samchain/econo-pairs-v1 huggingface dataset:
The latest indicators, for Q3, suggest that this growth trajectory will hold in the second half of the year, in keeping with the Banco de España’s pre-summer projection of GDP growth of slightly over 3% in 2015. For 2016 the estimate was marginally lower (2.7%), on the back of a degree of weakening in some of the factors that have driven growth this year, stemming in the main from the drop in oil prices and the depreciation of the euro. As I indicated earlier, the outlook for the external setting has deteriorated and there is heightened uncertainty and volatility in the financial markets. It is too soon to assess the scale of these developments and their possible impact on the growth prospects for the Spanish economy. In any event, the downside risks have increased, making it even more important to maintain the policies that have permitted economic recovery, job creation and the correction of imbalances. Spain’s higher growth will come from the strong rate of expansion of national demand. It is to be hoped that higher household disposable income, together with the foreseeable improvement in credit conditions, will continue to boost consumption and prompt a recovery in housing investment. In turn, strong final demand and a gradual return to normal in financial conditions will continue to have a positive impact on investment. In the area of foreign trade, the latest projections pointed to a practically neutral contribution from net external demand in 2015 and 2016.

Advances in the last two decades have made Bayesian econometrics a key tool for central banks. Norges Bank has benefited greatly from this, and two of our most important policy tools are results of such advances. NEMO (Norwegian Economy Model) is our estimated DSGE model. The model is based on international research and model development over the past 20 years. We use it to produce forecasts and guide monetary policy analysis. This year, the hype is “forward guidance”. The Fed does it, the Bank of England does it, and the ECB also. We have done it since 2005. We publish forecasts of the key policy interest rate and NEMO has been essential for the construction and, above all, explanation. When I describe Norges Bank’s policy decision at press conferences, I often refer to NEMO equations in order to explain our decisions. Our second key policy tool is our System of Averaging Models, SAM. The short-term forecast from SAM is the basis for the initial conditions when we use NEMO and when we make our policy decisions – and hence of core importance to monetary policy. Theory and experience suggest that a weighted average of forecasts from different models is often more accurate than forecasts provided by individual models. Norges Bank’s short-term forecasts are based on combinations of statistical and econometric models, where each model is assigned a probability depending on past density forecasting performances. Currently, we are working on how to incorporate mechanically density predictions from SAM into NEMO.
Although the growth rate of credit began to fall as from 2006, growing debt and the loss of competitiveness over the 12 years to 2008 led the external imbalance to an unsustainable position, with a current-account deficit of 10% of GDP and a strong increase in Spain’s external debt. But what counts is that Spain has since adjusted its current-account deficit at a spectacular pace. From almost 10% in 2008, the deficit fell at the end of last year to 3.7% – an adjustment of more than 6 pp of GDP in three years – and at the end of 2012 we might already be in balance. The climate of pessimism accompanying the crises leads some to underestimate the effort made by Spanish private-sector firms, suggesting that the external adjustment has been due exclusively to the fall in domestic demand. This decline naturally plays a part, but the improvement is also attributable to the relative gains in our export shares compared with other developed countries. During the years of crisis, Spain has seen its exports outgrow those of France, Italy and even Germany, and this situation should not worsen in the coming years. And not only has there been an improvement in exports, but the decline in imports has been greater than the fall in domestic demand, which also shows gains in the share of sales of Spanish products at home. Behind these improvements in the current-account balance is the significant progress recorded in the trade and services balance.

A case in point is the decisions we have taken in Frankfurt since the start of the crisis, such as interest rate cuts, the unlimited supply of liquidity, purchases of bonds and covered bonds and three-year refinancing operations, which, while aimed at resolving problems of the euro area as a whole, have proven particularly beneficial for Spain. But there are other less evident instances, such as when Europe obliges us to use competitive procedures to award banks that have been taken over or oversees the granting of public aid. Admittedly, this makes bank restructuring a lengthier and more complex process, but it should be acknowledged that it helps Spain ensure that sell-offs are open to all new investors that may be interested and that the taxpayer’s money is better allocated. The help of the European institutions should likewise be appreciated when, in compliance with the new economic governance framework, they obliged the Spanish authorities to be rigorous in cutting the budget deficit. This has not been to the liking of some but, however we view it, it is rightly one more reason to be confident about Spain’s possibility of emerging from the crisis. The discipline required by Europe, which may prove uncomfortable and even debatable in the short term, has, like monetary discipline, extraordinarily positive effects on our economy in the medium term. It is as though Spaniards had taken out insurance so that our governments, authorities and companies cannot take decisions that harm Spain in the long run.
These uninformed traders face a fundamental uncertainty: they may not be able to observe the market price at which their trades will be executed. This is driving through the rear-view mirror, stock-picking based on yesterday’s prices. Co-location speeds up the clock. But it has also had the effect of turning it back. Location matters once more. The race to zero has become a physical, as well as a virtual, one. Distance matters more than ever. The dinosaur has been resurrected, this time in high definition. In some ways, it is the ultimate contradiction. In sum, through this century changes in the structure of trading, and in the behaviour of traders, have gone hand in hand. Liberalisation and innovation have delivered fragmentation of structure and transformation of speed. Both structure and speed have experienced a highvelocity revolution. So what impact has this race to zero had on market dynamics? 3. From microstructure to macrostructure  This is difficult detective work. But there are theoretical clues and empirical fingerprints. The theoretical clues come from a literature that flourished after the stock market crash of 1987 – the so-called market microstructure literature. 5 This departs from the notion of frictionless trading and information-efficient prices. In its place it introduces frictions in the price-setting process, which arise from characteristics of market participants (such as their trading speed) and of the trading infrastructure (such as its degree of fragmentation). 4  “Latency” refers to the time it takes from sending an order to it being executed.

The emergence of HFT in fragmented trading platforms makes for a financial market place exhibiting complexity and contagion. As the race for zero has gathered pace, those two features are likely to have grown in importance. The trading system has become increasingly complex and tightly knit. From the work of Charles Perrow, these are the two essential ingredients in the recipe for systemic failure. 27 5. Market macrostructure and public policy  The rapidly-adapting topology of trading poses a challenging set of questions for policymakers, particularly those safeguarding the resilience of financial markets. How is this changing market macrostructure best understood and monitored? And how, if at all, can it be modified to bolster systemic resilience? This is unlikely to be an easy regulatory task. For the first time in financial history, machines can execute trades far faster than humans can intervene. That gap is set to widen. In some respects the 2010 Flash Crash and the 1987 stock market crash have common genes – algorithmic amplification of stress. But they differ in one critical respect. Regulatory intervention could feasibly have forestalled the 1987 crash. By the time of the Flash Crash, regulators might have blinked – literally, blinked – and missed their chance. Nonetheless, the experience of managing large-scale, non-financial systems suggests riskreducing regulatory intervention is possible. Drawing on that experience, two sets of policy tool are worth developing further.
Meanwhile, compared to the same period last year, the upward trend in the goods group accelerated due to the rise in unprocessed food products, international oil prices and the rise in exchange rates. Hence, the annual increase in the prices of goods reached 12.1 percent annually as of July 2006, surpassing that of services. Price increases have been observed in all of the special CPI aggregates due to the impact of exchange rates developments on tradable goods. Within this framework, the annual rate of increase of the special CPI aggregate (D*) excluding energy, unprocessed food products, alcoholic beverages, tobacco products and gold, which is calculated in order to measure the general inflation trend, became 7.19 percent in July. Inflation followed a track consistent with our projections and decreased by 0.44 percent in July, thus becoming 5.30 percent in cumulative terms in the first eight months and 10.26 percent in annual terms. The 1.21-percent monthly fall in food and non-alcoholic beverages prices and the 6.92-percent monthly fall in clothing and footwear prices as well as the disintegration of the base effect in the prices of alcoholic drinks and tobacco products were important factors in this decline. Especially the 4.43percent monthly decrease in the prices of unprocessed food products became the primary factor in the decline in the food and non-alcoholic drinks group prices. When prices of goods and services in August are analyzed separately, it is observed that annual inflation in these groups are 10.08 and 11.40 respectively, both below those of the previous month.

It requires instruments that impose tighter standards for individual institutions whose contribution to system-wide risk is larger, the so called Global Systemically Important Financial Institutions (G-SiFis), whose list was last updated by the Financial Stability Board (FSB) in November 2012. The second one, looks at how aggregate risk evolves over time. This requires the use of instruments that contribute to moderate the typical pro-cyclicality of the financial system. I will come to that later on, when commenting on the new Basel III capital framework. Before this, allow me to mention the Spanish experience with the so-called “dynamic” or “statistical provisions” which were introduced in 2000. This can be considered a pioneering case of a macroprudential response. The tool proved to be useful in Spain during the financial crisis in the two dimensions identified earlier: mitigating the build-up of risks – even if to a limited extent – and providing capacity of loss absorption to the banks. But the Spanish experience also showed that “dynamic provisions”, although, in my opinion, well targeted and designed, should have been complemented with other instruments. In order to develop and implement this new policy, the main developed economies have created new authorities in charge of macro-prudential supervision, such as the Financial Stability Oversight Council in the United States or the Bank of England’s Financial Policy Committee.
Given that, owing to structural reasons, the general level of interest rates is substantially lower than in the past, the vast majority of our investments can therefore be expected to deliver only a very modest return going forward. The development of share prices and exchange rates will therefore be determining factors with regard to the profits in the coming years. Given that these are by their nature subject to marked fluctuations, predicting the medium-term return on our assets is fraught with particularly high uncertainty. The approach set out in the new profit distribution agreement addresses this issue. Should the high earnings of recent years prove to be sustainable, the Confederation and the cantons will participate in them. However, should the net profits quickly dwindle, there will be an orderly reduction in the distributions based on the set thresholds. This brings me back to the demands for greater distributions that I mentioned at the start of my speech. Ladies and gentlemen, the rise in the allocations to the provisions coupled with the increase in the maximum profit distributions represent a balanced solution. On the one hand, it contributes to the robustness of the SNB’s balance sheet. On the other hand, barring any financial market upheaval, it allows for substantial amounts to be distributed to the public sector, in the best case totalling CHF 36 billion for the financial years 2020 to 2025. The distributions have not been raised as a response to the coronavirus crisis or higher government debt.

Joseph Yam: Changes in Asia – a brief look at the dynamics within the region Statement by Mr Joseph Yam, Chief Executive of the Hong Kong Monetary Authority, and Alternate Governor for Hong Kong, China in the Asian Development Bank, at the 40th Asian Development Bank Annual Meeting, Kyoto, 6 May 2007. *  *  *  I would like to thank the Government of Japan and the people of Kyoto for their hospitality in hosting this year’s Annual Meeting of the Asian Development Bank (ADB). I would also like to congratulate Mr Kuroda on his re-election as the President of the ADB. This year marks the 40th anniversary of the ADB. Over the past four decades, Asia has achieved remarkable development, particularly in terms of economic growth and the reduction of poverty, and clearly the ADB has contributed significantly to this achievement and has established itself as a regional financial institution of strategic importance. Asia has undergone remarkable changes too over the past four decades and in many ways, in particular in terms of the economic dynamics within the region, and between the region and the rest of the world. Changes have been particularly marked in the past decade or so, under the influence of globalisation and the revolution of information technology. There has, for example, been rapidly increasing trade integration, encouraged obviously by the high degree of freedom in international trade, and consequently increasing economic interdependence within the region. Changes always present new challenges and opportunities.
These include, for example, commercial real estate. Risk premiums on these securities have been pointing in a clear upward direction of late (cf. graph 2). The same development can be observed for US corporate bonds. However, by historical standards, the delinquency rate on credit card loans remains at a very low level, even though it rose in the third quarter (cf. graph 3). 2  BIS Review 150/2007  Graph 2: Risk yield premiums on commercial mortgage-backed securities 2  Graph 3: Delinquency rate on credit card loans 3  6%  5%  4%  3%  2%  1%  06  05  04  03  02  01  00  99  98  97  96  95  94  93  92  07 20  20  20  20  20  20  20  20  19  19  19  19  19  19  19  19  19  91  0%  The second risk is that the excellent economic environment in which we have operated until now might deteriorate. Of particular note here is the global economy, which so far has proved to be extremely resistant to the sub-prime crisis. The same applies to the stock markets. Save for a few corrections, they have held up fairly well since the middle of the year.

Here in Hong Kong we are well on our way to implementing the latest international standards in this respect, i.e. the Basel II standards. As the bank supervisor, the Hong Kong Monetary Authority has been working with banks and legislators to ensure that we are able to implement the new standards by 1 January, 2007. We have also been working with other regulators in the region through the EMEAP Working Group on Banking Supervision to share our experiences on the implementation process. 23. Ladies and Gentlemen, I have given you a brief personal perspective on financial integration and regulation in our region. I do not know whether I have convinced you of the importance of these topics for our continued economic prosperity and financial stability. But I certainly hope to have persuaded you that they are topics that deserve our attention whether we are policy makers, regulators of the financial system, or members of the private-sector financial community. I am sure that more will be  BIS Review 14/2006  3  said about these topics throughout the conference, and I look forward to hearing from our European colleagues about the experience in Europe concerning financial integration and regulation in the Euro area. 4  BIS Review 14/2006
In the past, the processes of raising interest rates in the US were surrounded by complex economic and financial developments in some economies. In the 1980s, the most critical case, there was the debt crisis in Latin America. Then in the 1990s, the most significant effects were circumscribed to some countries. In the 2000s, the emerging world was not so affected directly, but the subsequent subprime crisis in the United States and all its implications for the world resulted the Federal Reserve rate hike. Today, the conditions in which the United States and the emerging world confront the episode are different as seen from both sides. China's growth and the size of Europe make them a potential risk for the Fed, so it cannot overlook the effect of its decisions on these economies. At the same time, economic policy frameworks have changed in emerging markets and are more capable of dealing with external shocks. Anyway, it is still an element of risk. A box in this Report provides a deeper analysis of these topics. 5  Beyond the volatility of recent months, the dollar remains strong with respect to most currencies, developed and emerging. Our peso, which has depreciated a little more than 30% from its 2013 average, has behaved similarly to most of our trading partners’ currencies, so its multilateral variation has been much smaller. Accordingly, the real exchange rate index with base year 1986=100 is now near 93, some 3% above its 2013 average (figure 10).

The charts in Figure 5 show the realized and estimated cash flows from the Federal Reserve’s securities portfolio. The length of the darker bars show the actual amounts of Treasury securities and agency debt and MBS principal that matured or paid down; only the amounts 9  I discussed dispersion as a means to evaluate the efficacy of monetary control and transmission in an earlier speech. See Potter, “Money Markets at a Crossroads: Policy Implementation at a Time of Structural Change,” April 5, 2017. 10 ON RRP take-up also remains well below early expectations: before lift-off, median expectations for the level of ON RRP demand three years following liftoff was around $ billion. 11 See Potter, “Gradual and Predictable: Reducing the Size of the Federal Reserve’s Balance Sheet,” October 11, 2017, for a discussion of balance sheet normalization. 12 Statement Regarding Reinvestment in Treasury Securities and Agency Mortgage-Backed Securities, September 20, 2017. 4  above the cap were reinvested. Since October 2017, the Federal Reserve’s domestic securities portfolio has decreased by nearly $ billion to about $ trillion.13  The lighter bars in Figure 5 show the projected cash flows through the end of next year. Notably, the caps reached their maximal values this month. Going forward, reinvestment of Treasury securities will nearly exclusively occur in the middle month of each quarter. As had been expected in the design of the caps, principal repayments from the agency MBS portfolio have now begun to come in below the level of the maximum cap.
What is good for the client is presumably good for the bank as well. The structure of internal incentives also needs to be adapted to encourage a longterm relationship. It seems reasonable to suppose that some newspaper managements are likewise thinking about how their readers’ interests can best be served. Without in any way claiming to be exhaustive, these examples illustrate the major forces that are at work in many parts of our society with a view to making things function better than they did in the recent stock market boom. In addition there are of course the deliberations of economic policy decision-makers, authorities and international institutions. The message I want to put across today is primarily that there are no simple solutions that would prevent a repetition of what we have been through. We must also realise that the spontaneous healing mechanisms in a market economy can take time to work. They probably need the support of better institutional rule systems, for example in accounting practice. At the same time, I would be cautious about intervening too much, for instance by complicating matters with rule systems or unduly detailed supervision by authorities. It is a question of striking a balance so that the sound forces in the economy are free to act while tendencies that may develop into a crisis are held in check. How this is to be achieved is something that market players and the competent authorities continuously have to consider and try out in the light of experience.

This deprived the inexperienced investors of the necessary help and support. A look at, for example, the advice that was provided before stock markets began to fall tells the same tale: recommendations to sell made up less than one per cent of all advice. The media latched onto the stock market boom with reports of rapidly rising share prices. Instead of taking a critical look at what was happening, the notion that the new economy offered chances of earning a quick profit became the conventional wisdom. The part played by human psychology for herd behaviour in financial markets has in fact given rise to a new school of financial knowledge, known as Behavioural Finance. Two key concepts in this analysis are just conventional wisdom and wishful thinking. There’s nothing odd about that. When people make investment decisions they function in much as the way as in other contexts. A familiar example is our reluctance to enter a restaurant that is empty - we generally prefer one that already has many guests, particularly if there is a long queue outside. We simply rely on the good judgement of others and assume that all those inside have made the right choice. By arriving at a better understanding of how people behave, we can certainly do a good deal to prevent unduly large mistakes in market pricing and perhaps ultimately reduce the occurrence of financial bubbles.