samchain/econo-pairs-v1 huggingface dataset:
And, most striking of all, flows of information across agents and borders are occurring on an altogether different scale than at any time in the past. All of these trends increase the importance of taking seriously interactions between agents when modelling an economy’s dynamics. These benefits can perhaps best be illustrated by drawing out some of the key behavioural differences between ABM and mainstream macro-models. These differences should not be exaggerated: in practice, ABMs lie along a spectrum with micro-founded DSGE models at one end and statistical models at the other. But nor should they be overlooked. (a) Emergent Behaviour  In standard macro-models, system dynamics are fully defined by the distribution of shocks to the economy and the behavioural parameters determining how they ripple through the system. There is a classic Frisch/Slutsky impulse-propagation mechanism determining the economy’s fortunes. If the distribution of shocks and the parameters of the model are known and fixed, the dynamics of this system are well-defined and predictable. Complex systems, of which ABM are one example, do not in general have these properties. The Frisch/Slutsky decomposition is very unlikely to be stable, if it exists at all. The reason is that a complex system’s dynamics do not derive principally from disturbances arising outside the system but from interactions within the system. Dynamics are endogenously, not exogenously, driven. These feedback effects within the system may either amplify or dampen cycles.

Perhaps the most important program was the purchase of deteriorated portfolios by the Central Bank under a variety of schemes, including repurchase agreements, and in exchange of debt instruments, liquid resources, and a new liability called “Subordinated Obligation”. The impact of these programs on the assets side of the Central Bank balance sheet was huge, and so were the costs of the complete rescue plan. Altogether, it is estimated that only the direct fiscal cost of the Chilean Financial Crisis of 1982 reached 41% of GDP. The aftermath of the crisis The lessons learned from this crisis highlighted the fact that banking regulation and supervision needed to be substantially upgraded. In 1986, the General Banking Law introduced limitations on currency mismatch, constraints on related party lending, and restrictions for banks to receive  Page 2 of 5  Central Bank of Chile March 2019  goods instead of liquid resources; all of them, elements which were common practice before the 1982 crisis. Paradoxically, what could be considered harsher regulation did not hamper financial deepening. Instead, it fostered solvency and credibility of the banking system and allowed its healthy development in the ensuing decades. Regulation and Financial Development Credit has a valuable role in the economy. Financial intermediaries channel resources from agents that save, to agents that need to borrow to smooth consumption or finance profitable projects.
As a broad guide to the scale of this inflation of the risk margin and of TMTPs, the current aggregate level of risk margin for UK life firms of around 50% of SCR (with firms in a range around this average) can be compared to the size of the risk margin at the time of the EIOPA impact study used to calibrate its design (when market interest rates were higher) of around 35% of SCR. The purpose of Solvency II was not to raise capital levels on the stock of existing business across the industry. Therefore, the PRA has complete confidence in TMTPs as a legitimate means of achieving a glide path to the new Solvency II requirements and we give firms the full benefit of TMTPs when considering their capital positions. We encourage firms to provide full disclosure of the risk margin and drivers of TMTPs in their first Solvency and Financial Condition Reports in May. To conclude, Solvency II was too long in the making and expensive to implement for both regulators and industry. But that is the past. Broadly, it is now working well, with only a few notable exceptions such as the excessive sensitivity of the risk margin to interest rates. Some of the most important parts of Solvency II were drawn from the UK ICAS regime that was born out of UK experience, including the near collapse of Equitable Life.

Even more important is how firms determine their capital resources. Reviewing the adequacy of reserving is a core element of our supervisory approach, particularly for general insurers. In the case of life insurers with significant annuity books, a key determinant of reserves is their use of the Matching Adjustment. Solvency II sets clear criteria for assets that can qualify for the Matching Adjustment. They must match the maturity of the underlying liabilities – so, for example, long-dated annuity liabilities require similarly long maturity assets – and they must have fixed cashflows. 8  These requirements are set by the Directive; they are not a feature of the PRA’s implementation. Indeed we have sought to interpret them in a purposive and proportionate way so that firms can back annuities with a wide range of assets, including illiquid assets, and still benefit from the Matching Adjustment. For example, we have allowed firms to restructure portfolios of illiquid assets, such as commercial real estate mortgages, infrastructure finance or equity release mortgages, using internal securitisations in order to create senior tranches that meet the Solvency II requirements. We have also allowed pairing and grouping of assets to meet the eligibility criteria - for example, combining a floating rate note with an interest swap, or a foreign currency-denominated bond with a cross currency swap. Restructuring of this kind has added complexity, operational risk and some costs for firms.
The response to the new note has been predominantly positive; feedback indicates that the public find the theme and the design appealing, and the security features easy to remember. The SNB’s extensive information campaign surrounding the 50franc note in Switzerland and Liechtenstein played a role here. Among experts – both at home and abroad – the note is seen as high-quality and cutting-edge in terms of its security features. First impressions suggest that, overall, the new 50-franc note is more stable and, as hoped, more resistant to tearing than the eighth-series notes. However, given that so little time has elapsed, we do not yet have any hard data or long-term forecasts of the quality and fitness for circulation of the new notes. We do have some initial data on the  Page 1/3  Berne, 10 May 2017 Fritz Zurbrügg  News conference on new 20-franc note  security front. So far, only a handful of crude counterfeits have come to our attention; these were spotted immediately and withdrawn from circulation. We are happy to say that our logistics strategy for the issue worked well. The new 50-franc notes were available in the right place at the right time, right across the country. The decision to include the manufacturers of ATMs and other types of banknote-processing equipment early in the process paid off – the changeover was virtually seamless. The process of returning old 50-franc notes has so far also gone as expected. So far, over two-thirds of the old (eighthseries) 50-franc notes have been exchanged.

The oil importing countries in our constituency continue to face large fiscal and external imbalances and soaring public debt, although an upside surprise in remittance inflows has provided some relief. The recovery of the LICs, most already beset by fragilities, is further constrained by the lack of fiscal space, elevated debt levels, declining aid and limited access to financing. While welcoming the ongoing international efforts to assist the LICs, including through debt service relief from the IMF and the World Bank and the G20-led DSSI, we strongly believe that a broader international participation, including by private creditors, is critical given the LIC’s debt vulnerabilities and the uncertainties that threaten their medium-term economic viability. The fragile states and countries afflicted by conflict and those hosting refugees in the MENAP+ region deserve close attention and timely and commensurate response by the international community. 1/2  BIS central bankers' speeches  The IMF’s nimble and proportional response to the crisis, including through an expansion of its toolkit and higher access limits, provided a critical lifeline for members facing large financing needs. The crisis is still evolving and there is still need for emergency support. The requests of some 40 members are still pending, including that of a major country in our constituency. In this regard, we would like to reiterate our call on the Fund to ensure that its financial support, policy advice, and capacity development are available to all members in an evenhanded manner without exception.
Therefore, this cycle cannot be expected to disappear or to be completely stabilized by monetary policy, which is in turn not advisable. Macroeconomic policies should only aspire to smooth out any fluctuations. Monetary policy, committed to price stability, can stabilize both inflation and the business cycle. Halfway into last year, it was believed that a more restrictive monetary policy would contribute to reduce inflationary pressures in an international scenario showing less growth, but not a crisis. This was based upon the belief that, although the shock which had given rise to the increase in inflation was external, favoring a deceleration of internal demand would mitigate its propagation to other prices, which had already happened with the inflation records of part of the second and third quarter of 2008. However, a massive international crisis came on top of the natural evolution of the domestic cycle under a more restrictive monetary policy. This crisis, as we can see it today, is bearing a greater impact on output than we expected and than the one needed to bring inflation to target; and this has resulted in a change of sign of monetary policy aimed at mitigating the negative external impulse. 4  BIS Review 41/2009  (ii)  Real and financial impact of the international crisis  The global economic crisis has two kinds of domestic impacts. The first one is financial. Risk premiums rise and capital flows fall.

In all cases, and to ensure adequate liquidity, instruments designed last year will continue to be in force throughout this year and, if necessary, they will be extended in order to ensure the proper operation of the financial system, so that it may be able to play its role of channeling credit to the non-financial private sector. 6  BIS Review 41/2009  It is important to highlight that, for mechanisms of monetary policy transmission to work correctly, the money market must be aligned with the MPR. There is no gain in reducing the interest rate if such reduction is not transmitted to the rest of the market. Therefore, when the crisis worsened, the first task was to ease liquidity pressures. The unfolding of the crisis and its consequent effects on inflation forecasts brought the possibility for a monetary easing. Said monetary easing has had a significant extent when compared to our past experiences and to what has been done by other central banks. During the first quarter, the MPR was reduced by 600 base points – from 8.25% to 2.25%. It is important to note once again that our economy has not suffered any of the problems undergone by other economies in their financial systems. Therefore, monetary easing in Chile does not seek to re-establish the operation of credit, as it may happen elsewhere; rather, it has been totally consistent with the inflationary outlook.
Accordingly, we envisage inflation to decline until September, and increase slightly in September due to base effects. Then, following a fluctuating course, we project that it will reach 6.9 percent in the year-end. In addition to these forecasts, we discuss alternative scenarios on the inflation outlook and the global economy in the Risks section of the Inflation Report. You can examine the Report for details. While concluding my remarks, I would like to thank all my colleagues who contributed to the Report, primarily those at the Research and Monetary Policy Department as well as the members of the Monetary Policy Committee, and thank every one of you for your participation. BIS central bankers’ speeches  5  6  BIS central bankers’ speeches  BIS central bankers’ speeches  7  8  BIS central bankers’ speeches  BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11

In September 2007, Bank Negara Malaysia initiated the Financial Sector Talent Enrichment Programme (FSTEP) to train and prepare 1000 highly qualified graduates for immediate placements in banking and insurance institutions. This effort is undertaken in collaboration with the industry and training institutes and is aimed at boosting the supply of well-trained and competent personnel for the financial services industry. In the area of Islamic finance the continued international expansion has increased the demand for talent and expertise in the industry. The establishment of the International Centre for Education in Islamic Finance (INCEIF) in Malaysia in 2006 represents a structured investment in the development of human capital to support this global development of the  2  BIS Review 25/2008  Islamic financial services industry. The programmes are for practitioners and graduate students. In addition, it is envisioned that INCEIF will act both as a professional certification body as well as an education centre for post-graduate programmes in Islamic finance. With the firm commitment to build human capital, the challenge is to formulate the appropriate strategies and mobilise the resources necessary to produce results that will enhance the intellectual capital of the industry. This will require the combined efforts of internal strategies within banking institutions, that involves a holistic approach that coordinates the strategies for human resource management and development reinforced by strategies for organisational development. This will also involve putting in place the appropriate processes and structures. A total solution will be required. These efforts will also need to be supported by education providers.
Necessary austerity measures can amplify an economic downturn, with falling tax revenues and rising spending on benefits and measures, trapping both public finances and economic activity in a downward spiral. This is what we have seen in Europe. Structural reforms are often crucial to creating a basis for renewed growth. One case in point is the Nordic countries in the 1990s. Charts 4a and 4b: Public debt to GDP ratio and GDP A less successful case is Japan. The Japanese authorities hesitated for a long time before reforms were implemented, including financial sector reform. Government debt increased sharply after several unsuccessful attempts to kickstart the economy through deficit spending. The pace of growth in the Japanese economy has never regained its pre-1990 levels. Today, economic growth is low in virtually the entire OECD area. Many countries must implement fiscal consolidation measures, while there is also a need to stimulate the economy and create jobs. That is a difficult balancing act. Global growth is being supported by the expansion in emerging economies. This is generating positive growth impulses to advanced economies. Chart 5: Euro area crisis – less fear The European crisis was acute about a year ago, at the beginning of 2012. Spanish and Italian government bond yields had risen markedly. The reason was not only the uncertainty related to sovereign debt problems in those countries. Markets also reflected fears that the construction – European monetary union – might crumble. The question of the fate of the euro was on the table.

The current unusual circumstances are one of the main drivers for the prolonged boom in the local property sector. The risk of over-heating in the property sector to financial stability in Hong Kong is no smaller than that seen in 1997. We should note in particular that while mortgage rates were generally over 10% in 1997, after the burst of the property bubble, US interest rates have fallen, and mortgage rates in Hong Kong have spiralled down reaching about 2% in 2004. The situation we faced now is just the opposite. Mortgage rates are around 2%. And, even if the low interest rate environment were to remain until 2015 as anticipated by the US Federal Reserve, the US interest rates are bound to head back to more normal levels. Will mortgage borrowers in Hong Kong then be able to withstand the impact of interest rate hikes and property price falls? For example, under a 30-year mortgage, even though the borrower will be able to enjoy a low interest rate in the first two years, the repayment burden could become much heavier as a result of interest rate hikes in the years that follow. This could have serious consequences for the well-being of those families in the coming years. Therefore, I hope that the public will be cautious and should not underestimate the risks that rising interest rate could have on repayment ability, asset prices and the overall economy in Hong Kong. 2  BIS central bankers’ speeches
The May results of the SCE showed an increase of 29 basis points from April in the median of the individual means (see Slide 6) and this can also be examined by holding the sample constant using the panel structure. In this case we find an increase of 27 basis points from April and the distribution shifting to the right, although the statistical significance of the change is more marginal than the decline over the longer period.38 As can be seen in Slide 9 there is a wide dispersion in views about future inflation held by consumers.39 This sort of analysis highlights the value of the panel nature of the SCE in yielding more robust measures of expectations. Let me turn next to the surveys of market professionals conducted by the New York Fed. Probabilistic questions on the surveys of primary dealers and market participants Ahead of each meeting of the FOMC, the Trading Desk of the New York Fed asks a group of financial market participants, including both primary dealers and buy-side investors, to provide their views on a range of economic and financial indicators. The Desk has surveyed the primary dealers for over a decade, and since 2011 it has made the questions and results of the Survey of Primary Dealers (SPD) publicly available.40 Beginning in 2014, the Desk also launched the Survey of Market Participants (SMP), which solicits views from active investment decision makers, such as mutual, pension, and hedge fund managers as well as corporate treasurers.

In both the SPD and the SMP, many of the questions are tailored toward matters that are of policy relevance at the time of the survey. Further, we use the fact that the respondents are market professionals with a good understanding of finance and economics to ask direct and at times technically complex questions. In this regard, the surveys contrast with the SCE, which uses language that is accessible to respondents with no economic or financial training.41  37  See Armantier et al. (2016). 38  Using a standard test of the difference between two distributions, the change from September to January is significant at the 1 percent level. The change from April to May has a “p-value” of 16 percent. 39  This dispersion implies that random samples of small size (less than one thousand) will exhibit variability even if the underlying population distribution of inflation expectations remains constant. 40  Correia-Golay, Friedman, and McMorrow (2013) provide an introduction to the SPD. 41  Many surveys of market participants do not use their technical sophistication to the extent necessary to produce robust measurement of expectations. For example, currently many surveys ask market participants to identify the FOMC meeting at which the next increase in the fed funds target range will most likely occur. This question implicitly assumes that the next rate change will be an increase; moreover, eliciting expectations about the most likely meeting when the number of future meetings is large is particularly uninformative.
[12] As we move forward, we will reassess whether a normalisation strategy is sufficient to bring us back to 2% inflation over the medium term. Ultimately, the terminal rate at which our hiking cycle ends must be compatible with inflation returning durably to our target – and that rate will depend on how the economic environment evolves around us. One key factor will be how the persistence of the shocks we are facing affects inflation expectations and potential output. If there were evidence that high inflation risked de-anchoring inflation expectations, then the policy rate that is compatible with our target would lie in restrictive territory. Similarly, were we to conclude that ongoing supply shocks had durably lowered economic potential, we would have to ensure that demand remains aligned with supply. Another key factor will be how the growth outlook affects inflation. Negative supply shocks will result in a growth slowdown, which will likely have an impact on the prevailing inflation rate. In past euro area recessions going back to the 1970s, headline inflation has fallen by about 1.1 percentage points a year later, while core inflation has fallen by about half that amount. [13] But this is not a hard-and-fast rule: in some recessionary episodes, such as those triggered by a worsening of supply conditions, inflation has stayed the same or even risen.

Taking into account the overall subdued outlook for inflation, the weakening in the euro area’s growth momentum over the recent past and the continued subdued monetary and credit dynamics, our asset purchases should ease the monetary policy stance more broadly. They should also strengthen our forward guidance on the key ECB interest rates and reinforce the fact that there are significant and increasing differences in the monetary policy cycle between major advanced economies. Together with the monetary accommodation already in place, the determined implementation of the new measures will underpin the firm anchoring of medium to long-term inflation expectations, in line with our aim of maintaining inflation rates below, but close to, 2%. As all our measures work their way through to the economy they will contribute to a return of inflation rates to levels closer to our aim. Should it become necessary to further address risks of too prolonged a period of low inflation, the Governing Council is unanimous in its commitment to using additional unconventional instruments within its mandate. A separate press release will provide further information on the modalities of our new purchase programmes for ABSs and covered bonds. It will be released at 3.30 p.m. Let me now explain our assessment in greater detail, starting with the economic analysis. Following four quarters of moderate expansion, euro area real GDP remained unchanged between the first and second quarter of this year.