samchain/econo-pairs-v1 huggingface dataset:
On top of maintaining their central role in the payments system, this means that, even if operating an ‘originate and distribute’ model in their investment banking business, commercial banks still have substantial funds to employ in asset portfolios. This can be achieved in a number of ways: for example, holding onto originated assets, buying assets after they have been securitised by other banks, or entering the principal investment business. All three are underway to a greater or lesser degree. In the UK, until quite recently large banks probably held on to more loans than their peer group22. In the US and parts of Continental Europe, the commercial banking sector acquired massive portfolios of securitised assets in the first half of the decade, possibly diversifying sectoral or geographical exposures. And a range of banks have been entering or reentering the principal investment business. What to make of all this? Well it certainly underlines the difficulty of using the growth or composition of bank balance sheets as the sole basis for judging credit conditions. With so much credit distributed and traded via capital markets, quantity data have to be put alongside prices (yield spreads) and, ideally, qualitative information. It is in that context that the Bank is planning to introduce a formal survey of credit conditions next year. This important initiative is designed to help us get behind the money and credit data.

Andrew Bailey: Capital and lending Article by Mr Andrew Bailey, Deputy Governor of Prudential Regulation and Chief Executive Officer of the Prudential Regulation Authority at the Bank of England, published in the Sunday Times, 5 May 2013. *  *  *  Crises often lead to big changes in public policy. Britain’s decision in the 1990s to embrace the objective of sustained low inflation and an independent central bank had its roots in the horribly high inflation of the 1970s. Now we have a big change in financial regulation rooted in a more recent crisis, the credit crunch of six years ago. Since the start of April, the financial policy committee (FPC) of the Bank of England has had a statutory duty to protect and enhance the stability of the financial system. Alongside it at the Bank is the new Prudential Regulation Authority (PRA). Its job is to promote the safety and soundness of banks, insurers and large investment firms by focusing on the problems they cause for financial stability. This is a new direction for financial regulation. The crises that lead to such big changes often follow long upswings in economic and financial conditions that are allowed to go to excess. Light touch regulation in the run-up to the start of the financial crisis in 2007 supported expansionary growth in the balance sheets of banks – too much borrowing – which was literally too good to be true.
In fact, Malaysia’s capital account remains free with free mobility of inflows and outflows of capital for investments. The market remains open to all market participants and we shall ensure the necessary liquidity to the market. In essence, the measures that were instituted over the past week are consistent with our long standing policy of non-internationalisation of the ringgit and one that we expect banks to fully adhere to without exception. We do not recognize or condone the non-deliverable ringgit offshore market. Those who engage in NDF or NDF-related transactions are doing so at their own peril. I understand that to some, these are challenging measures but as I mentioned earlier, they are not new. We need to remove the negative influence of the NDF activities that impacts the smooth functioning and stability of the onshore financial market. We need to protect the interest of genuine investors and businesses, irrespective of whether they are foreign or domestic. Only through a concerted effort by all the stakeholders of the ringgit market, can this objective be achieved. We need to remember, that integrity and proper functioning of our financial market is in 3/5  BIS central bankers' speeches  the interest of every market participant, and all of us have a role to play towards achieving this objective. Way forward To overcome these challenges and to take on new direction and impetus, we had formed the Financial Market Committee (FMC) earlier this year.

John C Williams: The gold beneath our feet Remarks by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the GARP Global Risk Forum, Federal Reserve Bank of New York, New York City, 7 November 2019. * * * As prepared for delivery When plans for the New York Fed’s headquarters here at 33 Liberty Street were developed in 1921, the building committee compiled 33 pages of requirements for potential architects.1 I can assure you that our appreciation for bureaucracy has endured the test of time! Joking aside, the focus of many of those requirements was specifications for the building’s gold vault. Beneath our feet lies a triple-tiered vault system with 122 separate compartments for storing gold bars. For those of you who are Harry Potter fans, it’s as close to Gringotts Bank as you’ll find anywhere in the world—although for security reasons I am not allowed to confirm or deny that we have a dragon down there. The whole building was constructed around the vault. Engineers had to excavate 117 feet down to the bedrock for a foundation that could support the weight of the construction. Why am going into so much depth about the gold? There is a reason! But before I explain, I should give the standard Fed disclaimer that the views I express today are mine alone and do not necessarily reflect those of the Federal Open Market Committee or others in the Federal Reserve System.
In reality the division between us was a very narrow one, reflecting the fact - now acknowledged by most outside commentators - that the decision, as to whether or not we will need to raise interest rates moderately further, sooner or later, is very finely balanced. I hope this is a situation that we will get used to. I would expect the professional experts on the MPC to agree quite easily when monetary policy is clearly off track; but I would equally expect them to disagree as often as not at the margin when we are there or thereabouts. As it is I was actually encouraged by the reaction of many of the more thoughtful commentators who - in the circumstances - recognised that it was a reflection of a grown-up process that we could publish a division within the Committee and the reasons for it without generating significant market disturbance. In this sense, too, I think it likely that once the new arrangements are properly bedded down they will be seen to be a very considerable advance on what has gone before. Financial Stability Let me turn now to the Bank’s second core purpose, the maintenance of financial stability. On the same day that the Bank of England Bill was introduced into Parliament, the Chancellor launched the new Financial Services Authority, the FSA, which will become responsible for the authorisation and regulation or supervision of effectively all forms of financial services activity in the UK.

This is to be made up of myself, the two Deputy Governors, two Executive Directors of the Bank - responsible respectively for the Bank’s economic analysis and the Bank’s financial market operations, and four outside members nominated by the Chancellor and having professional knowledge and experience relevant to the Committee’s functions. It also includes a Treasury observer, who may participate in our discussions, and acts as a link between the fiscal and monetary authorities, but who may not vote on our monetary policy decisions. The overriding purpose of these new arrangements is to improve the credibility of monetary policy, and to demonstrate to the world at large the Government’s commitment to achieving and maintaining effective price stability. But it is important to understand that this objective is not simply an end in itself. The ultimate objective, of course, is growth of output and employment and rising living standards - there is no question about that. The argument is about means, not about ends. And effective price stability as the immediate objective of monetary policy is a necessary condition for growth to be sustained into the medium and longer term. The aim of achieving permanently low inflation is a deliberate attempt to break away from the boom-bust cycles of the post-war years, which led, as we can all remember, to a persistent ratcheting up of inflationary expectations and a steady erosion of long-term thinking and planning, saving and productive investment, on the part of consumers and businesses.
We were all surprised by the relatively high growth rate combined with low inflation and almost unchanged employment. In times such as these, with extensive structural changes and "shocks” succeeding one another, it is especially important to consider the economy’s capacity to adapt. The conditions for achieving lasting success in the form of higher employment and lower unemployment are greater if the measures are aimed at making the economy less sensitive to shock rather than at using stabilisation policy to try to fend off shocks. Moreover, it is much simpler to find useful measures that can be taken if one adopts the former policy rather than the latter. The focus on stabilisation policy is also surprising given the fact that the nominal interest rate is the lowest it has been since the 1960s and 1970s and that even when measured in real terms, i.e. nominal interest rate minus expected inflation rate, it is among the lowest we have seen in 20 years. Monetary policy is thus clearly expansionary. At the same time, fiscal policy is also expansionary and has stretched the limits of what is compatible with the long-term regulations. So, if I can modify my answer to the question even further: Yes, stabilisation policy is important, but it is even more important to undertake measures that enable the economy to adapt smoothly to new conditions.

Although it can probably be said that the credit expansion and house price trends have not yet had decisive significance in our interest rate decisions, they are factors that must be included in the equation. It is also important for the Riksbank to try to find a suitable balance between stabilising inflation and the real economy and also taking into account the consequences for financial stability. In the same way, fiscal policy must meet the requirements for long-term stability and sustainability in public finances, with the aid of budgetary targets and expenditure ceilings, which does not exclude consideration of the real economy. This allocation of roles has proved successful and we should therefore proceed with caution as regards making any drastic changes. My reply to the question of how roles should be allocated between fiscal policy and monetary policy is therefore; as they are now. The same conclusion has been reached in many other countries as well as in academic research. What is important in this context is that one realises that the Riksbank takes real consideration when formulating its monetary policy, to the extent it deems this to be wise. It is possible, however, that this is something we need to be clearer about. Can and should monetary policy and fiscal policy develop? In my opinion, one can of course say that both monetary policy and fiscal policy are constantly developing.
The context for this evolution of headline inflation is one where the economy has been making progress in correcting the macroeconomic imbalances accumulated in previous years. The latest available data suggest that the activity gap has resumed its closing process in recent months, as we anticipated in March. In fact, a broader look at capacity gaps shows that they have been closing for some time now. This considers indicators such as lower labor turnover, higher unemployment, a reduction in the over-utilization of installed capacity in manufacturing, and lower power generation (figure 2). Plus, cost pressures have been easing, despite remaining at high levels from a historical perspective. The reestablishment of supply chains, the normalization of global transportation costs, the decline in external prices and the appreciation of the peso relative to the end of 2022 stand out (figure 3). The currency’s performance responds to a reduction in local uncertainty, whose pass-through to prices is consolidated to the extent that it stabilizes around the closing values of our last Report. In any case, as I mentioned, both total and core inflation are still high and their effects remain in several areas of our economy. In this context, more limited cost pressures are observed in companies, as reported by the Survey of Price Determinants and Expectations (EDEP). There is also a trend toward a normal frequency of upward adjustments in the prices of some goods included in a microdata analysis, as shown in one of the boxes in this Report.

Figure 2  Activity gap by different methods (*)  Other gap metrics (*)  (percent)  6 4 2 0 -2 -4 -6 -8 -10 -12 -14 -16  (percent)  10.0  4.0  Capacity utilization Electric power generation (right axis)  3.0 2.0  5.0  1.0 0.0  0.0 -1.0  Range of models  -5.0  -2.0 -3.0  02  04  06  08  10  12  14  16  18  20  -10.0  22  -4.0 15  (*) For details on its calculation, see box II.1 in June 2023 MP Report. Source: Central Bank of Chile. 9  16  17  18  19  20  21  22  23  Figure 3  Commodity prices  (index, 2018-2023 average=100)  Real exchange rate (RER) (4)  4.0  122  3.5  115  3.0  108  2.5  101  2.0  94  1.5  87  (% of GDP, quarterly)  Foods (1)  180  Transportation costs (3) Oil (2)  140  100  60  20  (index, 1986 average=100)  19  20  21  22  23  Average of last 15 years  80  1.0 18  RER  18  19  20  21  22  23  10 11 12 13 14 15 16 17 18 19 20 21 22 23  (1) FAO food price index. (2) WTI-Brent average.
11 Of course, there are a number of practical and legal challenges inherent in this, such as integrating such measures into an operational monetary policy framework and ensuring an appropriate division of responsibilities between the central bank and the government or parliament. It is also probably something that should not be tried until other possibilities have been exhausted. However, considering the difficulties that are still weighing many of the world’s economies down, I think that it is wise to discuss the different possibilities, without closing any doors. If monetary policy in the period ahead will be less effective, it may be that fiscal policy in general may have to play a greater part in a wider stabilisation policy role than has been the case in recent decades. Of course, this primarily means more traditional fiscal policy, not funded with helicopter money. 10  See, for example, Rachel and Smith (2015) and Laubach and Williams (2015). 11  See, for example, Bernanke (2016) and Turner (2015). 8  BIS central bankers’ speeches  Higher inflation target? One suggestion that has also been discussed but which no country has yet implemented is to raise the inflation target. 12 The average level of the policy rate largely depends on how high the inflation target is. The higher the inflation target and average inflation are, the higher the average policy rate is too.

3 It also appears that the most important driving force behind the cycle is the monetary policy conducted in large countries, particularly the United States. Free capital movement makes it more difficult to isolate a country from the rest of the world – and indirectly thereby from monetary policy in large countries – even if it has a floating exchange rate. Some go so far as to say that developments on the financial markets have meant that the exchange rate is no longer a parameter for action in the trilemma. The trilemma has instead been reduced to a choice between only two alternatives – a dilemma: either one has free capital movement and accepts that it is then difficult or impossible to conduct a monetary policy of one’s own, or one conducts one's own monetary policy but counteracts the free movement of capital. 4 My main hypothesis: countries with floating exchange rates still have monetary policy autonomy However, this is probably going a bit too far as a general description of the actual situation in small open economies like Sweden. In a globalised world, developments abroad will always have great significance for what happens in your own country. Nevertheless, however, the situation seems to be that the choice of exchange rate regime plays an important part in how great the impact will be.
In both the GFC and March 2020 ‘dash for cash’, QE programmes increased liquidity in otherwise illiquid markets[9], supporting financial stability. There is however less experience on how this might operate in reverse. Now all the channels I just outlined work in two directions – tightening or loosening monetary policy – as well as over short and longer term horizons. While the effects are complicated and variable, at a high level I think about it like this: In the short-run, loosening monetary policy tends to support financial stability. For example, lower interest rates will reduce borrowers’ costs and the risk of insolvencies[10]. In the long-run though, the effects could reverse. Long periods of low interest rates might lead to a build-up of financial stability vulnerabilities, such as excessive borrowing[11] and asset price bubbles[12]. So there are clearly important ways in which changes in monetary policy can affect financial stability, even if in the end the two are complementary. Monetary policymakers also have reasons to care about financial stability. Financial instability can affect the economy directly whether by causing or by amplifying shocks – we saw that very clearly in the GFC. Another reason is that for monetary policy to work effectively, the financial system needs to ‘transmit’ it to the rest of the economy. So it matters for monetary policy makers whether the banking system is impaired, as in the GFC[13], or if gilt markets are in a spiral of forced selling, as in autumn 2022[14]. An unstable financial system is a problem for monetary policy.

Islamic financial institutions therefore need to understand these requirements and be able to provide not only new innovative products but also attractive financing packages. In  2  BIS Review 13/2007  addition, Islamic financial institutions need to intensify efforts to create greater awareness amongst the SMEs on the unique features associated with Islamic products and services. Enhanced financial literacy on Islamic financial products will facilitate the process for SMEs to make informed and effective decisions on their financial transactions. Today's event that marks the establishment of strategic partnership between CGC and the Islamic financial institutions augurs well for SMEs. It provides a platform for the Islamic financial institutions to extend greater financing to SMEs. For CGC, this is an opportunity to expand the scope of its guarantee beneficiaries to include Islamic financial institutions. The real beneficiaries would be the SMEs. On this note, it is my pleasure to once again congratulate CGC and the Islamic financial institutions for this initiative to forge this strategic alliance and collaboration to maximize the potential opportunities in SME financing. I wish every success in this strategic collaboration. BIS Review 13/2007  3
Lombardi, M, Madhusudan, M and I Shim (2017),”The real effects of household debt in the short and long run”, BIS Working Papers No 607. Långtidsutredningen (Long-Term Survey of the Swedish Economy) (2003), Fördelningspolitikens mål och medel – Bilaga 8 (Distribution policy’s objectives and means – Annex 8). Långtidsutredningen (Long-Term Survey of the Swedish Economy) (2015), Bostadsmarknaden och den ekonomiska utvecklingen – Bilaga 3 (The housing market and economic development – Annex 3). Mian, A and A Sufi (2018), “Finance and business cycles: The credit-driven household demand channel”, NBER Working Paper No 24322. OECD (2019). OECD Economic Surveys: Sweden, March 2019. Thedéen, E (2017),”Banking capital in times of stress”, speech at UBS Annual Nordic Financial Services Conference. Finansinspektionen. Sveriges Riksbank (2013), The Riksbank and financial stability. Sveriges Riksbank (2019), Monetary Policy Report, July. 13 [13]

The U.S. was not alone in this shortcoming, but given our position in the global financial system, we especially should have done better. We’ve taken important steps reflecting both new legislative mandates and a broader effort to rethink our regulatory and supervisory framework. In particular, systemically important banking organizations must now hold amounts of capital and liquidity that are better aligned with their risk profiles, compensation schemes for these institutions will be more focused on rewarding long-term results and the official sector is making progress in solving the “too-big-to-fail” dilemma. All of this remains very much a work in progress. But, these efforts should help us to avoid repeating the mistakes of the recent past, and to take a more proactive stance toward mitigating potential future vulnerabilities. Of course, we at the Fed are not alone here. Since the recent financial crisis, central banks worldwide have been engaged in a broad rethinking of how to better fulfill their mandates. Let me close with a final thought. The largest problems that countries create for others often emanate from getting policy wrong domestically. Recession or instability at home is often quickly exported. Equally important, growth and stability abroad makes all our jobs easier. This means that there are externalities in the work we do, so that more effective fulfillment of our domestic mandates helps to bring us to a better place collectively. Ensuring global growth and stability is and will remain our joint and common endeavor. BIS central bankers’ speeches  3
Chart 1  Total External Debt  MLT External Debt  percent of GDP  percent of GDP  ST debt (majority private debt) MLT debt  public and publicly guaranteed debt private debt  16.2 16.0  5.3  7.9  deposits of non-residents  12.8  7.8 8.2 16.5  14.1  10.9  37.4  25.6  31.3 17.4  0.6  1.2  1.0  2.6  4.0  2007  2008  20.4 15.6  2006  29.3  2005  30.9  2004  30.0  2008  2007  2006  2005  12.9  2004  60 55 50 45 40 35 30 25 20 15 10 5 0  60 55 50 45 40 35 30 25 20 15 10 5 0  Source: National Bank of Romania, Ministry of Public Finance, National Institute of Statistics  In 2004, the Romanian economy had little financial depth (measured as a ratio of M3 to GDP) of only 25.6 percent. The financial depth increased on the back of massive capital inflows, yet it remains relatively low by advanced economy standards (34.5 percent of GDP in 2008). Given the relatively little financial depth, the effects of capital inflows emerged fast and were significant (Chart 2).

Therefore, the measures set forth in the said arrangements secured the financing of Romania’s economy. This financing had a favourable impact in several areas: relatively larger investment compared to the case such arrangements would not have been concluded; slower depreciation and stabilisation of the leu against the euro and other currencies; the signing of the Vienna agreement based on which banks committed themselves to roll over the credit lines and to maintain capital adequacy ratios at safety levels. As for the future developments in the real effective exchange rate of the domestic currency, it is desirable that it stabilise around a level consistent with a current account deficit that may be safely covered via foreign direct investment. BIS Review 5/2010  15  Lower depreciation pressures on the leu and, implicitly, lower inflationary pressures ceteris paribus that emerge via the exchange rate channel, along with the fiscal consolidation efforts allowed the central bank to adopt a cautious easing of the monetary policy stance, which will make the descending slope of the GDP less sharp, without fuelling further inflationary pressures. The expected developments in GDP, inflation and the current account deficit presented in Figure III are similar to the profiles of the trajectories illustrated in Figure I. Figure III 1. Current account deficit* (% of GDP) 0  2.