samchain/econo-pairs-v1 huggingface dataset:
We must, with conviction and courage, move towards realizing our growth targets, while improving our macroeconomic fundamentals. If we can achieve 8% growth on a continuous basis for 8 or 9 years, we would be in a position to double our per capita income. For a country like Sri Lanka that would mean we would reach a per capita income of around $ 3,000 by the year 2015, from our current per capita of around $ 1,600. That is not an impossible dream. Sri Lanka has shown that, with determination and a clear focus, it can be done. In fact, from 2005 to 2007, our per capita income shot up by nearly 30%! These successes can be maintained, but that could only be done with hard work and more hard work. Mr. Chairman, South Asia, the huge giant, is finally waking up from its’ deep slumber. This giant had been taking a long rest, after enjoying a glorious past. A huge giant cannot stir, without the world around noticing the rumble. All recent indications are that the world is certainly taking note of this re-awakening. It is time for all of us in this region to capitalize on  6  BIS Review 29/2008  this new visibility. All of us who are in this region know that our destinies are linked. We rise and fall together.

We are about a month and a half behind schedule only on this issue. The consultations that the Minister of Finance and I had last week show that the signing of such a Memorandum is still possible but this will urgently require at least two things: firm political support and a clear mandate of the central bank governor. The political decision on this issue comes with a price. Over the last months, and especially the last weeks, markets have been giving us very clear and warning signals. The price of Bulgaria's newly issued debt has been rising at an unprecedentedly high rate. This implies an enormous additional financial weight in the medium term, which  3/5  BIS - Central bankers' speeches  more acutely than before poses the question about the terms of funding Bulgaria's budget and economy. What is the connection with the topic under discussion? The connection is direct. If you read credit rating agencies' announcements, you will see that the key factor for Bulgaria to get a rating upgrade, i.e. for improved terms of its funding, is the successful implementation of the euro area accession process. As a reference point, after the decision on Croatia's accession was made, two credit rating agencies upgraded its credit rating by two notches even before Croatia actually joined the euro area. Thus Croatia's credit rating, which before the decision was one notch lower than Bulgaria's, now is one notch higher than Bulgaria.
Sep.  3,8  3,8  T 3,7  0,8  S 1,0  1,5  T 0,8  S 4,0  World at market ER  2,4  2,9  3,9  3,8  2,6  S 2,8  2,6  Euro area  2,2  1,9  2,8  2,6  1,4  T 1,2  1,2  China  10,0  9,4  11,6  11,9  9,3  S 9,9  9,5  US  Japan  Rest of Asia  Latin America  Commodity exporters  Trade partners  3,1  1,5  2,5  1,6  5,5  4,8  2,7  3,1  2,7  3,0  2,9  3,1  2,9  2,4  5,5  5,4  2,7  4,6  2,0  2,1  5,8  0,7  1,4  4,7  5,6  4,3  4,8  3,4  3,3  2,0  S 1,6 T 0,8 T 4,6 = 4,3  T 1,6  S 3,5  5,0  T 2,5  4,4  3,4 2,8  T 0,4  1,9  T 9,0  8,9  = 5,0  3,5  S 3,8  3,3  T 3,1  2,4  2010 (f)  T 2,2  2,0  5,2  4,2  2,9 3,8  (*) Regional growth are weighted average by world GPP participation in IMF WEO (April 2008) (e) Estimated; (f) Forecasted. Source: Central Bank of Chile base on investment bank data, Consensus Forecast and IMF.

That is to say, financial regulation and supervision remained within the domain of so-called “microprudential policies”, decided upon and applied to each individual bank. Monetary policy (pursuing price stability) and fiscal policy (seeking budgetary stability) were, for their part, entrusted with managing the economic cycle. 1  However, the global financial crisis and its high cost in terms of economic activity, employment and public debt prompted the reconsideration of this paradigm. It should be borne in mind that the crisis came about owing to the build-up of previous imbalances, whose correction entailed a considerable loss of well-being for society. There was a macroeconomic dimension to these imbalances, which were concentrated in the financial sector, highlighting how the microprudential approach, bank by bank and market by market, was clearly insufficient to ensure the stability of the system as a whole. This is what is known as the “fallacy of composition”.1 Indeed, on occasions, bank managers’ decisions can be optimal from an individual perspective, but are not so once the effects on the system as a whole through the numerous interconnections between the different intermediaries and financial markets are taken into account. It was thus deemed necessary for economic policymakers to have an additional set of instruments for attaining the goal of (macro-) financial stability enabling them to incorporate this aggregate view.
In addition, the new technology has the potential to reshape activity currently taking place in the traditional financial sector, either through the migration of that activity or the widespread adoption of the technology. Crypto technology has the potential to bring significant benefits, for example by reducing the cost and increasing the speed of cross-border transactions, and encouraging competition in the financial system. But those benefits can only be realised and innovation be sustainable if it is undertaken safely and accompanied by effective public policy frameworks that mitigate risks and maintain broader trust and integrity in the financial system. In this way, the growth of cryptoassets and DeFi has highlighted another of the key challenges for policymakers: the need for regulatory frameworks to adapt. 3.The transition to net zero: structural change requires coordinated action from all sectors And finally, we face the continued need to support the orderly transition to a net zero economy. Climate change creates risks to financial stability through two channels: physical risks and transition risks. And the financial system will play a key role in financing the significant structural economic changes needed to deliver the transition to a net zero economy. The unique challenge here is that the orderly transition to net zero will require coordinated action across private and public sector institutions, and across all sectors of finance and the real economy. The Bank’s role is focussed on tackling the consequences (not the causes) of climate change.

First, to reap the benefits of the division of labour requires social institutions that give confidence to people to take up specialised employment. Social institutions and market economies go hand in hand. Second, people who, for the most part, pursue their own self-interest, are also prepared to stand back and ask how their actions should be constrained by social institutions. Such institutions arise because we build them. On the first, The Wealth of Nations begins with the most famous example of Smith’s commentary. He explains the idea of the division of labour by looking at a “very trifling manufacture”, namely “the trade of the pin-maker”: “a workman not educated to this business … could scarce, perhaps, with his utmost industry, make one pin in a day, and certainly could not make twenty. But in the way in which this business is now carried on, … it is divided into a number of branches … One man draws out the wire, another straightens it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head; … the business of making a pin is, in this manner, divided into about eighteen distinct operations”. 4 Smith describes seeing a small factory of this kind in which the daily output of pins was almost 5,000 for each person employed. Specialisation increases productivity. The division of labour permits “this great increase of the quantity of work”.
The interest rate decision showed simply that what were always fine judgements changed with the facts - as I can assure you they will in future, in either direction. BIS Review 55/1998

The rotation from the asset purchase programme to forward guidance on rates At our June monetary policy meeting, we initiated a rotation of our policy instruments from the asset purchase programme towards more conventional instruments of monetary policy – the policy interest rates and forward guidance on their likely evolution. We expressed our anticipation of a gradual winding-down of net asset purchases, subject to incoming data confirming our outlook for inflation. And we updated and enhanced our forward guidance on the path for interest rates, which is now expressed in terms of the expectation that key ECB interest rates will remain at their present levels “at least through the summer of 2019 and, in any case, for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2% over the medium term”. In addition, we re-affirmed our intention to reinvest principal payments from maturing securities purchased under the APP “for an extended period of time after the end of our net asset purchases and, in any case, for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation”. This combination of policy measures aimed to preserve the degree of monetary accommodation that is necessary to ensure sustained convergence of inflation towards our aim. Clearly, the end of net asset purchases is not tantamount to a withdrawal of monetary policy accommodation.
The role of the FROB was adapted, enabling it to acquire ordinary shares temporarily (up to 5 years), which was known as FROB II. The FROB covered shortcomings in the pre-existing arrangements on two main fronts: the insufficiency of the deposit guarantee schemes’ funds, as their capacity was not calculated to tackle systemic crises, with potential contagion arising in the event of their members being demanded to make extraordinary contributions; and to provide swift capital contributions for ailing banks, obviating the problems posed by mercantile regulations and, in particular, the need to obtain the approval of banks’ General Meetings. As detailed in Table 2.8 of the Report, the contributions from FROB I and FROB II totalled € million, assigned in their entirety to savings banks and conditional upon restructuring and the enhanced efficiency and governance of the recipient institutions. In April 2010 the regulations governing IPSs – dating from 2007 –were amended to afford them greater stability, reinforcing banks’ commitment to permanence, requiring that the central institution should take the form of a public limited company and that it should be at least 50%-held by the savings banks. The IPSs offered a flexible formula for integration analogous to mergers for practical purposes, but retaining the institutions’ individual legal personality and thereby facilitating integration processes principally between savings banks which, given their nature, did not have the same flexibility as banks to conclude merger agreements.

In response to the worsening of the crisis, the Government approved two Decree-Laws in February and in May 2012 on the write-down of real estate risks on credit institutions’ balance sheets; and in July 2012, a reinforced strategy for capital restructuring and strengthening was adopted through the Memorandum of Understanding (MoU) with the European Commission. This included an injection of funds, provided through the European Stability Mechanism, for more than € billion. That same summer, the European Union took further steps in the reform of the euro area’s institutional architecture, which were crucial in dispelling redenomination risk. The measures included the approval of the plans for the Banking Union and the decision in September 2012 by the European Central Bank on possible direct purchases in the secondary market for government bonds subject to economic adjustment programmes or precautionary programmes. Chapter III in the Report explains the strategy agreed upon in the MoU. The main features of the measures were as follows: a new recapitalisation and restructuring process with public aid via the FROB, including an external assessment of the Spanish financial system, all of which is detailed in Diagram 3.1 and Table 3.3 of the Report; the segregation of a substantial volume of impaired assets of the banks that received public aid, which were transferred to Sareb, as detailed in Table 3.5 of the Report; and compliance by all banks with a level of top-quality capital of 9 %.
Apart from the EU countries participating in ERM II, a number of countries – mainly in Central and Eastern Europe and in Africa – have unilaterally decided to peg their currencies either to the euro or to one of its legacy currencies. Other countries are pursuing managed-float policies, with the euro as the main reference currency, whereas another group of countries is pegging their currencies to baskets of currencies, such as the Special Drawing Rights containing the euro. Against this background, the use of the euro is likely to increase both as an intervention currency and as a reserve currency. As a matter of fact, just like private international investors, central banks may find it convenient to diversify their portfolios to incorporate a currency offering broader investment opportunities than its legacy currencies. Apart from the existence of a large, liquid and integrated capital market, another major prerequisite for the substantial use of a currency by foreign investors is confidence in the long-run stability of its purchasing power. In this regard, internal price stability should provide a sound basis for the development of the euro’s external value in the medium term. By maintaining price stability, the Eurosystem is contributing to the emergence of a solid and stable currency over the medium term, thereby fostering the euro’s international role. Conclusions Coming to the end of my speech, let me quote Mark Twain by saying that predictions should be avoided, particularly those about the future.

In these areas, the role of the Eurosystem is always to uphold confidence in the currency, to contribute to the smooth functioning of the financial system and to encourage prudent macroeconomic policies, which influence the will and capacity to save. BIS Review 6/2000  4
Unemployment Percentage of the labour force 10  10  8  8  6  6  4  4  2  2  0  0 04  05  06  07  08  09  10  11  12  13  14  Sources: Statistics Sweden and the Riksbank  10  BIS central bankers’ speeches  7. Inflation Annual percentage change 5  5  CPI CPIF CPIF excluding energy  4  4  3  3  2  2  1  1  0  0  -1  -1  -2  -2 00  01  02  03  04  05  06  07  08  09  10  11  12  13  14  Note. The CPIF is the CPI with a fixed mortgage rate. The data are updated with new outcomes after the publication of the July Monetary Policy Report. Sources: Statistics Sweden and the Riksbank  8. Repo rate with uncertainty bands Per cent, quarterly average 8  8 90% 75% 50% Outcome Forecast  7 6  7 6  5  5  4  4  3  3  2  2  1  1  0  0 04  05  06  07  08  09  10  11  12  13  14  Source: The Riksbank  BIS central bankers’ speeches  11  9.

The outlook for 2012 and 2013 depends, for instance, on developments in international economic activity and on the result of the coming wage bargaining rounds in the labour market. The financial markets during the summer Developments in the financial markets have been dramatic over the summer. Share prices, government bond yields and exchange rates have fluctuated substantially. This turbulence is one factor that could have significance for future forecasts. This is essentially due to renewed concern over sovereign debt problems in the euro area and the United States. Focus has primarily been on four issues: public finances in Greece, the risk of problems spreading to Spain and Italy, potential problems in the European banks and the management of the debt ceiling and public finances in the United States. New support package for Greece At the beginning of the summer there was particular concern over developments in Greece. After a series of meetings of various policy-making bodies within the EU as well as a vote of confidence and a decision on budget-strengthening measures, structural reforms and the sale of state-owned companies in the Greek parliament it was decided in mid-July that Greece would receive a further support package from the euro area and the IMF. This led to a slight fall in the yield on Greek government bonds from their extremely high levels (see Figure 11).
Government bank rescue measures and recapitalisation brought the ratio up to 8 per cent. Equity capital has not fully kept pace with growth in lending since then and the equity ratio has declined to 6 per cent. Today, the ratio is even lower than it was following the bank crises in the 1800s and the beginning of the 1900s. 6  In more precise terms, the sum of a bank’s assets and certain off-balance sheet items must not be greater than 20 times capital. For banks that are “in good standing” and that satisfy certain requirements, this multiple can increase to 23. See Financial Stability Review, Bank of Canada, June 2009. In the US, the ratio of Tier 1 capital to total adjusted assets must be at least 3 per cent for banks rated “strong” and 4 per cent for all other banks. The ratio applies on a consolidated basis. See “Background Note: Banking and the Leverage Ratio”, World Bank, http://crisistalk.worldbank.org/2009/03/banking-and-the-leverage-ratio.html. 7  See Northcott, Carol Ann, Graydon Paulin and Mark White (2009) “Lessons from Canada ”, Quarterly Journal of Central Banking, Volume XIX, No. 4, May, and Ratnovski, Lev and Rocco Huang (2009): “Why Are Canadian Banks More Resilient?” IMF Working Paper No. 152, July. 6  BIS Review 131/2009  For a number of Norwegian banks, the ratio of equity capital to total assets is lower than 5 per cent.

In the field, this is referred to as measures that increase the risk of moral hazard. 10  In bad times, the capital adequacy requirement is reduced to 1.5 times the international minimum requirement. See Swiss Federal Banking Commission (2008): “SFBC and large banks agree to set higher capital adequacy targets and introduce a leverage ratio”, press release 4 December. 11  See Myners, Paul (2009): “Developing a New Financial Architecture: Lessons Learned from the Crises”, speech at the Financial Times Global Finance Forum, 18 September, HM Treasury. The same theme is also dealt with in Bair, Sheila (2009): “Remarks by FDIC Chairman Sheila Bair to the International Institute of Finance, Istanbul”, FDIC, 4 October. 10  BIS Review 131/2009  I can provide an example. A creditor may for example assume that big banks are in practice “insured” by the authorities, which will also be reflected in rating agencies’ assessments. Banks considered systemically important receive a higher rating. As a result, funding costs for these banks are lower, allowing them to increase leverage and expand even further. Reducing the procyclicality of bank behaviour Both international studies and Norges Bank studies indicate that the current capital adequacy rules, Basel II, amplify the procyclical effects arising from bank behaviour. 12 During an expansion, bank earnings are high. Ample supply of capital leads to high credit growth. In a  12  See Andersen, H. (2009), “Norwegian Banks in a Recession: Procyclical Implications of Basel II”, Working paper 2009/4, Norges Bank , and Kashyap, A.K.
Conversely, the more confident people are that inflation will fall back the less we have to rely on slowing the economy to force them to hold prices and wages down. That is why the risk of inflation expectations drifting up has been such a central concern of the MPC over the last year. In my view it has been particularly important through recent months, when each forecast has been higher than the one before and each inflation figure has exceeded the earlier forecast, not to confuse the central message that we will set policy to bring inflation back down to target. We have seen households’ near-term expectations of inflation rise this year, but that was inevitable given experience and our own forecasts (Chart 3). What matters more are  2  BIS Review 114/2008  expectations of inflation over the medium-term, and whether they are consistent with the target, and here the surveys are less alarming: according to the YouGov/Citigroup survey, those expectations have fallen back a little and a gap has opened up between people’s perceptions of current inflation and their expectations of a year or more ahead. We can use other economic data as a cross-check on what is happening to inflation expectations. If households’ expectations had become detached, we should expect to see households spending more, and saving less, and pushing for larger nominal wage increases. If companies’ expectations had become detached, we should expect to see a broad-based pickup in cost and price inflation.

And within that asset class, most market participants have rebalanced their portfolios towards US Treasuries and government agency bonds. This confirms that the portfolio rebalancing channel has been instrumental in delivering the intended benefits of our quantitative easing. Slide 4 shows the extent of this rebalancing more clearly. Since the start of our asset purchase programme (APP), euro area investors alone accounted for more than half of foreign purchases of US debt securities. History suggests that these shares are highly unusual for the euro area. Only recently has the share started to decline again. Now, according to conventional models of the term structure, such capital flows should play no direct role in determining yields.4 In these models, the term premium reflects the covariance between expected bond returns and the representative investor’s stochastic discount factor. However, the conditions under which the supply of and demand for bonds are entirely neutral on yields are very restrictive and unlikely to hold in practice. Indeed, it is now widely accepted that arbitrageurs are often risk-averse and that many investors have so-called preferred habitats for certain assets or segments of the yield curve.5 Pension funds, for example, typically need to invest a significant portion of their assets in safe long-dated bonds to match the liability side of their balance sheet. With arbitrageurs capital-constrained, changes in the demand from preferred habitat investors can then affect the price of duration risk and hence term premia.