samchain/econo-pairs-v1 huggingface dataset:
In 1972, Irving Janis called this tendency for groups to act cohesively “groupthink”. 32 Janis focused on a number of US political decisions to motivate this concept, the most celebrated of which was President Kennedy’s decision to invade the Bay of Pigs in 1961. More recently, groupthink was used to explain the Challenger space shuttle disaster. 33 Groupthink is the collective manifestation of confirmation bias – the tendency to search and synthesize information in ways which confirm prior beliefs. This, rather than alcohol, is why drunks search for lost keys under the lamppost. 34 Confirmation bias is prevalent in uncertain environments, where popular narratives are used to filter uncertainties. 35 Psychologists such as Janis have identified a number of ways to mitigate groupthink or confirmation bias. Actively encouraging dissent in groups is one. Seeking alternative perspectives from outside experts is a second. And having the group chair state their preferences last is a third. 36 Evolution of Bank of England’s policy framework Let me now describe the evolution of the UK’s macro-economic policy framework over the past half-century or so. This is a journey whose starting point was a rules-based regime over which the Bank had little discretion and whose finishing line is a regime over which the Bank exercises significant discretion. For much of its 320-year history, the Bank of England’s role in UK economic policy was as operational agent. The role of policy principal was played by government.

There are several structural challenges facing the global economy. I want to elaborate on two key driving forces that will shape the medium-term outlook in both the advanced and emerging economies: deleveraging and monetary expansion. Deleveraging 8. Let me begin with deleveraging. From around 1990, debt levels began to rise rapidly in most advanced economies. Governments ran persistent fiscal deficits that were financed by borrowing. Total government debt in the OECD economies grew relentlessly, from 58% of GDP in 1990 to 98% in 2010. Households went on a consumption binge, financed by easy borrowings on the back of rising property prices and housing equity. Household debt in the developed economies also climbed, from 62% in 2000, to 76% in 2010. Deleveraging is the process by which this excessive debt is brought down to more sustainable levels. This will be long-drawn, only because the build-up of leverage took place over such a long period of time. Synchronised deleveraging in the US and EU 9. The deleveraging process that is unfolding across the advanced economies is taking place across three fronts:   Governments in the US and EU    Households in the US    Banks in the Eurozone  10. First, deleveraging by governments. The public finances of the US, UK, and the Eurozone, have substantially deteriorated, due to pre-crisis fiscal profligacy and post-crisis discretionary stimulus. These countries have now embarked on fiscal adjustment programmes to varying degrees, primarily through austerity measures.
As experience with gender and ethnicity illustrates, measurement and, ultimately, publication of diversity metrics can be important first steps towards creating a more socio-economically and cognitively diverse workforce. Metrics hold a mirror up to us all. Sometimes that casts a reflection none of us much like – a reflection that then prompts us to do better. And the measurement task is far from impossible. Simple metrics of socio-economic background already exist, however imperfect, and are being used in some organisations to help recruitment. Psychometric and neuroscientific tests are being developed at pace which help paint a picture – sometimes quite literally, through MRI scans – of an individual’s cognitive skills. In this respect, I applaud the Diversity Project’s intention to develop multiple metrics of diversity and to share this information among its membership. Third, recruitment. The filters applied in many of our standard recruitment procedures are, to my mind, a big barrier to building a diverse workforce. Filters such as academic prowess (grades at school and university), work experience (internships and voluntary activities) and social skills (team-building and networking) are standard recruitment filters and sound perfectly sensible. Yet these filters may, inadvertently but unhelpfully, disadvantage certain cohorts of society. Those whose parental incomes, and hence school choice, may have held back their academic scores and work experience opportunities. Those whose personality-type or brain circuitry means they are not as socially skilled or who dread interviews or team interactions. Let me take a specific example - autism.

The Eurosystem has been a very efficient firefighter during the crisis and is doing its best to contribute, within its mandate, to building a more dynamic growth path for the euro area, through its monetary policy. However, the success of monetary policy still needs to be complemented with a genuine economic union to achieve the European project. This is now the responsibility of the architects, including the next governments in France and Germany. 1 business.financialpost.com/fp-comment/robert-mundell-euro-is-here... 2 If we take the rule of thumb once used by John Williams, the President of the SF Fed. 6/6  BIS central bankers' speeches
5  Central Bank of Chile 29 June, 2017  Slide 8  Insurance companies coverage: international comparison Penetration of the insurance industry, 2015 (direct gross premiums as a percent of GDP) 40 35 30 25 20 15 Life  10  Non-life  5 LU IE KR US DK UK FR SZ JP IT SE PT DE BE AU NO AT FI ES NL SI IL CL CA NZ EE CZ BR PL AR SK CO IS HU LV MX GR PE TR  0 Source: OECD. [SLIDE 9] The development of finance in developed countries of course didn’t prevent them from getting into a big crisis a decade ago. But if you think that was big you should consider crises in developing countries, like the debt crisis of the early 1980s, the Tequila crisis of 1994 or the economic and political crisis in Argentina in 2001. [SLIDES 11 and 12] They devastated the entire financial system of those countries, evaporated or froze deposits, brought countries into deep recessions and massive unemployment and were only resolved after massive bailouts and debt write offs.

Revolutionary as they were for the public, these changes didn’t transform the banking business substantially. Banks kept taking short-term deposits to on-lend at longer maturities. They kept clearing funds and settling balances with one another and with the central bank to meet liquidity and reserve requirements. The main change for monetary policy in most countries was to switch from the control of monetary aggregates to the fixing of the policy rate for overnight liquidity operations. Technology is now creating opportunities for changes in financial services that are more farreaching, both for the public, financial institutions and central banks. Information technologies are doing this because finance is an information and record keeping business. By challenging the conventional centralized, multi-layered settlement and clearing system, distributed ledgers, supplemented by a number of other technological developments, create the possibility of an unbundling of financial services that question the very notion of a bank. These are exciting times not only for financial start-ups and the public, but also for leaders of developing countries, that see in these technological developments the opportunity to leapfrog financial development and remove one major roadblock to inclusive economic growth. To materialize this, however, policy makers—including central banks—need to make sure that they are not exposing people to greater risk, especially when they are using financial services for the first 18  Central Bank of Chile 29 June, 2017  time. Moreover, they may want enhanced access to financial services to facilitate formalization of economic activity rather than grow the shadow economy further.
Conference contents Let me now give a very brief overview of what we will hear in the next two days: The conference will start with the session "Transmission mechanism of shocks and policies" in which the paper by Adrien Auclert, Matt Rognlie, and Ludwig Straub analyzes the monetary and fiscal policy implications of shocks to energy prices in models with household heterogeneity and incomplete markets. Then, the paper by Emiliano Luttini, Ernesto Pastén, and Elisa Rubbo will shed some light on the heterogeneous effects of monetary policy across different households in Chile. 3/5  BIS - Central bankers' speeches  Then, the conference will move to the topic of "HANK Models", where the paper by Alisdair McKay and Christian Wolf will show us optimal policy rules in these types of models, and we will be able to contrast them to optimal rules in models without household heterogeneity and understand their main differences. The importance of the inclusion of heterogeneity for monetary policy analysis is not only about the understanding of the mechanisms that this implies, but also, and probably more important, is about whether these mechanisms are quantitatively relevant in changing the policy prescriptions. If so, it is fundamental for Central Banks to have the quantitative tools to solve and estimate these complex models. The paper by Marco Del Negro, William Chen, Shlok Goyal, Ethan Matlin, Donggyu Lee, Rebeca Sarfati, and Sikata Sengupta will show us one of the first steps toward achieving this goal.

The last paper of the session, by Dean Corbae and Pablo D´Erasmo, studies monetary policy design in a detailed model of a banking sector with heterogeneous banks. Finally, the keynote lecture by Novel Price laureate Thomas Sargent and the policy panel composed of James Bullard, Esther George, Claudio Borio, and Pablo García , will for sure shed some light on the importance of all these topics for current monetary policy and its expected evolution, including important questions that may remain unanswered. 5. Acknowledgements  4/5  BIS - Central bankers' speeches  I would like to especially thank Gianluca Violante for being the external organizer of this Conference, as well as Sofia Bauducco and Andrés Fernández for putting together such a wonderful program. I also thank all the speakers and contributors and look forward to the Conference volume that will be published thereafter. Let me finish by thanking María José Reyes, Constanza Martinelli, Carolina Besa, Daniela Gaete, Álvaro Castillo, and both the Public Affairs Department and the Economic Research Department of the CBC for all their invaluable help managing the logistics of organizing the first hybrid Annual Conference. Thank you and have a fruitful discussion over the next two days. 5/5  BIS - Central bankers' speeches
But are they? Well, in the crisis we learnt that decision-makers often were not. IT systems, data architecture and related processes were not up to the mark. Against that backdrop, we assessed how banks aggregate data and report risks. The yardstick was a set of global best practices that were defined by the Basel Committee on Banking Supervision. These are known as the BCBS 239 principles. The result of our review: many banks do not meet the global standards. As usual, we will therefore be very explicit on how these banks should improve. And we will closely monitor the progress made by the respective banks to ensure that they meet relevant standards. Ladies and gentlemen, good risk data is one thing. But processing such data is another matter. And that leads me to my next topic: internal models. Many large banks use these models to calculate their risk-weighted assets, which then serve as a basis for calculating capital requirements. Over the past years, internal models have diverged greatly, not least due to the fact that supervisors applied different standards when authorising them. In response, we have launched a project called TRIM. That stands for “targeted review of internal models”. It aims to ensure two things: first, that the playing field is level; second, that internal models produce reliable and comparable results. The calculation of risk-weighted assets should be driven by actual risks rather than by modelling choices. TRIM will help to raise trust in how banks calculate their risks.

Sabine Lautenschläger: Caution should be the life of banking Introductory statement by Ms Sabine Lautenschläger, Member of the Executive Board of the European Central Bank and Vice-Chair of the Supervisory Board of the Single Supervisory Mechanism, at the Association for Financial Markets in Europe (AFME) Board Meeting, Frankfurt am Main, 22 March 2017. * * * Ladies and gentlemen, Taking risks is at the heart of any healthy business, including banks. After all, it is the job of banks to take and allocate risks. But as Walter Bagehot said: “Adventure is the life of commerce, but caution is the life of banking”. I agree with him. Banks are far too important for the economy to indulge in adventures. They enable business by providing loans to companies or by helping them to tap the capital markets. And they also facilitate business by providing services in fields such as payments, mergers and acquisitions, and global trade. Banks help the economy to grow and prosper. But they can also badly hurt it; we saw that in the financial crisis. That’s why banks need to be cautious. In practical terms that requires, among other things, sound risk management. And this sets the scene for my short statement today. The topic is risk management. I will begin with some smaller, or rather bank-specific, risk management topics and end with a few big issues. Sound risk management depends on good data. It also depends on firm-wide risk aggregation and reporting. Those who take decisions must be in the picture.
In the fiscal consolidation process, the long-term perspective is fundamental. Over this horizon, it is well known that the biggest challenge to public finances stems from the pressure that population ageing will exert on specific expenditure items, particularly pensions spending. Following the Social Security reform approved in July 2011, a specific definition is  4  BIS central bankers’ speeches  now needed of the so-called “sustainability factor”, which should result in an automatic adjustment of the system’s parameters if imbalances are detected in the long run. The 2013 budget Before moving on to the Budget for 2013, I would like to specify the framework for debate of the draft legislation. Spain is a very decentralised country in terms of public spending, more so than certain countries with a federal political structure. Currently, almost half the consolidated public spending in Spain, i.e. net of transfers between general government sectors, is by regional and local government. Based on figures for 2011, central government was responsible for only 22% of total public spending; regional government for 34%; local government for 12%; and the Social Security system for 32%. That is to say, overall central government and social security spending in 2011 accounted for only 54% of the total, while that of regional and local government amounted to 46%. The picture given by the State and Social Security Budget is thus necessarily incomplete in respect of overall general government spending.

But given the nature of the problems at the source and in the development of this sovereign debt crisis, the role that any ECB decision may play in resolving it can hardly go beyond mitigating the risks of serious accidents and of providing more time so that the decisions that must be taken in areas other than the ECB may come to fruition. The Spanish economy Let me now turn to the key features of our current economic situation. The Spanish economy has been greatly affected by the financial tensions in the euro area, which emerged with the outbreak of the international financial crisis in 2007–2008, and the public finances problems of several euro area members, beginning with Greece. In our case, the crisis reached us and, in turn, we contributed to its unfolding as a result of the doubts over the sustainability of our public finances, our poor growth expectations and the scale of our foreign debt, which essentially built up during the real estate boom. Economic policy has striven to overcome various factors of vulnerability in a very adverse macroeconomic setting. The results of the reforms undertaken are still incipient, and we must persevere with this strategy, which is the only realistic way of resuming sustained growth. As recent events in Europe show, there are feedback loops from public finances and their problems to the banking system and its problems, and from the latter to activity and  2  BIS central bankers’ speeches  employment.
Lacker, J.M. (2010), “Real Regulatory Reform”, available at http://www.richmondfed.org/press_room/speeches/president_jeff_lacker/2010/lacker_speech _20100301.cfm Miles, D. (2010), “Leverage and Monetary Policy”, available at http://www.bankofengland.co.uk/publications/speeches/2010/speech451.pdf Modigliani, F. and Miller, M.H. (1958), “The cost of capital, corporate finance and the theory of investment”, American Economic Review 48, 261–97. Pigou, A.C. (1920) “The Economics of Welfare”, 4th edition, London: Macmillan, 1932. Tobin, J (1987), “The Case for Preserving Regulatory Distinctions”, in Restructuring the Financial System, Federal Reserve Bank of Kansas City, 1987, pp. 167–183. Tucker, P. (2010a), “Resolution of Large and Complex Financial Institutions: The Big Issues” available at http://www.bankofengland.co.uk/publications/speeches/2010/speech431.pdf Tucker, P. (2010b), “Shadow Banking, Financing Markets and Financial Stability” available at http://www.bankofengland.co.uk/publications/speeches/2010/speech420.pdf Weitzman, M. L. (1974), “Prices vs. Quantities”, Review of Economic Studies, vol. 41, p. 477–91. Wolf, M. (2010), “The challenge of halting the financial doomsday machine”, Financial Times, 20 April 2010. BIS Review 140/2010  11  12  BIS Review 140/2010  BIS Review 140/2010  13  14  BIS Review 140/2010

Concluding remarks Regulators play an important role in ensuring that effective regulations are in place to maintain the integrity of the payment system as well as to promote user confidence, particularly for new payment services. At the same time, it is also recognised that migration to electronic payment brings immense benefits to the country. Hence, a regulatory environment that would allow innovation to thrive has to be balanced against the objective of safeguarding public interest and confidence in the payments infrastructure. This balancing is required to ensure continued acceptance and usage of the various payment systems and instruments. The emergence of payments processors, such as Spare Change, Boku, Paymo, to facilitate payments for virtual goods and services over online social networks, such as Facebook, Bebo and MySpace, as well as person-to-person transfers among users, are developments which regulators are monitoring very closely. If their operations involve virtual currencies that enable payment for virtual goods and services, do they pose a risk to the safety and reliable functioning of the payment system? Should they be regulated? At what stage should they be regulated? Are regulatory concerns in these new payment innovations warranted if they exist only in the virtual space? How should they be regulated as they operate without geographical boundaries? In addition, should virtual currencies be allowed to be used to purchase real good and services or be exchanged for real world currency? I or we do not have answers to these questions. But these are the issues that regulators and market players are grappling with.
So I do not put them forward as the complete answer; rather I think we should be discussing whether there are some common understandings which could inform and shape crossborder cooperation. International complexity Of course reaching a common view will be difficult. But it seems to me a necessary step towards meeting the challenges of handling financial instability in the new world of open international capital markets and giant complex financial institutions. Many of the challenges have been discussed in the international community. In particular: the potential difficulty in amassing a complete picture of the health of firms and capital markets in crisis from different authorities; the potential complexity of large firm structures, where entities within a firm may be subject to different legal arrangements, preference rules and rules concerning ownership interests and creditor arrangements; and the possible technical difficulties in winding down an entity that is engaged in complex trading strategies. There are also of course issues around how liquidity and capital can be moved around a group: whether collateral, funding or capital can be moved quickly across borders to where it needs to be. Further, some of the commonly preferred methods for resolving a financial crisis, before moving to winding down methods, may be less easy to deploy than they were even a few years ago. I think many of us would share Eddie George’s view that we should look first for a private sector solution before committing public money to a rescue operation.

We are therefore doing all in our power to compliment the efforts of the Government and other well meaning partners to help foster economic and social development. To this end, our corporate social responsibility is focused on providing a stimulus that will help promote excellence in every aspect of our development, but more so in EDUCATION. By supporting the education sector, our aim is to achieve the following: •  contribute towards the development of the human resource base required to drive economic activities in the country. In this regard, our objective is to open doors leading to abounding opportunities for future generations in our own small way. We hope that by providing for those who have the ability to achieve academic excellence but cannot do so for lack of financial support, we can help restore the academic prowess for which Sierra Leone was known in the continent. We would therefore assure everyone, not only those in secondary schools, but also institutions and individuals who have the talent and the commitment to demonstrate outstanding performance, that you will get our attention and support, if you are deserving. Mr Chairman, Distinguished Guests, Ladies and Gentlemen, it is only recently that the Bank of Sierra Leone has taken up the responsibility of helping in the pursuit of excellence especially in education, as a vehicle of development in Sierra Leone.