samchain/econo-pairs-v1 huggingface dataset:
However, as proven by the evidence, and as our communication highlighted, taking this kind of measures grants no permanent solution. The solution must necessarily come from improvements in competitiveness and productivity. The second purpose of the program is to strengthen our international liquidity position. This means having the tools to deal with external turbulences. All the available evidence shows that a strong international reserves position helps to protect the economy of financial shocks coming from abroad, which in turn reduces the risk premiums of the economy. In our present  2  BIS central bankers’ speeches  conjuncture, the level of reserves we are pursuing with the program sets us on a very good foot in case of a major global disruption. Holding reserves is tantamount to having an insurance policy. During the good times, it bears a cost associated with the differential between the yield of foreign liquid and safe assets, and the cost of the domestic liabilities that finance them. However, during episodes of global recession and financial stress, the available reserves permit to cushion the impact of the shock on the cost of the country’s external financing and provide increased flexibility to economic policies to mitigate the effects on the domestic economy. Fluctuations in the international value of the peso cause significant volatility of our accounting results, as we have seen in recent years. In good times, the peso tends to appreciate, which generates accounting losses as the net worth is measured in pesos due to the effect of reserves revaluation.

In the baseline scenario I will present to you in a moment, we assume that the effects of the external scenario will be limited, and the Chilean economy will grow close to its trend, with inflation near the target. Now I will describe the factors that shape this baseline scenario and the implications of the risks I have mentioned. Macroeconomic scenario In Chile, the dynamism of output and demand moderated further during the second quarter, although somewhat less than had been forecast in June. Inflation, meanwhile, was slightly below expectations of a few months earlier. Headline y-o-y inflation has hovered around 3 percent, while the annual growth rates of core measures remain contained (figure 6). The inflation outlook has been characterized by limited transmission of food prices to the local market. Similarly, the propagation of the price increases of these goods and fuels to other prices has been in line with projections. As I said a while ago, the external scenario has brought important news, with the materialization of some of the risks considered in the last quarters. This, coupled with prospects of slower growth in developed economies and concerns about the debt spreading to Central Europe, has had a significant impact on global financial markets. The sovereign spreads of several Eurozone members, like the premiums of some banks, are in all-time highs (figure 7). Asset prices have seen substantial changes, where worth noting is the decline in interest rates on long-term T-bonds of several developed economies that act as safe havens.
5  And as recommended in the recent Group of 30 (G30) Report, “Financial Reform: A Framework for Financial Stability”. BIS Review 6/2010  3  ABCP, and SIVs The same is true of the Asset-Backed CP market. These vehicles are similarly reliant on committed lines of credit from commercial banks and, furthermore, in many cases were sponsored and managed by a bank. The case of Structured Investment Vehicles was subtly different. Some were sponsored by banks but did not have committed lines from them. Other SIVs were independently managed. With hindsight one fairly obvious solution would have been for banks to consolidate, for accounting and regulatory purposes, any such vehicles that they sponsored, managed and provided credit lines for. Looking ahead, banks should perhaps quit using such devices to move assets off balance sheet while retaining de facto control. Supervisors should be alert to such devices in future. They might consider whether consolidation for these and other vehicles could be avoided only where a sponsor had made it 100% clear that they would not provide any support in any circumstances. Securities dealers The case of securities dealers is different – in that they were real businesses which had developed over many decades. After Big Bang – in the 1970s in the US, and a decade later in the UK – their balance sheets grew.

This makes the connection between financial flows and economic activity operate through changes in the composition of demand and output, rather than “internal devaluations” which became especially fruitful for several Eurozone and EME countries in the past decade. The role of commodity prices Some EMEs, in particular those with large commodity sectors, may at certain episodes display a decoupling of capital flows from global financing conditions. This seems to have been the case in the aftermath of the Global Financial Crisis, in which the general risk-off attitude contrasted with the relative strength of commodity exporters due to China’s contribution to global growth. Indeed, the quick recovery in energy, food, and metal commodities beginning in 2010 led to a surge in growth and capital inflows to commodity-exporting EMEs that starkly contrasted with the depressed macroeconomic conditions that characterized the slow recovery of AEs. It is tempting to link the decoupling of economic and financial conditions of the 2010-13 episode as a sign that EMEs were beginning to overcome some of their past institutional weaknesses and policy mistakes. But the events triggered by the taper tantrum episode recommend taking this interpretation with a grain of salt. Indeed, such events mark a clear reversal in the outlook of EMEs and the direction of external financing to these economies, once again following closely the downward trend of global commodity prices. 2  See Elías Albagli, Luis Ceballos, Sebastián Claro, and Damián Romero (2018), “Channels of US Monetary Policy Spillovers to International Bonds Markets,” forthcoming, Journal of Financial Economics.
Rapid liquidity support at an early stage is critical to help pre-empting temporary liquidity difficulties in sound economies from escalating into a wider crisis. We call on the Fund to review its lending toolkit and emphasise that potential solutions should minimise stigma, and  BIS central bankers’ speeches  1  send effective signals that differentiate crisis bystanders as fundamentally sound economies. A study of gaps and new solutions can be undertaken together with an early review of the Flexible Credit Line and Precautionary Credit Line. The latter should be aimed at improving the accessibility and flexibility of these instruments whilst limiting moral hazard. ii) Surveillance The Fund’s credentials on surveillance suffered a setback after it had not given sufficient warning in the run-up to the 2008/9 crisis. The 2011 Triennial Surveillance Review (TSR) is therefore a good opportunity for the Fund to address the shortcomings. On the whole, we welcome the key TSR objective of making the Fund’s surveillance as interconnected as the global economy itself. Given its universal membership, cross-country experience and deep technical expertise, the Fund is uniquely placed to identify global challenges and facilitate dialogue with country authorities to undertake appropriate policy responses. To leverage on this strength, the Fund needs to invest time to build stronger trust and consensus amongst members on its surveillance and analytical frameworks. The Fund is also well placed to integrate its macroeconomic and financial surveillance, and thus to identify latent vulnerabilities, interconnections and transmission channels.

This quadrant [slide 4] shows four categories of possible shocks linked to the transition. They can have a positive versus negative impact on supply, and a positive versus negative impact on demand respectively. They are not mutually exclusive, and may combine or succeed one another. Their stand-alone probability is hard to assess at this stage, but there are reasons to believe that the upper-left one (the negative supply shock) is slightly more probable than the  Page 5 sur 8 others. However, given the large range of shocks, their sources and macroeconomic effects – which could include a positive scenario of large green private capex v – [slide 5], we must continue our modelling, in line with our first commitment in relation to the ECB’s climate agenda: we committed in July 2022 to “assess the macroeconomic impact of climate change and mitigation policies on inflation and the real economy”. vi  But being uncertain about the combined macroeconomic effects does not mean being passive or inert on action now. What we can already derive from these scenarios is a set of four firm convictions and prescriptions. 1. A shock that is global and certain >>> an orderly transition - First, climate transition entails structural changes to the global economy that are both universal and certain, with an overall and possibly negative supply shock that will generate frictions and costs in terms of the necessary reallocation of production factors.
Opening Remarks Veerathai Santiprabhob, Governor of the Bank of Thailand Bangkok Sustainable Banking Forum 2019 13 August 2019, Bangkok, Thailand Distinguished guests, Ladies and gentlemen, Good morning and welcome to the Bangkok Sustainable Banking Forum 2019. This forum was first started last year to promote sustainability practices in the Thai financial sector and to highlight the potential role of the financial sector in addressing common challenges facing the Thai society, such as income inequality, environmental degradation, excessive household debt, and the persistent problem of corruption. Certainly, addressing the challenges around environmental, social, and governance (ESG) aspects are critical for the sustainability of the Thai economy and to some may seem far beyond financial institutions’ core mandates. Nevertheless, as main intermediaries of financial resources, the financial sector can influence how these resources are allocated and, hence, can influence how the economy and society progress over the longrun. Many people may view that the concept of sustainability for the financial sector generally encompasses financial institutions partaking in charity or corporate social responsibility projects. I am afraid that the concept is often misunderstood. The core concept of sustainability needs to be considered first in the context of the long-run sustainability of the financial business itself. When financial institutions focus mainly on short-term gains, neglecting the potential long-term effects or negative spillover of their activities, this can in fact increase  1/7  financial institutions’ risks; risks that can impair their credibility, public trust, and financial positions in the long-run. Allow me to highlight three well-known incidents in particular.

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Earlier this year I went to Brooklyn, the Bronx, Queens and Puerto Rico, while last year I visited several upstate cities. My trip started yesterday with a policy speech to the West Point cadets and was followed by a colloquium with their economics faculty. So, this visit to the upper Hudson Valley brings me in contact with some of our country’s future leaders – you and the cadets who will lead our country in very important, if different, ways. I will also have a chance to see more of what makes Albany so distinct from both downstate and Upstate New York. Of course, I may have a leg up on this because I was born and raised close by, in western Massachusetts! The greater Albany area is home to 900,000 people – roughly the size of three average cities in the United States. You and your fellow residents tend to be highly educated and be employed as public servants. These factors are all part of what makes Albany feel special. Today, I want to talk with you first about the Fed – what we do and why we do it. Then I’ll give you my views on the economy nationally and locally. It’s a serious issue because it affects your family and students’ job prospects at graduation time. What the New York Fed does By way of introduction, I will briefly review what the New York Fed does and what makes my job so interesting.

That is why we are treading a fine line between stimulus to demand in the short run, and a rebalancing away from private and public consumption towards exports and import substitution in the longer run. Without monetary stimulus – low interest rates and large asset purchases – there is a risk that growth will stall and inflation fall below our symmetric 2% target. But easy monetary policy, by bringing forward spending from the future to the present, means that the ultimate adjustment of borrowing and spending will be even greater. That is our dilemma, and that of other deficit countries. The best way to escape this dilemma would be higher spending by the surplus countries – to make possible rebalancing by the deficit countries – and supply-side reforms in the deficit countries – to raise expected future incomes and ease the burden of debt repayments. Each country can put itself in a position to rebalance, as we have done in the UK. But in the absence of rebalancing, globally and especially in the euro area, we could be facing a recovery that is not merely reluctant but recalcitrant. Just as St. George’s Hall was reconstructed to meet the needs of Liverpool in the twenty-first century, so the international financial system must be reconstructed to ensure a return to prosperity. We can be optimistic – the fundamentals of the UK economy are strong. But without a rebalancing of spending in the world economy, a struggle between debtor and creditor countries will inflict economic pain on everyone.
Given the stage of development of the financial markets and its relative size in the international financial system, disorderly conditions that do not self equilibrate generally threaten to undermine the performance of the real economy. This was evident during the Asian financial crisis in 1997 and 1998. Ten years hence, several financial reforms and initiatives have been implemented by the region. These reforms include deregulation and instilling greater market orientation, the development of the domestic financial infrastructure and the supporting legislation, increasing the range of instruments at the disposal of the Central Bank and strengthening the surveillance capabilities of the Central Bank. 2  BIS Review 74/2010  These developments have yielded tremendous payoffs to the Asian region. The strengthened resilience that has been achieved has enabled most financial markets in Asia to absorb the destabilising implications of the recent global financial market turmoil. Most importantly, there was no disruption to our financial intermediation process. This has not only allowed the markets to facilitate the transmission of policy but it has also supported the recovery of private sector economic activity. Equally important has been the role of the Central Bank in addressing the build up of financial imbalances which would not only have an impact on financial stability, but also on macroeconomic stability. While interest rates have been an important tool to address the build up of such financial imbalances, most Central Banks in Asia have placed greater reliance on macroprudential measures.

Howard Lee: Central bank innovations - payments, data and capabilities Speech by Mr Howard Lee, Deputy Chief Executive of the Hong Kong Monetary Authority, at the BIS Innovation Summit 2021, 23 March 2021. * * *  Introduction 1. Fellow central bankers, distinguished speakers, ladies and gentlemen. It’s my pleasure to speak to you in this important event. While participants of this event generally embrace technology and innovation, I guess that two years ago not many of us could have expected that virtual meetings would become a norm for international conferences. So while technological advances would often drive work process or behavioral changes, there are also times when societal changes spur technological developments or adoption. 2. Of course the COVID-19 pandemic has had a lot more impacts than countless virtual meetings. The unprecedented disruptions and contractions in global trade have literally brought many economies to a standstill. Small and medium sized enterprises (SMEs) are especially hard-hit given the smaller buffers they have. On the other hand, many ecommerce and other online activities are thriving. We are experiencing a much accelerated process of digitalization on many fronts. 3. These new developments call for central banks’ innovations and digital solutions too. In the digital age, central banks will have to become innovators and commit ourselves to digital transformation for the benefit of our economies. In fact, the launch of the BIS Innovation Hub (BISIH) in 2019 is a testament to this commitment.
This means that the Swedish mortgage market is in fact not only a concern for us here in Sweden but also for many investors around the world. All in all, this means that shocks of various kinds can lead to the high level of indebtedness in the household sector causing problems for both the real economy and financial stability. This may make it more difficult for the Riksbank to perform its tasks. There are therefore good reasons for the Riksbank to care about household indebtedness. The analysis to date has been based on limited data The debate on whether the level of household indebtedness is sustainable or not has to date been based on partly inadequate data. In recent years, the analysis has largely been based on aggregate data on the households’ assets and liabilities from Statistics Sweden’s quarterly data. 5 However, over the last four years it has also been possible to some extent to base the analysis on the annual mortgage survey conducted by Finansinspektionen, in which information on randomly-sampled new borrowers and some aggregate data are gathered from the banks. However, the random samples in the mortgage surveys only cover a limited period and only refer to new loans. The random samples thus only represent only 1.6 per cent of the debts of the household sector. Consequently, they do not provide a comprehensive view of the situation in the loan stock, that is for existing loans.

Cecilia Skingsley: Household debt under the microscope Speech by Ms Cecilia Skingsley, Deputy Governor of the Sveriges Riksbank, at SABOs (the Swedish Association of Public Housing Companies) Finance Day, Stockholm, 8 May 2014. *  *  *  I would like to thank Annika Svensson, Marianne Sterner, Jakob Winstrand and Dilan Ölcer for their help in writing this speech and for their views on earlier versions. The issue of household indebtedness is currently under discussion in many different contexts. The Riksbank, for example, has expressed its concern about the development of household debt and the situation on the mortgage market for several years now. 1 The discussions centre on to what extent the increase in household debt that we have seen for some time poses a risk to the real economy and to the stability of the financial system, and on the measures that may be needed to reduce these risks. However, the statistics available to date have not made it possible to conduct all the analyses that we would have liked to conduct to get a complete picture of the debt situation. With the support of the Sveriges Riksbank Act, the Riksbank therefore decided in the summer of 2013 to collect data on individuals’ debts from the eight largest banks in Sweden. This data provides important pieces of the puzzle regarding household debt.
BIS Review 24/2008  3  rating agencies to expand their scope as widely as possible, and for banks to use off-balance-sheet vehicles; and •  improving crisis management arrangements, including the process for providing liquidity to institutions under stress and for restructuring weak and failing banks. Measuring and adjusting for risk The focus of this work is the recent structural changes in banking and credit markets and ways to prevent those making the financial system more prone or less resilient to large cyclical swings. That is important. But we have been here before. It is not so long since a vast amount of work was set in train in the wake of the LTCM crisis in 1998 and again after the dotcom boom blew out. While each crisis has its own idiosyncrasies there are common elements and they too need to be addressed. In my view the key lies in the measurement of risk and the repeated inclination to underprice risks at the top of the cycle and thus take comfort from exaggerated estimates of risk adjusted returns; and the corollary, a tendency to overprice risk as the cycle swings down.

BIS Review 116/2006  5  One important difference between the two hedge funds was how much they had borrowed in relation to their capital. The debt/equity ratio at LTCM was between 25 and 30, while that at Amaranth was around 5. A further problem for LTCM was that the fund was partly involved in very complex positions on the derivatives market that were difficult to close. Many other funds and banks held the same types of positions. Amaranth, on the other hand, was largely alone in its part of the market – most others had no positions, or contrary positions, in energy derivatives. This made settlement easier, if not cheaper. A further explanation is probably that Amaranth’s losses occurred under very favourable economic and financial circumstances, where the market had good access to capital. This was far from the case when LTCM tried to settle its positions in the midst of the Russia crisis. Under more strained conditions, perhaps the sequence of events for Amaranth would have been entirely different and the risks to the financial system much greater. However, the fact that the financial system could manage the problems in Amaranth may also imply that it has become more resilient. The markets have demonstrated that they can manage a number of major strains in recent years, both macroeconomic shocks and unexpected market events, without any tangible effect on their functioning. The banks’ management of risk and their collateral requirements do appear to be stricter than they were in 1998.