samchain/econo-pairs-v1 huggingface dataset:
Accordingly, in order to raise its expenditure levels (or alternatively, to provide more funding to the government), it may go back on its tight monetary policy and reflate the economy so as to extract real resources from the public. It, therefore, tries to fool the people by generating inflation without their knowledge. However, the public are also smart and aware that the central bank would reverse the course of its policy by inflating the economy after it has made small gains. This mistrust of the public about the policy actions of a central bank is well revealed by the exceedingly high inflation expectations they normally form about the future trends in inflation. Consequently, they also try to fool the central bank by asking for higher wages, if they are employees, or higher future contract prices, if they are producers, than the normal wage or contract price levels permissible under the now low inflation rate. This battle between the central bank and the people will trap the economy in a high inflation-high wage spiral making it a self-defeating enterprise for both the central bank and the public. The high inflation in the economy now exerts pressure on the exchange rate to depreciate.

6  Various annual reports of the Central Bank of the Philippines. The author is grateful to Deputy Governor of BSP, Diwa C Guinigundo, for making available those annual reports and other literature on the liquidation of the CBP. BIS Review 58/2009  5  As mentioned above, the net foreign assets of CBP became negative from 1981 onwards due to the depletion of reserves and the increase in foreign borrowings. They were negative by 4 billion Pesos in 1981. But, the negative position progressively increased thereafter rising to a peak of 141 billion Pesos in 1990 and recording at an annual average level of 101 billion Pesos during 1982-90. The result was the payment of interest surpassing significantly the interest receipts. The total such losses amounted to 91 billion Pesos for the period 1983-90. The net outcome of all these adverse developments was the decline in the net-worth of CBP to a dismal level of 2.6 billion by June, 1993 as against a total outside liability level of 605 billion Pesos and a domestic asset creation of 440 billion Pesos. The capital funds as a percent of domestic assets fell to an insignificant level of just 0.5% indicating that the entirety of the currency issue (monetary liability) had been backed by worthless domestic assets. By end 1993, the foreign exchange liabilities of CBP amounted to $ 11.4 billion or 35% of the Philippine’s GDP 7 . Thus, CBP became insolvent and had to be liquidated in July, 1993.
The comprehensive nature of the information facilitates the development and validation of credit scoring models by the banking institutions, leading to more robust credit decisions. Information provided through CCRIS allows financial institutions to look beyond collateral and cash flow statements, to understand the borrowers’ track record in making payments. This undoubtedly contributes to higher loan growth and better asset quality. Since the inception of CCRIS in 2001, loan outstanding grew at an annual average rate of 8.9%, while the overall impairment ratio showed a significant decline  BIS central bankers’ speeches  1  from its peak of 16.2% in 2001 to 2.2% currently. The World Bank, in its Doing Business Report, has ranked Malaysia No. 1 for five consecutive years in the category of “Getting Credit”. Another example is the Credit Bureau Malaysia (CBM) which was established to assist SMEs build credible credit records from transactions outside the regulated banking system such as transactions with suppliers and utility companies. With this credible credit record, SMEs that utilise the formal banking system for the first time will be able to more effectively obtain access to finance. CBM also has a comprehensive credit scoring methodology which helps banking institutions assess the credit worthiness of potential customers. Further, CBM plays an important role in educating SMEs on how credit scores are calculated and how borrowers can improve their business operations and transaction conduct to improve their credit scores. At end-September 2012, CBM has 28,337 SME members and had produced 707,164 credit reports.

For example, the 1-year forward rate, 9 years ahead has declined sharply over the past year, falling from around 5 percent in December 2013 to just under 3 percent currently. What can explain such a large shift in forward rates at such a long time horizon? Third, when U.S. monetary policy is normalized, how fast should we raise short-term interest rates? In other words, what is the appropriate path back to the long-run equilibrium real federal funds rate, shallow or steep? In my view, the paper reaches five major conclusions – conclusions that I find myself broadly in agreement with: •  There are many factors that influence the level of the equilibrium real short-term interest rate. Real potential GDP growth may be one factor, but the real equilibrium rate is also affected by financial conditions, uncertainty and risk aversion, financial market performance (e.g., bubbles and busts) and the degree of restraint exerted by the stringency of banking and financial market regulation. •  There is little evidence supporting the so-called “secular stagnation” view that the equilibrium real short-term rate will persistently remain near or below zero. •  The equilibrium real short-term rate is non-stationary. Thus, it will not necessarily revert back to some long-run average value. •  U.S. and global markets are integrated to a significant degree. As a result, the equilibrium real short-term rates both here and abroad will tend to move together.
6  To-date there is more than 10 retakaful companies providing retakaful capacity for both family and general takaful business. 7  United Nations Conference on Trade & Development's (UNCTAD) World Investment Report 2007. 8  Sources: JETRO from Ministry of Finance Balance of Payments Statistics and Bank of Japan foreign exchange rates. BIS Review 23/2008  5  markets would contribute towards further international financial integration and thus achieve a more efficient allocation of resources across borders. Conclusion Let me conclude my remarks. The increasing awareness and appreciation of the inherent strengths of Islamic finance and its tremendous potential for advancement have ignited interests amongst the global financial community to venture into this new sphere of finance. Taking advantage of the increasing role of Islamic finance in bringing together different parts of the world with surplus funds in search of investment opportunities, with those that have financing needs, will increase these mutually reinforcing prospects. We look forward to Japan's participation in this new financial evolution. Thank you. 6  BIS Review 23/2008

I will also mention the on-going discussion on Libor and Stibor as this has been a major news item during the summer. I have chosen to call this a “springboard” for the monetary policy meeting in September. This is not intended to direct one’s thoughts to sporting achievements, which can easily happen, given that the Olympics are still fresh in our minds. What I mean to indicate is that this is a status report on which to base the start-up of a new process, which for the Riksbank is a process that will lead to a new joint economic assessment. I will not be presenting this type of assessment today. This will be released in connection with the next monetary policy meeting on 5 September. The assessment in the July Monetary Policy Report Great uncertainty over future developments Perhaps the most difficult question we had to deal with at the most recent monetary policy meeting was how an unexpectedly strong outcome in Sweden at the beginning of the year should be viewed in relation to increased concerns over poorer developments in the euro area. When we Executive Board members gathered in July, concerns on the financial markets regarding the crisis in the euro area had increased and the prospects for growth in Sweden had thus deteriorated. There was considerable uncertainty over future developments. Work was underway on resolving the problems in the euro area. But it was also clear that much remained to be done before sustainable solutions could be implemented.
For 2015, the Board estimates that GDP growth will be in the 2.5 to 3.5 percent range, so the economy is expected to continue growing below its mediumterm rate, which the Board estimates to lie between 4 and 4.5 percent. 2  BIS central bankers’ speeches  The economy is expected to outperform 2014 next year, thanks to the rapid and significant adjustments it made this year, as is visible in the current account, interest rates, and the real exchange rate. It also relies on the expected improvement in consumer and business confidence, as well as in the external conditions foreseen for 2015, which although not so good as expected in September, are an improvement from 2014, partly owing to the boost coming from the oil price decline. The significant monetary impulse that has been added already, the stronger fiscal impulse and the effect of the peso depreciation on the tradable sectors will provide important support. Finally, although the financial situation of households and enterprises has tightened, it is not expected to be a hindrance to economic recovery (table 1). On the external front, the baseline scenario considers a less dynamic outlook than forecast in September, but still pointing at greater growth rates in 2015 and 2016 than in 2014. This outlook reflects world activity that has recently receded, but that is compensated, at least in part, by the boost coming from the oil price drop.

External debt is now only 60% of GDP compared to 90% at its peak. Financial institution performance in Thailand has also strengthened considerably. Last year the banking system recorded an operating profit of 0.68 % on assets, boosted by both improved interest income and fee-based income. The transfer of non performing loans to the government owned, Thai Asset Management Corporation, has reduced the NPL ratio in the banking system to 11.5%. With less need for provisioning, the average BIS ratio of the Thai banks now stands at approximately 13% at the end of March this year. BIS Review 44/2002  1  Last week the Thai authority also finalized the measures to deal with losses from the financial sector intervention. The government will fiscalize the losses by issuing bonds to cover them in full. The servicing of the interest rates will be entirely from the government budget. The retirement of the principals will be borne by the central bank. But it will be paid out of the central bank's future yearly profits which would be earned mostly from the international reserves and would normally be paid over to the government in its yearly appropriation of the profits anyway. Thus the scheme will not affect the Bank of Thailand's ability to formulate monetary policy in the future. The scheme also makes more clear the path of fiscal deficit in Thailand.
It has been argued that targeting a 2% inflation rate results in this zero bound constraint binding too frequently, inhibiting the effectiveness of monetary policy. 47 A higher target would loosen that constraint. This academic debate may run for some time. On the financial stability side, the position is less straightforward. There is no single, easily observable or quantifiable target for systemic risk against which to hold the FPC and PRA to  45  Bernanke and Mishkin (1997) first coined this term in the context of inflation–targeting. 46  Shiller (1997). 47  Ball (2014). BIS central bankers’ speeches  7  account. And the public at large often do not have well-defined or strong attitudes towards financial stability – except, perhaps, when things go wrong. Since 2012, the Bank has been surveying the general public on how they believe the Bank has performed in protecting the financial system. Some reassurance can perhaps be taken from the fact that this has moved from a net dissatisfaction score of 13 in 2012 to a net satisfaction score of 40 today. 48 Nonetheless, by itself this approach falls well short of having a clear objective against which the FPC and PRA can periodically be assessed. The FPC has begun publishing a set of financial stability indicators against which it assesses systemic risk and is held to account.

Chart 4 plots a measure of financial markets’ expectations of UK inflation since 1985. Also shown is the date of Bank of England independence and inflation targets since their inception in 1993. These measures of inflation expectations were consistently and materially above target in the period prior to independence – the myopia or inflation bias problem looked real. But from pretty much the point of announcement of independence, they began ratcheting down. Within 12 months, they were aligned with the inflation target. They have stayed there in the period since. The Bank of England has thus far passed the marshmallow test. Another lens is provided by looking at the stability of inflation and output either side of central bank independence (Chart 5). Since independence, UK inflation variability has fallen by a factor of five and output stability by a factor of almost two. As this period saw the largest macro-economic collapse in memory, it loads the dice against independence. This evidence may seem to suggest that central banks have tamed the inflationary tiger. That metaphor is apt. Friedrich Hayek likened the process of controlling the economy as akin to taking a tiger by the tail. 53 As far as inflation control is concerned, Hayek was right. As some countries are finding today, the tiger is capable of biting back. Chart 6 plots inflation expectations from financial markets in the UK, US, the euro-area and Japan over recent years. In Japan, inflation expectations have been anything but wellanchored, varying significantly around a trend close to zero.
Two points are clear from these charts. First, it is possible to achieve relatively high hit rates of up to 70% at relatively modest calibrations of the leverage ratio of under 4% and with relatively low false alarm rates of around 30%. This suggests that, with the benefit of hindsight and abstracting from definitional changes which affect the interpretation of specific numbers, a leverage ratio of around 4% before the crisis would not have been met by around 70% of banks which subsequently ended up failing. It served as a decent signal of subsequent failure. Clearly, such banks might still have failed during the crisis even with a leverage ratio of above 4%. But the low false alarm rate at that calibration, corresponding to the observation that most banks which survived the crisis had a leverage ratio of above 4% going into it, indicates that such a constraint may have helped to curtail their risk-taking, as measured by their leverage ratio, and reduced their likelihood of failure. Second, to achieve high hit rates of above 80%, both the calibration of the leverage ratio and the false alarm rate increase sharply. Achieving a 90% hit rate with a leverage ratio alone requires its calibration to be boosted to around 5.7%. Even then, it comes at the cost of a high false alarm rate of over 80%. In other words, the balance of marginal benefits to costs becomes notably less positive when using a singular deposit freezes and bank holidays.

In such cases, we could not avoid reacting by surprising markets rather than being behind the curve. This is what a sound risk-management approach calls for: weighting seriously the long-term risks to price stability in the case of persistently higher inflation. xi We rightly had to give priority to risk management on inflation, over expectations management on interest rates. It is paramount, nevertheless, that financial markets and economic actors understand our reaction function in order to avoid unwarranted volatility: if inflation—and especially core inflation—is higher than what we expected, we are likely to raise rates more quickly, although never following a mechanical rule. And we should preserve some short-term signaling—or guidance—in our new “meeting-by- meeting” approach: this is somewhat new territory for us, where as much as possible (i) guidance if any should come from explicit statements from the top rather than from unsourced leaks, (ii) multiple and somewhat disorderly expressions of personal wishes should be more restrained, and the silent period should obviously be respected. II.D. R* remains useful to delineate normalization and tightening To be sure, R* is unobservable and its estimation remains surrounded by uncertainty. But I believe it remains a helpful concept in the current normalization. Page 7 sur 8 According to me, for the euro area, until we are around R*, the neutral rate— which possibly lies between 1 and 2% in nominal terms—the road ahead is clear and we can go in a sustained and determined way, including through some guidance.
Several objectives have indeed to be met: maximizing the spillover effects of 2/3  BIS central bankers' speeches  innovations, protecting the consumer and addressing financial stability issues, and ensuring that innovation is beneficial to all parties, in particular in the form of new services and costs reduction. Such a balance can only be reached through adequate and proportionate rules, based on the risk profile of the service provided and not on the nature or the legal status of the provider. This principle has guided European authorities in the review of the payment services directive, which will be thoroughly discussed during this afternoon’s session. On top of these regulatory changes, technological innovations reinforce the need for fruitful dialogue and cooperation between all parties concerned. At the French level for instance, this is the purpose of the “Fintech Forum” launched in July last year by the French prudential supervision and resolution authority, the ACPR, in coordination with the French Financial Markets Authority. The continuous dialogue between regulators, supervisors and companies will ensure that innovations are properly understood, that the necessary changes in regulation are identified in a timely manner and that information flows appropriately between stakeholders. We have also committed the Banque de France and the ACPR to a gradualist and proportionate approach in the regulation and supervision of Fintechs. We think it is still more appropriate than a “sandbox”, which could create threshold effects. At the European level, cooperation between all stakeholders has been enhanced in the field of payments, so as to prevent market fragmentation.

This is the central role assigned to the Euro Retail Payments Board. Later on this morning, Yves Mersch will give us further insights into the work of the ERPB. Allow me now to conclude briefly by expressing again my gratitude to all the speakers, panellists and participants who are present today to share their thoughts on a wide variety of subjects of topical interest. I wish you extremely fruitful discussions throughout the whole day. Thank you for your attention. 3/3  BIS central bankers' speeches
The Bank of England did try to help a couple of years ago via its Secured Commercial Paper Facility, on which my Markets colleagues engaged actively with the ACT. Suppliers were to be financed by banks, against a claim on their large-firm customers. By bundling together portfolios of such claims into securities, the lending bank was able to “discount” the resulting paper at the Bank, thereby obtaining off-market funding. In effect, the scheme offered banks providing invoice-financing a way to fund the lending involved. There has been an increase in invoice-based financing by banks, but take up of the Bank’s facility has been very limited. It remains open should there be further interest. However they are delivered, improvements in working-capital finance, while important, are insufficient. For longer-term finance, I hope that businesses and the City can work together to broaden access to the corporate bond markets. Since the onset of the crisis, there has been  2  BIS central bankers’ speeches  a marked pick up in the number of UK companies successfully raising funds from the sterling bond markets for the first time. Here, I do think the Bank acting as a de facto market maker of last resort in corporate paper helped revive the market in 2009, by alleviating the inventory risk faced by cash- and capital-strapped dealers in those markets. And the Monetary Policy Committee’s quantitative easing has helped, by encouraging longer-term investors out of gilts and into the bond market.

Overall, it is surprising how little commentary there has been from the perspective of securities market regulators. An exception is Luigi Zingales, “The Future of Securities Regulation”, Chicago Booth School of Business Working Paper No. 08–27. While I do not necessarily support all of his prescriptions, the paper is noteworthy for approaching the reform agenda from the perspective of securities markets and regulation rather than solely that of bank soundness and prudential supervision. 12  See Gorton, op cit. 13  See Bank for International Settlements (1986), “Recent innovations in international banking”, prepared by a Study Group established by the Central Banks of the Group of Ten Countries, known as “the Cross Report”. 14  For examples of market intelligence on innovations at the beginning of the latest cycle see, Rule D (2001), “Risk transfer between banks, insurance companies and capital markets: An overview”, Bank of England Financial Stability Review, December 2001. BIS Review 6/2010  7  “shadowing banking” has become significant to sustaining stability in the provision of essential financial services to the broader economy; when it is founded on liquidity lines, incomplete risk transfer or other kinds of support from the core commercial banking system; and when it involves the provision of the liquidity or monetary functions of banking as well as credit intermediation. Running leverage and liquidity risk is not sufficient to make a firm or fund a de facto bank. I do not think AIG’s securities lending/credit spread business was really a bank. More like a hedge fund.