samchain/econo-pairs-v1 huggingface dataset:
At the macro level it is hard to assess what is a warranted rise in asset prices and what an unsustainable boom; in regulation it has proved hard to design systems which adjust appropriately for the cycle, never mind which effectively lean against it; and at the micro level firms find it difficult to measure the risks in their strategies and to base their targets and incentive systems on risk adjusted returns. We must try to align incentives between actual risk and return by improving risk management practices (for example on off-balance sheet activities) and rectifying the revealed weaknesses in the originate-to-distribute model whether in the US mortgage market, in valuation practices or in the use of rating agencies. But we know that many of the incentive problems are deeply embedded – after all, asymmetry is inherent in any limited liability arrangement. The protection of depositors is well established. And it is hard for firms to take account of the collective implications for the credit cycle of their individual behaviours. Of course there is a role for monetary policy in smoothing the cycle but it has to address the whole economy and not just the financial sector. So we need also to consider again how far we can make our regulatory regime for capital and liquidity counter cyclical – that is create a system which raises requirements as the boom gathers pace in order to dampen the upswing and create additional headroom for losses as the cycle turns.

The upswing – a new structure of banking The roots of the problem lay in the so-called “great stability” of steady growth and inflation and in particular the last five years of persistently low nominal interest rates. The confidence born of that stability was combined with an increased institutional demand for fixed income and heightened international competition among the largest banks to develop scale. That led to a remarkable decline in corporate investment yields which was matched, and for a while seemed justified, by declining volatility (see Chart 1 which shows the fall the spreads and volatility of high yield bonds). 1 And it put pressure on investors to find new ways of generating returns from credit. At the same time advances in IT and financial modelling allowed the development of new derivatives, and the slicing, dicing and recombining of credits in new structured credit instruments. The search for yield would have made the US sub-prime mortgage market attractive to many investors. What made it irresistible was the financial engineering that offered high yields with high credit ratings. The success of structured credit created a huge demand for the raw material of these products in particular sub-prime mortgages (Chart 2). It allowed banks to move increasingly from the traditional “lend and hold” model towards an “originate and distribute” model. This boosted the supply of credit and allowed risk to be more widely dispersed across the system as a whole. But it also involved a long chain of participants from the original lenders to endinvestors.
Prasarn Trairatvorakul: Trust as a pillar of the industry Keynote speech by Dr Prasarn Trairatvorakul, Governor of the Bank of Thailand, at The Asian Banker Summit 2012 “Trust as a Pillar of the Industry”, Bangkok, 26 April 2012. *  *  *  Ladies and gentlemen, It is an honor to join all of you today, and to welcome leaders of Asian banking community to Bangkok. The theme of this year conference, “Trust as a pillar of the industry”, highlights the fact that the global financial market stands at an important cross-road. The topic of trust inevitably arises after a crisis. The cross-road is about how to reform regulation, that is, how to re-regulate. This is the juncture which we have reached today, with reforms proposals such as those by the Basel Committee, the Financial Stability Board, or Dodd-Frank Act in the US. All these are attempts to rebuild trust and confidence. It is well known that Trust is the cornerstone of the financial industry. But it should also be added that, Trust alone is not enough. We also need to have a good dose of healthy skepticism. The reason for this is that we must avoid, on the one hand, overly trusting market mechanism, or on the other hand, overly trusting in regulation. This is because of the rapid changes in the financial system and how risk is transmitted. The last crisis showed how financial innovation and complexity of bank business model overtook risk management and regulation in the west.

The development of High Frequency Trading for instance – whose economic utility is by the way also questionable – could hamper the resilience of financial markets in times of stress. New services such as smart contracts embedded on a blockchain could create new shock transmission mechanisms or result in new forms of interconnectedness or pro-cyclicality that could be the sources of financial instability. Third, it could threaten market integration, especially in Europe after a decade of tremendous efforts to foster harmonization between financial markets. Such efforts are evidenced in the securities markets area, by the recent launch of the Target2 Securities platform in 2015, in the payments area, by the completion in 2016 of the second round of the SEPA project which now allows for fully harmonized credit transfers and direct debits denominated in euros, throughout the European Union. By contrast, the current profusion of new technologies, standards and protocols that are not fully interoperable, at least at this stage, constitutes a potential risk of market fragmentation. Additionally, they could lead to some kind of social fragmentation, if the new payment means are less accessible to the less welloff. 3. Against this background, public authorities play a key role in helping to reap the full benefits of innovation while preventing the threats it brings This implies first rethinking the regulation so as to strike the right balance between innovation and security.
However, the lower growth of our trading partners will gradually reduce the external demand faced by Chile, which will be more noticeable from the second half of this year onwards (table 1). The Chilean financial market has followed the global market trends. Particularly, the local fixed-income market showed important drops in the rates of sovereign bonds, in addition to allowing the placement of bank and corporate debt. While these developments are positive, it is important to note that the depth of the Chilean capital market has been significantly reduced in recent years. For the same reason, a relevant 5  factor for the resilience of the Chilean economy is to ensure that this market is not affected again. Projections In the central scenario, headline inflation is projected to continue to decline in the coming quarters and to converge to the 3% target in the latter part of 2024. Inflation will end 2023 at 4.6% annually, that is, one percentage point higher than we estimated in the previous MP Report. This correction originates in the higher levels of inflation of recent months —particularly its core component—, the slower adjustment of consumption, and the output gap taking longer to close. In this scenario, core inflation outpaces the previous estimate and will reach annual variations in the order of 3% only by the end of the projection horizon (figure 11). For 2023 and 2024, our projections considers a real exchange rate that, on average, is lower than estimated in December.

As foreseen in the central scenario of this MP Report, projected growth in the United States and Europe will be negatively affected by lower credit expansion and greater global uncertainty. This effect will be most visible in the second half of 2023 and early 2024. For these years, growth in those developed economies that are Chilean trading partners is expected to average 0.4%, which compares with the 0.7% forecast in December (figure 10). Emerging economies will face tighter financial conditions, which will also affect the external demand relevant to Chile. The better outlook for China after its reopening, together with the evolution of the copper and oil market balances, has been behind the improvement in our terms of trade, which are revised upwards from the last MP Report. This combines the better outlook for copper prices and lower projected prices for foods and fuels. For copper, our projected prices for this and the next two years are increased. We foresee an average price of 3.85 dollars per pound in 2023; 3.65 dollars per pound in 2024, and 3 and a half dollars per pound in 2025. Oil prices have been quite volatile due to the tensions in the financial markets in recent weeks and their possible implications for world growth. In addition, inventories have been accumulated and OPEC has recently announced production cuts. In the central scenario, the average Brent-WTI price is projected to gradually decline from 73 dollars per barrel in 2023 to 67 dollars in 2025.
Earlier this year, one of the major UK supermarkets withdrew from its shelves Marmite, a popular yeast-based spread that has the appearance, viscosity (and, for some, taste) of the bitumen spread on British roads. The situation arose because the supplier had increased significantly the product’s price in the light of sterling’s depreciation last year. Remarkably, “Marmitegate” led the news for much of the day it broke. In the event, tragedy was averted when the supermarket and supplier reached agreement and the great British public were allowed to continue tarring their toast. This high-profile event did, however, quite helpfully put on the general public’s radar the likelihood of prices in the shops beginning to rise in the period ahead. It was information with narrative content and personal touch. Arguably, “Marmitegate” raised public awareness of rising inflation much more effectively than any amount of central bank jawboning. Stories, like Marmite itself, stick. (c) Public Understanding, Understanding the Public  Many central banks have made big strides towards improving public understanding of the economy and their policies over recent years. Many have an active schools programme, websites with educational resources, issue leaflets, posters, podcasts and videos. Some have a Museum. These are all great. But central banks, like many institutions, have sometimes been better at talking than listening. Or, put differently, they have done better at public understanding than understanding the public.

Beige Book summaries reach fewer than 10% of the US adult population. FOMC minutes are accessible to only around 2%. 60  Kincaid et al (1975). The precise algorithm used will have some bearing on the final Flesch-Kincaid score that is computed for a given text. Other metrics of linguistic complexity yield broadly similar results. 61 Kirsch et al (1993). 16  All speeches are available online at www.bankofengland.co.uk/speeches  16  According to OECD studies, levels of literacy in the UK and US are not greatly dissimilar. 62  Assuming the  same literacy rate in the UK and US implies that political speeches are accessible to slightly less than half the population, Dickens novels to around 40% and newspapers to around 30%. Bank of England publications are accessible to less than 10% of the adult population. These fractions are low. Around 95% of the general public are likely to find central bank publications inaccessible. Perhaps unsurprisingly, these tend to be the same segments of society with least trust and understanding of central banks – for example, the young and less well-off. Mainstream media can help mediate, but they have an increasingly constrained reach among those same cohorts. Herein lies central banks’ challenge: a rising tide of central bank communications on the one hand, a retreating tide of public trust and understanding on the other. Conventional means of communicating are unlikely to be able to reach those parts of society for whom mistrust and misunderstanding are most acute.
I would like to underscore that large spaces still exist for improvement and narrowing the gap between the Albanian market and the advanced markets, and to some extent between the regional markets, .They should, therefore, constitute our common challenge for the future. In the framework of encouraging market towards these innovative services, the Bank of Albania as the regulator and catalyser has undertaken recently a set of measures. In more concrete terms, the establishment of legal and regulatory basis for the e-money institutions, followed by the licensing of the first institution of this type in March 2015, constitutes a 2  BIS central bankers’ speeches  premise to introduce the innovative services in the Albanian market of payments. The regulation of the activity of these institutions is based on the European practices not only in the framework of Albania’s adherence to the Single European Market, but also as one of the most optimum solutions in terms of security and efficiency at national level. The liberalisation of the payment systems market through the Law on Payment Systems will boost the development of the market. This legal framework provides the necessary space for private enterprises, and lays down the standards in terms of security and efficiency, and will support the development of a contemporary financial structure.

In its role as the regulator, the Bank of Albania’s vision is to contribute to the future, aiming to establish a highly adequate environment for boosting financial innovations and modernising the financial structure. Our regulatory regime aims at fostering innovation, being a positive catalyser and not a barrier. We aim at being avant-garde for a modern financial infrastructure. But experience shows that technology always is a step ahead and rapidly spreading. Technology has no limits and we, as regulators, should adopt rules and laws that these technologies be used by the consumers, individuals or businesses. At the same time, we should be aware of the risks that accompany these new technologies. Finding a perfect balance between the promotion of new ideas and the regulatory prudence constitutes one of the major challenges in this regard. BIS central bankers’ speeches  1  Bank of Albania has designed a payments regulatory framework, which paved the way for the development and modernisation. This framework provides all banks or other suppliers of financial services with the possibility to access the payment system in an equal and transparent way, thus contributing to the development of a competitive payment industry, without any asymmetry. Bank of Albania welcomes the contribution of innovation and technology in financial services as a support for achieving its strategic objectives for financial inclusion and reduction of cash use in the economy. These objectives serve crucially to both the transmission of the monetary policy and the safeguarding of financial stability.
For an in-depth description of the Scandinavian currency union, see Jonung, L., “Den skandinaviska myntunionen – vad säger den om EMU?” (The Scandinavian currency union – what does it say about the EMU?) Ekonomisk Debatt, no. 4, 2003. BIS central bankers’ speeches  1  The Bretton Woods regime, which came into force in 1951, saw the introduction of a stabilisation policy regime where monetary policy, in addition to focusing on a fixed exchange rate, was also marked by detailed regulation of both the volume and allocation of credits: Liquidity ratios, loan caps and ceilings for lending rates were all weapons in the Riksbank’s arsenal, at the same time as there was an aim to allocate loans towards the housing sector. 3 During the Bretton Woods era 1951–1973, the Swedish economy developed strongly at the same time as inflation was also relatively low (see Figure 1). But when the Bretton Woods regime collapsed in 1973, a period of more unstable economic development began. Sweden entered a number of fixed exchange rate regimes (see Figure 1). One condition for these arrangements to work was that economic policy would largely be conducted in a way that was in harmony with international developments. The oil price shocks of the 1970s were met with the so-called bridging policy, which involved using expansionary fiscal policy to try to bridge over economic downturns. However, the oil price shocks entailed what are usually known as negative supply shocks, which generate a combination of low growth and high inflation.

Christian Noyer: Fostering economic growth in Europe Introduction by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, for the Round Table 3: Bank of France Financial Stability Review “Financing the Economy: New Avenues for Growth”, at the Paris Europlace International Financial Forum, Paris, 20 April 2015. *  *  *  Ladies and gentlemen, The purpose of this third round table is to launch the latest issue of the Banque de France Financial Stability Review entitled “Financing the economy: new avenues for growth” and which basically discusses the need for more market–based financing. I am thrilled to exchange views over this particularly topical issue today in a country that shifted towards market-financing a long time ago and which has a lot to tell us. In the United States, 80% of debt financing takes place in capital markets whereas this proportion is only 20% in the Eurozone. This new edition of our FSR, just like previous ones, brings together contributions from prominent academics, practitioners and policy-makers from all over the world. I warmly thank all the contributors. I cannot mention all of them but Sheila Bair and Barbara Novick among others are with us today. These contributions are very diverse, or even divergent, in their analysis and proposals. This is precisely how we want it to be. It is clear that we don’t necessarily share the views expressed in the articles but we believe in exchanging ideas.
The academy has a special role in the ecosystem of ideas by providing an independent place where different perspectives are heard. But as well as being heard, these views are also subjected to scrutiny and challenge, and judged by rigorous standards. Universities have well established principles governing what is valued as an intellectual contribution. These principles are enshrined in things like the Haldane principle which states that the subjects of research should be chosen by academics and not by politicians. 31  Practices such as peer review, competitive processes for  funding research, requirements to publish data and transparency about conflicts of interests in publications are well established in the academic world. 32  Perhaps some of those standards and principles widely used in academia need to be adapted and applied more widely to the world of think tanks, websites and the media? For example, should think tanks have to report transparently about where their funding comes from? Should journalists and bloggers be exposed for reporting or recirculating falsehoods or rumors? Should digital platforms take greater responsibility for their content as part of their duty to inform and to protect their own brands? The debate on standards and good practice has just begun, and is very welcome. 33  29  Edelman Trust Barometer, 2016.

Putting these factors together, I would argue that the outlook for inflation is likely to remain low for the foreseeable future. The November FOMC forecasts for core inflation in 2012 were concentrated near 1.8 percent, and the forecasts for total inflation in 2013 and 2014 were in the range of 1.5 percent to 2.0 percent. My own assessment is that inflation will be at the lower end of these ranges. Fed performance Given the high unemployment rate and low job growth, I think it is clear that the Fed has fallen short in achieving its goal of maximum employment. As for the price stability component of our dual mandate, the majority of FOMC participants – including me – judge that our objective is for overall inflation to average 2 percent over the medium term. With my own view that inflation is likely to run below this rate over the next few years, I believe we will miss on our inflation objective as well. What Is the right course for policy? The traditional course of action when inflation is below target and real output is expected to be below potential is to run an accommodative monetary policy. I support such accommodation today. And I believe the degree of accommodation should be substantial. I believe that the disappointingly slow growth and continued high unemployment that we confront today reflects the fact that we are in what economists call a “liquidity trap.” Let me explain.
In this respect, there is still a need to better coordinate the roles of the different European authorities – SSM and ECB, SRM, Commission, and EBA – in order to 3/5  BIS central bankers' speeches  have a clearer “pilot in the plane” in crisis management. At a later stage, we should even consider establishing a single banking authority for our single Banking Union, acting to bolster the robustness of the European banking sector. The second challenge is to support cross-border bank consolidations in the euro area. You, the “foreign” bankers in the Netherlands, are probably especially sensitive to that. The head of the SSM too, Danièle Nouy, insisted on this point last week. We still lag far behind the American market in this respect: the market share in the United States of the top five banks is more than 40% whereas the market share in the euro area of the top five banks is less than 20%. Sound and safe cross-border consolidations would make banks better able to diversify their risks across the euro area, and channel savings more effectively towards investments across borders; this would foster the Financing Union I talked about. From a supervisory point of view, it involves supporting an approach on a consolidated basis by granting more waivers on liquidity and capital so as to allow more flexible capital allocation and limit ring-fencing. Swift execution of cross-border transactions is also essential: the implementation of a fast-track process by the SSM would address this issue.

This issue is topical also because it is the right time to step up the pace in Europe. Indeed, we have clearly succeeded in building a Monetary Union, but this is not sufficient. It is urgent to make concrete progress on Economic Union, on which we have not yet delivered. We are living in a time of unique historic opportunity: first, the economic context is now favourable to move forward, since euro area growth should be at least 2.2% in 2017; “when the sun is shining, it is time to fix the roof”. Second, after the recent elections in France, Germany and the Netherlands, we have a “democratic alignment”, in terms of the calendar and probably in substance, for the four years to come. Lastly, the Brexit vote and the election of Mr Trump in the United States have come as external stimuli, showing how important it is to breathe new life into European integration so that we Europeans take our destiny into our own hands, as Chancellor Merkel rightly said in Munich last spring. In my remarks today, I will explore three economic concentric circles: first the Economic Union, by presenting the accelerators that are needed to make concrete progress; second the Financing Union, by focusing on one of these accelerators, which might be of particular interest to your community of banks and financial institutions; and third the Banking Union, which is a key part of the Financing Union and which has to be completed.