samchain/econo-pairs-v1 huggingface dataset:
The very first CSFI survey in 1994 highlighted the important tension between financial risk and business risk when it observed: “…that banks are being forced by the quest for new sources of business to become a different sort of financial institution – sometimes without noticing it, and probably without the necessary skills.” 5 ; As 1987 and 1998 remind us, the best laid hedges and collateral can lose much of their reliability during times of stress. When financial institutions seek to liquidate portfolios to meet margin calls or solvency requirements, their attempts to lower risk exposures can cause a high degree of correlation amongst assets that appeared uncorrelated in normal times. We saw the same phenomenon on a much smaller scale in May and June this year. In less liquid markets the price impact of any shock tends to be larger, the knock-on to balance sheets greater, and the spillover effects across market participants wider. Our contacts in financial markets continue to suggest that market liquidity remains plentiful, but that there is a trend towards tying up funds in potentially illiquid assets in markets with relatively few players. And while hedge funds have played a positive role in recent episodes of turbulence – by absorbing some of the losses – their capacity and willingness to provide liquidity in the event of a large shock to the market remains uncertain.

And the issuance of asset-backed securities in the UK, which involve parcelling up and selling different claims on pools of assets such as consumer loans and mortgages, has risen to some $ billion from $ billion in 1995. The UK now accounts for around a third of the issuance volume in European ABS markets. On the whole, such developments are positive for financial stability. Coupled with greater macroeconomic stability (Chart 3), they have made the financial system more robust by allowing market participants greater scope to distribute and diversify risk and to manage it effectively. Experience of previous rounds of financial innovation also suggests grounds for optimism. Swaps and other over-the-counter interest rate derivatives, for example, are now well understood and widely recognised as increasing economic flexibility and the productivity of capital. More recently global financial systems and the newer asset markets appear also to have withstood several recent shocks, such as September 11, the Dotcom bubble, the GM related wobbles in May 2005, Refco, and the Iraq war. The fact that some investors, such as hedge funds, are willing to take on greater risk does not necessarily give rise to system-wide concerns. Systemic risk in modern financial systems But there are limits to the amount of risk that can be hedged away. The financial system cannot reduce the amount of risk in the economy, but only repackage and transfer it.
That said, in practice, developing a well-articulated macroprudential policy framework raises some challenges. I trust the benefits of addressing them are worth the impressive hard work currently underway. Thank you for you for your attention. 4  BIS Review 35/2010

(2001), “Sectoral job creation and destruction responses to oil price changes”, Journal of Monetary Economics,48 (3), 465-512. Fornaro, L., & Wolf, M. (2023), “The scars of supply shocks: Implications for monetary policy”, Forthcoming Journal of Monetary Economics. Hamilton, J. D. (1983), “Oil and the macroeconomy since World War II”, Journal of Political Economy, 91 (2), 228–248. Hamilton, J. D. (1996), “This is what happened to the oil price-macroeconomy relationship”, Journal of Monetary Economics, 38 (2), 215–220. Hamilton, J.D. (2003), ”What is an oil shock?”, Journal of Econometrics, 113 (2), 363–398 Hamilton, J. D. (2011), “Historical oil shocks”, NBER Working Papers 16970, National Bureau of Economic Research, Inc. Kilian, L. (2009), “Not all oil price shocks are alike: Disentangling demand and supply shocks in the crude oil market”, American Economic Review, 99 (3). Mork, K. A. (1989), “Oil and the macroeconomy when prices go up and down: An extension of Hamilton’s results”, Journal of Political Economy, 97 (3), 740–744. Nakov, A., & Pescatori, A. (2010), “Oil and the great moderation”, The Economic Journal, 120 (543), 131–156. Footnotes [1]  More volatile energy prices alone could also increase volatility in growth and  domestic inflation and even increase overall uncertainty in the economy. For instance, Nakov and Pescatori (2010) find that a reduction in oil price volatility contributed considerably to reducing output and inflation volatility in the Great Moderation period. Bjørnland, Larsen and Maih (2018) find that high oil price volatility exacerbates the effects of oil shocks.
While in 2017 the non-financial sectors (energy, transport, building and agriculture) led the way, banking is now the most advanced sector in disclosing information. Chart 3: Rates of disclosure against each TCFD recommendations by industry  Banking  Insurance  Energy  Materials & Buildings  Transport  Agri, Food & Forest  Tech & Media  Consumer Goods  a. Board Oversight  48%  29%  38%  37%  25%  22%  19%  29%  b. Management's Role  54%  35%  32%  35%  18%  26%  17%  40%  a. Risks and Opportunities  51%  39%  57%  50%  39%  40%  38%  50%  b. Impact on Organisation  55%  26%  64%  65%  34%  45%  25%  52%  c. Resilience of Strategy Risk Management a. Risk ID and Assessment Processes b. Risk Management Processes c. Integration into overall Risk Management Metrics and a. Climate-Related Metrics Targets  20%  12%  13%  12%  5%  4%  2%  6%  52%  30%  38%  41%  23%  24%  24%  22%  46%  33%  42%  39%  17%  26%  19%  23%  32%  16%  21%  18%  11%  9%  17%  21%  51%  27%  49%  63%  36%  45%  37%  55%  b.

Scope 1,2,3 GHG Emissions  42%  22%  39%  41%  28%  26%  29%  38%  c. Climate-Related Targets  50%  24%  45%  53%  32%  30%  24%  51%  Recommendation Governance  Recommended disclosure  Strategy  Through multi-sector TCFD summits and more focused TCFD industry preparer forums, companies should continue to share knowledge on how, what and where they disclose information to give the market the information it needs. Better TCFD disclosure is an opportunity. Research by the Bank of England and PwC finds a positive correlation between companies’ stock price and the number of TCFD disclosures that firms make.10 This could be because investors reward companies that are leaders in managing climate-related risks or simply  9  TCFD Status Report (2019) On average each additional TCFD disclosure correlates with a 0.18% increase in stock price. While a positive correlation between financial metric and TCFD disclosure does not indicate that TCFD disclosure caused an increase in stock price, it raises questions for further analysis about the effect of climate-related disclosures. 10  6  All speeches are available online at www.bankofengland.co.uk/news/speeches  6  because TCFD adoption identifies companies that are more naturally disposed to longer-term strategic thinking and planning.
What is a bit different about the recent UK experience, however, is the scale of the effects. Compared with the cycle of the 1990s, they appear to have been less positive during the recession – in the more recent downturn job losses weren’t as skewed towards the lower paid – but more negative during the recovery (the skew in net job creation has been bigger). Overall, taking the 2008–14 period as a whole, the compositional effects added around 3% less to average wages than in the equivalent six years in the early 1990s. If anything, Chart 3 hints at a break in the series long before the Great Recession, sometime in the late 1990s. It’s not clear why this occurred (I’ll later offer some slightly speculative suggestions). But the recent drag from compositional effects might help to explain a couple of recent puzzles in the aggregate data. One is low productivity growth. As we know, output per employee has been particularly weak in recent years. It fell steeply during the recession and its rate of growth has been pretty insipid since. Chart 5, plotting three-year growth rates for output and employment, is one way of expressing that. What this work on compositional effects suggests – somewhat tentatively, and only if you’re prepared to interpret it in this rather crude fashion – is that this may partly reflect a slower rate of improvement in the average “quality” of the employed workforce.

It is our sincere hope that this global forum will be rewarding and may the collective wisdom derived from the deliberations lead to more collective actions that will be to our increased mutual benefits. Let me once again express our appreciation to Yang Amat Berhormat Dato' Seri Abdullah Badawi for his presence here this afternoon and for accepting to deliver the keynote address at our Forum today. Thank you. 2  BIS Review 30/2007
However, I am confident that once the process is complete we will be able to look back with satisfaction on what has been achieved. There is no doubt in my mind that Basel II will produce a step-change in risk management practices  4/5  around the world, with the result that the global banking system will become both more efficient and more robust. Through all the pain of the transition, we need to keep our eyes firmly on that prize. 5/5

These changing global dynamics, interacting with market’s reactions to potential US rate hike, may cause volatile ups and downs of financial markets. BIS central bankers’ speeches  1  I will not discuss these at length. Rather, at this juncture, the key question is how to design or adjust policy frameworks to cope better with these financial spillovers while preserving monetary policy independence. Undoubtedly, there is no single recipe that fits all central banks. Thus the aim of my talk is to offer a central bank’s overall perspectives and Thailand’s experiences on policy framework in managing capital flow and exchange rate stability. I will also touch on some beneficial policy cooperation among regional countries. A brief background of Thailand’s monetary policy framework Let’s begin with a broad perspective of Thailand’s monetary policy framework. The Bank of Thailand (BOT) has been conducting monetary policy under “Flexible Inflation Targeting” framework since May 2000. As a pragmatic response to the failure of a pegged exchange rate system, transparency of the policy making process under IT was deemed appropriate for Thailand, particularly after the 1997 Asian Financial Crisis. Under this regime, price stability is the overriding and explicit objective, while economic growth and financial stability are also taken into policy deliberation. The policy interest rate is our main tool in achieving the mandate. With managed-float exchange rate regime, the Thai baht is generally allowed to be determined by the market.
If importers expect a price change to be temporary, they will no doubt be more prone to absorb the exchange rate fluctuations in their profit margins. That this may have been the case is indicated by some preliminary studies. BIS Review 75/2001  5  •  Generally increased confidence in the low-inflation regime may also have tended to reduce the exchange rate’s pass-through to inflation. More stable expectations about future inflation should make prices less volatile. •  During the 1990s, moreover, competition in the Swedish economy has generally increased, for instance as a consequence of EU membership, continued tariff cuts, the reduction of other barriers to trade and deregulation of the domestic economy. Increased IT trade and the advent of new low-cost producers have had a similar effect. Although such changes are of the one-off type, in the past decade they have affected a series of markets and thereby presumably had a more protracted effect on the aggregate price level. Fig 2. Exchange rate impact on consumer prices 0.20  0.20  0.15  0.15  0.10  0.10 Recursive estimations of TCW coefficients lagged 3 quarters  Jan-01  Jan-00  Jan-99  Jan-98  Jan-97  Jan-96  Jan-95  Jan-94  Jan-93  Jan-92  Jan-91  Jan-90  Jan-89  Jan-88  Jan-87  0.00 Jan-86  0.00 Jan-85  0.05  Jan-84  0.05  Source: The Riksbank  The conclusion from all this is that the pass-through from the exchange rate to consumer prices has probably decreased.

In my opinion, moreover, they have had a favourable effect on the Riksbank’s internal atmosphere and efficiency. 6  BIS Review 75/2001  As regards currency market interventions, we should likewise naturally aim to be as open and distinct as possible. The arguments about credibility and legitimacy apply here as well. There is also reason to believe that interventions will be more successful if they are perceived as a monetary policy signal, with information about the central bank’s assessment of price developments and thereby the future path of the instrumental rate. When the Riksbank intervened last June we made a point of demonstrating that the measure’s context was monetary policy. The measure was announced and communicated in speeches by Urban Bäckström and myself. At the time of the first intervention, moreover, the Executive Board issued a press notice and Urban Bäckström took part in a broadcast interview in which a good deal of time was devoted to this issue. The degree of openness was also substantial in the sense that we informed our counterparties that the interventions had been made and confirmed this when questions were asked. Moreover, the size of the interventions could be calculated later from the weekly publications of the Riksbank’s balance sheet. So on this occasion we were more transparent and distinct than is customary with currency interventions, compared both with our earlier record and with most other central banks. We did, however, depart from the customary procedure in one respect.
There is a residual question about how much of that activity should go via exchanges or via other trading platforms. That’s something which I doubt will be completely resolved this year. I think it will remain part of the G20 and the FSB agenda going into next year. But it is a very important part. Another key element of changing capital markets is much greater transparency around, and much reduced reliance on, credit rating agency ratings. One of the problems in global capital markets has been that too many investors and banks have given up on reaching their own view on borrowers and on instruments, but have effectively subordinated their own judgment to the judgment of credit rating agencies. The FSB is sponsoring and leading work in order to reduce the extent to which credit rating agency ratings are inscribed into, or embedded in the regulatory fabric of our capital markets. 6. Incentives  The sixth thing is incentives. The issue that gets most attention here is compensation or pay, on which the FSB issued a code. The essence of that is that more pay should be deferred. I would add that perhaps part of deferred compensation should be in the form of a debt contract, so that the managers and workers in large firms eventually become creditors of the firm and so they themselves have the same risks as other debt holders. That works only if we can develop resolution regimes leaving debt holders taking risks in our largest firms.

But that’s generally the sort of thing that has to happen: almost always, these currency substitutions occur only once the existing currency has become deeply compromised3. Even then, the thing people naturally reach for is an existing, trusted currency – often the US dollar – rather than some entirely new unit of account. So if it’s neither the “digital” nor the “currency” aspect of bitcoin that matters, what is it that has sparked so much interest? Well perhaps a better name for what we’re talking about, albeit more of a mouthful, is a “decentralised virtual clearinghouse and asset register”. As the Quarterly Bulletin articles explain, the key innovation in bitcoin is its settlement mechanism. Instead of relying on an independent third party to process and record transactions, holders of bitcoin use a decentralised computer system called the “distributed ledger”. The distributed ledger works by encouraging users to verify for themselves, and others, blocks of transactions made over time. As everyone in the system has the right to do this, and everyone can see the results, there is no need for a trusted, centralised clearer. In principle, this technology could be applied to many things, not just the exchange and registering of financial assets. A recent official report in the UK suggested that distributed ledgers might eventually be used for a wide variety of government services, including the collection of taxes, the delivery of benefits – potentially including new “smart” transfers that could target particular groups – the keeping of business registers and other things besides4.
Volatility is calculated as standard deviation of annual growth rates. 5.

Paul Tucker: Macro, asset price, and financial system uncertainties Text of the Roy Bridge Lecture delivered by Mr Paul Tucker, Executive Director Markets and Member of the Monetary Policy Committee of the Bank of England, at the Bank of England, London, 11 December 2006. *  *  *  It is a great privilege to give this lecture, named in honour of Roy Bridge, for many years a very distinguished head of foreign exchange at the Bank of England and the first President of your association, the ACI. The world in which Bridge worked was so very different from ours that, although my responsibilities cover the same part of the Bank, I cannot really imagine what he would have made of three striking features of the current environment which I plan to review this evening. First, while monetary authorities are commonly given some of the credit for the return of macroeconomic stability, central bankers themselves devote a great deal of effort to conveying what they see as risks to the outlook. Second, while some distinguished commentators see a puzzle in lower macro volatility not having been matched by an equally large decline in asset price volatility, central bankers by contrast worry publicly that many financial asset prices imply unusually low future volatility. And third, while central bankers and others in the official sector celebrate the gains in risk transfer and efficiency brought by recent changes in the structure of the financial system, they also issue warnings about associated threats to systemic stability.
However, it is difficult to evaluate the extent of these structural changes and to gauge how quickly their impact will be felt on medium-term growth, particularly at an early stage. In addition to the specific factors resulting from the introduction of the euro, the rapid change in information and communication technology is likely to add further potential for structural changes in the economy. The possible emergence of a "New Economy" may raise the economy's productive capacity temporarily or on a more permanent basis. Much faster data transfer and the increased transparency of information in a knowledge-based society could enhance efficiency. Even if some of the euphoria surrounding the start of a new economic era has dissipated, as could be seen in stock market developments over the last few months, there remains a remarkable potential for economic change in the future. To date, however, clear evidence of positive effects on the supply side, which may lead to a temporary or even permanent higher potential output growth, is still lacking for the euro area. In addition, it should be borne in mind that the expectation of higher growth and positive wealth effects may also lead to inflationary pressures from the demand side of the economy. Therefore, the implications of the "New Economy" for monetary policy are far from clear. Monetary policy-makers, whose aim is to maintain price stability, need to exercise particular caution in such an environment of change.

However, on the basis of the information available at present, it is likely that world economic activity will remain at an acceptable level this year. In addition, it should be borne in mind that the euro area itself is also a large domestic market - it is, in fact, the second largest in the world - accounting for over 15% of world GDP. Exports of goods and services only amount to around 17% of euro area GDP: this implies that the influence of external trade on real economic growth is limited. Instead, euro area economic activity is mainly influenced by domestic factors. Economic growth in the euro area has recovered considerably since the second half of 1999. Real GDP growth is expected to have been around 3 1/2% in 2000, compared with an average real GDP growth of 2% in the 1990s. Real GDP growth in the euro area has slowed down somewhat since the second half of 2000, as demonstrated in recently published GDP data and short-term indicators, such as industrial production and, to some extent, the European Commission's industrial confidence indicator. However, at the same time, this indicator, together with the capacity utilisation rate, have remained at a high level and continue to give a relatively favourable picture. Regarding private consumption, the European Commission's consumer confidence indicator recovered on average in December and January, following a dip in the previous months. In particular, private households were more optimistic about the future economic situation as well as their own financial situation.
On a different yet related note, international cross-border payment arrangements are another compelling case study on how to bring this specific domain into the 21st century. Despite not yet being overwhelmingly disrupted by digital innovations, their flaws have recently come under the spotlight thanks to initiatives such as Libra which have clearly targeted this market segment with the promise to overcome its present weaknesses. Indeed, as attested by the recent Financial Stability Board (FSB)7 and Committee on Payments and Market Infrastructures (CPMI)8 reports to the G20, cross-border payments still suffer from a number of long-standing frictions which hamper global trade, development and economic growth. These include, in particular, legacy technology platforms, limited operating hours and onerous compliance checks, alongside other relevant aspects such as high funding costs, weak competition or an insufficient degree of standardisation. In this light it comes as no surprise that this issue is one of the top priorities on the G20 strategic agenda for 2020. Accordingly, since last December, the FSB and the CPMI, with the support of other international organisations, have been working together on defining the necessary building blocks to deliver a global roadmap that can help achieve the required structural improvements.9 Interestingly, this reform programme, a combination of practical steps and indicative time frames, does not hinge only on technological developments.

The sixteenth President of the United States of America, Abraham Lincoln, once said that the best way to predict the future was to create it. As I see it, today, digital technologies are bringing this vision one step closer to becoming a reality. Thank you for your attention. 6