samchain/econo-pairs-v1 huggingface dataset:
To give you the punch line, this research and work done by others in the field lead me to conclude that, although we have made great strides, a good deal of slack remains in the labor market. Labor force participation and employment As everyone in this room is aware, the labor force participation rate has fallen throughout the recession and recovery and is now at a 35-year low. 1 As Julie Hotchkiss described earlier this morning, it is well understood that much of the decline is due to trends that far predate the Great Recession. The movement of baby boomers into retirement age and the longrunning declines in teenager and prime-age male participation would have significantly reduced labor force participation rates independently of the economic downturn. Chicago Fed economists first did work on the prospects for a declining labor force participation trend back in 2001 – near the time the rate peaked at just over 67 percent. 2 Even after revisiting this topic numerous times and with multiple generations of research assistants running the programs, their views about the trends that are consistent with the composition of the population and a labor market near equilibrium have not changed much  1  The labor force participation rate is defined as the share of the population aged 16 and older who are either employed or unemployed. To be unemployed, a person has to not have a job but be actively looking for work in the prior four weeks and to be currently available to work.

Yet there is an effective limit to lowering rates since ultimately this conflicts with the ability of citizens to hold cash. Therefore some scholars have called for the imposition of electronic money and the abolition of cash. As I have discussed at length elsewhere, I see serious problems with such an approach.8 It risks gambling with central banks’ credibility at a time when credibility is paramount. And perhaps even more importantly, it denies the crucial social function of cash. Another option proposed by some observers is for central banks to raise their inflation objectives and therefore to lift equilibrium nominal rates. Leaving aside the debate about the costs of higher inflation, I am not sure that this idea is entirely convincing. The reason is that the mechanism through which it works is the signalling channel – people expect higher inflation, so inflation rises. But at a time when inflation is low everywhere, and when central banks are running very accommodative monetary policies just to achieve that, one can question whether such signals would really be credible. I see a risk, in fact, that changing our strategy to rely on fuzzy concepts and unobservables would only end up damaging our credibility. So what we need today, in my view, is to shift the debate away from its narrow focus on monetary policy. Rather than concocting more and more innovative solutions for central banks to get around the lower bound, we should focus instead on what other policy areas can contribute.
The government and the Central Bank introduced several short-term measures to address the pressure in the external sector, although the external sector developments once again highlighted the need for structural reforms to boost the tradable sector, particularly by enhancing merchandise and services exports in the medium to long run. The external sector was also affected by political instability during the latter part of 2018. Political developments, compounded by concerns regarding fiscal slippage in the lead up to the elections, were significant causal factors in the decisions of all three major rating agencies to downgrade Sri Lanka’s sovereign ratings. This, in turn, negatively affected investor confidence. 6  However, such downgrading only on the premise of heightened political uncertainty and anticipated rather than actual fiscal slippage cannot be justified as there was no solid evidence of a deterioration in macroeconomic policies or fundamentals. This was evidenced by the good progress made in completing the fifth review of the Extended Fund Facility (EFF) of the International Monetary Fund (IMF) until 26 October 2018. Sri Lanka continued to receive the assistance under the EFF and we received the fifth tranche of the programme in June 2018. We look forward to the successful completion of the IMF EFF programme in 2019. We are optimistic that the staff level agreement reached in principle with the IMF on the fifth review will proceed to the next level. Although the government continued its efforts towards fiscal consolidation, the performance on the fiscal front was rather mixed in 2018.

I would like to conclude by quoting Ben Bernanke, Professor of Economics and former Chairman of the U.S. Federal Reserve's Board of Governors: “The more guidance a central bank can provide the public about how policy is likely to evolve the greater the chance that market participants will make appropriate inferences” I believe that policies and plans unveiled in relation to the monetary and financial sector would be instrumental in ensuring continued stability in our economy. The effectiveness and the success of those policies cannot be realised without your support as stakeholders, and I am sure, as in the last year and in the past, you would continue to extend your maximum support going forward. Thank you and I wish you all a Happy and Prosperous New year 2019. 43
François Villeroy de Galhau: Technological innovations in payments and beyond Opening speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Bank of France and CNPS (French Payments Committee) conference "Technological innovations in payments and beyond", Paris, 6 January 2017. * * * Ladies and gentlemen, I am very pleased to welcome you all to Paris, for this conference on technological innovations in payments and, more generally, in the financial system. Representatives from a wide range of stakeholders, from market to regulatory spheres, are here today and I have no doubt that this variety of backgrounds will make the discussions fruitful. Before leaving the floor to the speakers and panellists, I would like to share with you a few thoughts on three challenges raised by digitalisation, from the perspective of a central banker. 1. Technological innovations are opening up new opportunities for payments, which can provide benefits to the whole economy Payments are often viewed as a very technical and incidental activity, and sometimes even just as a matter of “plumbing”. And yet they are crucial for our economy and for central banks. For the Banque de France, payments are of the essence in all our three missions – what we call the “3 Ss”: monetary strategy, financial stability and economic services. First, monetary strategy: what is at stake with payments is the future of money.

Several objectives have indeed to be met: maximizing the spillover effects of 2/3  BIS central bankers' speeches  innovations, protecting the consumer and addressing financial stability issues, and ensuring that innovation is beneficial to all parties, in particular in the form of new services and costs reduction. Such a balance can only be reached through adequate and proportionate rules, based on the risk profile of the service provided and not on the nature or the legal status of the provider. This principle has guided European authorities in the review of the payment services directive, which will be thoroughly discussed during this afternoon’s session. On top of these regulatory changes, technological innovations reinforce the need for fruitful dialogue and cooperation between all parties concerned. At the French level for instance, this is the purpose of the “Fintech Forum” launched in July last year by the French prudential supervision and resolution authority, the ACPR, in coordination with the French Financial Markets Authority. The continuous dialogue between regulators, supervisors and companies will ensure that innovations are properly understood, that the necessary changes in regulation are identified in a timely manner and that information flows appropriately between stakeholders. We have also committed the Banque de France and the ACPR to a gradualist and proportionate approach in the regulation and supervision of Fintechs. We think it is still more appropriate than a “sandbox”, which could create threshold effects. At the European level, cooperation between all stakeholders has been enhanced in the field of payments, so as to prevent market fragmentation.
The contributions to the FSR show that most commitments have been materialized in a regulatory framework that is currently being finalized: in particular, at the international level, in April 2012 the CPSS (Committee on Payment and Settlement Systems) and the IOSCO (International Organization of Securities Commissions) published the “Principles for Financial Market Infrastructures” that update, strengthen and broaden the former standards applicable in the different jurisdictions. BIS central bankers’ speeches  1  I will pay a particular tribute to the leadership of the US lawmakers in this field of regulation and the personal action and involvement of Senator Dodd, with the law named after him and his colleague Senator Frank. European Union legislation with EMIR (European Market Infrastructures Regulation) has also marked a decisive step to address the need for further security and transparency on OTC derivatives markets. But the contributions to the Financial Stability Review, also show that reforms must be pursued. Before we get to the discussion, let me briefly give you some personal thoughts on this. Efforts in the reforms should tend to establish a comprehensive, adequately calibrated and consistent regulatory framework. 1. There is a need for a comprehensive framework. This means that we have to extend and complete security and transparency. •  First, pay a close attention to the regulation of OTC derivatives that will remain noncleared.

For introducing this FSR, we are extremely fortunate to gather an exceptional panel: •  An outstanding US lawmaker: Senator Dodd, thank you, it’s a privilege to welcome you today;  •  A prominent regulator: Paul Tucker, Deputy Governor of the Bank of England, in charge of Financial Stability. Paul, you also chair the Basel Committee on Payment and Settlement Systems and co-chair the CPSS/IOSCO Steering Group on central counterparties: your views on the subject are particularly sharp;  •  Two top market practitioners: Michael Bodson, President and CEO of DTCC and Craig Overlander, CEO of Société Générale Americas. You will provide us with the “insider” vision. •  A distinguished academic, who specialized notably on counterparty risk and OTC derivatives: Manmohan Singh, from the IMFThank you all for being with us today. As you know, for our FSR issues, we always try to pick up topics which are both analytically complex and relevant to current policymaking. This is clearly the case with this issue: the crisis has led the G20 leaders to commit to changing the rules for over-the-counter derivatives markets, with a view to strengthening their security and transparency. First, strengthening security: all sufficiently standardized derivatives should be subject to mandatory clearing through a central counterparty in order to reduce counterparty risk and foster market liquidity. Second, on transparency, the aim is a registration of all transactions with trade repositories to provide authorities with a consolidated overview of derivatives trading.
23 These measures appear to have contributed both to the rapid subsidence of SARS-related fears and uncertainties among the general public and to containing the spread of the disease. Since April 2004, there have been no reported cases of SARS. The global information infrastructure of GOARN is widely acknowledged as having helped nip the SARS crisis in the bud. There are important lessons here for the financial system. At present, risk measurement in financial systems is atomistic. Risks are evaluated node by node. In a network, this approach gives little sense of risks to the nodes, much less to the overall system. It risks leaving policymakers navigating in dense fog when assessing the dynamics of the financial system following failure. The market repercussions of Lehman’s failure were in part the result of such restricted visibility. What more might be done to prevent a repeat? Part of the answer lies in improved data, part in improved analysis of that data, and part in improved communication of the results. On data, in some real-world physical networks, data is collected on virtually all nodes and links. For example, in modelling the US electricity grid, data are collected on all major power stations (nodes) and power lines (links). 24 As these total 14,000 and 20,000 respectively, this is a large-dimension network. Data from physical networks such as the power grid are relatively easy to collect. For many other large-dimension networks, sampling techniques are typically required. These typically take one of three forms: node sampling; link sampling; and “snowball” sampling.

Together, these resulted in a financial network: •  Which was at the same time both robust and fragile – a property exhibited by other complex adaptive networks, such as tropical rainforests;  •  Whose feedback effects under stress (hoarding of liabilities and fire-sales of assets) added to these fragilities – as has been found to be the case in the spread of certain diseases;  •  Whose dimensionality and hence complexity amplified materially Knightian uncertainties in the pricing of assets – causing seizures in certain financial markets;  •  Where financial innovation, in the form of structured products, increased further network dimensionality, complexity and uncertainty; and  •  Whose diversity was gradually eroded by institutions’ business and risk management strategies, making the whole system less resistant to disturbance – mirroring the fortunes of marine eco-systems whose diversity has been steadily eroded and whose susceptibility to collapse has thereby increased. This evolution in the topology of the network meant that sharp discontinuities in the financial system were an accident waiting to happen. The present crisis is the materialisation of that accident. Given that diagnosis, Part 2 of the paper provides some tentative policy prescriptions. The experience of other network disciplines suggests a rather different approach to managing the financial network than has been the case in the past, if future systemic dislocations are to be averted.
I would like to draw your attention to why the euro and Monetary Union have been successful from the outset, and to the conditions and prospects for building on this success. I. The euro and monetary union are based on a credible monetary policy and contribute to an appropriate economic and monetary equilibrium in Europe  I.1  A credible, stability-oriented monetary policy  a/ First of all, let me point out that, from a technical and operational point of view, the launch of the euro on financial markets has been an indisputable success. In this respect, one has to remember all the doubts voiced three years ago. The decentralised organisation of the Eurosystem has achieved the objectives it was assigned in three important respects: –  operational efficiency, as is demonstrated by the timely adjustment of banking liquidity and steering of short-term interest rates;  –  the security provided by the procedures and systems implemented by the Eurosystem, both for the execution of its operations and in the field of large-value payments. At the shortest end of the market, the integration of the interbank market took place in 1999, right from the start of Monetary Union, thanks to the setting up of the Target system for the transfer of large-value payments in real time throughout the euro area and other EU countries. The system now processes over 4 million payments on average each month, representing roughly 1,100 billion euros daily, of which 40% are cross-border payments.

Jean-Claude Trichet: The euro after two years: European competitiveness in a globalized global world Speech by Mr Jean-Claude Trichet, Governor of the Banque de France, to the Swedish National Committee of the International Chamber of Commerce, Stockholm, 6 April 2001. *  *  *  Ladies and gentlemen, it is a great pleasure and an honour for me to be invited to speak at this meeting of the Swedish National Committee of the International Chamber of Commerce, today in Stockholm. I am particularly happy to express my views on the already successful existence of the euro and Monetary Union, and the conditions and prospects for its further success. As you all know, within nine months, on 1st January 2002, the euro will become a reality across Europe as euro banknotes and coins are introduced. This will be the largest monetary change over the world has ever seen. However, it should be recalled that for all economic, monetary and institutional purposes, Monetary Union was created on 1st January 1999. Then, a decisive event in the history of Europe occurred. The euro was born and the irreversible nature of this change has convinced an increasing number of economic players that the success of the euro is necessary for Europe. It is a keystone of the European single market, which will ensure prosperity in Europe for the benefit of the rest of the world.
The next version, Basel II, came in 2004 and was more extensive and refined, but also contained a source of the instability that ensued, at least in Europe. The new framework allowed the denominator of the capital adequacy ratio to shrink if the banks themselves estimated loss probability as low. And they did. The reported capital ratio could rise without increasing the real capital base. The financial crisis of 2008 was the biggest global economic setback since the 1930s. The banking sector had contributed to fuelling the economic upturn in the years leading up to the crisis, but triggered and amplified the downturn. The financial crisis brought with it a fiscal crisis in many countries, following the exact pattern of earlier crises as described by Reinhart and Rogoff.3 Euro area GDP is still below the pre-crisis level, and in some countries far below that level. The course of history should then be that we are now facing a new paradigm shift in the field of economics. So far, the Basel II framework has been replaced by Basel III. That is something, but can hardly be called a paradigm shift. That does not, however, exclude the possibility that greater concepts are in the making. It is food for thought that paradigm shifts –  2  Getz Wold, Knut, “Norges Banks samarbeid med statsmaktene, bankene og utlandet” (Norges Bank’s cooperation with the government authorities, banks and abroad), Kristofer Lehmkuhl Lecture, 1972.

The recent global financial crisis serves as a reminder that status quo is never good enough. Financial development is therefore a journey that should never end, with milestones along the way. BIS central bankers’ speeches  1  As we move on to the next stage of our journey, it bodes well with a saying that “Yesterday was a walk in the park. But tomorrow is a step in the dark.” While I would not exactly call our past events a walk in the park, there are approaching challenges that depict dark clouds above our path. The contextual trends and challenges that I am going to highlight tonight derive from technological developments, the ageing society, urbanization, and regionalization. Firstly, with technological developments, traditional barriers to entry were brought down, allowing non-banks such as fintech companies and cross-border players to the market, and helped reduce operating costs. At the same time, consumers expect better and more timely services. Banking is something that customers want to do “anytime and anywhere”, and they want to do it cheaply as well. While technology may help us reach our destination faster, it also dictates that we be more adaptive and responsive to changes. Banks that get stuck in the past will lose out quickly. A second challenge that put banks’ adaptability to the test is the shifting demographic structure of Thai population.
Complexity has meant that avoidance and arbitrage can flourish behind a curtain of opacity. And self-regulation has meant that even as one wormhole is closed, others can be created in their place. Taken together, this evidence does not paint an especially encouraging picture. Many of the intended aims and purported advantages of a complex, risk-based regulatory approach may not have materialised in practice. Worse, some of the assets of the risk-based approach may even have become liabilities. 6  BIS central bankers’ speeches  Unintended consequences So much for the intended consequences of the shift to self-regulatory standards. What of the unintended consequences? Three are worth noting. (a) Cost and compliance First, regulatory complexity comes at a cost – the cost of compliance. These costs are borne, in the first instance, by the regulator and regulated firms. The costs of moving to Basel II, and the emergence of internal models, are difficult to calculate. But external estimates put it at tens of billions of dollars. For European banks, the costs of implementing Basel III are estimated at over 70,000 jobs per year (Harle et al (2010)). For US banks, the costs of Dodd-Frank are also estimated to be tens of thousands of jobs. The costs of Solvency II, the new capital standard for European insurance companies, have been put at tens of billions of euros – and it is unclear even whether this standard will be implemented.

Granularity may not improve risk-sensitivity; it could even worsen it by amplifying model risk. And given that uncertainty, simpler metrics may often provide a more robust signal of solvency. (c) Risk-shifting and robustness A third argument used to justify risk-based frameworks is that they help defuse incentives to engage in “risk-shifting” or other types of regulatory arbitrage (Kahane (1977), Kim and Santomero (1988)). Risk-shifting refers to incentives to shift portfolios towards higher-risk, higher-return assets. These incentives are likely to be strongest when risk is not well aligned with return – for example, under an equally-weighted leverage ratio. Indeed, this powerful logic justified moving to risk-based capital standards in the first place. Historically, there have certainly been episodes when risk-shifting appears to have been important. For example, the movement by banks into Latin American debt in the 1980s; the loading-up on zero risk-weighted OECD sovereign debt in the 1990s; and the extension of zero-weighted 364-day lines of credit in the 2000s. Yet in these cases, the problems seem to have been generic - mis-calibration of risk weights. A few studies have looked at the evidence on risk-shifting more systematically. For example, Furlong (1988) looked at the behaviour of around 100 US bank holding companies after the introduction of the leverage ratio in 1981. While banks’ average riskiness increased, there was no difference in behaviour between regulatory-constrained and unconstrained banks. This suggests risk-shifting was not too potent a factor. Sheldon (1996) reaches the same conclusion when considering the move by international banks to Basel I.