samchain/econo-pairs-v1 huggingface dataset:
The Governing Council takes its decisions collectively and independently, free from outside influence, and its position is clear: no country’s national fiscal policy should influence our single monetary policy, either now or in the future. In keeping with the mandate entrusted to us democratically, we should maintain a single focus: price stability throughout the euro area, with inflation below but close to 2% over the medium term. This is how we can contribute to sustainable growth, by managing the economic cycle and guaranteeing low interest rates. 4/ All of this brings me to the fourth reason: in the euro area, fiscal and structural policies are the responsibility of individual governments. We have built a system based on the principle of subsidiarity, where a maximum number of decisions are taken at the national level. This is good news for democracy. The counterpart to this decentralisation, however, is that governments have to abide by a minimum number of rules, including the Stability and Growth Pact. But following these rules is also in the national interest. If public deficits and debt were the keys to growth, then our two countries would be the growth champions of Europe: unfortunately, that’s not the case. In the short term, a bigger deficit will not necessarily have a positive impact on growth if it’s also accompanied by a higher risk premium on interest rates.

In total, nearly a quarter of 18 to 24 yearolds in Italy and 19% in France are NEETS (Not in Employment, Education or Training) – well above the OECD average of 14%. Therefore, we have no greater priority today than developing skills, apprenticeships and professional training. As well as this need for the right reforms in our two countries, the decentralisation of the euro area has another consequence: we need a more symmetrical adjustment, with wage increases and fiscal stimulus in those countries that have the room to manoeuvre, such as Germany and the Netherlands. Fortunately, this process has already begun, with the fiscal plans set out by the coalition governments elected in 2017, and the pick-up in wage growth as these countries get nearer to full employment. The excessive external surpluses in the euro area are also a sign of poor resource allocation. The Macroeconomic Imbalance Procedure carried out by the European Commission must therefore be symmetrical. 3/5  BIS central bankers' speeches  II. To construct a more solidarity-based euro area, we need an Italy that is committed. At the same time, the euro area also needs to be improved: although Monetary Union is a success, the weaknesses of the Economic Union continue to pose a problem. We need to find a “tightrope” that combines responsibility and solidarity. Since Meseberg last June, France and Germany have put forward some initial proposals.
But this does not say very much about the future, of course. And as I mentioned at the beginning, I shall not make any overall assessment of economic developments here today; I shall wait until the Executive Board’s next monetary policy meeting at the beginning of September. I will now go on to describe how the Riksbank, and I personally, viewed monetary policy at the most recent monetary policy meeting at the end of June. Swedish monetary policy Following the financial crisis, monetary policy in Sweden has been aimed mainly at moderating the depth of the economic recession that came in the wake of the crisis. The repo rate has been held at an all-time low of 0.25 per cent for a whole year. The Riksbank has also provided the banks with more liquidity than normal, through a number of extraordinary measures. However, for some time now the situation has been such that we could begin to normalise monetary policy, and now in the final part of my presentation I shall describe in more detail our reasoning at the most recent monetary policy meeting. Normalisation of the repo rate In July we raised the repo rate from 0.25 to 0.50 per cent. I agreed with the picture of economic developments painted in the most recent Monetary Policy Report and supported both the proposal to raise the repo rate by 0.25 percentage points and the repo rate path described in the Report.

More worryingly, we have seen major cyberattacks occurring globally which caused disruptions to essential financial services and destroy savings or financial assets that the underbanked depend on. Financial institutions are not only prime targets for cyberattacks but bear tremendous fiduciary and legal, regulatory, and compliance responsibility to protect customer data and privacy. Safeguarding trust in the formal financial system is now particularly important for the newly included grassroots. In financial services, the push for digital innovation, disruptive technologies, delivery of more personalized customer experiences, and seamless access to consumers for more inclusion continuously introduces new threats. Forrester Research calls this dynamic an “epic” battle between privacy and digital innovation, and predicted that by 2020 financial services and insurance companies expect to generate the biggest portion of their total sales from digital products, services, or items sold online. Alongside this drive toward digital business, many organisations rely on legacy IT systems that are expensive to maintain and susceptible to more vulnerabilities, greatly compounding the cybersecurity challenge. Importance of cybersecurity The current chairman, president and CEO of IBM, Ginni Rometty had described cybercrime as “the greatest threat to every profession, every industry, every company in the world.” While cybersecurity used to be considered an issue primarily for the IT folks, these days it is an agenda item for the entire C-Suite. What has really changed? It is not just the frequency of media reports on cybersecurity breaches. If anything, these are merely symptomatic of a larger shift underway.
Turkey has faced a series of significant shocks in the past years. Most recently, the slowdown in the economic activity, tightening in financial conditions, sharp currency depreciation, and rising inflation have necessitated a coordinated action by all relevant authorities. Central Bank has mainly focused on inflation and FX developments during this period. We used our rich toolkit to tighten monetary policy, but at the same time provided liquidity support to FX market through reserve requirements and other tools. As part of the coordinated policy mix, other authorities have taken a series of measures to support the credit channel and economic activity. In order to stimulate the loan supply and demand, the bank regulation authority has released some of the buffers accumulated in recent years, including the maturity restrictions and loan-loss provisions. The government has announced a stimulus package to contain a possible adverse feedback loop between economic activity and loan supply. To this end, collateral conditions were eased for corporates, several incentives were provided to stimulate investments and exports, direct support for SME loans were provided through government guarantee schemes and loan restructuring processes. Most recently, tax cuts have been introduced for certain durable products to support demand and production without generating inflation. 11  Moreover, as a reflection of the enhanced fiscal-monetary policy coordination, the finance ministry announced clearly that no tax hikes are envisaged in 2017.

This is largely attained by the banks having the opportunity to calculate their risk-weighted assets, and thus capital requirements, using internal models. When the financial crisis broke out, however, it became clear that these models often underestimated the risks in the banks’ exposures. This meant that the capital requirement was lower than was appropriate. Many actors, both regulators and market participants, have therefore expressed doubts as to how well these models actually reflect the risks. In 2013, the Basel Committee therefore published a number of reports analysing what capital requirements the banks’ internal models generated. The reports show that there are major differences in the banks’ capital requirements. They also show that these differences cannot be explained by the differences in the underlying risk in their assets, but are instead due to the way the banks measure risk. The fact that this is so not only makes it difficult to compare capital requirements between the banks, it also reduces the credibility of the international capital regulations. The Committee’s current work therefore concerns to a large extent ensuring that the models used by the banks are reliable and reflect the risks in their operations in a correct manner. This work includes revising and to some extent limiting the banks’ scope to use internal models to calculate their risk-weighted assets and thereby their capital requirements. For instance, the Basel Committee is planning to introduce floors for a number of the parameters the banks estimate themselves.
The level of solvency had increased, in terms of CET1 capital, from € billion in December 2007 to € billion in December 2019, up by slightly over 35%. This rise in capital entailed  1  From the 2008 peak to March 2020, the number of employees fell by 48% and branches by 35%. 1  a notable increase in loss-absorption capacity. Indeed, almost half of all capital took the form of buffers above the minimum regulatory level, which can be released should it prove necessary.2 In comparative terms, the CET 1 ratio of the main Spanish deposit institutions stood below the European average, while their leverage ratio is slightly above. This is because Spanish banks’ asset risk weightings are higher, basically as a result of a more intensive use of the standardised approach to risk management. The drive spread to the entire non-financial private sector in Spain, the deleveraging of which from 2010 to 2019 (almost 30 pp of GDP for the household debt ratio and 45 pp of GDP for firms’ debt level) has contributed to it being better positioned to tackle the strong shock to activity imposed by the pandemic. One way of illustrating this resilience are the stress tests we supervisors regularly conduct. This is the case of the FLESB (Forward Looking Exercise on Spanish Banks), conducted annually by the Banco de España. Its latest aggregate results were published in our autumn Financial Stability Report.

If this is the case, the nominal policy rate will not necessarily return to its pre-crisis levels. There are, however, other economists who argue that the observed drop in real rates was mainly of a cyclical nature. If this view is correct, the steps towards neutral monetary policy – steps already undertaken by some central banks in recent years – may easily continue to the pre-crisis levels. I am therefore glad that we have here two papers that may shed some more light on this policy important topic. The next session will be devoted to the exchange rate. Nobody doubts that exchange rate movements are of utmost importance for open economies. The papers in this session analyse the monetary policy channel of the exchange rate and the possibilities of international policy 1/2  BIS central bankers' speeches  coordination. Both are simultaneously fascinating and policy relevant. Friday, the second day of our conference, will include two sessions. One will be dedicated to bounded rationality in macroeconomics. The rational expectations revolution that started in the late 1960s changed modern macroeconomics in a significant way. The rise of new Keynesian DSGE models some 20 years ago demonstrated that the rational expectations approach can be fruitfully applied even to large-scale models that are of practical use in policy institutions such as central banks and international organisations. Let me remark that the CNB has been successfully using its own DSGE model as its main forecasting and policy analysis tool for more than a decade now.
If in the coming months we achieve normalisation, understanding by normalisation a situation in which political agents act with a real observance of our entire legal framework to the letter, and I would stress real observance, that would very likely lead to a better growth scenario than that considered in our latest projections and to an ultimately moderate impact. If, on the contrary, such normalisation does not come about, that may affect consumption and investment more markedly. A further loss of confidence may prompt households to increase their precautionary saving and to postpone their consumer-durables and house purchase decisions. And, above all, it may affect business investment in Catalonia, given that the climate of uncertainty would delay the undertaking of new investment projects and set back hiring decisions. Moreover, these effects on investment and consumption decisions might extend to both resident and non-resident agents, adversely affecting variables such as tourism and foreign investment. The outcome would be a greater adverse impact on activity both in Catalonia and in the Spanish economy as a whole. Conclusions Allow me to conclude. In addition to the risks I have highlighted, we are facing other problems, chief among which, owing to its far-reaching and numerous consequences in the medium and long term, is the ageing of our population, which is expected to continue and even intensify in the near future. This process involves various adverse effects, including most notably, as we all know, the challenge that a progressively longevous population poses to the public pensions system.

In the financial domain, the valuations of certain assets in some jurisdictions and segments of the capital markets have increased most markedly, suggesting that there has been an increase in the risk of there being corrections in the coming years potentially affecting financial stability. I would also like to refer to the economic risks posed by the political situation in Catalonia. In our Financial Stability Report, published early last November, the Banco de España estimated a range for the economic impact of the tensions in Catalonia drawing basically on assumptions about their duration and intensity. The conjunctural information for the final 5/6  quarter of 2017 indicates that economic activity is expected to have slowed in Catalonia in the closing months of the year to a greater extent than in the other main regions with the greater GDP; at the same time, it seems clear that the application of Article 155 of the Constitution has contributed to easing economic tensions, as shown by recent developments on financial markets, where a correction has been observed in the higher volatility and more negative dynamics that stock markets and the Spanish sovereign debt risk premium had experienced in the opening weeks of October. Indeed, the risk premium stood today below 85 basis points relative to the German benchmark, the lowest level since 2010, following the upgrade announced by a rating agency.
I think there is little doubt that the current exchange rate is below this new, lower equilibrium rate, as is often the case in a financial crisis. However, there is great uncertainty about how far below equilibrium it is. There is also considerable uncertainty about how much the equilibrium exchange rate will rise in coming years and how much the exchange rate will correct itself. The Central Bank’s newly published forecast assumes that the exchange rate of the króna against the euro will remain close to current levels until well into 2010, whereupon it will gradually rise to about 170 in 2011 and 2012. We hope, of course, that this forecast is unduly pessimistic, and experience tells us that the currency can appreciate swiftly once it gains upward momentum. But it would be imprudent to base plans and policy actions on such a hope. On the contrary: I believe we should prepare ourselves for a protracted episode of weakness. And, like so many other things, there are both pros and cons associated with such a development. BIS Review 146/2009  3  That doesn’t change the fact that we would all have to make a concerted effort to botch things in order to prevent the exchange rate from being considerably higher in a few years’ time than it is today. But then we will have to remember to buy back the foreign exchange that we have used to support the króna in 2008 and 2009.

Heng Swee Keat: Dealing with the implications of the crisis and implementing policy reforms Keynote address by Mr Heng Swee Keat, Managing Director of the Monetary Authority of Singapore, at the Opening of EDHEC-Risk Institute, Asia, Singapore, 21 January 2011. *  *  *  His Excellency Olivier Caron Ambassador of France to Singapore Mr Richard Simonin Chairman, EDHEC International Advisory Board Mr Olivier Oger Dean, EDHEC Business School Professor Noel Amenc Director, EDHEC-Risk Institute Associate Professor Frederic Ducoulombier Director, EDHEC-Risk Institute, Asia Ladies and gentlemen Introduction 1. Good morning. I am very pleased to join you today at the grand opening of EDHECRisk Institute’s Asian centre in Singapore. Key observations from the crisis 2. The financial crisis has fundamentally changed the way we perceive and manage risks and uncertainty. Assumptions and models that had been taken for granted are being challenged, and new developments are changing the risk landscape. Let me share three observations about risks. 3. First, the growing complexity and interconnectedness within the financial system, and between the financial and economic systems have multiplied risks significantly. There are now many more potential sources of failures and the transmission of shocks from one market to another have become faster and more unpredictable. 4. Prior to the crisis, financial and capital intermediation had increasingly shifted to relatively unregulated non-bank financial institutions. Complex securitisation structures and off-balance vehicles that were thought to disperse risks led instead to concentration of risks and excessive leverage.
On the basis of the discussions at this conference, I draw the conclusion that there is no disagreement in the economics profession on this central tenet, but a  BIS Review 110/2006  1  lot of different views on how to organise the monetary analysis so that it has an appropriate influence on interest rate decisions. And this is the second issue mentioned at the opening of the conference. As was pointed out by Prof. Christiano and his co-authors Rostagno and Motto, including informational asymmetries, transactions costs and financial frictions in “state-of-the-art” macroeconomic models allows to better reflect the role of money and credit aggregates within such frameworks. I found compelling the argument that monetary analysis be used to monitor (and possibly offset) macroeconomic risks which are not related to price stability at shorter horizons, but which may nevertheless have important consequences for maintaining price stability over the medium and long run, like risks to financial stability. On this point in particular Lucas Papademos’ remarks yesterday evening were particularly stimulating. Although the use of such models for policy purposes is in its infancy, their further development is a promising way forward and should, therefore, remain an important field of ongoing research. However, at present the practical challenge of conducting the monetary analysis requires the adoption and employment of practical and fully operational tools. Conducting such an analysis has not always proven to be an easy task.

In this regard, we recently announced the Education and Industry Forum on Financial Services Culture to support these efforts. The Forum, which kicked off in April, brings together business schools and industry representatives. Participants will research and design case studies for business school students. This will mean that students planning to enter the industry will have the tools to handle the ethical challenges that can arise in real-life work situations. 2/3  BIS central bankers' speeches  “Convene” means bringing together stakeholders to share best practices. And that’s where our Supervisors Roundtable comes in. The Roundtable brings together supervisors from around the world to share their jurisdictions’ approach and what they’ve learned from it. Participants have developed a shared set of tools for supervisors that can be leveraged in cultural assessments. Finally, let me turn to this principle of “catalyze,” and how we can use our position in the heart of the Financial District, to create change. As well as talking the talk—we’re walking the walk. This year, for the first time, this Bank is taking the Banking Standards Board (BSB) Assessment. The BSB Assessment measures the extent to which nine characteristics are demonstrated by an organization, and it includes things like honesty, accountability, and respect. The assessment started in the UK, and the Irish Banking Culture Board now takes a similar approach. I would love to see firms in the United States adopt an industrywide survey that can measure culture and benchmark banks against their peers.
This owes to the fact that, if synchronised crises occur in any of the cited components – sovereign debt, exchange rate, inflation and banking system – synchronised recession episodes are likely to follow. Certainly, simultaneous resorting to external financing with a view to underpinning a great many anti-crisis programmes makes the resources to each country relatively less available and costlier than in the case where only a small number of countries use a given amount of resources. In addition, synchronised recession episodes could translate into greater individual recessions for the economies in which the export-oriented sector holds a sizeable share in GDP. Against this background, the difficulty in adopting a package of reforms and in securing external funding is bigger in the context of the quasi-singular episodes when a large capital inflow cycle ends. Romania took this into account at the time of asking for financial assistance from the EU, the IMF and other international financial institutions to cover the financing gap estimated for 2009 and 2010. I will get back to this topic in the concluding section of the paper. The modern age of global finance saw several episodes of such synchronous, heavy capital inflows. In principle, once in a while, foreign investors find enough reasons to invest relatively large amounts of capital in emerging economies. Considering the time period that elapsed after World War I, one may assert that the pattern failed to repeat itself in the ’30s, the ’40s and the ’50s.

If I tell you to shoplift, then I am committing an unethical act - and so are you, if you follow my instruction. “I was only following orders” is not a legitimate defence. There is, if you like, a double-lock on unethical instructions within a wholly human environment - on the part of the instructor and the instructed. This is one reason why firms and regulators are so determined to promote ‘good’ cultures, including, for example, ‘speak up’ cultures, and robust whistle-blowing. But there is no such double-lock for AI/ML. You cannot tell a machine to “do the right thing” without somehow first telling it what “right” is - nor can a machine be a whistle-blower of its own learning algorithm. In a world of machines, the burden of correct corporate and ethical behaviour is shifted further in the direction of the board, but also potentially further towards more junior, technical staff. In the round this could mean less weight being placed on the judgements of front-office middle management. 6  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  6  There have been some initial steps to promote the ethical use of big data and AI/ML in financial services. Notably, for example, in Singapore,7 and – more broadly – within the EU.8 In the UK, the Centre for Data Ethics and Innovation is looking at maximising the benefits of AI,9 and many consider them leaders in this field. Principles-based expectations have focused on areas such as fairness, ethics, accountability and transparency.