samchain/econo-pairs-v1 huggingface dataset:
I will return to this instrument shortly. However, such broadly-acting tools  4  The Riksbank has defined financial stability as meaning that the financial system can maintain its basic functions while also having resilience to disruptions that threaten these functions. The Riksbank and financial stability (2010). See also Nordh-Berntsson and Molin (2012), “A Swedish framework for macroprudential policy”, Sveriges Riksbank Economic Review 2012:1. 5  Rajan (2005) argues that the element of distorted incentives for managers of financial assets to take serious risks has increased as a result of structural changes to the financial sector, in which the banks’ significance has decreased and the role of other players, such as securities funds, insurance companies, pension funds etc., has increased. 2  BIS central bankers’ speeches  have the disadvantage that they risk having unforeseen effects in sectors that have not had problems. If the problems are clearly concentrated on a specific sector, tools with a narrower area of effect are thus to be preferred. If, for example, the problem is a rapid build-up of housing loans in combination with rapidly rising housing prices, it may be better to focus specifically on the housing market. A more narrowly-acting tool in this case could be an increase of risk weights specifically on housing loans. However, it is not certain that there will always be narrowly-acting tools that are sufficiently effective. Thirdly, there may be a need for tools that can be focused on different types of participant.

Philipp M Hildebrand: Switzerland - the challenges of being and remaining a leading financial centre Speech by Dr Philipp M Hildebrand, Member of the Governing Board of the Swiss National Bank, at the Financial Management Association (FMA), European Conference Zurich, University of Zurich, Zurich, 3 June 2004. *  *  *  I am pleased to be here this evening to reflect on Switzerland: the challenges of being and remaining a leading financial center. Moreover, I am honored to share this platform with Peter Wuffli, Walter Kielholz and Bruno Gehrig. The Financial Management Association should be commended; you have assembled three outstanding leaders and representatives of the Swiss financial industry. I very much look forward to their comments. When I think about the Swiss financial industry, two closely linked thoughts come to mind: first, Switzerland’s status as one of the world’s leading financial centers and second, the important contribution of the financial sector to the overall vigor and resilience of the Swiss economy. Going forward, the key challenge for the Swiss financial industry will be to maintain its leading global status in a world of fierce competition. Because of the financial sector’s critical contribution to the overall economic well-being of the Swiss people, meeting this challenge is important not only to the financial sector but to all Swiss citizens who are concerned about the long-term vitality of their economy. Many of you are familiar with the relevant figures: roughly 10 percent of Switzerland’s real GDP derives from the financial sector.
Figure 8 Interest rates on nominal 10-year benchmark bonds  Stock markets (*)  (change with respect to 1 July 2020, basis points) 200  Chile  (change with respect to 1 July 2020, percent)  United States  40  Chile  World  30  150  20 100 10  50 0 0  -50 Jul.20  -10  Oct.20  Jan.21  Apr.21  -20 Jul.20  Oct.20  Jan.21  Apr.21  (*) World denotes ACWI stock index in local currency from Morgan Stanley Capital International. For Chile, the IPSA is used. Sources: Central Bank of Chile and Bloomberg. Page 18 of 27  Figure 9 Businesses confidence (PMI) (*) (diffusion index)  Manufacturing PMI  Services PMI  United States  70  Eurozone  70  China  60 60 50  50  40  40  30  30  20  20  10 Jul.19  Jan.20  Jul.20  10 Jul.19  Jan.21  Jan.20  Jul.20  Jan.21  (*) Value below (above) 50 indicates pessimism (optimism). Source: Bloomberg.

First, persistent misperceptions of future spending power may generate a mix of demand that proves to be unsustainable. I believe this was an important factor underlying the crisis. Although output in deficit countries – like the UK – appeared to be growing at a sustainable rate, that gave a misleading impression of the sustainability of the Great Stability. In fact the level of domestic demand was too high and the level of net exports correspondingly too weak. Second, as Hyman Minsky described, periods of stability encourage exuberance in credit markets, leading eventually to instability. And third, low short-term policy rates may encourage investors to take on more risk than they would otherwise accept as they “search for yield”. It is arguable that monetary policy paid insufficient heed to the potential impact of such financial vulnerabilities. Financial shocks are costly because their effects can be too rapid for policy easily to offset, and because they hit potential supply so creating a trade-off between output and inflation. In other words, the Taylor frontier is less favourable (further from the origin), when account is taken of financial shocks, than we might have believed. Taking the entire period of inflation targeting – including the recent past – might give a more accurate indication of where this “Minsky-Taylor” frontier lies than using data for the Great Stability period alone (Chart 4). What implications does this have for monetary policy? Possibly none – if we can rely now on macroprudential tools to ensure financial sector resilience.
During the period from August to mid-September the price of natural gas fell by 40 per cent and in a couple of weeks Amaranth lost USD 6 billion, which corresponded to two thirds of its capital. Despite the size of the amount, the market effects were largely non-existent and there was never any concern in terms of financial stability. The private sector also managed to settle its positions without any intervention from the responsible authorities. Does this mean that the concern over hedge funds is exaggerated? Or is increased regulation necessary? Before I discuss these questions, 1 however, I would like to take a brief look back at the development of hedge funds in recent years. A look back Hedge funds are a relatively new phenomenon in the Swedish market. However, the first hedge fund was established in the United States 60 years ago. At the end of the 1940s, US journalist Alfred Winslow Jones bought shares he considered to be under-valued and sold short shares he considered over-valued. His idea was that the price of under-valued shares should rise relatively more on a rising market and the price of over-valued shares should fall relatively more on a falling market. If the fund managers made a reasonable selection, this meant that the fund would earn money regardless of whether the market rose or fell – in other words the fund was protected, or hedged, against systematic market risk.

In Sweden, hedge funds are obliged to register with Finansinspektionen, the Swedish Financial Supervisory Authority, and to regularly report any measures that describe the risks in the fund, such as value-at-risk measures or measures of liquidity risk and indebtedness. The main rule is that the fund’s resources, as in the case of securities funds, should be invested according to the principle regarding risk diversification. Given this, it has not been considered necessary to set a minimum requirement for investment. Previously, Swedish hedge funds were obliged to report all of their holdings to Finansinspektionen, but this was not considered particularly meaningful. There are two main arguments for regulating hedge funds’ operations. The first is based on protecting the consumers from funds that take excessive risks. Amaranth’s gigantic losses affected several pension funds, for instance. However, in my opinion, this type of argument is rather strange. If one wants to protect pension savers’ investments, one should limit the pension funds’ investment opportunities, not the hedge funds’ operations. The second argument is linked to financial stability and the increasing role played by hedge funds. If a large number of funds were to fail and at the same time be highly indebted, there is a risk that the financial markets would be affected. However, this scarcely constitutes a reason for limiting the hedge funds’ investment freedom or for introducing some form of capital adequacy requirement.
However, using the CPI as a target variable has occasionally led to a number of pedagogical difficulties, not least in recent times. The reason for this is that household mortgage rates are included in the CPI. For example, when the Riksbank lowers the interest rate to bring inflation up, mortgage rates will fall. The short-term effect on the CPI therefore heads in the “wrong direction”, that is, the interest rate cut makes inflation fall further (see Figure 2). 5  See, for example, Skingsley (2015) and Flodén (2015). 6  When the inflation target is very low, say, 1 or 0 per cent, inflation will vary around that level. The nominal interest rate will also be lower on average for a lower target. The lower the interest rate is in normal conditions, the less scope there is to lower it before it hits its lower limit and can no longer be used to stimulate the economy. Another problem with permanently low inflation is that because it has proved to be difficult to lower nominal wages in practice, it can be difficult to adjust real wages between individuals at a company and between different sectors.

If this discussion were to eventually conclude that it is appropriate to make certain changes within the areas I raise, then this would not have drastic consequences for the monetary policy framework as such. Rather, it would mean adjustments and improvements which could be accommodated well within the existing framework of flexible inflation targeting. Before I continue, I would like to underscore one important thing: the members of the Executive Board always give their own views in their speeches. The ideas I express here are therefore entirely my own. The issues I raise are issues we in the Executive Board have discussed off and on, but it is an ongoing discussion and we have not yet drawn any conclusions. What I say here should therefore not be interpreted as the Riksbank's official view on these issues. I would like to highlight two aspects of the monetary policy framework – the target variable and a potential interval, or band, surrounding the target. 3  In Canada, this work has been formalised in that the monetary policy framework is reviewed every five years. This results in an “Inflation-Control Agreement” between the Bank of Canada and the government. 4  The evaluation of Swedish monetary policy by Marvin Goodfriend and Mervyn King on behalf of the Committee of Finance (Riksdagen, 2014), which is assessing different areas of the monetary policy framework, will undoubtedly further stimulate the discussion. This evaluation will be presented in January.
In particular, according to the European Commission, the eurozone, - a destination for more than half of Poland’s exports - is expected to grow at 2.1 percent in 2006 and 1.8 percent in 2007, which is significantly above a eurozone average growth rate in the years 2002-2005 when it stood at 1.2 percent per annum. There are numerous risks to these forecasts and the balance of risks is slanted to the downside. The International Monetary Fund in its World Economic Outlook published in April 2006 3 mentioned four risks: high and volatile oil prices, tightening in financial market conditions, rising global imbalances and an avian flu pandemic. Let me now comment briefly on three of the risks, and I will address the fourth - financial markets conditions a little later. So far high oil prices have had a remarkably small impact on world growth and world inflation in comparison with previous oil price shocks. For example, in one of the recent speeches 4 titled “Has oil lost ability to shock?” David Walton, member of the Bank of England’s Monetary Policy Committee, analyzes five episodes in which oil prices have risen significantly and tries to uncover the reasons for the relatively benign outcome on this occasion. He comes up with two key conclusions: (1) this time the shock has taken longer to unfold and the economy is less dependent on oil; (2) both monetary policy conduct and monetary policy framework focused on stabilizing inflation have anchored inflation expectations well and prevented the second round effects, ie.

Since the second half of 2004, the liquidity of offshore spot zloty market has increased significantly and average daily turnover reached almost USD 1 billion. In addition, high nominal values of single transactions between non-residents contribute to a segmentation of the zloty foreign exchange market. This phenomenon is even more visible in the case of the zloty option market. At the same time the consolidation of the Polish banking sector, transfer of treasury operations to parent banks and very limited amount of Polish banks’ capital, which determines the scope of risk they can take, limits the liquidity of the domestic market. In the future, financial market for instruments denominated in zlotys could become even more segmented and therefore less effective in absorbing different kinds of risks. 12 This process will accelerate with our accession to the eurozone. Experience of some EMU members, e.g. Finland, indicates that EMU membership will be accompanied by a visible contraction of the domestic market. 13 The introduction of the euro will change banks’ internal organisation of risk and liquidity management. Treasury activities will be centralised on a multi-country group level and proprietary trading will be transferred abroad to head offices. This process might be accelerated by the already observed transformation of subsidiaries into branches of foreign banks. Domestic outlook Let me turn to domestic outlook of the Polish economy.
The first is that, while it is agreed that more needs to be done to achieve a robust and diversified financial system, the key focus of financial sector reform in the region should remain to be the serviceability or access to finance for the majority of the region’s population. This is to say that for financial sector development to really matter, the people of East Asia across all income groups must be able to enjoy the access to and the benefits of a modern financial sector. The second is the observation that the region’s financial sector continues to be less integrated within the region than with the rest of world. And it follows that, with weak regional integration, the region will lose the opportunity to leverage on its own high levels of savings to support investment. The financing cost for corporates and SMEs will also be higher because of the round-tripping of funds. This, I think is a fair and important point, because greater reliance on the region’s own savings will help reduce the volatilities associated with capital reversals that we have seen in the recent months. The third is the concern that, despite rapid growth, the role of Asian financial institutions remains small. Their participation in the region’s finance, especially cross-border finance, is not at par with the flows of savings that need to be intermediated.

With close to 120,000 employees 8 in 2014, the banking sector is a major employer. The size of the banking sector, as measured by the ratio of total assets to GDP, is high by international standards. 9 Macroeconomic stability is thus a long-term asset for Switzerland. Low interest rates make borrowing conditions for firms and households cheaper. This leads to higher investment and supports the real sector. Macroeconomic stability is not only a precondition for sustained economic growth, but has helped to build a stable and robust financial sector. It is the longterm stability, combined with high quality work, which has helped create ‘brand Switzerland’. The Swiss financial sector has not only benefited from this brand but also contributed to its international propagation. However, long-term stability can sometimes be associated with short-term costs. As a small open economy, Switzerland can be subject to short-term exchange rate volatility resulting from the safe-haven status of its currency. The costs of this volatility are substantial at times. Strong fluctuations in the Swiss franc have had major effects on the Swiss economy in the past. For example, in the early 1990s, during the European Monetary System crisis, the Swiss franc appreciated strongly against European currencies. The entire economy had to adjust to a strong currency. More recently, Switzerland has been particularly heavily affected by international disturbances since the beginning of the financial crisis. The Swiss economy and its inflation outlook have been subject to strong downside pressures, due to massive exchange rate appreciation, weak international demand, and volatile financial markets.
7  All speeches are available online at www.bankofengland.co.uk/speeches  7  Given that the number of unionised workers has been falling over time, the wage premium from unionisation will have had a direct, “batting average”, effect on wage growth as fewer workers benefit from this premium. For example, with a wage premium of 15%, the shift in union membership since 2000 would have subtracted around 1 per cent from wages over the period, or less than 6 basis points from average annual wage growth. This effect is modest but, to my mind, is very likely a lower bound. For example, it takes no account of the broader spill over effects of unionised wages on the wages of other workers. There is evidence self-employment, flexible working and zero-hours contracts also affect wages, after controlling for differences in occupations and locations. For example, self-employment has been found to be associated with a wage discount for workers, perhaps in the region of 15%. 15  The reasons given for this  discount include the fact that workers may be willing to accept a lower wage in return for the increased control and flexibility that comes from self-employment. 16  There may also be problems in recording  accurately income from self-employment. For workers on temporary contracts, there is also evidence of a wage discount, perhaps of around 5-6%. 17  For agency workers, the wage discount is smaller, perhaps around 2 ½%. For zero hours contract workers, it is larger at around 7%.

To listen as often as we speak; to try and better understand the issues people tell us matter to them, rather than the issues we tell them ought to matter to them; to close that gap between “us” and “them”. With the fortunes of the economy uncertain, the value of this grassroots intelligence has never been greater. So where is the UK economy at this critical juncture? Overall, the picture is a reasonably reassuring one. The UK economy has grown for 17 consecutive quarters. Output has increased by around 2% over the past year, just a little below its historic trend rate. Employment in the UK is at its highest rate since 1973. Unemployment is currently at its lowest since 1975. Confidence among businesses and consumers remains solid. And inflation, which had been below its 2% target for three years, has bounced back sharply recently. Nonetheless, the UK economy clearly does face a number of important challenges. Consumer price inflation (CPI), at 2.9%, is currently well above the government’s inflation target of 2%. It is likely to move further above that target during the course of this year, probably reaching 3%. Meanwhile, growth in the UK has slowed fairly sharply since the end of last year, as higher prices squeeze households’ purchasing power in the shops. Activity in the UK economy remains below its long-run potential. And, of course, all of this is before the full effects of Brexit have been felt.
Andrew G Haldane: The Bank and the banks Speech by Mr Andrew G Haldane, Executive Director, Financial Stability, Bank of England, at Queen’s University, Belfast, 18 October 2012. *  *  *  The views expressed within are not necessarily those of the Bank of England or the Financial Policy Committee. I would like to thank Bethany Blowers, Forrest Capie, John Keyworth, Victoria Kinahan, Emma Murphy, Varun Paul, Richard Roberts, and the staff of the Bank’s archives for their comments and contributions. In the light of the financial crisis, there is much to explain. Doing so is not just important for reasons of accountability to the public. Explaining and understanding errors of the past is absolutely essential if policymakers are to learn lessons for the future. To misquote someone none of you have ever heard of, those who forget the errors of the past are doomed to repeat them. During the course of its 318-year history, the Bank of England has had plenty of crisis experience. And encouragingly, on my reading of history, there is evidence of it having learnt from this experience. In response, radical reform of the Bank’s policymaking framework has been commonplace. There are few better examples than the radical reform of the Bank’s transparency and accountability practices over the past twenty-five years. Those reforms are continuing to the present day. A wholly new framework for financial stability policy is being put in place in the UK, perhaps the most radical in the Bank’s history.

The euro is now used worldwide, with around 15 billion notes in circulation worth over 900 billion euros in all. That’s broadly comparable to the total value of the US dollar bills, no mean feat in just 12 years. Today is also a chance to highlight the importance of maintaining people’s trust in the euro. One of the main reasons for introducing a new series of notes is to ensure that everyone who uses them can continue to do so with complete confidence. That’s why we have drawn on a number of new technologies to modernise the security features, making the notes even more resistant to counterfeiting. In addition, the new banknotes have an innovative coating that makes them more durable than the first series. The five euro and ten euro notes are not always treated kindly. By protecting them better, we can prolong their service life and reduce their environmental impact. The new ten is the second note in the Europa series and follows the new five, which started circulating in May last year. As I’m sure you’ll agree, the note you’re going to see is instantly recognisable as a ten. It certainly resembles the ten euro notes you have in your pockets, with its distinctive Romanesque architecture. However, perhaps it will have more of a visual impact, as the images are larger and more defined, the colours are stronger and the bridge has added depth.