samchain/econo-pairs-v1 huggingface dataset:
So, in brief – if the policy rate is not the only and best weapon, what else do we have available in our arsenal? And which authority should have its finger on the trigger? One of the problems the crisis has brought to light is that there was too little focus on overall risks that could threaten the financial system as a whole – systemic risks. In many parts of the world they are now working on introducing a framework aimed at preventing such risks. This could contribute to preventing imbalances that would have consequences “merely” from a monetary policy perspective, even if this is not the explicit aim. One means of preventing an exaggerated upturn in house prices and lending, for instance, is to cut the permitted loan-to-value ratio – how much it is possible to borrow in relation to the market value of the underlying collateral. Another means may be to introduce an amortisation requirement. Two weeks ago, Finansinspektionen (the Swedish financial supervisory authority) presented a proposal for a recommended ceiling for the loan-to-value ratio for housing of 85 per cent of the property’s market value. Division of responsibility and other problems I asked earlier who should have their finger on the trigger. It is not entirely clear who should have the power of authority to introduce the type of measure I just mentioned. There may be good reasons to delegate this to the central bank, at least with regard to measures that affect the macro economy and are not aimed at individual banks.

Elements of “irrational behaviour” such as over-optimism and speculation are not just difficult to capture in models and other analyses during an upturn phase. They are also hard to capture during a downturn phase. The Swedish crisis in the 1990s is a very good example of a self-reinforcing downward spiral, the effects of which had unforeseen serious consequences – with a drastic fall in property prices, large loan losses that threatened the financial system and a deep recession. In the most recent crisis, too, confidence and mood played an important role in developments. We probably all underestimated the force in the mechanisms that were able to drag the world economy down into the worst recession since the 1930s. This has, of course, also had an impression on the debate on monetary policy and asset prices. It seems as though several advocates of the strategy of “cleaning up afterwards” have modified their view, primarily because the potential profits of limiting bubbles appear to be greater than they previously assumed. The well-known American professor Alan Blinder also notes in an article this year that it appears as though even the advocates of “cleaning up afterwards” are beginning to support the opinion that central banks should at least do something when they suspect that a loan-driven imbalance is building up. However, this does not necessarily mean raising the policy rate, even if there now appears to be greater acceptance for this, too, if it is supplemented with other measures.
22  All speeches are available online at www.bankofengland.co.uk/speeches  22  Chart 13: World trade in goods and euro-area and US capital goods orders Percentage change on a year ago 6 5 4 3 2 1 0 -1 2012  2013  2014 World trade in goods  2015 2016 Capital goods orders  2017  Sources: CPB Netherlands Bureau for Economic Policy Analysis, European Central Bank, Thomson Reuters Datastream, US Bureau of Labor Statistics, US Census Bureau and Bank of England calculations. Notes: World trade in goods is a volume measure; capital goods orders is defined as US new orders for non-defence capital goods excluding aircraft, deflated by the private capital equipment producer price index, and euro-area volume of new orders for capital goods, weighted together using 2014 US and euro-area manufacturing value-added data. Adjusted to match the mean and variance of annual growth in world trade in goods since 2012. Chart 14: VIX and media references of uncertainty Annualised standard deviations  Number of references per month 700  70  600  60  500  50  400  40  300  30  200  20  100  10  0 2000  0 2002  2004 VIX (RHS)  2006  2008  2010  2012  2014  2016  Media references to uncertainty (LHS)  Sources: Bloomberg, Financial Times, Daily Telegraph, Guardian and Independent.

Jessica Chew Cheng Lian: Launch of FSPB Professional Code for the Financial Services Industry Welcome address by Ms Jessica Chew Cheng Lian, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Launch of FSPB Professional Code for the Financial Services Industry, Kuala Lumpur, 24 May 2018. * * * I am delighted to be here to witness the launch of the Financial Services Professional Board (FSPB) Professional Code for the Financial Services Industry. Thank you for allowing me an opportunity to offer some brief remarks this morning on the importance of this initiative from Bank Negara Malaysia’s perspective. Let me begin by saying that the launch of the Code comes at a time when issues of culture and conduct in the financial industry have become an important focal point for financial regulators. After a hive of activity largely focused on strengthening prudential rules and standards, there is an acknowledgement that behaviour is ultimately regulated by something that runs deeper than rulebooks. It is not an easy thing to put your finger on. Regulators have talked about “the way things get done” in an institution, or “the human element in everyday decisions”. We like to think of it as how one behaves when no one is watching. On this score, the financial industry could do better. Despite much publicity and widespread efforts to tackle the issue, incidents of misconduct continue to cast a dark shadow over the financial services industry across the world.
Taylor, M, Pevalin, D and Todd, J (2007), ‘The psychological costs of unsustainable housing commitments’, Psychological Medicine, Vol. 37, pp. 1027-1036. Viladecans-Marsal, E (2004), ‘Agglomeration economies and industrial location: city-level evidence’, Journal of Economic Geography, Vol. 4, No. 2, pp. 565-582. Viscek, T, Shlesinger, M and Matsushita, M (eds.) (1994), Fractals in Natural Sciences, World Scientific. What Works Centre for Local Economic Growth (2018), ‘Developing effective local industrial strategies’, What Works Centre for Local Economic Growth, June 2018. Wildman, J (2003), ‘Income-related inequalities in mental health in Great Britain: Analysing the causes of health inequality over time’, Journal of Health Economics, Vol. 22, No. 2, pp. 295-312. 51  All speeches are available online at www.bankofengland.co.uk/speeches  51

They do not, for example, cover how the supervisors of the large EU banks active in London will cooperate with the UK supervisory authorities to  8  All speeches are available online at www.bankofengland.co.uk/news/speeches  8  provide assurance about the risk being imported into the UK. Or how the EU authorities – at European and at member state level – will manage the pooling of EU risk in the global markets of London. We have a good basis on which to build. Most obviously we leave the EU with the same legislation and regulation – ‘equivalence’ at the starting point of this new relationship should not take the regulatory authorities on either side very long to establish. The Financial Policy Committee of the Bank of England has made clear that it is committed to maintain a level of financial sector resilience that is at least as great as that currently planned, which itself exceeds that required by international standards. On the supervisory side, the Bank of England has over the last 18 months signed 30 MoUs with EU and EU member state authorities covering pretty much all aspects of financial sector activity. The Financial Conduct Authority has done likewise. The issue therefore is not the starting point but how our regulatory frameworks and supervisory practices and cooperation will develop over the future. The UK has been very heavily involved and instrumental in the development of the EU regulatory framework. That will no longer be possible.
The financial structures that we thought were in place to assess, absorb and neutralise risk were either dysfunctional, or worked – perversely – to magnify volatility. This is how financial risk was created, transmitted to the real economy and eventually became systemic. Key factors in creating this risk were opaque financial structures, particularly vulnerability to contagion and domino effects, and pro-cyclicality in financial markets. The lack of transparency in many financial instruments meant that market participants did not know who was exposed to what kind of risk. In this state of incomplete knowledge, some market players could exploit – for their own, private benefit – information that was not generally available. 2  Neil Wallace (1981) has an early theorem on the ineffectiveness of open market operations. Gauti Eggertson and Mike Woodford (2003) prove the irrelevance of liquidity measures at times of zero interest rates. See Wallace (1981), “A Modigliani-Miller Theorem for Open Market Operations”, The American Economic Review, Vol. 71 No 3, pp. 267–274, and Eggertson, G. and M. Woodford (2003), “The Zero Bound on Interest Rates and Optimal Monetary Policy”, Brookings Papers on Economic Activity, 1, pp. 212–219. 2  BIS Review 29/2010  Pro-cyclicality acts as a formidable accelerator of financial trends. Demand for finance increases and declines in tandem with the cycle. But the supply of finance does not simply accommodate demand: it often amplifies the cycle. Where does pro-cyclicality stem from? To my mind, distorted incentives and herd behaviour are key explanatory factors.

Overall conditions in the markets for capital have improved greatly from the autumn 2008 paralysis. The functioning of money markets is now comparable with the conditions that prevailed in the third quarter of 2007. Money market spreads are close to levels that are reasonable to view as normal after the equilibrium re-pricing of risk that was needed and is likely to have taken place since then. Term lending has resumed on a satisfactory scale. The funding ability of banks is not a restraining factor for lending, as it was the case for some time after October 2008. Since the second half of last year, it appears to support bank profitability. Corporate and bond spreads have also declined steadily across the quality spectrum. Currently, these considerations are what motivate and guide a gradual phasing-out process. We started to phase out our enhanced credit-support measures in December 2009, in an environment of improving financial market conditions and emerging signs of recovery. On 4 March we came to the conclusion that the current pace of phasing-out is appropriate. With the resumption of longer-term loans in the private market, we have started to adapt the conditions of our longer-term credit to banks. The first step was to announce a discontinuation of one-year and six-month longer-term refinancing operations. One-year refinancing now pays an interest rate indexed to the average rate that will be applied in our weekly main refinancing operations over its 12-month life. The pricing will be the same in our upcoming and last 6-month refinancing operation.
On the other hand, price pressures could become more persistent if supply bottlenecks last longer or wages rise more than is currently anticipated. So far, there is no evidence of significant second-round effects through wages and inflation expectations in the euro area remain anchored, but we continue to monitor risks to the inflation outlook carefully. Monetary policy The ECB’s Governing Council concluded its review of our monetary policy strategy in July. As part of the review, a symmetric 2% inflation target over the medium term was adopted. Our new strategy also recognises the importance of taking into account the effective lower bound on nominal interest rates, which can require especially forceful or persistent monetary policy 1/4  BIS central bankers' speeches  measures. In support of this inflation target and in line with our monetary policy strategy, the Governing Council revised its forward guidance on the key ECB interest rates. We expect them to remain at their present or lower levels until we see inflation reaching 2% well ahead of the end of our projection horizon and durably for the rest of the projection horizon, and we judge that realised progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilising at 2% over the medium term. Preserving favourable financing conditions over the pandemic period is essential to reduce uncertainty and bolster confidence, thereby underpinning economic activity and safeguarding medium-term price stability.

Euro area activity rebounded strongly in the second quarter of this year and looks set to also have been strong in the third quarter, supported by a marked recovery in domestic demand on the back of the success of vaccination campaigns and substantial monetary and fiscal policy support. While there is still uncertainty about how the pandemic will develop from here, we see the risks surrounding the euro area growth outlook as being broadly balanced over the medium term. The downside risks are related both to the pandemic and supply bottlenecks becoming more persistent than is currently expected. However, upside risks could also materialise from higher confidence effects and further spending by consumers. Inflation has increased markedly since the beginning of this year and we expect it to rise further this autumn. We continue to view this upswing as being largely driven by temporary factors, especially the strong recovery in oil prices from the sharp drop in spring 2020, the reversal of the temporary VAT reduction in Germany, and cost pressures arising from temporary shortages of materials and equipment. The impact of these factors should fade out of annual rates of price changes in the course of next year, dampening annual inflation. Our baseline scenario foresees inflation gradually increasing thereafter, but remaining below our 2% target over the medium term. Inflation could prove weaker than foreseen if a renewed tightening of pandemic-related restrictions were to affect economic activity.
It requires both depth and breadth, and will increasingly require both local and global experience and know-how. MAS already has several initiatives in place to further this objective, including the Finance Scholarship Programme and the Finance Associate Management Scheme (FAMS) for Singaporeans early in their finance careers2, as well as the International Posting Programme (iPOST)3. To equip local practitioners with Asia-relevant leadership capabilities, MAS will be launching a new Asian Financial Leaders Programme (AFLP) later this year for Singaporeans who aspire to take on regional or global leadership positions. Through the AFLP, participants will be able to learn from regional policy-makers, as well as interact with fellow financial sector leaders from other countries. IBF will complement these initiatives by introducing a new IBF Fellows Scheme. Financial industry veterans will be recognised as thought leaders and serve as trainers, speakers and panel discussants, or as mentors. Many of our industry pioneers and senior professionals have a wealth of experience to share, having been through the ups and downs of the industry and various market cycles. This scheme will provide a structured way for us to transfer knowledge from past to future leaders in the industry, complementing what is done within individual financial institutions. Financial sector skills and leadership development is a key priority for the industry, and MAS takes this very seriously. It will define our continued success as a financial centre. MAS will continue to invest in developing Singaporeans who are committed to a career in the financial sector.

William J McDonough: Toward greater financial stability Remarks by Mr William J McDonough, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Bank of Thailand, Bangkok, 5 February 2001. *  *  *  It is my pleasure to accept the invitation of the Bank of Thailand to speak to you tonight on how we can promote greater financial stability. In the wake of the Asian crisis, authorities in the region have done much to promote increased financial stability, through a variety of measures to strengthen domestic banking systems and corporate sectors, and institute broader improvement in accounting, legal, and supervisory systems. Thailand has taken a number of such actions, including efforts, among others, to close troubled financial institutions, attract significant private sector capital (including foreign capital) into the banking system, and improve the legal framework. Macroeconomic policy adjustments, including the move to flexible exchange rates, have also furthered greater stability. These actions have helped countries recover from large-scale banking crises, and restore solid growth generally. That said, in Thailand and elsewhere, the recovery is not yet complete, and much remains to be done. Moreover, the restructuring and reform agenda will be challenged by slowing global and regional growth, which may contribute to already apparent signs of increasing reform fatigue within the region.
SPEECH DATE:  08/12/2020  SPEAKER:  Governor Stefan Ingves  VENUE:  Business Arena  SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11) Tel +46 8 787 00 00 Fax +46 8 21 05 31 registratorn@riksbank.se www.riksbank.se  Monetary policy in a changing world∗ We have had a dramatic year in 2020, when a lot has changed in our lives. For members of staff and for us in the Riksbank’s Executive Board, the year has brought intensive work to manage the effects the coronavirus pandemic has had on the Swedish economy. Our focus has been on ensuring that there is good access to liquidity and keeping interest rates low. We have wanted to provide the economy with the best conditions possible to recover after the coronavirus pandemic and, as usual, to get inflation to develop in line with the inflation target. In many ways, our measures have resembled those of other central banks. However, compared with the period before the financial crisis, just over ten years ago, monetary policy has changed radically, above all because the monetary policy toolbox today looks very different. Back then, adjustments of the policy rate were seen as the only monetary policy tool. These days, most central banks work with several tools, some of them modern iterations of older approaches, both in times of crisis and in more normal times. Monetary policy and the way we ‘do’ monetary policy has changed, but the objective of attaining the inflation target still remains.

At present, this ratio exceeds 100 percent in all these three cases. The trend has been also growing fast in Greece, albeit from a lower base. In Portugal, for instance, domestic banks took the opportunity to issue eurodenominated bonds in euro area markets to increase rapidly the volume of domestic loans both to the corporate sector and to households. Capital inflows through banks financed a mounting current account deficit. It also fuelled fast growth of domestic demand and GDP in 1998-2000. This experience could in principle be viewed as a manifestation of the expected potential benefits of monetary integration. In fact, it has been argued that euro area membership has enabled the participating countries to overcome the famous Feldstein-Horioka puzzle, i.e. the traditional strong link between domestic savings and investment. In other words, the current account constraint may become non-binding after euro adoption, which should lead to a more efficient allocation of capital in the long run. However, it might be also questioned whether such a fast credit expansion will lead to a build-up of vulnerabilities in the balance sheets of financial institutions, firms or households. In the case of Portugal, for example, the debt burden of the household sector has exceeded 100 percent of yearly disposable income, even though a decade ago this ratio was comparable to the current situation of some acceding countries. As a result, one can think of adverse scenarios in which the repayment capacities of the banks’ clients would deteriorate substantially, with adverse consequences for financial stability.
A few months ago, we brought together mental health and policy experts to examine the pandemic’s impact on mental health in communities of color, including the correlation between depression, anxiety, and economic factors such as lost income.6 And next week, we’ll be hosting an event in collaboration with New York University’s Rory Meyers College of Nursing, the New York City Department of Health and Mental Hygiene, the Low Income Investment Fund, and the Robert Wood Johnson Foundation to discuss the need for investments in maternal and child health.7 Our goal for convening this coalition of thought and civic leaders is to find innovative ways to ensure that all mothers across the city have the care they need to fully participate in the economy and that their children are positioned for a healthy start. Today you’ll hear from an exceptional lineup of panelists: leaders in the medical, academic, and policy worlds. We’ll close with a panel of my colleagues, fellow Reserve Bank presidents, who will share their reflections on what we’ve learned and discussed today. So, with that, I’ll hand it over to Marielle Segarra of Marketplace who will moderate the next part of the program. Thank you all again for joining today’s event. 1 Centers for Disease Control and Prevention, Introduction to COVID-19 Racial and Ethnic Health Disparities,  updated December 10, 2020.

People who lack good health or healthcare often struggle to participate fully in the economy. On top of that, social determinants of health—economic stability, housing, and education—can be barriers to employment and affect the kinds of jobs people get. Of course, we at the Federal Reserve are neither healthcare workers nor healthcare policymakers. But a major part of our core mission is to foster a strong economy and promote maximum employment. And to put it simply, we need healthy people to have a healthy economy and workforce. That’s why understanding the nexus of race, health, and the economy is central to achieving our goals. We are deeply committed to doing so, both in this series and beyond. The pandemic demonstrated just how acute many of the connections are between physical and economic health for individuals and communities. And it exposed just how dramatic racial disparities can be, especially in accessing healthcare and other critical resources. The convergence of a health crisis, business closures, and job losses created tremendous hardships for many Americans, and was especially devastating for communities of color. We know that people of color, and Black people in particular, experienced higher rates of illness and death.1 Significant representation in essential services work—jobs that required close contact with others—contributed in part to these tragic outcomes.2 Over the past 18 months, we learned how these issues played out for families through regular conversations with community leaders in our district and beyond. Separately, our research shone a spotlight on many of these painful realities.