samchain/econo-pairs-v1 huggingface dataset:
It assumes that the rest of the world has confidence in the Swedish housing market and the Swedish financial system. Historically, foreign investors have often been the most “fickle” in times of financial turbulence. If their confidence in the banks is damaged, for instance, through a heavy fall in housing prices, investors will either reduce their lending or charge more for loans. This could happen so quickly and in such large volumes that the banks might experience problems. The fact that we have not experienced a fall in housing prices is certainly one of the reasons why the effects of the crisis were milder for us, since it helped to sustain demand in the economy. But it is also a cause for concern, particularly as household debt has been increasing more than household income for a fairly long time. Ultimately, this is not sustainable. The danger is that this trend will continue so long that when it finally breaks it will be under dramatic forms and cause problems similar to those we have seen in other countries. We all want to avoid this happening. 2  BIS central bankers’ speeches  The problems have varied from one country to another. In many countries the banks have suffered such severe problems that the state has had to intervene. At the same time as fiscal policy has been used to support the banking sector, it has also needed to uphold demand in the economy.

But we do this for partly different reasons, as we have different tasks. The risks now building up in the mortgage market concern individual banks. But risks are also building up that threaten financial stability – what are known as systemic risks. Ultimately, the macro economy may also be affected. This means that the division of responsibility is unclear. The problem with the division of responsibility can be illustrated as follows. If we assume that the trend in household indebtedness and housing prices does not slow down, despite all efforts, and continues at an alarming pace. Which authority should be the first to take action and on what grounds? Is it a question of consumer protection or of inflation and resource utilisation? Then the answer is simple. But what if it is a question of risks that threaten the financial system? Or perhaps everything at once? We in Sweden are not alone in struggling with these issues. Around the world there is intensive debate on the management of systemic risk – what is usually known as macroprudential supervision. As I have already mentioned, we in the EU have agreed to establish a European Systemic Risk Board to monitor the build-up of systemic risk in the member states and to recommend measures to deal with it. It is of course necessary that we in Sweden have a framework ready to respond to any such recommendations, in the form of allocation of responsibility and tools.
They were “self-similar”. Selfsimilarity appears to be present throughout the physical world, from coastlines to cauliflowers, from snowflakes to lightning bolts, from mountain ranges to river deltas. 16 One of Mandelbrot’s earliest applications of fractal geometry was to stock prices. In a 1967 paper, he argued that stock prices could best be understood by distinguishing between two measuring rods: clock time and volume time. 17 While empirical studies typically used the first measuring rod (days, hours, seconds, milli-seconds), stock prices were better understood by using the second. Mandelbrot’s explanation was relatively simple. If trading cannot occur within a given time window, price movements can only reflect random pieces of news – economic, financial, political. So, consistent with efficient market theory, price changes would be drawn from a normal distribution with a fat middle and thin tails when measured in clock time. They were a random walk. But as soon as trading is possible within a period, this game changes. Strategic, interactive behaviour among participants enters the equation. Volumes come and go. Traders enter and exit. Algorithms die or adapt. Behaviour within that time interval may then no longer be random noise. Rather trading volumes will exhibit persistence and fat tails. This will then be  15  Blackledge (2008). 16  Peters (1994). 17  Mandelbrot and Taylor (1967). See also Clark (1973). BIS central bankers’ speeches  7  mirrored in prices.

012234  56789 98 7  !"# # 3 ;796<967  3 Y6%&'#%: )' >%: #&'#6 6% --'&&:  922 2 68 2 2 68 2 8  2 2 27 2 2 8    5 85  217252 2 3285  9 3297  27 2 8  5385 953859  2 2 2 999 232852 22 2178 9 2 2  8252 9  9523 5 91 13 1645 23   1 1 416 5 91 "46 447 6 9 55 63   5 54 5 !
Behavioral risk refers to behaviors within an organization that could potentially lead to negative business outcomes.3 In such organizations, behavioral risk is not effectively mitigated or even considered, and the stated values of the firm are not reflected in the actions and norms of the organization’s members. Group think is prevalent and employees do not speak freely, or are ignored, when they have concerns about the way their group is doing business. The letter of the law may be followed but not the spirit, with illegal activities only coming to light when discovered by authorities. “Conduct” is viewed as something that is only the responsibility of the compliance department through a set of rules and controls. The outcomes stemming from high behavioral 1/5  BIS central bankers' speeches  risk reduce cultural capital, damage the firm and the trustworthiness of the industry over time. In an organization with a high level of cultural capital, on the other hand, behavioral risk is low. Employees refrain from taking excessive risks and they are unafraid of – and rewarded for – raising issues up the management chain. When they speak up, they believe the organization will take them seriously with meaningful responses. The organization recognizes and rewards employees who understand and internalize the expectations of laws and regulations, and do not view compliance as a checklist. In organizations with a high level of cultural capital, an important factor in advancing to senior leadership is role-modeling behavior consistent with a firm’s values, assumptions and behavioral norms.

While it may still be too early to understand the long-term impact of a fully-remote staffing model on trust, it is interesting to note that over the last few years, a number of large firms that had favored a highly remote workforce, including Yahoo and IBM, had begun to reverse course, asking employees to return to the office to increase personal interaction and collaboration.9 We can perhaps learn by comparing firms that intentionally transitioned to a virtual work environment with limited personal interactions, to those that relied heavily on personal interactions and were forced into a fully remote posture. Indeed, we will explore how proximity impacts trust as part of a panel on trust and decision-making that I’m moderating on December 2 for the New York Fed. 3/5  BIS central bankers' speeches  Severed networks. The second dynamic is severed personal networks. Beyond formal networks and hierarchy within an organization, the value of informal networks should not be underestimated. As I mentioned, the financial sector has been quite effective in maintaining core services and operations during the pandemic so far. One hypothesis is that this success reflects, in part, the development of personal relationships, teams, and networks over years, and possibly decades. As people came together during the initial months on the pandemic, it is likely that they relied on their existing networks and leveraged the strength of existing relationships.
Some economists think that a shift from a rigid exchange rate regime to a free float would result in lower interest rates to ease the interest rate pain. However, recent experience in Asia has shown that the market demands even higher interest rates than before under a floating rate regime due to the need for hedging, since there is a perception of higher credit risks and exchange rate risks. 17. I interpret the currency turmoil in the region not as exchange rate volatility, but as a painful but necessary adjustment in the real economy (manifested through the financial system and markets) to the new world of greater competition. In essence, we must all work harder to get greater productivity gains to meet the new challenge. No one can afford to be complacent in this global world. To the extent that the free market is demanding higher interest rates because there is a reverse flow of capital from Asia to the OECD markets, we will all have to bear the pain and adjust accordingly. 18. And not all interest rate pain is bad. Higher interest rates would increase savings in Hong Kong and bring inflation down further, thus increasing our competitiveness. To the extent that higher interest rates would reduce house prices, they would also make housing more affordable. 19. The currency board system with a fixed exchange rate is appropriate for a small and highly externally-oriented economy like Hong Kong. It further imposes a strict discipline on public finances. Hong Kong runs budget surpluses, not deficits.

Much attention will also be required, in the fullness of time, to make sure that the financial systems through which financial intermediation takes place are robust so that the benefits of financial liberalization could be maximized and the associated risks could be minimized and prudently managed. 3. As a financial services centre which operates with a highly liberal regime, Hong Kong has important roles to play in all this. There is not enough time to go into details here on this occasion, so I shall just identify three general areas for your consideration. 4. The first area concerns financial intermediation within individual economies, in other words, the channelling of domestic savings into domestic investments. Here Hong Kong, at this stage at least, largely only plays an advisory role. The less liberalized financial systems in this region are very much dominated by domestic financial institutions, particularly in the banking market. Further, domestic politics and a desire to protect domestic financial institutions from undue competition are such that liberalization to admit foreign financial institutions to take part in domestic financial intermediation would only proceed at a pace dictated by these considerations. For example, it will, I think, take some time and patience for Hong Kong-based banks to gain a physical presence in the mainland of China, be allowed access to renminbi banking business and command a significant share of that business. 5.
The growth of our financial sector in part has been driven by our ability to attract  1  Source: http://www.bloomberg.com/news/articles/2016-01-07/global-markets-at-the-beginning-of-a-crisisgeorge-soros-says  BIS central bankers’ speeches  1  international investors, traders and financial intermediaries to participate in our financial markets, and for foreign corporates to tap our markets for their funding and hedging needs. Clearly, Singapore does not and cannot operate in isolation from rest of the world; indeed, we have become an important node in the global financial system. 6. Singapore’s attraction and standing as an international financial centre must be underpinned by investor confidence in a stable business environment, with clear rule of law and a sound regulatory framework. Only when there is confidence and stability in the system would corporates, financial institutions and individuals tap our financial centre to invest, to raise capital and to manage risks. 7. As our markets develop, we must continue to safeguard this reputation of integrity, trust and resilience. Because many global financial institutions operate here, we have to also measure ourselves to international standards and expectations by incorporating international rules and best practices where appropriate. In the securities markets, the MAS has an active role in international standard setting bodies such as International Organisation of Securities Commissions (IOSCO); as an example, we co-chair a CPMI-IOSCO Working Group on strengthening the cyber resilience of financial market infrastructures, including dealing with cyber-threats. 8. As exchanges in Singapore are key financial market infrastructure with a global participation, they are regulated to meet international standards.

In other words, a risk began to gradually build up that the role of the inflation target as benchmark for price-setting and wage formation would begin to weaken – that the nominal anchor that has been an important part of the favourable developments in Sweden since the 1990s crisis would begin to slip. Some say that the Riksbank should not attach any weight to this, but instead hold the repo rate at a higher level. However, I find it difficult to see how the Riksbank could deliberately ignore the risk that confidence in the inflation target, the linchpin of the inflation-targeting policy, begins to be undermined – something the Riksbank alone has the explicit task of preventing – to instead continue to try to counteract financial imbalances building up; a task for which others share the responsibility and have more tools to manage. Should central banks raise their inflation targets? Most of the post-financial crisis debate on the level of the central banks’ inflation targets has been based on rather different trains of thought, as I mentioned earlier. Here the starting points has instead been that problems can arise if inflation and inflation expectations fasten at a too low level for too long. Many economists and debaters have therefore begun to ask whether the central banks’ current inflation targets should therefore be raised. 15 The idea behind the proposal can be described as follows.
In line with the new Government’s announced policy, the Central Bank now gives the priority to it to have due justice to the depositors. We need to fix the finance companies sector and their risky business models through strong regulation and market discipline. Otherwise, this sector will pose risk to the financial system stability in next 10 years. Another regulatory intervention that created immense macro economic consequences was the attempt to appreciate and maintain the currency highly over-valued during the period 2009 – 2012 at around Rs. 109 – 110 per US Dollar. For this purpose, the Central Bank lost about $ 3.5 billion of foreign reserves leading to a foreign exchange crisis. Finally, crisis was managed by raising a loan of $ 2.6 billion from the IMF to restore the international reserve and allowing a sharp depreciation of the currency to around Rs. 134 per $ in June 2012. This intervention led to raise interest rate, control credit and raise fuel prices which had dampening impact on the growth of the economy reducing to 6.3% in 2012. In this regard, although some raise concerns over current intervention in the exchange rate, we are comfortable with current level of international reserve, pending already arranged inflow of foreign resources to strengthen the reserve. Another case in point is the Pramuka Bank failure in 2002 – 2004.

As the Manager of Public Debt, the Central Bank raises local and foreign debt to meet expenditures approved through the Consolidated Fund, maintains such loan records and service such loans out of funds at Government Account with the Central Bank. The popular criticism here is the monetization of the budget deficit through Central Bank funds. The Central Bank’s purchase of Treasury bills is the cause of this criticism. The Central Bank purchases Treasury bills in order to use them for regulation of the domestic market liquidity (Open Market Operations) as permitted in the MLA and not for lending to Government. Further, under the MLA, the Central Bank is authorized to provide provisional advances to the Government up to 10% of the estimated Government revenue of the current financial year, subject to recovery of each advance within 6 months, and such advances are only to meet the expenditures authorized under the Consolidated Fund. Managing public debt by the Central Bank is beneficial for the country since the Central Bank can raise public debt in line with interest rate structure envisaged in its monetary policy. If the debt management is undertaken by a separate Government office, it may attempt to raise debts without regard to market interest rates and monetary policy and that will cause immense conflicts with the current monetary policy. The opposite view is that as the Central Bank manages public debt, its monetary policy is constrained by the need to attempt to raise and maintain public debt at low cost.
Geopolitical uncertainty and other factors holding back growth may recede, and the U.S. economy could resume the robust trajectory of last year. Or GDP growth could continue closer to trend, which is my own forecast. Finally, there’s always a chance that downside risks could knock GDP growth off course. But what the data’s telling us is that this period of slow growth isn’t an aberration—it’s the “new normal” we should expect for the foreseeable future. Monetary Policy So what does all this mean for interest rates? With the economy running close to our dual mandate goals, monetary policy is in the right place. Looking ahead, the Fed will watch the data and use monetary policy to keep the expansion on track. When growth is well above trend, raising interest rates to keep the economy on a sustainable path is the right decision. Equally, when faced with a crisis like the Great Recession, it’s incumbent upon policy makers to use every tool at their disposal to get the economy back on course. It’s important to remember the change in the long-run economic fundamentals means that interest rates are likely to be lower than what we saw in the 1990s, for example. In addition, the slope of the yield curve is unlikely to return to levels typically seen in the past. This “new normal” clearly has implications for banks, large and small. Conclusion In conclusion, the outlook is positive. GDP growth is on track, unemployment remains low, and there are no signs of inflationary pressures building.

First of all, in a Monetary Union which covers an area stretching from Lapland in the north of Finland to Andalusia in the south of Spain, we cannot expect complete homogeneity of the economic cycle or of economic conditions in a more general sense. Therefore, it makes sense for the euro area Member States to maintain control over the remaining tools of economic policy so as to be able, if necessary, to respond to developments which are particular to their own economies. On the other hand, when formulating their economic policies, euro area Member States must give sufficient consideration to the impact that these policies will have on the rest of the euro area economy. This is particularly important in EMU since euro area countries are no longer exposed to the discipline of financial markets to the same extent as used to be the case when they conducted their own autonomous monetary policies. Prior to the introduction of the euro, unsustainable economic policies were penalised by the markets in the form of higher interest rates, substantial risk premia and exchange rate pressure. In EMU, however, where financial markets take an increasingly euro area-wide focus and where the exchange rate risk associated with national currencies no longer exists, the effects of inappropriate policy choices in any one country tend to be largely spread across the entire euro area. Only relatively small risk premia remain.
Vítor Constâncio: How fit are statistics for use in macro-prudential oversight? Speech by Mr Vítor Constâncio, Vice-President of the European Central Bank, at the Sixth ECB Statistics Conference, Frankfurt am Main, 17 April 2012. * 1. *  *  Introduction  Macro-prudential analysis and oversight are not new tasks for central banks. In broad terms, the objective of macro-prudential analysis and oversight is to identify and prevent systemic risk, so as to minimise the costs that financial instability can impose on the real economy. Pursuing this objective calls for the definition of qualitative and quantitative intermediate goals, which can pose considerable analytical and informational challenges. Over the past few years, the financial crisis has clearly illustrated just how devastating the materialisation of systemic risk can be for the financial sector and the broader economy. In particular, the financial crisis has demonstrated the need for a coherent and well-articulated macro-prudential policy framework at the national, European and global level. In this respect, it exposed deficiencies in the information base on which macro-prudential oversight was being conducted. It is on this latter topic that I will focus my presentation today. In assessing the question as to how fit statistics are for use in macro-prudential oversight, I will outline the data needed for macro-prudential analysis, touching upon the ECB’s responsibilities in the field of macro-prudential oversight. I will then move on to reflect on what has been achieved so far, paying particular attention to the macro and microdimensions of data requirements.

More data on the granularity of balance-sheet exposures and across types of financial instruments are essential inputs for evaluating propagation effects with contagion and spillover models. Recent initiatives in central bank statistics also address interlinkages beyond the sample of large players – for example, by means of so-called “from whom to whom” information on deposits and loans from financial corporations, or through securities holding statistics with a view to also creating “who to whom” data for various sectors of the economy in the Euro Area Accounts. Dedicated ad hoc surveys, for example in the context of the ESRB’s work at an EU-wide level, should also contribute to shedding light on this topic. Sufficiently granular information would facilitate linking the regulated financial sector with the shadow banking sector. In addition, enhancing information on financial conglomerates – banking groups with substantial activities over and beyond the banking sector – would be essential, as nonbanking activities may be systemically important. In the case of financial conglomerates, contagion and concentration risks can be exacerbated by the increased intra-group complexity and potential conflicts of interest. At the micro-level, improvements to data for characterising interconnectedness are being pushed forward by several initiatives with different objectives and time lines.