samchain/econo-pairs-v1 huggingface dataset:
So what was the potential role of monetary policy in contributing to the crisis? The main argument blaming monetary policy for the crisis is that policy rates in the U.S. were kept too  6  Kohn (2006, 2008) specifies three conditions that should be fulfilled for central banks to take “extra action” to deal with a possible asset-price bubble: “First, policymakers must be able to identify bubbles in a timely fashion with reasonable confidence. Second, a somewhat tighter monetary policy must have a high probability that it will help to check at least some of the speculative activity. And third, the expected improvement in future economic performance that would result from the curtailment of the bubble must be sufficiently great.” He concludes, also in 2008 and after thorough considerations, that those conditions would rarely be met. 7  See Bean (2009) for an extensive and excellent discussion of the crisis, including the credit expansion and housing boom, the macroeconomic antecedents, the distorted incentives, the information problems, the amplification and propagation of the crisis into the real economy, the policy responses and the lessons for monetary policy and economics generally. 4  BIS Review 112/2009  low during the period 2001-2005, which would have contributed to the build-up of excessive credit growth and a house-price bubble (Taylor 2007). There are two relevant questions in this context about U.S. monetary policy during 2001-2005. First, was the low interest rate reasonable given the information available at the time?

What does it mean for an investment to be responsible or ethical? Certainly, human behaviour is the only one liable to be qualified as ethical. Actions by animals or acts of nature lack this dimension, irrespective of whether their consequences are good or bad. Finances, as an exclusively human activity, could thus also be analysed from this dimension. Broadly, we identify ethical or responsible investment as that which meets certain standards, namely ESG (environmental, social and governance) criteria. As I mentioned, this is a very topical subject in the press, but we are clearly dealing with something more than a passing trend. Large companies, credit institutions, multilateral banks, official credit agencies and even governments themselves have been making a growing number of debt issues that meet these criteria, generally under the name of “green bonds”, which are duly focused on environmental sustainability. But issues of “social bonds” are also beginning to emerge. However, these ESG standards go beyond any debt class. Companies are increasingly incorporating these criteria into their decisions and actions. And banks are certainly no exception to this trend. 1  Banks have, for some time, had corporate social responsibility areas. But their involvement needs to go further. As we supervisors have been insisting, banks also need to incorporate these elements into their risk analysis and management. In this respect, both the European Single Supervisory Mechanism (SSM) and the Banco de España have recently published supervisory expectations relating to the inclusion of environmental risk in banks’ management.
The simple model is written P/E = d/(k-g), where P is the share price, E earnings per share, d the percentage dividend, k the expected return and g the expected dividend growth. 3  BIS Review 137/1999  –  the expected real return has fallen from 6% to 4%, or  –  the expected real earnings trend has risen from 2.5% to 4.5% a year, or  –  a fall in the expected real return from 6% to 5% has been accompanied by an acceleration of expected earnings growth from 2.5% to 3.5%. Has the expected stock market return fallen? Let us begin with the possibility of a lower expected return. Does it seem likely? For a long period the expected return, in the United States as well as in Sweden, has been stable at around 6%. So why should things have suddenly changed in recent years in a way that dramatically alters conditions for the long-term valuation of share prices? Moreover, a lower expected return would mean that the real return on shares is much the same as on treasury bonds, for example. Why would share investment be perceived as having roughly the same risk as investment in bonds issued by a sovereign? But there are, in fact, some reasons why the expected return may have become somewhat lower. One is that when central banks around the world focus monetary policy on price stability, this is expected to result in greater stability in the real economy.

Rather, the purpose is to overcome weaknesses in our analytical tools related to the possible buildup of financial imbalances resulting from keeping interest rates low over time. Monetary policy will continue to react to shocks that affect the medium term path for inflation, output and employment. After a decade of learning, inflation targeting has become more flexible. Flexibility is good to have, and easy to lose. The inflation target has to be reached over time, otherwise our credibility is put at risk. In assessing various considerations, monetary policy must be geared to meeting its primary objective of low and stable inflation. There are limits as to how many goals monetary policy can meet. Other instruments must be used to attain other objectives. To ensure that new or further financial imbalances do not build up we also need a tighter international overarching policy framework to address the stability of the financial system as a whole. A macroprudential policy framework should be part of this new framework. Macroprudential policy framework Financial market participants can trigger self-reinforcing economic fluctuations. Individual banks and investors do not necessarily take into account the overall risk in the financial system. The consequences became clear during the financial crisis: banks had inadequate equity capital, relied excessively on short-term wholesale funding and had insufficient buffers of liquid assets. 2  BIS central bankers’ speeches  The new international regulatory framework is intended to remedy this situation.
This sounds like a difficult task to achieve but it is my conviction that it is better to begin a step towards this direction rather than waiting for it to happen in future. 2  BIS Review 9/2010  Mr Chairman, as I conclude, let me take this opportunity to guide the participants that discipline is key in accessing venture capital funds. It is common practice in Zambia for entrepreneurs to mis-apply funds obtained for capital purposes. Instead of growing businesses, we tend to use funds obtained as loans, for luxurious goods such as latest cars, suits etc. This results in business failures and thus non-performing loans for banks and thereby higher interest rates. It is also important to realise that not all projects can access venture capital funds. Only innovative, high quality and highly profitable projects may qualify for these funds. Therefore applicants of these funds should think outside the box and provide well researched project plans that meet international standards. In this regard it is key for project promoters to collaborate and pool resources as a team instead of the usual norm of going it alone. In addition, as we are all aware, small and medium sized enterprises form the engine of economic and social development as they generate employment, and are an ingredient to growth and international competitiveness. It is therefore imperative that this key sector rises to the challenge and creates wealth through innovative entrepreneurship.

This is important if we are to ensure that monetary and supervisory policy frameworks are fully supportive of the ability of the financial sector to finance growth and development. Zambia today has a large portfolio of large scale industrial and energy projects such as the Multi Facility Economic Zones (MFEZ) and several large and small hydro-power projects. These require innovative financial solutions as well as varied sources of finance and expertise, both domestic and foreign. BIS Review 9/2010  1  Ladies and Gentlemen, as you may be aware, the banking sector in Zambia has over the last few years, witnessed significant growth in lending. The credit expansion has no doubt brought significant benefits to the economy as resources are channeled through to the lower end of the market. However, most of the credit extended by banks and microfinance institutions is targeted at already established enterprises and individuals in formal employment. Only an insignificant amount is extended to start-up initiatives or businesses with potential for growth. In order to bridge this financing gap, it is pertinent to establish financing arrangements such as Venture Capital Funds. Venture Capital Funds are essentially collective investment schemes where investors place their money into a Fund with the aim of achieving greater impact and security than could be realised individually.
This certainly underlies the growing popularity of inflation targeting and the forward guidance that comes with it. But even this may be challenging in a changing environment, where the business cycle overlaps with structural changes, and more so in areas, like financial stability, where policy targets may be hard to design and explain. From credibility to trust So, a broader approach to credibility-building may be needed. To this end, it may be useful to acknowledge that credibility is an attribute of a certain individual or institution: that of being believed or trusted. So surely, credibility does not depend exclusively on your own actions but on how far others trust you. Trust, in turn, is defined as a person’s belief or expectation that another person or institution will act in favor of one’s well-being (OECD, 2017). So we could think of credibility as an institutional asset that depends on the factors that influence trust from stakeholders and the public. Credibility in a central bank refers to public’s belief that future actions of monetary policy that are optimal today will be carried out even if they no longer seem optimal in the future. This is related to public trust, but the two concepts are not quite the same. One can imagine the public having trust in the central bank and at the same time the latter adopting a discretionary monetary policy strategy to retain full flexibility regardless of past promises.

Spain stands out as the euro area country where consumer lending has grown most in recent years, with year-on-year growth rates since April 2016 of between 10% and 16%, well above the euro area average of 5%. This growth is making an important contribution to economic recovery in Spain. In September, the balance outstanding of consumer lending was € billion, 6.7% of GDP. In addition, this growth in consumer lending is being achieved in a more competitive environment, with lower interest rates, accommodative conditions and narrowing margins on average loans. Moreover, default rates are below the average for lending as a whole in Spain. Another feature of this expansion is its adaptation to the new environment resulting from the entry into the financial system of firms that make intensive use of new technologies, with a particular impact on the financial sector. Your Association has attached particular importance to analysis of the challenges that these firms pose, through seminars, the work of various committees and the preparation, last year, of a comprehensive report on consumer lending and the digital society, initiatives that the Banco de España naturally applauds. Financial institutions must take up the challenge of responding to the new digital reality, with e-commerce (which is growing at rates of over 20% and amounted, in 2016, to € billion) now being used by more than one-third of consumers for their purchases. Clearly, these new firms with their strong technological capabilities pose a challenge and also an opportunity for established firms.
Over the years, I have returned to China many times and witnessed its remarkable transformation first-hand. How China has changed! Revolutionary songs in public have given way to pop songs in karaoke lounges. Mao jackets have been discarded in favour of Gucci, Armani and other luxury brands. I am told that many Chinese go to Hong Kong to buy branded goods, while many Hong Kongers cross over to Shenzhen to buy cheap imitations. China is today the third biggest luxury goods market worldwide. 10. The physical transformation of China is remarkable enough but the mindset change is even more impressive. When Deng Xiaoping pronounced that the colour of the cat is not important so long as it catches mice, pragmatism supplanted ideological purity. Today, there are more capitalists in China than in Japan. According to a recent Xinhua article (13th October 2005) entitled " China's Rich Get Gloriously Richer", the total wealth of China's 400 richest people grew by 40 percent in 2004 and amounted to 7 percent of GDP. The Chinese have made a strategic choice to pursue what they call  BIS Review 83/2005  1  'socialism with Chinese characteristics'. But to me, it is capitalism with Chinese characteristics. China has also embraced globalisation and with its admission to the World Trade Organisation in 2001, China will have to play by international trade rules. There is no turning back. As China grows, it has a vested interest to strengthen the international system that has enabled its success. 11.

ASEAN is becoming increasingly integrated so that its market will be at least half as big as China's and India's. ASEAN made a fundamental strategic choice to form the ASEAN Economic Community (AEC) by 2020. It is also formulating an ASEAN Charter, a visionary document that will chart its future direction. 29. In addition, ASEAN is positioning itself to ride on the growth of China and India. ASEAN's total trade with China and India has grown significantly over the past decade, and in 2004 amounted to $ billion and $ billion respectively. 30. ASEAN is working hard to ensure that its Free Trade Agreements (FTAs) with China and India are completed and fully implemented by 2010 and 2011 respectively. Besides China and India, ASEAN is also negotiating FTAs with other major economies like Japan, South Korea, Australia and New Zealand. BIS Review 83/2005  3  Japan's role and response 31. In the past decades, Japan has led the growth of China, South Korea and many other countries in the region in a 'flying geese' formation. Japan has been an important source of investments, capital and technology, and a major export market for many Asian countries. After a decade of stagnation, Japan is firmly back on the path of healthy sustained growth. Prime Minister Junichiro Koizumi's leadership and overwhelming victory in the recent election give cause for hope that his reforms will be sustained. As the second largest economy in the world, Japan will remain an important global player. 32.
•  A third explanation, and one we hear from the Bank’s network of agents, is that the low level of headline inflation may be limiting upward pressure on pay in some cases as relatively small nominal pay awards are sufficient to increase real incomes. If this is an important factor, the lags between headline inflation and the determination of pay awards mean it could increase the persistence of weak wage growth for some time to come. This too should ultimately fade as the effects of energy and the exchange rate on inflation dissipate. •  A fourth potential explanation is that the severity of the recession and the increase in uncertainty that accompanied it has had a lasting impact on the decisions people take and the tradeoffs they make – just as it seems to have done in the market for tyres. It may be, for example, that with the recession still reasonably fresh in their memories, workers are marginally more reluctant to push for the kinds of pay settlements they would have been used to before 2008, or marginally less willing to take the step of switching employers in order to gain a higher salary. In deciding how to vote in monetary policy meetings each month, I look across a wide range of indicators. There are many signs that the economy is normalising – the labour market is tightening, consumption growth is solid, investment is recovering, and even productivity growth is showing tentative signs of a return.

Retain flexibility  Of course one can never know exactly what the future holds. So when the time does come to raise Bank Rate, it will be important to retain the flexibility to change course if needs be, either by tightening policy more quickly than originally envisaged or by being prepared to loosen again. Were it required to respond to unforeseen events, the MPC would have two tools at its immediate disposal: Bank Rate and QE. Past experience gives us a good dataset from which to gain an understanding of how changes in policy rates transmit to the economy. Based on a rich literature of international estimates over the period since inflation targeting began, the peak impact on inflation is generally estimated to occur with a lag of between 18 and 24 months, although it begins to  5  See Shafik (2015) and Broadbent (2015) for more on this issue. 6  Though should proposed legislation pass, the number of MPC meetings per year will reduce from 12 to 8, in line with the recommendations of the Warsh Review (Warsh, 2014)  7  The market curve represents the mean of the priced distribution of interest rates. Consideration of risks can cause this whole distribution to move relative to true expectations. Risks can also affect the shape of the distribution, though Dison and Elliot (2015) found that the shape of the distribution is currently being heavily influenced by the proximity of Bank Rate to the effective lower bound.
New regulations are being introduced in an increasing number of countries and new tools are being deployed. New institutions are being established to ensure coordination across countries, markets and instruments. A clearer macro dimension has been integrated into banking regulation, based on the recognition that the financial system as a whole can be vulnerable even if individual institutions seem to be solid. Systemic risk entails a risk that the entire financial system could become unstable or, at worst, collapse, with substantial negative consequences for the real economy. The aim of the new regulations is to guard against systemic risk. BIS central bankers’ speeches  1  As the new regulatory regime has been introduced, another dimension has been added to the discussion. The question being asked is whether the new instruments relieve monetary policy of taking financial stability into account. Experience of the new regulatory regime is still limited, and we have little knowledge about the effectiveness of the new tools. At the same time, a number of central banks are facing a demanding challenge with regard to the practical implementation of policy: how can the economy be brought back on track without laying the basis for new imbalances? My presentation today will focus on financial imbalances and systemic risk. I would like to offer you some insight into some of the issues and analyses in the interface between monetary policy and financial stability that we are now working on at Norges Bank.

As the largest hub in Asia ex-Japan for Real Estate Investment Trusts and Business Trusts, Singapore is well-placed to partner China to help securitise or list Chinese assets into the Singapore market. Singapore investors are familiar with China’s industrial real estate assets. Singapore’s financial institutions also have a long history of experience with China-based assets and infrastructure assets. Nine of the 32 REITS listed on the Singapore Exchange1 invest in Mainland China properties. There are several advantages a listing in Singapore can bring. First, Singapore has a more diversified pool of investors compared to the local markets in the Western Region. This helps to ensure adequate liquidity for the securities. Second, the REITs listed in Singapore tend to fetch higher yields than those listed in other developed markets. Third, the Singapore market has a reputation for high quality assets and strong governance. This will help raise the profile of REITs listed in Singapore. I am pleased to note that currently, we have an ongoing demonstrative project where Shanghai Pudong Development Bank is looking to securitise a portion of its client’s assets as a REIT in Singapore. This innovation could inspire similar deals under the CCI. Developing risk management solutions to support investment Third, we can work together to develop risk management solutions to support CCI investments. Infrastructure projects are often exposed to large risks like natural catastrophes. Just last year, Chongqing experienced disruptions due to floods and heavy rain. More recently, in June 2017, Sichuan Province’s Mao County experienced a tragic landslide.
Source: Central Bank of Chile. 9  Figure 7 Nominal exchange rates (averaged index, 1/Jul/2007-10/Dec/2010=100)  80  70  70  60  60  Peru  Thailand  Rango (1)  Promedio  Eurozone  80  Czech Rep.  90  Mexico  90  South Korea  100  Israel  100  Canada  110  Colombia  110  Indonesia  120  Malaysia  120  New Zealand  130  Brazil  130  Chile  140  South Africa  140  Japan  150  Australia  150  Spot (2)  (1) Range indicates peaks and troughs of the local currency parities during the period. (2) Spot value as of 10 December 2010. Sources: Central Bank of Chile and Bloomberg. Figure 8 Real exchange rates and international reserves (*) (percent)  Depreciation of RER (%)  10 5 0  Lithuania Bulgaria  Denmark  Hungary Czech Rep.  Estonia  Hong Kong  Algeria  N. Zealand China Poland Peru Romania Israel Russia Canada Japan Sweden Korea Malaysia Phillipines S.Africa Mexico Indonesia Australia Chile Brazil Norway Argentina  -5 -10  India  -15  Latvia Croatia  -5  0  Turkey  Saudi Arabia  Singapore  Thailand  Iceland  5  10  15  Reserve acumulation as % of GDP (*) Considers variations between September 2009 and November 2010. Source: Central Bank of Chile based on data from the BIS and Bloomberg.

There is the rise in commodity prices relative to the global price of finished goods and services, which means that we have to pay more for the raw materials that we need. And there is the substantial depreciation of sterling, which is a counterpart to the necessary re-balancing of the economy, but which also implies that we have to pay more for our imported goods and services. The second, and related, point is that while monetary policy cannot ultimately insulate us from the associated hit to our living standards, it can affect the adjustment path. In particular, the MPC’s chosen approach has been to accept a temporary period of above-target inflation, rather than seeking to hold inflation as close to the 2% target as possible at all times. Achieving the latter would have required a markedly higher level of Bank Rate and with it most probably a somewhat higher level for sterling. That would have moderated some of the external inflationary impulses facing us, but would also have depressed activity and pay even more and retarded the requisite re-balancing of the economy.