samchain/econo-pairs-v1 huggingface dataset:
Real effort is needed to try to understand the dynamics of collective, and sometimes irrational behaviour of firms, their clients and counterparties - particularly behaviour that could lead to one-way markets. In a downward market they can be the scourge of stability and destroyer of liquidity. 3. Financial stability and public policy  The business of oversight of, and possible intervention in, the financial system falls to public authorities. The justification for this involvement is accepted by all but the freest of free marketers. 1  Raymond Goldsmith, Comment on Hyman Minsky’s “The Financial Instability Hypothesis: Capital Processes and the Behaviour of the Economy” in C P Kindleberger and J-P Laffargue Eds, Financial Crises: Theory, History and Politics. Cambridge University Press (1982). BIS Review 5/2004  1  Financial stability can be looked on as a public good. And the costs to society of crises and instability can go well beyond the cost borne by players within the financial services arena itself. Not only is it important in providing an effective monetary transmission mechanism, but collapse and instability can lead to decline in aggregate demand and a rise in unemployment. Research suggests that the average cumulative output loss of a banking crisis in an emerging market economy is nearly 14% of GDP, and up to 25% in developed countries.2 The roles and aims of the public authorities - a combination of supervisors, central banks and government - embrace two interdependent fields.

The issue is whether this world, however desirable, is realistic. There are some reasons for doubt. Financial system reinvention One of the likely consequences of the crisis, and the resulting regulatory response, is that the financial system will reinvent itself. Financial activity will migrate outside the banking system. And with that move, risk may itself change shape and form. What previously had been credit and maturity mismatch risk on the balance sheet of the banking system may metastasize into market and illiquidity risk on the balance sheets of non-banks. This could have important implications for the stability of the financial system and the broader economy. With more activity outside the banking system, and with the banking system itself better protected, the financial system and economy may become less prone to the low-frequency, high-cost banking crises seen in the past. But that is not the end of the story. Risk, like energy, tends to be conserved not dissipated, to change its composition but not its quantum. So it is possible the financial system may exhibit a new strain of systemic risk – a greater number of higher-frequency, higher-amplitude cyclical fluctuations in asset prices and financial activity, now originating on the balance sheets of mutual funds, insurance 4  BIS central bankers’ speeches  companies and pension funds. These cyclical fluctuations could in turn be transmitted to, and mirrored, in greater cyclical instabilities in the wider economy. In this world, it would be very difficult for monetary, regulatory and operational policy to beat an orderly retreat.
The upper and lower confidence intervals for this calculation method mean that the current level of equilibrium unemployment can be said, with 95 per cent confidence, to lie between just over four per cent and nine per cent. The grey curve shows a calculation using an alternative unobserved components model, while the blue curve is a calculation based on what is known as a structural VAR model, which includes GDP and unemployment. When it is considered that it is unclear which of the three methods of calculation should be used, uncertainty over the equilibrium level will increase. This can be seen from the variation, depending on method, of the estimates of equilibrium unemployment. 8  See, for example, Forslund (2008) for a discussion of factors affecting the level of equilibrium unemployment. 9  This state of long-term economic equilibrium is the same as saying that the economy is in a steady state.

If inflation stays too low, people will start to expect it to stay that way, creating a vicious cycle, pushing inflation further down over the longer term, and making it harder to achieve our goals through monetary policy. The Second District All of these numbers tell the story of the U.S. economy at the macro level, but they’re not always reflected in the real experiences of Americans across the country. I referred at the beginning of this speech to the Second District—which includes New York State, parts of New Jersey and Connecticut, Puerto Rico, and the U.S. Virgin Islands—and is the area the New York Fed is responsible for. I spent yesterday and today meeting with district business leaders, community organizers, and elected officials, hearing about their work, their successes, and their challenges. People’s experiences are influenced by the macro level, but their local economy plays an equal, and often more important role in shaping their economic opportunity. One aspect of the Fed that we don’t talk about enough is the work our regional economists and our outreach teams do, trying to understand what’s going on at the local level. While the U.S. economy has been growing for the last 10 years, analysis by New York Fed economists shows that not everyone is feeling the benefits equally.
Does this create an unlevel playing field that might compromise fair competition as well as the soundness of the banking system? Need to rethink the nature and management of financial risks? 5. Mainstream thinking in recent years has been to see risk in terms of probabilities of events that can be quantitatively expressed and forecast with statistical models. However, if we did not know before we certainly know now, that some of these models make strong assumptions, such as “normally distributed returns” or other not sufficiently fat-tailed  BIS central bankers’ speeches  1  distribution assumptions, which are usually not supported by empirical evidence. These quantitative models underestimate the likelihood of the “tail events” and the amount of losses that would occur in such events. As we now know, the highly improbable event, or the “tail risk”, has occurred all too frequently and with highly disruptive, if not devastating, impact on financial as well as macroeconomic stability. 6. This has been on the cards for a while. According to the account by Roger Lowenstein in his book “When Genius Failed”, the ill-fated Long Term Capital Management, LTCM, in one of its investor newsletters back in 1994, suggested that its VaR analysis showed that, “only one year in fifty should it lose at least 20% of its portfolio.” LTCM also calculated that losing all of its capital within one year was a 10-standard-deviation event.

Christian Noyer: European financial markets – opportunities for growth and value creation Speech by Mr Christian Noyer, Governor of the Bank of France, at the First French-Indian Financial Forum, Paris EUROPLACE, Mumbai, 16 May 2007. *  *  *  Ladies and Gentlemen, In the absence of Mr Mestrallet, Chairman of Paris EUROPLACE and CEO of Suez Group, who cannot be with us today because of last minute commitments that require his presence in France, I have the great pleasure of welcoming you to our first French-Indian Financial Forum in Mumbai. India’s rapid economic growth in recent years makes it an attractive investment destination for international investors. And the economic revival in Europe also offers interesting opportunities to Indian investors and issuers wishing to diversify their investment strategy. That’s why Paris EUROPLACE believes that we all have a common interest in attending this forum today to discuss business opportunities between European and Indian Financial Markets. I would like to express my warm thanks to my friend Dr. Rakesh MOHAN, Deputy Governor of the Reserve Bank of India, for being with us today. We are also very honoured to welcome Mr Ashok WADHWA, Chairman, Capital Markets Committee of FICCI, the partner of Paris EUROPLACE in the organization of this forum, Mr Ravi NARAIN, Managing Director and CEO of the National Stock Exchange of India Ltd and Mr Peter KURIAN, Chairman of the Association of Mutual Funds in India, as well as all the other distinguished representatives of the Indian and French financial communities.
First, it led to bank supervision becoming the responsibility of an increasing number of central banks. Second, the focus on systemic stability led to the emergence of macroprudential supervision as an explicit concept and task for which naturally central banks have become responsible. In Bulgaria the monetary regime can be viewed as a rather traditional one, the primary objective of the BNB being to maintain price stability through ensuring the stability of the national currency. For more than 20 years now, our regime has been based on the operation of the currency board. The BNB also conducts micro- and macroprudential policies. As a matter of fact, well before the recent global crisis we designed and applied countercyclical macroprudential measures, even though the term ‘macroprudential’ was still not being used. Many other countries in the region, subject to massive capital inflows at the time, did the same. Therefore, the BNB’s tasks and responsibilities, as we see them today, are an outcome of decades of evolution. And this reflects, and is consistent with, the long-term developments of central banks’ mandates globally. It can be argued from a historical perspective that changes in these mandates follow common evolutionary paths which are often shaped by crises, such as the global one in 2007/2008. The financial stability focus That led to reassessing the importance of financial stability as a policy objective of central banks. Before the 2007/2008 global crisis, central banks focused on price stability as their primary objective.

Dimitar Radev: Achieving the financial stability objective through macroprudential measures cannot be sustainable without understanding the financial cycle Opening remarks by Mr Dimitar Radev, Governor of the Bulgarian National Bank, at the Conference "The Current Global and European Financial Cycle: Where Do We Stand and How Do We Move Forward? ", jointly organized by the Bulgarian National Bank and the Bank for International Settlements on the occasion of the 140th Anniversary of the Bulgarian National Bank, Sofia, 7-8 July 2019. * * * Dear colleagues, Distinguished guests, We are delighted to have you with us to participate and share in our joint BNB-BIS conference organized on the occasion of the 140th anniversary of the Bulgarian National Bank. I would like to extend my special thanks to the General Manager Agustín Carstens and the BIS for their support in organizing this event. This is only a latest example in decades of cooperation between our two institutions. The BNB is among the oldest central banks in the world, 13th by order of establishment1. Today’s conference, therefore, marks a long history of central banking in Bulgaria. Evolution of a central bank’s mandates A central bank is historically associated with the goal of keeping the national currency and prices stable. After the Great Depression of the 1930 s supervision has become a function entrusted to or taken away from central banks in cycles depending on crisis experiences. With respect to supervision as a central bank function, the 2007/2008 global crisis had two effects.
Hence, it is a modality in which there is strong explicit emphasis on the economic viability of the underlying assets and on good governance, ethics and transparency. A demand-driven industry with growing potential This decade has seen the global Islamic finance industry evolve from being faith-based to a business driven industry for all communities. Its significant similarities to the principles in  BIS Review 121/2008  1  ethical finance and socially responsible investment has been a further factor that has drawn interest in Islamic Finance. Islamic finance does not only involve the avoidance of riba (usury) but also extends to issues relating to ethical values, such as fair trade and environmental protection. This has prompted participation from conventional global players in Islamic financial activities and in the acquisition of strategic stakes in Islamic financial institutions. There is also a growing number of established international financial centres such as London, Tokyo, Hong Kong and Singapore that have initiated plans for the integration of Islamic finance into their financial systems. Islamic finance has now become one of the fastest growing segments in the global financial system. The total Islamic assets under management by Islamic banks and conventional banks offering Islamic banking services is reported to exceed USD500 billion. This growth has also been in the other major components of the Islamic financial system. Islamic mutual funds are estimated to be about USD300 billion, while global takaful or Shariah-compliant insurance contributions are estimated to be about USD5 billion.

BIS Review 58/2003  5
John C Williams: Monetary policy and the economic outlook Remarks by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at Euromoney Real Return XIII: The Inflation-Linked Products Conference 2019, New York City, 4 September 2019. * * * As prepared for delivery Thank you for the opportunity to speak this morning. In a speech Chair Powell gave last month, he said, “Low inflation seems to be the problem of this era, not high inflation.”1 Persistently low inflation is just one of the reasons the theme of this conference is very timely. Our Dual Mandate Goals And inflation is one of the topics I’m going to address today. The Fed has two goals set by Congress: maximum employment and price stability. These are also known as the dual mandate. When I talk about price stability, our objective is to keep the inflation rate near our symmetric 2 percent goal,2 so understanding inflation data and how it fits into the broader economic picture is critically important. This morning I’m going to set the scene for that broader economic picture and explain how changes in the landscape influenced the rate adjustment the Federal Open Market Committee (FOMC) made in July. I’ll then discuss the challenges on the horizon and how they feed into my thinking on monetary policy.

The effects of this angst are already showing up in the investment numbers. An additional fly in the ointment, if you will, is the recently released downward revision for GDP growth covering last year and an announced estimate of a sizable downward revision to payroll employment. One implication of these revisions is that the economy’s underlying momentum was already somewhat less robust than previously thought, even before recent developments pointed to a less rosy outlook. The Path Forward So what will the response from the Fed be to all of these developments? Our role is to navigate a complex and at times ambiguous outlook to keep the economy growing and strong. As events unfold and conditions evolve, it’s critical we understand which developments are mere bumps in the road and those that will affect the outlook in a material way over the longer term. That means maintaining a data-dependent approach that takes into account the risks and uncertainty that are weighing on the economy. I will continue to consult everything from very granular data about individuals’ experiences of employment conditions, through to the macro projections for global growth. We need to consider all of the information available and be flexible in our response. Conclusion Low inflation is indeed the problem of this era. The current outlook of moderate growth, low unemployment, but stubbornly low inflation is a reflection of the broader economic picture—the July rate adjustment an appropriate response to ease financial conditions and support the economy.
Ardian Fullani: Bank of Albania’s work progress, 2012 results, and challenges for the future Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the Parliamentary Commission on Economy and Finance, Tirana, 9 April 2013. *  *  *  Honourable Chairman, Honourable Deputies, Ladies and Gentlemen, I would like to start by expressing my great appreciation for this opportunity to present to you, on behalf of the Bank of Albania, the central bank’s work progress and results over the past year. Also, this meeting will let us share our opinions about recent economic and monetary developments, and touch upon the challenges, which, in Bank of Albania’s opinion, deserve attention in the future. Right from the start, I would like to emphasize that the Bank of Albania succeeded in fulfilling its legal responsibilities in 2012. Consumer prices remained stable, as depicted by the 2% average inflation rate during the year. The financial system soundness also improved at both macro and micro levels. The major objectives of the Bank of Albania were achieved, despite adverse internal and external environment, and shocks posed to Albanian economy over this period. Their achievement reflected, to a great extent, the Bank of Albania’s cautious monetary policy, regulatory measures and our policy of banking supervision. They were favoured by ongoing improvement of the financial payment infrastructure, prudential and efficient liquidity management operations, and transparent communication with the public.

The whole our work was supported by qualitatively improved financial literacy of the public, analytical study of several phenomena, matters of interest for the development of the country, and production of financial statistics conform to international standards. Finally, I would like to emphasize that the Bank of Albania has been a serious and important player in Albania’s integration project, completing and updating all its legal responsibilities and institutional commitments. *** Honourable Ladies and Gentlemen, In my speech, I will address the key issues of the Annual Report, focusing on main directions of Bank of Albania’s work over the past year. I will start my speech with our work and results in fulfilling the primary objective: achieving and maintaining price stability. 1. Economic developments, price stability and monetary policy in 2012  As I said in the introduction of my speech, the year 2012 was another difficult year for the Albanian economy. Weaknesses in our financial and trading partners were manifested in a low demand for Albanian exports, tight financing conditions for foreign capital, and elevated uncertainty among economic agents. Also, the public and private sector domestic demand remained weak in the Albanian economy. Besides these factors, two other specific shocks hit the economic activity over the past year. Hence, bad weather in the first quarter was reflected into a sluggish activity in construction and export over the period. The banking system’s response to new and tighter regulatory measures provided by the European Banking Authority (EBA) was the other shock of higher importance and influence.
5 Unfortunately experience, including the experience gained during the Swedish crisis of the 1990s, has shown that it can be difficult to reach practical decisions on measures to promote financial stability. 3  Another factor that we have highlighted in our inquiry into risks on the housing market and in our stability reports is the banks’ mortgage funding, which to an increasing extent comes from foreign investors. The banks are dependent on the confidence of these investors in the Swedish housing market for their funding. Historically, foreign investors have been “volatile” in times of market unease. A fall in housing prices in Sweden could therefore constitute a funding risk for the Swedish banks. 4  See “The economy will benefit from stricter requirements on banks”, Finansinspektionen press release, 26 November. 5  Finansinspektionen’s proposal on risk weights for mortgages has now been circulated to the authorities concerned for comment and the Riksbank will present its comments at a later date. 4  BIS central bankers’ speeches  A point that I have made in many different contexts is worth repeating: the less others do, the more monetary policy has to do. As you know, the Riksbank has two objectives for its operations: “a safe and efficient payment system”, which we usually interpret as financial stability, and “price stability”, which the Riksbank has formulated as an inflation target of two per cent. I believe that one of the most important lessons of the financial crisis is that these two objectives are interlinked.

Public finances were hit hard when the banking sector had to be rescued in the wake of a bursting housing bubble, in which housing prices and bank lending had chased each other’s tails to form an unsustainable spiral. This was why these countries quickly encountered major problems in managing the growth of their sovereign debts, despite their relatively good position at the outset. An excessive build-up of debt – irrespective of whether it takes place in the private or the public sector – leads to problems sooner or later. Events in the euro area in recent years provide a frightening illustration of this. It is clear that the euro area is facing major challenges, not only for individual countries but for the EMU as a whole. The ECB, the EU and the IMF have implemented a range of support measures to come to terms with the acute problems. A number of new decisions and measures have also been announced within the EMU over the course of the year. However, it is important to point out that responsibility for managing these problems primarily lies with the politicians in the respective countries. Decisions are required at the national level, not only to resolve the problem of weak public finances but also to improve competitiveness (see Figure 6).