samchain/econo-pairs-v1 huggingface dataset:
There are different estimates and they change all the time as the news from the US housing market deteriorates. 1  Calculated using purchasing power parity (PPP) exchange rates. 2  Again, calculated at PPP exchange rates. BIS Review 136/2007  1  Second, there is great uncertainty about where these exposures will end up. So banks have become more worried about the creditworthiness of their counterparties. And third, this lack of information, in a complex and globally interconnected financial system, breeds fear: of ratings downgrades, of fire sales and just of unknown consequences. And fear breeds more uncertainty. So banks have been hoarding liquidity, to protect themselves against further upsets; and they have become more reluctant to lend to other banks. So the rates at which they lend to each other have risen, relative to the levels which are expected to be set by central banks. The squeeze in core liquidity markets has already been unusually prolonged. And it is very hard to say when conditions will return to something more like normal. When the dust has settled, the financial landscape may look a bit different. Investors may be more aware of risk and warier of complexity. Some recent financial innovations will disappear. Others may survive but in modified form, and probably at an increased cost to final borrowers. What does all this mean for UK monetary policy?

And no doubt the world economy will also have a share in these benefits. 3  BIS Review 109/2000
Market inflation expectations have risen, particularly for the short term, but are still close to 3% over the policy horizon. In this Report’s baseline scenario we foresee that GDP will grow this year between 4% and 5%. This range is higher than December’s, as it responds largely to the faster output growth of late 2011 and early 2012. In addition, a number of the risks that were examined in the last Report have moderated and the dynamic of the domestic demand adjustment will be somewhat more gradual than was envisaged in December. This scenario assumes a stronger impulse from abroad, associated with better terms of trade and external credit conditions. Overall, the occurrence of temporary and limited frictions in international financial markets is a possibility that cannot be ruled out. We also assume that growth will continue to approach its trend levels – which the Board still estimates at 5% – and respond to the lagged effects of the increases made to the MPR in 2011 (table 2). The baseline scenario foresees a current account deficit in 2012 that is virtually unchanged from the December forecast: 3.4% of GDP, after posting a deficit of 1.3% of GDP in 2011. This enlargement obeys primarily to a bigger deficit of the trade balance, determined mainly by the copper price, which is down from 2011. Furthermore, the oil price has risen from last year.

However, there are risk scenarios which, if materialized, may alter the macroeconomic outlook, with implications on monetary policy. On this occasion, after assessing the alternative scenarios, the Board estimates that the risk balance for both output and inflation is unbiased. Although the risks in the international scenario are similar to those in previous Reports, their possibility of occurrence is smaller. Still, structural issues persist in the Eurozone, so the regained confidence in financial markets is yet to be consolidated. Repeated or intensified financial stress episodes, in a context where banks are more cautious in their lending decisions and capital requirements have increased, could deepen credit constraints, complicating the growth outlook for the region and the world at large. There are also persistent doubts about how China’s slowdown will be. If more intense, its effects will not only hinder world growth, but also pull down commodity prices, especially for copper. Conversely, other economies could well perform better than expected, and offset part of these effects. The calmer external financial markets and the renewed appetite for risk have revived concerns about how to accommodate the new capital flows into emerging economies. Prolonging the strong monetary stimuli in the developed world, particularly in the U.S., may foster an extension of global imbalances. Public indebtedness is elevated in the U.S. and the high oil price hinders the resolution of its external deficit.
This type of inherent risk is the reason why there are special rules for banks, supervision and, for example, a deposit guarantee protecting depositors against losses. Furthermore, a central bank can mitigate the effects of such a crisis by ensuring that there is money available when no one else wants to lend. This function as lender of last resort is based on the central bank’s unique ability to create unlimited amounts of liquid funds in its own currency. 6 According to the classic doctrine, the central bank can give generous emergency liquidity assistance (ELA) at a high rate of interest and against good collateral. 7 The ability of central banks to act as lender of last resort has had major significance in many financial crises, and was particularly important during the financial crisis of 2007–2009. This crisis led to a number of financial institutions encountering difficulties which ultimately caused the global financial markets to stop functioning. The shortage of liquid funds and credit threatened the entire global economy. Central banks around the world were forced to take extensive measures to handle the situation. These measures included loans in various currencies and the purchase of large volumes of government securities, as well as other assets. Several of them were also used during the subsequent sovereign debt crisis in the  5  See SOU 2011:78. 6  See Goodhart (1988) and Capie et al. (1994). 7  See Irwin (2013). 4  BIS central bankers’ speeches  euro area.

The need for analysis changes over time, however, and developments on the financial markets mean that the central banks’ analyses must now cover more than just banks. It is a question of analysing central counterparties, insurance companies, shadow banks, asset prices, risk premiums, different markets or different phenomena (market liquidity risk, high-frequency trading, block chain technology, etc.) in the financial system. It is important that central banks continuously “scan” the financial market and keep track of risks and vulnerabilities in different places, all the time focusing on the system risk perspective. To ensure this, it is vital that we can independently request all the information we consider necessary to be able to perform our analyses. Not least the ability to provide ELA in an effective manner – and simultaneously limit the risks to the state, by only giving assistance to institutions that have liquidity problems but otherwise are healthy – requires good access to information. It is the Riksbank’s and ultimately the state’s funds that are at stake here and it can be a question of very large amounts. …and it needs to be clarified The Riksbank’s task of promoting financial stability, not least via its responsibility for the RIX payment system and our role as lender of last resort, requires analysis of risks and vulnerabilities in the financial system. This also provides us with the right conditions to be able to identify feasible measures in order to manage the risks.
Heng Swee Keat: Developments in Asia and Singapore’s insurance industry Keynote address by Mr Heng Swee Keat, Managing Director of the Monetary Authority of Singapore, at the GE/FICS Award Ceremony, Singapore, 24 July 2008. *  *  *  Mrs Fang Ai Lian, Chairman, Great Eastern Life, Mr Tan Hak Leh, Managing Director, Ladies and Gentlemen, It is my pleasure to be here on this happy occasion, made all the more significant as Great Eastern Life (GE Life) celebrates its centennial this year. For a corporation to achieve success for 100 years is a significant achievement. It attests to the agility and business acumen of its leaders, as well as the commitment of several generations of staff. Today, we celebrate GE Life’s achievement as the first insurer in Singapore to acquire accreditation as a FICS assessment service provider. This reflects well on GE Life’s commitment towards staff development. Developments in Asia and Singapore’s insurance industry Despite the recent financial turmoil, the life insurance industry has held up relatively well in this region. While regional economies would not be insulated from the global economic slowdown, the medium-term outlook for the region remains good. The pace of economic growth and wealth creation in the region will drive demand for a range of insurance products. Indeed, estimates from Swiss Re show that life and general insurance premiums have been growing at a faster pace than GDP in most emerging Asian economies.

This is sometimes described as choosing a point on the Taylor frontier showing, as in Chart 4, the combinations of lowest volatility of inflation for a given volatility of output. 9 That optimal choice leads to a policy reaction function describing how the central bank responds to shocks hitting the economy. 10 The success of the New Keynesian framework was that it showed how the long run objective of price stability could be implemented by an appropriate central bank policy reaction function. It stressed the importance of expectations and credibility, to which too little attention had been paid during the inflationary episodes of the 1970s and 1980s. But inevitably, as with all models, the basic New Keynesian model omits a number of key factors. The treatment of expectations is simplified, and neglects the possibility that expectations themselves may be a source of fluctuations, rather than simply reflecting changes elsewhere in the economy. Sentiment can vary, misperceptions occur, and people can change the heuristics they use to cope with a complex world. 11 And it lacks an account of financial intermediation, so money, credit and banking play no meaningful role. Those omissions obviously limit the ability of the model to help us understand the trade-offs between monetary policy and financial stability.
There are also risks of higher wage outcomes in some of the areas where settlements are still pending and, in that case, of this spreading throughout the labour market in the coming years. That could add to domestic price pressure. This might be particularly troublesome if it were to be accompanied by falling productivity, which has been the historical pattern in an economic slowdown. There are grounds, however, for being cautious about historical comparisons. Some slackening of productivity seems likely but not to the same extent as previously because firms now seem to adjust their labour force more quickly. These, briefly, are the tensions in the situation in which monetary policy is being formulated at present. On the one hand a clear slackening of international activity that may become more marked; on the other, wage negotiations that can still cause problems, rising domestic inflationary pressure and an exchange rate that may lead to inflationary impulses. It is still too early to judge the strength of these factors and reach conclusions about which of them will predominate. Against this background it is important during the spring to maintain a high state of readiness for a repo rate adjustment if new information indicates that this is called for. 4  BIS Review 20/2001

The securitisation figure covers US and European securitisation markets. 3  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  3  As a knowledge intensive service industry, the financial sector depends crucially on the availability of specialised labour. Complex financial service firms rely on access to a large pool of skilled workers. For example, 390,000 people work in financial services in London and 330,000 in New York, the two largest financial centres. Financial services have an increasingly complex production chain that depends on the availability of specialised intermediate inputs of both financial and non-financial services. A modern financial market transaction may be the simple purchase or sale of a single financial asset. But it is more likely to be a complex chain of transactions involving a range of financial markets and intermediaries. One can see this complexity in the value chains of financial services. In 2014, every £ of Gross Value Added created by the financial services sector in the UK relied on £ of inputs from other financial services firms and £ of inputs from legal, accounting, consultancy, information, IT and business support services. Knowledge and information is a critical input to financial services – perhaps more than any other industry. Quick access to information can lead to better decisions about the allocation of capital. Information about successful innovations in financial firms’ production processes can lead to more efficient production across the industry.
However, although there are elements that cause concern, there is also a lot to indicate that the process of price formation has changed. The most important change since the 1970s and 1980s is probably the change in the target for monetary policy and the support and credibility attained by the inflation target. I am convinced that the Riksbank’s inflation target is understood and accepted by trade union members, officials and leaders. Knowledge about the inflation target and the role of monetary policy has become widespread in a quite different way to the fixed exchange rate norm. The fixed exchange rate regime basically required that wage cost increases should be adapted to the surrounding world in order not to affect employment negatively. When, despite this, wages rose more than in our competitor countries, employment was saved by recurrent devaluations. The high level of activity in the Swedish economy during the latter half of the 1980s also played an important role. No wage formation system would have coped with the overheating that existed at the end of the 1980s. The insight that excessively high wage increases rather quickly lead to growth being dampened and an increase in unemployment with a monetary policy focused on an inflation target, probably serves to have a restraining effect on wage formation. BIS Review 20/2000  4  Large increases in real wages with low inflation have probably increased insight into the value of price stability.

The development of information technology and growth of IT related investments have probably been promoted by the stable economic environment and been an important driving force behind the unparalleled upswing. It is not then possible to see any clear signs in the Swedish economy that we are on our way into a development similar to the American. At the same time, there are similarities, both with regard to the reorientation of the macroeconomic policy and to the penetration of computers and information technology in Swedish society. An important difference between USA and Sweden is that use of resources in the American economy has been high for many years while the Swedish economy was in a downturn for practically the whole of the 1990s. Investment usually increases only after a long period of high capacity use. The focus on stable prices and budget consolidation also started later in Sweden than in the USA. A very benevolent interpretation could be that we are moving in the same direction as the USA but with some time lag. The USA also waited for a long time for the productive effects of many computers introduced everywhere in the economy. The conclusion that can be drawn now is that it is anyway still not possible to base monetary policy on a real acceleration of potential growth. Is consumption affected by increase in wealth?
Obviously, as I argued earlier, we need economic and social reforms at the national level. But a large part of the solution lies at the European level as well: (slide 11) as of today, Europe needs what I call a “Financing and Investment Union” (FIU) to steer abundant savings into productive investment. The FIU would merge together the initiatives already in place, which do not deliver sufficient results: the Capital Markets Union of course, but also the Juncker Plan and the Banking  Page 7 sur 8 Union. We need to put the pieces of the puzzle together in order to magnify their impact through synergies. There are two objectives: increased diversification of firms’ financing – with more equity financing, and higher resilience of the euro area thanks to private risk-sharing across domestic borders. 3. Beyond the “Financing and Investment Union”, which is the first step, I believe that Europe should move forward on two further concrete steps. The second step, after the FIU, is a collective economic strategy for the euro area. Growth and employment will be stronger in Europe if we combine more reforms where they are needed, such as in France and Italy, and more fiscal support in those countries with room for manoeuvre, such as Germany. In practice, for such a collective economic strategy to exist, the euro area needs to overcome the current sense of distrust. So it needs an institution that fosters confidence: it could consist of a euro area “Finance Minister”.

Thankfully, Marvin, along with others, helped lay the intellectual groundwork and created the vocabulary for us to work through some of the most significant issues facing central banks. His work is a true emblem of how researchers play a vital role in informing and shaping the policy discussion. I look forward to the upcoming conversation. Thank you. 1 Jeffrey C. Fuhrer and Mark S. Sniderman, Conference Summary, Journal of Money, Credit and Banking, Volume  32, Number 4, Part 2, pp. 845–69, November 2000. 2 Marvin Goodfriend, Overcoming the Zero Bound on Interest Rate Policy, Journal of Money, Credit and Banking,  Volume 32, Number 4, Part 2, pp. 1007–35, November 2000. 3 Board of Governors of the Federal Reserve System, Transcript of the Federal Open Market Committee Meeting  and presentation materials, January 29–30, 2002. 2/2  BIS central bankers' speeches
Yes, corrections can be costly. Thus, we should aim at organising the system to be even more resilient and well-functioning. I remain convinced, however, that we would be wise to continue to base our economic system on open borders, competition and increasingly deeper and more integrated markets for goods, services, capital and labour. Thank you for your attention! 17  8  Financial Times, January 25, 2008  BIS Review 14/2008

This potential trend, of course, would also depend on accounting standard and a regulation on fair valuations, which itself is still under much debate. Thus, strengthening of risk management and supervision is important. Indeed, the importance of this is highlighted by the rebound in many regional stock markets as well as upward pressure on the currencies. I have also observed from some reports that, within the many financial centres, the recent return generated by FX traders have been strong, while hedge funds, thought to have seen end of days, are starting to come back to life. We may be heading in for a sporadic period of increased risk-appetite. At the same time, many corporate borrowers, particularly the large conglomerates which used to fund from global market, may switch to domestic market, due to retrenchment of international debt market, as well as still heightened risk-aversion and retrenchment of global banks. This would be at the same time as increasing issuance of local sovereign debt to finance stimulus package. In the early stage of recovery, risk of crowing-out may not yet be high, but even at this stage, the investment portfolio of local financial firms may shift significantly, and may likely see increasing concentration risk due to increased exposure to major conglomerate which used to source overseas funds. But as momentum of recovery gathers pace, competition for funds and risk of crowding-out rises. Therefore, even abstracting from challenges of reshaping regulatory framework, managing the risks from the current market environment is demanding.
Export demand was expected to rise at a slower pace, while domestic demand was forecast to increase somewhat faster, mainly owing to increased investment but also to a slightly stronger pick-up in private consumption. That was also assumed to contribute to an improvement in the labour market. Against the background of the continued cyclical upswing and expectations of a reduction in spare resources, domestic inflation was forecast to rise. Higher wage costs in line with an increase in employment and lower productivity growth was assumed to imply a faster increase in unit labour costs and a gradual rise in companies’ costs. The factors that had resulted in falling prices for imported goods in the past year were estimated to gradually diminish during the forecast period, even though we anticipated that imported inflation would remain low in the period ahead as well. It is reasonable to expect that a pick-up in resource utilisation in the world economy will lead to higher international price pressures. We also made the assessment that the krona would not appreciate nearly as much during the forecast period as in recent years and that it would therefore not have as large a restraining effect on price increases in Swedish kronor in the period ahead. The shift seen in imports in recent years, which has involved a greater share coming from low-cost countries, is likely to continue, however, and probably depress import prices in the period ahead as well.

The main driving forces behind the low inflation are supply factors that in themselves are favourable for Sweden’s economic performance and that by and large are not affected by monetary policy. Interest rates are already record-low and this has resulted in a fast increase in household borrowing and house prices. Monetary policy is stimulating demand at a time when the economy is growing at a rate that is not judged to be sustainable in the long term. We therefore expect resource utilisation to rise in the coming years and, as a result, cost pressures and inflation too. Our most recent forecast points to an inflation rate in line with the target at the end of the forecast period. Our conclusion at the last monetary policy meeting was that the repo rate should be left unchanged at present, but that there was not any hurry to raise it either. The new data that has been received since the publication of the Inflation Report gives us no reason at present to revise that assessment. Finally, I would also like to remind you that we regularly assess the new information that we receive and its effects on future inflation. For example, we could end up in a situation where we see that economic activity is either being notably dampened or is speeding up unexpectedly; in such a case there may of course be reason to revise our assessment. 1a.