk bond issuance has risen sharply in the past few years, accounting for about 24% of all bond issuances so far in 2013, while the average high-yield spread has fallen below 5%. While the buoyancy in the asset markets helps support the economy in the short term, imbalances could build up in the economy and the financial system that may pose a threat to systemic stability when the unconventional monetary policies begin to unwind. 13.

4  Ladies and gentlemen, before moving on to what lies ahead, let me briefly summarise my key message – excessive leverage is the root cause of the global financial crisis, but surprisingly, not much has changed. Many have still not learnt the lesson, and think the problems can be solved by further leveraging. And policymakers advocating extremely accommodative monetary easing still believe liquidity-driven growth is the answer. Indeed, it’s ironic that low interest rates, mispricing of risk and excessive debt levels, which contributed to the crisis in the first place, are now considered the “solution”. BIS central bankers’ speeches  What lies ahead? 14. So, we have now entered “uncharted waters” or the “world of the unknown”. It has often been argued that the Global Financial Crisis was unprecedented and one which demanded unprecedented policy action. As most of the advanced economies have very little, if any, fiscal headroom to support growth and job creation, the use of zero interest rates and QE, and leveraging on central banks’ seemingly limitless ability to expand their balance sheets, appears to be “The Only Game in Town”. Presumably, this means the situation has become so bad, we may as well try these unconventional policies to see if they work. However, as I outlined earlier, the efficacy or potency of these policies has not been as strong as first thought. In the US, the pace of economic recovery has been rather moderate, if not disappointing, despite the unprecedented fiscal and monetary support packages launched since 2009.
The employment level and wage growth are generally good; economic expectations are high. A notable feature of the Nordic-Baltic markets is their high level of integration. Let's take the example of Estonia. Last year, Finland and Sweden accounted for about 40 percent of Estonian exports and 30 percent of imports. In the stock of FDI, the share of Sweden and Finland is about 75 percent. Cross-border financial integration is all but complete, with the market share of Nordic financial institutions accounting for 99 percent of bank loans and leasing. A long list of Nordic companies regards Estonia and the other Baltic countries as their home market. Therefore, many important business functions, for example liquidity and risk management, are increasingly run on a group-wide basis. Viewing the Baltic countries as a part of the home market, Nordic companies take a long-term business view. This lowers the risk of sudden slowdown or reversal of capital flows, often named as the main risk in the Baltic environment of strong credit growth and high current account deficits. A bit of history: entry of Nordic banks Of course this high degree of integration has been achieved over time. In the Baltic countries, today's level of economic and financial development was a distant dream as recently as 10 years ago. The fall in GDP bottomed out in mid-1990s. The following years have brought rapid output growth. In Estonia, for example, the level of real GDP has more than doubled.

Building on the paper’s analysis of the Fed’s Reverse Repo Facility (RRP), I will make the case that central banks are now more proactive in: the influencing of market rates; the provision of liquidity insurance, and the design of market infrastructure. Finally, I’d like to say a few words about pass-through beyond the money markets. As interest rates decline toward zero, it becomes more difficult for banks to pass through changes in policy rates to those rates faced by households and businesses – hampering the transmission of monetary policy. The Term Funding Scheme is designed to mitigate this impact, and hence re-inforce pass-through to the real economy. So I’ll end by briefly outlining how that works. BIS central bankers’ speeches  1  The impact of regulation on money market function Let me start with the impact of regulation on money market function. Darell and Arvind’s analysis of the dispersion of money market rates offers evidence of the impact of regulation on behaviour and pricing. Their index of money market rate dispersion has risen since the introduction of the Supplementary Leverage Ratio, and has a tendency to increase around key regulatory reporting dates (Chart 1). It is difficult to dispute the idea that regulation has had an impact on how markets function globally. The decline in repo market activity has actually been larger in the UK than in the US and is around 20% below its 2013 level (Chart 2).
Malaysia has made great strides in eradicating poverty. This is the result of numerous efforts to meet the needs of society’s most vulnerable, and to provide them with opportunities for upward social mobility. Nevertheless, the COVID-19 crisis reminds us that shocks affect different segments unevenly, and this has clearly exposed gaps in our social protection system. It is therefore critical to accompany the transition to high income with efforts to close these gaps. The growing economic pie will provide the state with more capacity to deepen its social protection. We must use this space to future-proof the system to impending structural changes: Malaysia will transition to an ‘aged nation’ status, with the old-age dependency ratio expected to increase to 16.6% by 2040. However, in a 2018 Employees Provident Fund study, two out of three active contributors are projected to have insufficient retirement savings to meet a minimum pension of RM1,000 per month. 2/4  BIS central bankers' speeches  The nature of work will evolve, as we transition to a more knowledge-based, service-based and gig-based economy. Work arrangements are expected to become more flexible, and provisions must be made to ensure that workers remain adequately protected. Notably, provisions for shorter and more flexible working hours may entice women to participate in the labour force. The third change is the displacement of certain jobs, as we enter the dawn of the next industrial revolution. The trend towards automation and AI requires a smooth transition of the workforce into new skills and occupation areas.

In the past three decades, only a handful of countries have managed to achieve that status, and importantly, to sustain their position. In fact, the road to becoming a high-income economy is more difficult today, as countries are confronted with challenges and uncertainties like never before. According to the OECD1, the present landscape has “new rules, new environmental constraints, new technologies and more competition”. We will need to adapt to these changes, while managing other shocks that may come our way. What we don’t want is for the economy to take one step forward, only to be pulled two steps back. Along these lines, allow me to share four points on how Malaysia can more confidently transition towards a high-income economy. An economy centred on innovation My first point is on putting innovation at the centre of our economic development. Malaysia has come a long way. From being a commodities-based economy, we have diversified into high-end manufacturing and modern services. This helped us advance into a middle income economy in the early 70s. Yet, since then, we have struggled to achieve productivity- and innovation-driven growth needed to become a high-income economy. Even today, the deficit in the innovation capability of our economy remains. For instance: Malaysia does not spend enough on R&D. In fact we spend less than half of other frontier economies like Korea, Taiwan and Singapore. Our R&D efforts have focused on generating scientific knowledge, but less on applying that knowledge. This has resulted in low commercialisation of R&D.
Between these two extremes – the US and the no-hoper – there are of course many cases where the situation is less clear-cut or less predictable. Euroland provides an interesting example. Given the careful steps which were taken before the advent of the euro to ensure the insulation of monetary from fiscal policy and to outlaw monetary financing of budget deficits, we might wonder why the news of impending budget overruns should cause the euro to weaken. It seems that not only do credit spreads faced by individual deficit countries widen (presumably for fear, however slim, of sovereign default), but also the currency weakens for fear of governments conspiring with the central bank to abandon its mandate against inflation or to break the rules against monetary financing. A rather different interpretation could be that foreign exchange markets are merely exhibiting a pavlovian reaction: having been brainwashed to the effect that a deficit is inherently bad if it surpasses certain preannounced limits, the reaction when such a breach does occur is bound to be negative, even if analysis of the substance underlying the breach provides little or no justification for such a reaction. In the context of trying to identify a relationship between the fiscal position and the exchange rate, these examples demonstrate that there is no simple, pre-ordained relationship. The outcome depends on a wealth of factors, including the nature of the disturbances affecting public finances, the policy regime and policy responses, and the state of sentiment in financial markets.

Tony Latter: Preserving monetary stability in the face of budget deficits Speech by Mr Tony Latter, Deputy Chief Executive of the Hong Kong Monetary Authority, at the Insight Investment conference in Hong Kong, 20 November 2002. *  *  *  Introduction There has been much talk recently in Hong Kong about the possible threat to exchange rate stability from the burgeoning budget deficit, which is predicted by many to reach about 6% of GDP for the current financial year as a whole. Evidence of this concern is apparent when any media report suggesting a deterioration in the fiscal position is invariably accompanied by a weakening, even if shortlived, in the forward exchange rate of the HK dollar. This phenomenon is not confined to Hong Kong. In Europe, news of widening budget deficits, threatening to breach the terms of the stability and growth pact, and allegations of lack of commitment among officials to the degree of fiscal discipline necessary to conform to that pact, have tended to weaken the euro's exchange rate, at least temporarily. But there is another story which can be told. This is of an economy where the budget deficit rose from about 1½% of GDP to 4½% in the space of 4-5 years. What happened to its exchange rate? It strengthened over the same period by some 70% in trade-weighted terms. The authorities reined in the deficit somewhat over the next couple of years, but then it began to expand again.
The crisis showed that the cooperation and coordination between national resolution authorities is often incapable of taking swift and efficient decision on cross-border bank failures. In past cases, national interests tended to prevail, even if resolution costs became larger. In the SRM, the Single Resolution Board will take the resolution decisions for all cross-border banks and all banks under direct ECB supervision. Resolution decisions can be taken under a common interest, in swift and unbiased fashion, notably in the case of crossborder cases, while taking into account spill-overs and contagion risks. A robust SRM, as a complement to the SSM, will address all these shortcomings. The ECB has always been of the view that a robust SRM should contain key essential features for effective resolution, namely: (a) a single system, (b) a single authority with efficient decisionmaking procedures (c) a single fund and (d) a backstop facility for bridge financing. We have stated this in our opinion on the SRM proposal as well as in many speeches. I am therefore very pleased that the agreed SRM regulation broadly fulfils these criteria. A single system To begin with, the SRM follows an integrated approach, in which all banks of EU Member States that participate in the SSM fall under the SRM. Any Member State outside the euro area which opts to join the SSM will thus automatically also fall under the SRM. The powers of the SRM will embrace all resolution tasks, e.g.

Before recommending the establishment of the Federal Reserve System - a plan which it described as “essentially an American system, scientific in its methods, and democratic in its control” - the Commission produced 22 volumes on the monetary and banking systems elsewhere, especially in Europe. Copies of these volumes sit proudly in the Governor’s anteroom in the Bank of England. The authors noted that “the important place which the Bank of England holds in the financial world is due to the wisdom of the men who have controlled its operations and not to any legislative enactments”. But they did not see the Bank of England as a model, and they recommended the creation of an institution framed by legislation. It would be ninety years before Britain finally learnt the lessons of the National Monetary Commission and passed legislation to buttress whatever wisdom the Bank could command. Institutions embody accumulated wisdom and experience, and they should not be meddled with lightly. From time to time, however, it is necessary to rethink the role of our institutions. The changes made to the Bank of England in recent years, including an inflation target and a high degree of transparency, have, I believe, improved Britain’s monetary arrangements. Whether either the men and women or the current institutional arrangements of the Bank of England will have any more success in influencing monetary arrangements in the United States today than in 1908 is a matter I leave to you.
Short-termism estimates which are statistically significantly below unity (at the 5% confidence level) are shown in red. The simple average of x across the 20-year period is very close to one (0.9935). On the face of it, this does not suggest that short-termism has been a particular problem among this crosssection of firms. Chart 4  Chart 5  Short termism estimates over time  Industry estimates  Source: Bank of England. Source: Bank of England. Notes: Bars show the estimated x parameter for regressions for the UK and US pooled data. Estimates where the 95% confidence interval spans 1 are coloured grey. Notes: Bars show the industry estimates for the sample split into (1) 1985–1994, and (2) 1995–2004 for each industry. S&P and FTSE industry classifications were used. Bars are coloured based on the significance of the estimates at the 5% level. But this masks some important within-period variation. In 13 of the 20 years, x is lower than 1. And in 9 of these years, x is statistically significantly below unity. Moreover, there is evidence of a rising tide of myopia: 8 of these 9 years occur in the final decade of the sample. To illustrate, Table 5 shows point estimates of x over two decadal sub-samples (1985–1994 and 1995–2004) and over the full sample. Estimates are significantly below unity in the second sub-sample, but not the first.

Caleb M Fundanga: Small-scale cross-border trade and payment services in southern Africa Official opening remarks by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at a roundtable symposium on small-scale cross-border trade and payment services in southern Africa, Lusaka, 21 March 2011. *  *  *  Distinguished Invited Guests Let me begin by welcoming you to this Roundtable Symposium on Small-Scale CrossBorder Trade and Payment Services in Southern Africa. May I also warmly welcome our colleagues from neighbouring countries who have come to join us in this important event. It is my sincere hope that you shall enjoy your stay in Zambia and that you shall find this roundtable symposium fruitful. Distinguished Ladies and Gentlemen, cross-border trade plays an important role in supporting livelihoods, especially those of border communities, thereby buttressing prosperity in the region. Furthermore, by strengthening commercial ties, promoting cultural understanding, and deepening community relationships, cross-border trade helps to nurture harmonious relations amongst countries in the region. The unique feature of small-scale cross-border trade lies in geographical proximity which minimises transportation costs, thereby allowing traders to take advantage of differences in the supply, demand, and prices of various goods and services available on either side of the border. It is worth noting that most cross-border trade activities are not reported in foreign trade statistics. However, surveys conducted on the subject show that cross-border trade is carried out by individuals or small traders and their families.
6  BIS central bankers’ speeches  Unquestionably, this scenario of new technologies and new emerging competitors poses a challenge to the traditional banking business. However, technical progress is also an opportunity for the more dynamic banks to generate efficiency and to extend the services provided to their customers. For instance, banks are proving very adept at developing instant payment services. And some of them might be well-positioned to develop direct lending facilities (P2P) competing with the new non-bank operators (e.g. crowdfunding). Banks retain advantages in terms of experience, market roots and the ability to offer a full range of transactional and intermediation services which should help them face competition which, nonetheless, will be increasingly intense. In our capacity as regulators and supervisors, we should seek to strike a balance between facilitating technical progress, supporting the development of new products and services, and properly safeguarding customers and financial stability. 3.3  Consolidation  Finally, orderly correction of the excess capacity in the banking industry will foreseeably require greater consolidation in the sector. I spoke to you about this exactly a year ago in this same forum and I believe that since then the view that such a process is becoming increasingly likely has become widespread. Ideally, consolidation should take place at the European level, in order to overcome the strictly domestic vocation of the overwhelming majority of banks.

This is hardly surprising given that housing loans constitute the larger part of credit extended to households. Now that the world economy is trying to shrug off the consequences of the liquidity crisis of late summer and falling house prices in America, the question as to how sound housing finance in converging CEE economies really is has become substantial. A reassuring answer to that question comes out of the analysis in a paper 7 presented in Session 4, which focuses on house prices in the CEE economies. The analysis has shown that the very rapid house price increases in our region have generally been based on fundamental factors: a boost in housing demand due to rising per capita GDP, falling real interest rates and demographic factors, coupled with the rapid development of housing markets and housing finance, virtually non-existent in the era of central planning. All in all, the house price inflation in the region seems to reflect a process of relatively fast convergence to a new equilibrium. Again, however, the question remains open whether that new equilibrium has already been reached or perhaps even overshot in some economies, and whether the rapid growth in mortgage loans that is a natural consequence of the housing boom can be safely described as sustainable. Experience has taught us that rapid credit growth cannot be ignored even if it reflects nothing more than a convergence process, as it usually means that loans have been extended to households with ever lower margins.
Conclusions  Let me conclude by quoting David Marquand’s recent book, “The end of the West”:4 “The economic crisis itself, like its predecessor in the 1930s, is political, not technical….The world’s economic blocs will have to find painful answers to urgent problems; and the allocation of the pain will be a supremely high-political matter. It will raise profound questions of distributive justice, of the obligations that the present generation owes to future ones, of the proper balance between the claims of poor and rich nations, and of the proper relationship between the human and other species. Such questions are quintessentially global in character, and the answers will have to be global too. But for the Union’s leaders to opt out of the global search for answers would be a betrayal of their citizens. And they will be unable to opt in if they cannot speak with one voice and lack the democratic legitimacy to carry their people with them.” Lastly, I would like to praise the organisers of this Festival of Europe Conference for having chosen Florence as the place to debate such important issues related to the future of our continent, as I like to think that one of the best way to symbolize Europe is the David (by Michelangelo): young, vigorous but also gentle, his gaze fixed fearlessly on the challenge; he can triumph, against all odds. That’s the way Europeans should be. Thank you for your attention.

The US dollar has remained the main international currency, as a result of the predominance of US financial markets and also the inability of several emerging economies to pursue independent policies (for example by de-pegging their currencies from the US dollar). But there is little reason to believe that these factors will not change over time. The renminbi, in particular, should be in a position to relatively quickly emancipate itself from the dollar and become a major international currency if the Chinese authorities were to consistently pursue capital account liberalisation, greater exchange rate flexibility and all related policy measures in the years to come. The international role of some other emerging market currencies is also likely to increase over time. We are clearly moving towards a multipolar currency world. The question is whether the euro will be one of the poles – so to speak – of the new system. I will not dwell on the advantages for Europe of being one of the poles, but rather I invite you to reflect upon what would happen if it were not. To be sure, the euro, like any other currency, would be affected by economic and political developments in the countries issuing the leading reserve currencies, and would suffer severely from external shocks. Consider, as an illustration, the recent experience of the Swiss franc, a currency which is renowned for its stability.