samchain/econo-pairs-v1 huggingface dataset:
That paper £ note contains sophisticated counterfeit protections ranging from holographic images to ultraviolet features, which will be further enhanced when we switch to a polymer £ in 2020;  -  12  The foundation of the payments system, RTGS, which processes over £ billion of bank-to-bank payments per day to the highest standards of efficiency and resilience;  13  8  The data are for 2016. To note, banknotes accounted for 45% of transactions in 2015, and as such there was a 5 percentage point fall year-on-year which may be related to increased use of cards and online payments. 9 See McLeay, M., Radia, A., and Thomas, R., (2014), Money Creation in the Modern Economy, Bank of England Quarterly Bulletin 2014 Q1, which notes that the reality of how money is created often differs from that found in standard textbooks, and rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits. 10 Although it does not target monetary aggregates per se, the Bank of England conducts monetary policy to ensure the amount of money creation in the economy is consistent with low and stable inflation. In normal times, the Bank of England implements monetary policy by setting the interest rate on central bank reserves. In exceptional times when interest rates cannot be lowered further, the Bank implements monetary policy by purchasing assets, which has the by-product of increasing the central bank reserve holdings of private banks.

Indeed, the average volatility of the top ten cryptocurrencies by market capitalisation was more than 25 times that of the US equities market in 2017. This extreme volatility reflects in part that cryptocurrencies have neither intrinsic value nor any external backing. Their worth rests on beliefs regarding their future supply and demand—ultimately whether they will be successful as money. Thus far, however, rather than such a sober assessment of future prospects, the prices of many cryptocurrencies have exhibited the classic hallmarks of bubbles including new paradigm justifications, broadening retail enthusiasm and extrapolative price expectations reliant in part on finding the greater fool. Far from being strengths, the fixed supply rules of cryptocurrencies such as Bitcoin are serious deficiencies. Fundamentally, they would impart a deflationary bias on the economy if such currencies were to be widely adopted. 16  17  If “those who cannot remember the past are condemned to repeat it” , recreating a virtual global  gold standard would be a criminal act of monetary amnesia. centralised authorities like the Bank of England that supervise them) – reliance is placed on the network and the rules to update the ledger reliably. 15 Satoshi Nakamoto (2008), ‘Bitcoin: A Peer-to-Peer Electronic Cash System’ bitcoin.org, October 2008. 16 For example, the supply of Bitcoin is limited to 21 million units by 2040. In the long run, a fixed money supply may harm the macroeconomy by contributing to deflation in the prices of goods and services, and in wages.
1 This means that all participants know the expected value of the dividend stream with certainty. The participants are allowed to buy and sell these assets from one another. In this framework, if all participants were fully rational, then trading should occur only at intrinsic values based on the expected dividend stream. But this is not what happens in practice. In 14 of the 22 experimental runs, prices rose significantly above fundamental valuations and these price bubbles were followed by crashes. When traders in these experimental runs were “experienced,” meaning that they had participated in the experiment before, the probability of a bubble was reduced, but not eliminated. The authors conclude: “What we learn from the particular experiments … is that a common dividend and common knowledge thereof is insufficient to induce initial common expectations. …” The lack of common initial expectations leads to a willingness to trade to try and earn capital gains above fundamental value. 2 Relaxing the conditions in these types of behavioral studies to admit more uncertainty about fundamental asset valuations works to enhance the propensity for bubbles by increasing the degree of divergence in participants’ initial expectations. Lastly, over the past few decades, there simply have been too many episodes in which asset prices have dramatically overshot on the upside and then violently corrected to suggest that the behavioral studies conducted in the laboratory do not also have real world counterparts.

In addition, the sharp rise in stock prices led to a re-assessment of the appropriate equity risk premium. The higher that stock prices rose, the more people thought that equities had little risk. Everyone could become a millionaire with little risk or effort. 4 Similarly, in the subprime/structured finance boom, there were several important positive feedback mechanisms. In particular, the surge in credit availability drove up the demand for housing and pushed up housing prices. This increase in demand caused the default  4  In fact, one book, Dow 36,000, which was published in 1999 shortly before the stock market peaked, argued that “fair value” for the Dow Jones Industrial Average should be 36,000 because the appropriate risk premium for the equity market versus Treasury bonds should be zero. BIS Review 43/2010  3  experience associated with such lending to be very low, reinforcing the notion that subprime lending was not very risky. It also reinforced the demand for the complex CDOs secured by such assets. During the boom, the structured finance models appeared to be sound because losses on the underlying subprime mortgage loans were low and because the correlation rates in performance across different assets in the pools were low, just as the models had assumed. Fourth, the proportion of market participants who believe that a particular episode of asset price increases are justified by the innovation tends to rise as the boom persists.
These rules emphasise sensible governance structures – such as preventing control function officers from having their bonuses determined by the profits of business units they oversee. They also require risk-adjustments in quantifying bonuses – for instance, two traders who bring in the same profits, but expose the firm to different levels of risk, are rewarded differently. The other area that is important to fostering a healthy culture at the situation-level is “speaking up”. It is important that there are clear and robust whistleblowing arrangements for employees to raise legitimate concerns about illegal or unethical practices. In addition to the statutory protection offered for whistleblowing to authorities, it is also important that financial firms have internal arrangements for concerns to be raised within the organisation. However, whistleblowing only makes up a small portion of a speaking up culture. In fact, it is a last resort which will not need to be used in an organisation with a healthy culture of open discussion. For professionalism and integrity to prevail – it is crucial that financial firms encourage constructive challenge and healthy debate. This is particularly pertinent for the more ambiguous issues of ethics, professionalism and integrity. (c) Person We have discussed the elements of “system” and “situation”. The third element that is critical for a healthy culture is that of the “people”. I pointed out earlier that the evidence of psychology suggests that the “system” and “situation” are far more likely to predict actual ethical behaviour compared to personal convictions.

Perhaps it is fitting that I end by quoting from a great icon of professionalism in finance, the late Tun Ismail Ali. And I quote: “It is timely that we should examine the real meaning of integrity, hard work and capacity for efficient management of our affairs, accountability and corporate citizenship” These words still ring true today. As leaders, our challenge is to emulate his example of building a culture of genuine professionalism and integrity – one that sinks into the very DNA of the financial industry. I wish you all a fruitful session today as you think through and discuss these interesting issues together. 5/5  BIS central bankers' speeches
With the agreement of the region’s regulatory authorities, this can be achieved through the formation of a regional dealers’ network for the primary and secondary market. Such regional dealers will help to distribute securities around the region and more importantly create the market to facilitate cross-border transactions. In doing so, it creates liquidity in the fixed income market, attracting greater foreign investors’ participation and lowers the cost of funding. ASEAN corporates are thus able to tap into new markets and investors and widen their sources of financing. This contributes to greater depth and breadth of the regional fixed income market. Secondly, as intra-regional trade within ASEAN is becoming more significant with further potential in intra-regional investments, another untapped area is the cross currency foreign exchange market, that could support regional settlement for trade and investment. ASEAN is well positioned to advocate the greater use of regional currencies that will further enhance and deepen regional financial integration via use of regional currencies for trade settlement. The cost of hedging the exchange rate risk will be lower thus it promotes efficiency in trade BIS central bankers’ speeches  3  and enhances export competitiveness of our businesses. We should therefore, work together and double our effort to promote and enhance the use of regional currencies for trade and investment settlement. Sovereign funds managers could also give a timely boost to this effort by investing a fraction of their funds into domestic currencies of regional bond markets.

Going forward, ASEAN with a sizeable population of 618 million offers vast investment prospects as the economy is expected to grow strongly for the next few years. ASEAN leaders have also embarked on an ambitious vision to create a single “common market”. Realisation of this vision will lead to a freer flow of goods and services, capital investment and skilled labour across the region. Many initiatives and measures have been implemented under the ASEAN Economic Community Blueprint since its launch in 2007 and many more areas of importance are being discussed and negotiated. Like most regional economic community, ASEAN aims to promote greater regional connectivity in which lessons of history in economic development had shown, would expand economic growth potential. Data has also shown that intra-regional trade flows have already grown substantially among ASEAN-10 members countries reflecting the increasing phenomenon of freer trade with its neighbouring countries in recent years. Consequently, the share of intra-regional trade has also increased, from 22.5% in 1999 to 25% in 2011. Against this backdrop, ASEAN financial markets had also grown significantly in tandem. In particular, the ASEAN fixed income markets, are instrumental to support the growth of intraregional trade, financing and investment in infrastructure. ASEAN fixed income markets have expanded by more than six folds since 2000, and now stand impressively at USD1.1 trillion.
I’ll highlight two areas where markets have evolved in ways that raise questions about their resilience, even if all the intermediaries are safe. They might mean investors aren’t able to take the liquidity of markets for granted if they adjust. In both cases, there is no proven problem for markets or the economy. Inquiries are, as the police like to say, ongoing. Through our market intelligence gathering, I’m pleased to say that market participants are helping with those inquiries. And I look forward to the contributions of this Centre too. i) (Mis) use of volatility measures  Against a backdrop of relatively stable markets, some investors may have developed an appetite for betting that a range of markets, including bond markets, will remain stable. 10  All speeches are available online at www.bankofengland.co.uk/speeches  10  That means selling options – effectively insurance against moves in market prices. A put option, for example, is insurance against falling prices. An investor who buys this insurance is guaranteed a sale price for the asset insured, regardless of what happens to the market. If prices are currently higher but then fall below the guaranteed price, an investor that wants to sell will incur some loss – think of this as the insurance excess – but the insurer will pay for the rest. If markets stay stable, as the insurer is betting they will, no payout is made and the insurance collects a premium. While markets are stable, it’s a nice little earner for the insurer.

The question we ask is ‘could they reasonably be judged to be stretched?’ In global corporate bond markets, the answer is yes. As we highlighted back in November, corporate credit appears priced for perfection. Investors expect short-term risk-free interest rates to stay pretty low. And they are demanding little compensation for that being wrong or for the possibility of corporate default. Conviction that interest rates will remain low has meant the ‘term premium’ investors’ demand for holding longer-dated fixed income bonds has rarely been lower. Conviction that growth will be steady and corporations healthy has meant the credit risk premium investors demand for holding corporate bonds has compressed. All in, spreads between corporate bond yields and the estimated path of expected short-term interest rates are below pre-crisis levels. So it’s not just that, as in recent weeks, corporate bond yields are at risk from the – hardly radical – possibility that sustained global growth might mean higher global interest rates. They are also at risk of a reappraisal of how uncertain the outlook is for interest rates and corporate health. 6  All speeches are available online at www.bankofengland.co.uk/speeches  6  The compression of bond yields has been especially pronounced at the riskier (‘high yield’) end of the market. The difference between yields on high-yield and investment-grade bonds has shrunk to levels seen prior to the global financial crisis. However you look at it, it’s cheap for companies to borrow in bond markets.
This is particularly evident in foreign exchange and financial markets, where exchange rates and interest rates are influenced when participants shift large amounts partly on the basis of their expectations concerning economic policy and economic developments. Financial market expectations concerning economic policy are entirely different today from what they were 20-30 years ago. Behaviour can change from being very rational to herd behaviour. The issues that receive attention, and that govern movements in exchange rates and interest rates, change. It is thus important that the authorities do not sow doubt, but on the contrary act in a predictable manner within a long-term framework. The authorities must be credible and inspire confidence. There must be consistency between the stated objectives of economic policy and what is actually done to achieve them. This is the most important reason why the implementation of monetary policy has been delegated to the central bank in Norway, as has been the case in other comparable countries. In Norway, the responsibility for interest rate decisions was delegated to Norges Bank through the 1985 Norges Bank Act and through the application of the Act in 1986. Developments in economic theory have also had considerable influence in this context. Seminal studies on economic policy guidelines were conducted by Finn Kydland and Edward Prescott at the end of the 1970s.6 These studies are based on the assumption that economic agents do not make systematic errors in their assessments of what the authorities are planning for the future.

Part of the work involves developing a fairly small model that can serve as a reference and a basis for discussions and deliberations within the Bank and the Executive Board. The thinking behind this is that this model will contribute to disciplining and structuring discussions and to consistent argumentation across issues and over time. Moreover, this model could serve as an aid in our external communication on monetary policy and our view of the functioning of the economy. The model must satisfy the following requirements:  1. The model must have a well defined equilibrium  The model must be predicated on the experience gained in the 1970s and 1980s, which showed that we cannot increase employment in the long run by accepting higher inflation. In the long run, inflation is a monetary phenomenon. 2. Inflation expectations must be modelled explicitly  We must have a line of reasoning and a model that takes account of the forward-looking behaviour of economic agents when making decisions. Agents take account not only of today’s economy policy, but their expectations as to future economic policy. As mentioned, it may be difficult to form a perception of how expectations are formed. An advantage of modelling expectations explicitly is that we can analyse the effects of different views on how they are formed. 3. Monetary policy must have a defined role in the model  The model must address monetary policy’s main task: providing a nominal anchor. 4.
Emerging Market Forum – Paris, 16 May 2022 Welcome remarks: “Multipolarity and the role of the euro in the International Financial System”  Speech by François Villeroy de Galhau, Governor of the Banque de France  Page 1 sur 7 Ladies and Gentlemen, It is a great pleasure to welcome you today in Banque de France premises for the 15th Emerging Markets Forum. “Navigating in a fast moving and turbulent world” certainly requires great skills, and recent developments in the International Financial System remind us that it is currently all but smooth sailing. We have seen disruption in the global value chains due to the still ongoing pandemic. International trade may slow down or even contract if these disruptions lead to a significant wave of re-shoring. Now the brutal war in Ukraine has induced further supply disruptions and led our democratic leaders to use financial sanctions in response. In this uncertain situation, our first duty as a central bank is to provide appropriate monetary policy. The consensus in our Governing Council is now clearly emerging, as summed up by Christine Lagarde in her speech last Wednesday i: to fight an inflation which is not only higher but broader, we now have to normalise our monetary policy. I won’t add my precise calendar prediction to the many existing ones, but expect a decisive June meeting, and an active summer.

However, and this is a point I have made elsewhere, monetary policy is too blunt an instrument for addressing specific risks to financial stability, and it can sometimes cause collateral damage to the rest of the economy if it tries to do so. [10] An integrated policy framework could perhaps shed light on the circumstances under which monetary policy could also serve financial stability objectives, and whether there are benefits to jointly calibrating monetary policy and macroprudential policy, as well as how this calibration should be done. The BIS and IMF have both been undertaking research on these issues. Central bankers have at the same time gained considerable experience in employing an eclectic mix of policy instruments, with varying degrees of success. There is merit in bringing these practical experiences to bear in formulating an integrated policy framework. Conclusion Developing eﬀective policy instruments and using them in a coherent fashion will enhance macroeconomic and macro-financial stability. It will help to make financial globalisation safer, especially for EMEs, at a time when there are growing risks of fragmentation in international economic relationships. Your task is therefore vital. I wish you a fruitful conference ahead. [1] IMF Balance of Payments, IMF International Financial Statistics, MAS calculations. [2] Fratzscher, M., Lo Duca, M. and Straub, R. (2013), “On the international spillovers of US quantitative  easing”, ECB Working Paper No. 1557; Bhattarai, Chatterjee, and Park (2017), “Global Spillover Eﬀects of US Uncertainty”, Fed Reserve Bank of Dallas, Working Paper No.
When the Riksbank is portrayed it is often the case, consciously or unconsciously, that the present inflation figures are linked to the current monetary policy conducted. If the most recent inflation figures are above the target level, the conclusion is often drawn that the Riksbank should raise the repo rate. If inflation is below the target level, as now, it is often said that the repo rate should be cut. The problem is that today’s monetary policy has very little effect on today’s inflation rate. The way monetary policy functions in practice, the impulse from monetary policy decisions spreads through the economy very slowly. By affecting the cost of loans, incentives to save, exchange rate trends and thereby exports and imports, etc. the interest rate has an effect on total demand in the economy and gradually also on inflation, but this process takes time. It is possible that the reaction time has been reduced somewhat as households have reduced the average period for fixing their loans, from around one and a half years to around one year. However, the accepted estimate is that an interest rate decision makes its greatest impact one to two years after the decision was taken. The inflation figures registered today are thus largely due to interest rate decisions made one to two years ago, and the decisions we make now will not have their real effect until one or two years from now. The somewhat thankless situation for the Riksbank is therefore that we are always reviewed with hindsight.

Germany thus has a domestic demand problem, which it is trying to solve through supply side reforms, while fiscal and monetary policy are tied by the EU and ECB. All this appears to have contributed to further prolonging the  BIS Review 41/2005  3  economic downswing in Germany and if the recovery in the euro area were to be delayed further, it would have an effect on Swedish export demand. If these negative risks are realised in full, it could be more difficult for domestic demand to relieve the export-driven growth of recent years. This could break the present recovery impetus, which would lead to a need for further stimulus of the economy from monetary policy. Conclusion All in all, we should continue to be vigilant of risks and possible changes in the direction of business tendencies. However, it is important to hold on to a stable analytical framework and a consistent forecast assessment. The underlying factors still indicate a rise in resource utilisation and thereby a rise in inflation. 4  BIS Review 41/2005