samchain/econo-pairs-v1 huggingface dataset:
In the light of high  BIS Review 15/2003  1  expectations of future growth, households financed their consumption, and companies their investment, by increasing their indebtedness in the belief that these debts would be easy to repay due to high future earnings and income. Moreover, a large proportion of the companies' financing was obtained via the stock market. Balance sheets became inflated, as did the actual growth in the economy. When earnings prospects later proved to be lower than expected, there was a fall in both share prices and the value of assets. Debt levels appeared high, particularly in the corporate sector. In order to lower their debts, companies had to increase their income and reduce their costs, which resulted in weaker demand in the economy. Furthermore, the declining share prices prompted households and the financial institutions that invest households' money to seek out investment alternatives that appeared safer. The downward adjustment of the future outlook itself also resulted in uncertainty. This in turn was compounded by the uncertainty caused by international terrorism and the attempts to deal with this by putting pressure on Iraq. This contributed to an increase in the spreads between corporate and treasury bonds as well as to greater volatility in the markets. To counteract the effects of balance sheet and income statement adjustments on the real economy, monetary policy was eased in several countries around the world. At the same time, fiscal policy became more expansionary.

Fintechs, leading players in the digital revolution The digital revolution has ushered in a new wave of players, activities and services that first swept into the payments sector, and then spread gradually to all financial services. Some of you, the Fintechs, are living proof of this: more than half of all payment and electronic money institutions received their licence between 2018 and 2021, in other words since European regulations relaxed the conditions for market entry.i Fintechs are here to stay: to give just one example, according to an ACPR study published in July,ii online banks and other 100% digital payment players doubled their customer base between 2018 and 2020, and in 2020 alone captured 35% of new retail current accounts. The rise in interest rates should help them on the crucial path towards profitability – which  Page 2 of 5 is necessary for everybody, even though situations vary widely, depending on the business model. The digital revolution is leading to a major restructuring of the financial landscape, at the point where these new players and the existing ecosystem meet. According to an ACPR survey published in January,iii all banks and insurers questioned said they had set up partnerships with innovative players. Legacy banks and insurers are thus being forced to operate with a more open structure, exploring new distribution channels and offering new products. I welcome this wholeheartedly: no Maginot Lines and no trench warfare.
In the moving year ending in the second quarter of 2022, the current account accumulated a deficit of 8.5% of GDP, a figure in which the savings-spending imbalance of the government played a preponderant role, due to the income-support measures adopted in 2021. Households also showed a significant imbalance, given the liquidation of savings involved in the withdrawal of pension funds to finance higher levels of private consumption (figure 7). Although the impact of these phenomena has been receding, this will only begin to show up in the current account in the second half of this year. On the external front, the sharp rise in inflation and the response of central banks has led to tighter financial conditions, which has reduced global growth prospects and increased the risk of a global recession happening in 2023. Inflation numbers not seen in several decades 3  have been reached in several economies. Given inflation’s higher persistence and expectations, most central banks have maintained and/or accelerated their interest rate hikes, where worth singling out are the unexpected magnitude of the hikes and the more restrictive message from the Fed. The worsening of financial conditions has begun to impact on the activity and expectations of different agents, in addition to the uncertainty surrounding the unfolding of the Russia-Ukraine war, Europe's gas supply disruptions, and the weakness of the Chinese real-estate sector and overall economy (figure 8). Commodity prices have fallen across the board, driven mainly by lower expected demand and an appreciated dollar.

The SSM allows us to compare and adapt supervision across 19 countries, to identify best practices and to ensure that they are implemented consistently through effective quality assurance. There are now completely new possibilities for comparative and cross-sectoral analysis than were available at the national level. For our tasks, we can use information and insights from banks with very different business models. This enables us to identify risks and undesirable developments more clearly and at an earlier stage, and to take suitable countermeasures. We can also put work on banks’ internal models, which have a significant influence on a bank’s capital requirements, on a new footing. We will use the opportunity, given the improved level of data and insight, to implement strict rules for the approval and ongoing supervision of internal models. Despite this progress, there is still a lot to do in the further development of supervision. The effectiveness and efficiency of supervision is dependent on the legal framework it applies, although this is not the sole determinant. Soft European standards or diverging national rules impair the SSM’s ability to take action and its effectiveness. And this does not just concern  4  BIS central bankers’ speeches  national rules that affect the quality of banks’ equity. The SSM applies 19 different national legal frameworks and not only when, for example, we examine the professional suitability of managers in large, internationally active banks.
It is important to note that the international purchasing power of our reserves is unaffected by the strength of the Singapore dollar. •  Our foreign reserves serve two key purposes during a crisis: they finance our imports from rest of world, and they help to safeguard the value of our currency. •  On both fronts, it is the foreign currency value of reserves that matters. •  We report our profit and loss in Singapore dollar only because it is international convention for central banks to report in national currencies. Banking system remains sound, but concerns over rising household debt Now I will touch on financial stability, asset prices, and leverage. A key focus of MAS in the last two years is managing risks posed by extremely loose global monetary conditions. •  Short-term interest rates at or close to zero bound globally. •  This has in turn spurred strong demand for credit in Asia and banks flushed with liquidity are more than willing to lend. •  There is a substantial flow of credit to asset markets, especially in real estate. •  Accelerations in property prices and build-up in household leverage are seen throughout Asia. The combination of low interest rates, growing leverage, and surging property prices poses significant risks to financial stability – hence MAS’ concern. Singapore’s credit-to-GDP ratio has risen from 200% to 270% over last three years. MAS has been monitoring this very closely but credit growth, in and of itself, is not a cause for major concern.

The regulatory response to the crisis was oriented towards strengthening the banks’ soundness as well as designing treatment of systemically important banks which certainly require a special attention by the authorities. Systemic risk requires systemic and comprehensive solutions, including changes in the institutional setup. In the EU it was done by establishing crisis management mechanisms, strengthened governance aimed to monitor and prevent against any macroeconomic imbalances, as well as to move towards the banking union. The EU member states and institutions face many challenges when making the new institutional setup operational and when making the necessary adjustments in a reasonable time framework. In addition, all other countries face the challenge of converting the lessons from the crisis into policy actions. The changing role of central banks During the crisis, the role of the central banks moved from traditional way of monetary policy implementation towards combining the monetary and financial stability objectives, both being complementary components of macroeconomic stability. The set of instruments became more complex because of the unconventional measures, designed to bridge the period of extraordinary circumstances affecting the effectiveness of standard instruments, and aiming to strengthen the financial stability or economic recovery. Due to the variety of those unconventional measures across the countries, it is still difficult to assess their impact, although the experiences of countries could confirm the quite largely accepted consensus that the "monetary stimulus" really supported the economy.
Simon M Potter: Models only get you so far Remarks by Mr Simon M Potter, Executive Vice President of the Markets Group of the Federal Reserve Bank of New York, for the Federal Reserve Banks of Atlanta and New York's First Annual Joint Research Day on Quantitative Tools for Monitoring Macroeconomic and Financial Conditions, Federal Reserve Bank of New York, New York City, 22 February 2019. * * * Accompanying Figures of the speech. As prepared for delivery It is a pleasure to deliver the lunchtime address during the Atlanta and New York Fed's first annual research day on quantitative tools for monitoring macroeconomic and financial conditions.1 My remarks will focus on some insights from the book Superforecasting by Philip Tetlock and Dan Gardner, with respect to how we interpret, use, and evaluate the results from our quantitative tools.2 If you have read the book, subtitled "The Art and Science of Prediction," you will probably be aware that it is much less mathematical than the discussions we have been having today, but at the same time is more complex in how it articulates the role of forecasting in good decision-making. Before I continue, I should note that these remarks reflect my own personal views and not necessarily those of the New York Fed or the Federal Reserve System. The insights in Superforecasting grew out of a forecasting tournament sponsored by the Intelligence Advanced Research Projects Activity (IARPA).

Since then, we have made significant progress in moving the unemployment rate back to a more normal number. Yet, at 6.1 percent, it remains too high. And, as we have heard all morning, other measures of labor market activity remain suppressed. We have underperformed on the inflation front as well. Since 2008, year-over-year total inflation as measured by the Personal Consumption Expenditures Price Index (PCE) has averaged just 1.4 percent, well below its 2 percent target. Today, PCE inflation stands at 1–1/2 percent and is expected to move up only slowly toward the FOMC’s target. Nonetheless, we have come a long way in healing the injuries the financial crisis inflicted. Certainly monetary policy has been doing some heavy lifting. The Federal Reserve responded quickly to the unfolding recession by cutting the fed funds rate to near zero by December 2008. At the zero lower bound (ZLB), we then turned to unconventional measures, such as large-scale asset purchases and forward guidance about the federal funds rate to provide further accommodation. In the fall of 2012, with the unemployment rate hovering stubbornly at around 8 percent and core inflation steadily drifting lower than our 2 percent target, the Fed introduced open-ended asset purchases and, later, forward guidance that related federal funds rate actions to thresholds explicitly expressed in terms of our policy goals. Together, these efforts have helped the economy make impressive progress toward our employment mandate and appear to be moving us closer to our 2 percent inflation target as well.
The financial core countries at the beginning of the period (such as the US and UK) remain core at the end; the offshore financial centres (Hong Kong and Singapore) remain significant throughout; while emerging markets remain, in the main, on the financial periphery. To illustrate that, the share of intra-advanced country external asset stocks in the global total was 77% in 1980. By 2005, that fraction had actually risen slightly to around 80%. Over the same period, the contribution of advanced to emerging market external asset stocks in the total fell from 13% to 5%, at the same time as the GDP share of emerging markets rose from 13% to 16%. So despite rising significantly in absolute terms, financial globalisation has not obviously closed the gap between core and periphery. These aggregate patterns mask two important, more recent trends. The first is the well-documented accumulation of official foreign exchange reserves by emerging market countries, in particular since 2005. The stock of global official reserves stood at $ trillion by end-2010, having more than doubled since 2005. These flows are in some respects an oddity of international finance, with capital flowing “uphill” from emerging to advanced economies and with emerging market investors exhibiting a “foreign bias” for debt securities (Prasad, Rajan and Subramanian (2007)). 1  A similar database has been developed by Lane and Milesi-Ferretti (2007). Von Peter (2007) looks at the pattern of the international banking network.

But those strains have also been exacerbated by an unexpected breakdown in the technology for liquidity insurance provided by central banks. For well over a century, throughout industrialised world there has in effect been something akin to a Social Contract between the banking system and the authorities. The banking system is permitted to profit from undertaking leveraged maturity transformation in the course of intermediating the liquid savings of depositors into illiquid loans to households, firms and others. In doing so, commercial banks provide liquidity insurance, whether via demand deposits or committed lines of credit. They can do this because their deposit liabilities are  BIS Review 38/2008  3  money, which puts them at the heart of the payments system and is what makes them special; banks are at the heart of a monetary economy. In return, the authorities respond with a combination of prudential supervision, to contain the risks that banks run; deposit insurance, to protect savers; and liquidity insurance from the central bank. Smaller commercial banks can try to buy liquidity insurance from their larger brethren. Large banks cannot realistically do the same. But there is no cast iron guarantee that asset markets will remain liquid in all conditions. So since Bagehot’s day, central banks have stood ready to provide unlimited liquidity against good collateral at a rate that is higher than the normal market rate.
Stablecoins deserve special attention and scrutiny in this regard. 2- A second reason why we care about innovation is that it is a new lever for financial inclusion. Financial inclusion is definitely a major challenge and digitalisation should help identify new avenues to improve it. Inclusion is not only an essential topic for the financial sector and the economy, but more broadly for society as a whole. Without this access, there is no or only limited ways for people to take part in the formal economy, build up capital, buy goods and services, develop an entrepreneurial project, or save their earnings in a secure and easily manageable way. This is essential because it is about reducing inequalities and making sure that more fragile populations, households and small businesses, are not left out of economic development. Of course, private actors have understood that financial inclusion might benefit improvements and have a huge role to play in such a journey. There are many areas where private actors can help: improving access to financial services, for instance via mobile devices, gathering more and better data, which allows for more tailored and better-priced products, driving down operation costs, and making relationships with fragile clients more profitable. These expected benefits should obviously not hide new risks related to financial inclusion in a digitalised world: a risk of digital divide, leaving out those who are not at ease with digitalisation, or even the risk of security issues for personal data if not handled properly.

This is the reason why promoting innovation requires us to look thoroughly at new technologies from an efficiency perspective as well as from a safety one, in line with our financial stability mandate, in order to ensure that they improve welfare in a sustainable manner. This applies in particular to the new trend towards the tokenisation of financial assets (i.e. security tokens), the creation of new tradable assets associated with new rights, such as utility tokens, new means of payments such as stablecoins and, more generally, all the new use cases referred to as decentralised finance. A series of private and public initiatives 1/5  BIS central bankers' speeches  tokenising financial assets have emerged in the world over the last three years, with the aim of generating new business opportunities, enhancing liquidity and improving the functioning of market infrastructures. We are, for example, currently analysing whether tokenisation can help with one of the major remaining inefficiencies, i.e. cross-border payments, which are still costly, incur long delays before settlement, and give rise to uncertainties on AML-FT checks. This is one of the top G20 priorities, and a solution based on new technologies and innovation could help us facilitate their transfer for the common good. But no sound and sustainable development is possible in a hazardous environment. And from that perspective, it is also  important to ensure that new risks are not brought to the financial system, such as liquidity fragmentation, negative collateral effects on harmonisation efforts and disruptive effects on the ecosystem.
Incoming data show that about one third of the jobs lost during the pandemic have been recovered. Employment growth has been slower in services, which is relevant because they are more labor-intensive Page 3 of 19  (Figure 9). It is noteworthy that the increase in employment has been concentrated in non-salaried or informal occupations and has benefited women less. In fact, in the last year, the rate of female participation has fallen by nearly 9 percentage points, citing family responsibilities as the reason why (Figure 10). Given the social division of household work that predominates in Chile, it is likely that the recovery of female labor participation is conditional on the reopening of schools. On investment, there has been a slight improvement in the most recent period, as works that had been shelved because of the pandemic have been gradually resuming. However, performance continues to lag behind more than we had anticipated, in part because restrictions have had a greater effect on constructions on site. Thus, after falling 13% this year, gross fixed capital formation is projected to increase by 7.3% in 2021. This projection, however, is subject to higher than usual degrees of uncertainty. On the one hand, although the surveys show increases in the number of new projects, these concentrate on mining and energy, with no major transmission to other economic sectors. In turn, engineering services posted significant drops in the third quarter, showing little activity in the initial stages of investment projects.

The report starts with the following bold statement: “CEMFI is a remarkable adventure, both on the research front and in terms of educational achievements. A relatively recent introduction in the landscape of European higher education in economics, CEMFI has succeeded in establishing itself as one of the premier research centers and postgraduate schools (in Europe).” A number of factors have contributed to this success. First, I tend to think CEMFI has 1/2  BIS central bankers' speeches  benefitted from the long-term stability that the institutional support of the Banco de España has given it. Second, it has a very good working relationship with the university system, through the agreement with Universidad Internacional Menéndez Pelayo, which provides the official recognition of the Master’s and PhD degrees. At the same time, it is not burdened by some of the constraints, that make it difficult in Continental Europe to organise graduate studies comparable to those of the best US universities. Third, CEMFI has developed over the years norms of behaviour and a collective culture in respect of the admission of students, the hiring and promotion of faculty, and the responsibility and commitment to the institution that are key ingredients for achieving excellence in training and research. Finally, CEMFI has been fortunate to count on an outstanding leadership that has steered its development over the years. Besides the Master’s and PhD programs, and the important contribution of faculty to frontier research, CEMFI provides other valuable services.