samchain/econo-pairs-v1 huggingface dataset:
Third, and this is the trickiest of the three, is when individuals consciously tap on these cognitive biases to their own advantage. The rise of the asset management industry is one example, where asset managers’ herd behaviour may be looked at as perfectly rational. An IMF researcher referred to such situations as “rational bubble-riding”, whereby financial benchmarking and the short-term nature of performance appraisals imposed on asset managers, lead them to consciously ride on bubbles, despite believing that the prices are unjustified by fundamentals. Investors may be incentivised to herd, preferring to succeed or fail together to prevent reputational damage. As John Maynard Keynes famously said, “It is better for reputation to fail conventionally, than to succeed unconventionally”. Whether these cognitive biases are unconsciously wired in us or consciously being tapped on, we ought to recognise the power of perception. Edward de Bono aptly pointed out that “perception is real, even if it is not reality.” In reality, a few of these misperceptions result in tangible consequences that influence the ringgit exchange rate level. Let me cite five instances of misperceptions that have been making its rounds in the market: First, the perception that the ringgit is driven by oil prices. This was derived from fact that Malaysia is one of South East Asia’s net exporters of oil and gas. Petronas is also one of the world’s largest producers of LNG.

Most of these are not statistically based, but rather convenient rules-of-thumb that ended up shaping our perception and driving sentiments. Unfortunately, in this information age, these perceptions and negative sentiments can be perpetuated rapidly and become self-fulfilling. The widespread negative coverage in the mainstream media feeds on our confirmation bias, where we seek out information that confirms rather than contradicts our preconceptions. And when such information becomes widely available, we risk falling into a self-reinforcing process known as the ‘availability cascade’, whereby a simple idea, whether it be right or wrong, gains traction given repetition and inherent simplicity. As the saying goes, “Repeat something often enough and it will become true.” Second, we tend to, in some other instances, base our perception on prior evidence and situations that we are familiar with, rather than update our views with new information. For many economists and analysts, Malaysia is an oil-dependent economy. When the oil price goes south, the Malaysian economy suffers. While this was true many years ago, these simple relationships are continuously assumed to be fixed and hold to perpetuity. Despite the many structural changes leading to a more diversified Malaysian economy and reduced reliance on oil, this perception has persisted. For the uninitiated, the percentage of oil revenues to government 2/7  BIS central bankers' speeches  revenues was 41.3% in 2009 compared to only 14.6% in 2016. This fact seems to elude many analysts.
For example, the rate cuts in 1996 and 1997 had caused a decrease in the CPI via housing costs. This could have resulted in the claim that interest rates should have been lowered further, as a direct consequence of the fact that they had only just been cut sharply. However, it wasn’t until the turn of the year 1998/1999 that the Riksbank developed a coherent, explicit approach to these issues. It had been preceded by a long discussion, where the main idea had been to change from the CPI to a different index, in which the components that fluctuated most due to temporary reasons would be excluded. However, the more we discussed this the clearer it became that there was no index that always provided the best picture of inflationary pressures in the economy. For this reason we opted instead for an approach whereby we, in connection with each decision, would make it as clear as possible what considerations were guiding policy at the time. This would enable our actions to be evaluated in a better way than before. The clarification states that monetary policy should normally be centred on bringing inflation to target one to two years ahead. It also identifies two cases when the Riksbank may depart from this rule: transitory effects on inflation and large deviations from the target.

The MIFC initiatives that were announced yesterday would propel Malaysia into becoming a vibrant, innovative and competitive international Islamic financial services industry supported by high calibre human talent, world-class infrastructure and best international standards. Building on what we have, we need to create a global brand to be promoted more aggressively in the global arena. This will be key to penetrate markets as well as to attract global players to our shores, henceforth enhancing the viability and sustainability of Malaysia's Islamic financial system. Malaysia will embark on more strategic promotional and marketing efforts through greater collaboration and smart partnership. MIFC WILL BE OUR GLOBAL BRAND. 2  BIS Review 75/2006  On this note, on behalf of the hosts and organisers, I would like to thank the distinguished panellists and moderators, media and the respected audience for making this Forum a success, and I hereby declare the forum officially closed. Thank you. BIS Review 75/2006  3
Despite some recent easing, tightness in financial conditions still persists and the tightening of business loan lending standards continued – albeit at a slower pace – during the second quarter. We predict that bank lending rates for consumer loans would follow gradually, as the lagged effects of cumulative easing of 950 basis points since November 2008 would start to ease credit conditions towards the last quarter of this year. However, the current unfavorable labor market conditions are expected to restrain the recovery in consumption, and therefore domestic demand conditions would continue to support disinflation. The fiscal discipline is crucial in maintaining low levels of medium and long-term interest rates for the recovery of both consumption and investment. The implementation of a credible fiscal framework would bring down risk premiums further, and hence lead to a permanent fall in longer-term interest rates. This, in turn, would foster investment and labor demand, and thereby support the recovery process, providing the Green Shoots with the breathing room. Therefore, the determined execution of the medium-term program to ensure fiscal discipline and debt sustainability would have an expansionary rather than contractionary impact on economic activity. In sum, while Turkish economy contracted sharply during the recent crisis, its well capitalized and sound financial system is likely to support the economic activity along the recovery. In fact, recent GDP releases suggest that economic activity in Turkey displayed a solid rebound in the second quarter.

Therefore, we feel that the worst episode of the crisis is now behind us, which should in turn support Turkey’s economic prospects. However, it remains to be seen whether recent improvements in leading indicators will translate into a long lasting and durable recovery, since part of the rebound reflects the impact of the fiscal stimulus packages. The situation is similar across the globe: recovery has started in the global economy, yet the extraordinary policy measures taken since the last quarter of 2008 makes it harder to interpret the underlying trends. Given the elevated levels of unemployment and ongoing de-leveraging process, the recovery is likely to be gradual. Distinguished Guests, Let me close my speech by turning to the main theme of this session. Overall, I am encouraged to recognize initial signs of recovery but also I am anxious that the green shoots that have sprouted may still expose to a spring frost. “Green shoots” may not be vigorous enough and important downside risks still remain. However, unlike a couple of quarters ago, we should also acknowledge that we can now at least talk about upside risks – that is, “blossoming shoots”. Thank you. 4  BIS Review 123/2009
They now expect the economy to grow by 0.9 per cent in 2023, 1.5 per cent in 2024 and 1.6 per cent in 2025. At the same time, our past rate increases are being transmitted forcefully to financing conditions and are gradually having an impact across the economy. Borrowing costs have increased steeply and growth in loans is slowing. Tighter financing conditions are a key reason why inflation is projected to decline further towards our target, as they are expected to increasingly dampen demand. Our future decisions will ensure that the key ECB interest rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to our two per cent mediumterm target and will be kept at those levels for as long as necessary. We will continue to follow a data-dependent approach to determining the appropriate level and duration of restriction. In particular, our interest rate decisions will continue to be based on our assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation, and the strength of monetary policy transmission. The Governing Council confirms that it will discontinue the reinvestments under the asset purchase programme as of July 2023. The decisions taken today are set out in a press release available on our website. I will now outline in more detail how we see the economy and inflation developing and will then explain our assessment of financial and monetary conditions.

Financial and monetary conditions Our monetary policy tightening continues to be reflected in risk-free interest rates and broader financing conditions. Funding conditions are tighter for banks and credit is becoming more expensive for firms and households. In April lending rates reached their highest level in more than a decade, standing at 4.4 per cent for business loans and 3.4 per cent for mortgages. These higher borrowing rates, together with tighter credit supply conditions and lower loan demand, have further weakened credit dynamics. The annual growth of loans to firms declined again in April, to 4.6 per cent. The month-on-month changes have been negative on average since November. Loans to households grew at an annual rate of 2.5 per cent in April and increased only marginally month on month. Weak bank lending and the reduction in the Eurosystem balance sheet led to a continued decline in annual broad money growth to 1.9 per cent in April. Month-on-month changes in broad money have been negative since December. In line with our monetary policy strategy, the Governing Council thoroughly assessed the links between monetary policy and financial stability. The financial stability outlook has remained challenging since our last review in December 2022. Tighter financing conditions are raising banks' funding costs and the credit risk of outstanding loans. Together with the recent tensions in the US banking system, these factors could give rise to systemic stress and depress economic growth in the short term.
In this environment, both the negative interest rate and the SNB’s willingness to intervene in the foreign exchange market as necessary remain essential. These measures allow us to ensure price stability – and thus fulfil our mandate in the interests of the country as a whole. Facilitating and securing the operation of cashless payment systems is part of the SNB’s mandate. And for good reason: A smoothly functioning payment system is critically important to the performance of an economy. Payments connect buyers and sellers; borrowers and lenders. The ability to make payments securely and irrevocably is fundamental to sustaining confidence in the financial system. Digitalisation and the proliferation of mobile internet services are changing the way we pay for things. New applications and technologies promise ever faster, easier and cheaper payment options via smartphone, tablet or smartwatch. The entire payments ecosystem is set to undergo profound change as a result. My colleague Thomas Moser and I will take a more detailed look at how innovation is shaping developments in the payments arena. We will focus in particular on the challenges such innovation presents to central banks. In the past, payment innovations have often been driven by the private sector. Facilitating – and especially securing – the operation of payment systems has long been a fundamental task of many central banks, however. It is thus essential that all the various stakeholders maintain a constructive dialogue.

But an appreciably weaker development of consumption, which was a prominent component of one of the alternative scenarios, seems to have become somewhat less probable. Exchange rate The Riksbank does not target the exchange rate. The monetary policy target is price stability. But the exchange rate does feature as one important factor in the Riksbank’s assessment of inflation in the coming two years. The exchange rate conditions demand in the economy, particularly in the export sector, and also affects inflation directly in the form of import prices. The latter, more immediate effect is, however, transitory and of secondary interest provided it does not influence inflation expectations and thereby price and wage setting behaviour. An assessment of future inflation therefore requires a forecast or judgement of the exchange rate in the coming two years, yet this is a variable that is notoriously difficult to predict and has fluctuated widely for Sweden since 1992. A natural starting point for this is the current exchange rate together with an estimate of what a reasonable long-term level might be in relation to competitiveness, financial saving, etc. The past six months provides an example of how the argument might go. Since October 1996 the krona’s effective exchange rate has weakened by about 7 per cent. Most of this change stems from the appreciation of sterling and the US dollar against currencies in continental Europe (Diagram 6).
Therefore, the number of observations in common with an artificially reduced register could be very low or even zero. The path to striking a balance between giving access to the research community to the more interesting databases while ensuring confidentiality and anonymisation could much benefit from the experience of other institutions. To this end, a few years ago several central banks set in motion the so-called INEXDA network. At present this network comprises central banks, including the participation of the ECB Statistical Directorate, and other statistical institutes, like Eurostat. In this forum participants from the statistical areas and datalabs exchange experiences in the management of micro data, the aim being to guarantee the harmonisation of certain procedures and share best practices in this domain. Access to the information in the hands of private sources is also a very interesting field where we can make further progress. INE had a very good experience this year in exploiting data from mobile phones to analyse citizens’ mobility in different cities and regions, easing and lessening the cost of developing such statistics, with the help of new technologies. The need to better understand and organise the transition from customer data, privately used by service corporations, to citizens’ micro data, of interest for public analysis, has to be studied thoroughly. That is why I welcome and congratulate INE on recently launching a Business to Government Working Group (B2G WG), under the name of “WG about the role of official statistics on data stewardship”.

Indeed, as part of the Eurosystem, as a participant in the Single Supervisory Mechanism and given its responsibility for the proper functioning and stability of the financial system, the Banco de España regularly collects a wealth of financial and supervisory information from credit institutions, which is key to performing all our duties. This information is also necessary for strengthening the performance of other functions of the Banco de España, such as the conduct of monetary policy, the oversight of the stability of the financial system and the compilation of statistics. We are also responsible for designing financial reporting as efficiently as possible and, in this endeavour, both the Banco de España and the European authorities have some substantial challenges ahead. I shall refer to these later. Some of the key statistics produced by the Banco de España are present in the Spanish National Statistical Plan (the PEN, as we refer to it). They include some macroeconomic statistics, such as the balance of payments and the financial accounts, which complement and have to be consistent with those compiled by INE. In this regard, I think we can be proud of the long-standing tradition of close and candid cooperation between our two institutions. Joint discussion continuously enriches our professionals, and their efforts to ensure the consistency and complementarity of the results are a guarantee of the quality of the statistical system.
Obviously this can delay the whole process - a point to which I will return later. This is only a very short description of the mechanics of a workout and hardly does justice to what can be an enormously complicated exercise involving banks with widely different levels of security as  BIS Review 45/1999  2  well as non-bank creditors whose interests also need to be taken into account. But I hope that I have given you enough to illustrate the central principles of the process: a willingness by the debtor to recognize that there is a problem and to approach the banks to seek assistance, matched by support and forbearance by the banks and a willingness to work together to reach a solution by consensus. That solution may not be the optimum one for every individual bank but the objective should be that each bank is at least better off than it would be in a liquidation and is treated fairly vis-à-vis others. In the course of preparing this speech I have had the benefit of talking to a number of market participants about how effectively the workout process in Hong Kong and the HKAB Guidelines are working. It is fair to say that there are varying shades of opinion on this point, but there is general agreement that the Guidelines have made an important contribution in codifying what is expected of banks in Hong Kong. It is equally true that there may be room for improvement in the workout process.

1  BIS Review 45/1999  It is important to note that workouts should not be seen as a soft option for the debtor or an act of charity on the part of the creditors. Banks will generally only be prepared to embark on a workout if the prospect of eventual recovery is greater than it would be in a liquidation. Bearing in mind the generally low recovery rate that unsecured creditors obtain from liquidations, workouts will usually be the better option. But the threat of liquidation must always be there as a last resort to provide an incentive for the debtor to face up to its problems and to agree to cooperate with the banks. Workouts have a long history in Hong Kong but the principles that govern them were only recently codified in the form of the Guidelines on Corporate Difficulties issued by the Hong Kong Association of Banks in April 1998. These are generally known as the “HKAB Guidelines”. The Guidelines are non-statutory, but they are supported by both HKAB and the HKMA and all banks are expected to use their best endeavours to comply. In my view, this represents one of the most important initiatives of HKAB in recent years, taken as it was at a time when the economy was in the early stages of recession and when the need for workouts would inevitably rise.
Exceptionally low short-term interest rates have alleviated some of the burden borrowers face in servicing their debts. Low long-term interest rates – partly a consequence of Quantitative Easing – will have given a lift to asset prices, and so to wealth and the cost of capital. It is arguable that this defers some of the rebalancing needed in the real economy, but overall it reduces the risk of unnecessary destruction of the economy’s productive capacity. That stimulus can be sustained only so long as medium-term inflation expectations remain anchored to our target of 2%. We must be alert to the need gradually to withdraw stimulus as and when recovery builds. And we must be alive to the possibility that the alleviation of current macroeconomic problems could sow the seeds, somewhere in the financial firmament, of the next set of imbalances. Where risks to stability do emerge, we must use what other instruments we have to try to temper them. This can never be perfect, but it can be better. BIS central bankers’ speeches  11  Chart 1:  Chart 2:  Spain’s net external balance sheet  Italy’s net external balance sheet  Source: Eurostat  Source: Eurostat  Chart 3:  Chart 4:  Gross external liabilities  10-year spot real interest rates  Source: International Financial Statistics. 12  Source: Bloomberg.

With regard to the operation of the secondary market of government bonds, the Bank of Thailand is currently working on the promotion of a full-fledged primary dealership system to facilitate the conduct of open market operations. We aim for the primary dealers to eventually provide marketmaking functions for both government and private securities. The operation of primary dealers or counterparties of the central bank will be complemented, should market participants deem it useful, by the presence of inter-dealer brokers, who can assist in ensuring continuous two-way quotation, as well as helping to preserve the anonymity of transactions or positions held by a market participant. In August 1999, we appointed 9 counterparties, which comprised eight banks and one securities firm. Starting 19 January 2000, the Bank of Thailand also began trading outright with the 9 counterparties. This operation serves as a monetary policy instrument as well as the mechanism to promote the development of the secondary bond trading. At this early stage, the outright operations will be conducted primarily in the benchmark issues or those with potential to become benchmark issues. These selected counterparties are expected, ultimately, to become primary dealers and we are currently working on putting the right incentives to ensure that appropriate rights and obligations be accorded to these primary dealers. The third area I would briefly touch on is infrastructure issues. Here, work is ongoing to promote a fully automated system of delivery versus payment (DVP) settlement, information disclosure, and instituting appropriate code of conduct on market participants.