samchain/econo-pairs-v1 huggingface dataset:
Chart: Excess return, cumulative annual since inception and quarterly The long-term return and the wide annual variations in the Fund’s value are largely dependent on financial market developments. The most important questions therefore relate to the Fund’s strategy. We have nevertheless continuously sought to exploit the scope for profitable active management. The contribution from active management to the overall annual return was set at 0.25 percentage point by the Executive Board in 2001, which may appear to be neither considerable nor demanding. According to the Ministry’s calculations, the expected real return on the Fund rose by 0.4 percentage point when the equity allocation was increased from 40 per cent to 60 per cent 10 . In this context, a contribution of 0.25 percentage point does not seem small. It is also fairly demanding to achieve this. The degree of efficiency in financial markets is generally high. In a model, Nobel prize winner William Sharpe divides investors into two groups: passive and active investors. In this model, all passive investors will achieve a return in line with the general market. The return earned by active investors will on average be lower than the market return because of higher management costs 11 . The idea that rational and profit-motivated participants should, on average, lose money is a paradox, as pointed out by Sanford Grossman and Joseph Stiglitz in 1980 12 . For investors and managers to expend resources on gathering and analysing information, opportunities for profit in the markets must be sufficient to cover their costs.

As an example, allow me to present the background for the monetary policy decision in June, when the key rate was raised from 6.5 per cent to 7 per cent. Developments in international financial markets were uncertain at that time, as they are today. We assumed that activity among our trading partners would show only a gradual recovery. Oil prices were high, also measured in NOK. Private consumption had shown a substantial rise as a result of strong income growth. Households expected strong income growth and borrowed heavily. Housing investment was high and financial investment was low. House prices were rising. Public expenditure was growing as a percentage of GDP. It was also expected that the level of petroleum investment would be high. Against this background, pressures on real economic resources were deemed to be strong. Wage growth was markedly higher than projected earlier. The outcome of the various settlements pointed to wage growth of 5½-6 per cent this year. The wage settlement awarded high pay increases with effect from next year for some groups even though they will also be negotiating pay increases in 2003. Developments in the krone exchange rate had the opposite effect. The krone had appreciated. Expectations of higher interest rates as a result of developments in wage settlements probably contributed to this.
Considering this historical evidence for the euro area, even if gas prices have returned to levels close to those at the start of the war in Ukraine, the upward effects of gas prices on core inflation could still be significant in the short term. However, if the significant reduction in gas prices continues, it should be expected to gradually begin to trigger reverse transmission effects. Consequently, at the current 3  The remaining 30% is the part that the mo del canno t identify as a demand o r supply co mpo nent. It is an unexplained co mpo nent that sho uld not be given an interpretatio n under the appro ach used. 4  Bo rrallo , F., L. Cuadro -Sáez and J. J. Pérez (2022). “Rising food co mmodity prices and their pass-thro ugh to euro area co nsumer prices”, Analytical Articles, Economic Bulletin 3/2022, Banco de España. 5  Ló pez, L., S. Párraga and D. Santabárbara (2022). “The pass-thro ugh of higher natural gas prices to inflation in the euro area and in Spain”, Bo x 4, “Quarterly repo rt o n the Spanish eco no my”, Economic Bulletin 3/2022, Banco de España. 3  juncture, we could well be at some sort of crossroads, where the lagged effects of the past increases in commodity prices would still be present, but diminishing, and the first effects of the most recent decreases would be emerging and on the rise.

We will feel the stones of the economy with the bottoms of our feet as central bankers and proceed accordingly. Draghi’s Old Man At a recent meeting I attended in Frankfurt, Mario Draghi of the European Central Bank told of a man who needed a heart transplant. The doctor leveled with him that he had several choices, including the heart of a 75-year-old central banker. “I’ll take that one,” the man answered immediately. “Why?” the doctor asked. “Well,” said the man, “because it’s never been used.” As was made clear in Chair Yellen’s speech in Chicago earlier this week, central bankers have hearts, and the Fed is working to harness monetary policy to relieve the plight of the cyclically unemployed. But we also need to be vigilant in making clear that we are obligated to maintain price stability and that allowing inflation to take grip is a cardinal sin for a central bank, for it is the cruelest of afflictions for all of society. Joachim Fels of Morgan Stanley noted that Draghi’s little joke serves as a reminder not that my colleagues and I at the Federal Reserve belong to a heartless tribe but that “central banking is about making rational, cool-headed and unemotional decisions often under difficult circumstances” 7. We must conduct monetary policy in a cool-headed and unemotional manner in order to achieve both of the mandates Congress has given us – preserving price stability and achieving full employment – while avoiding financial market turbulence.
It should be possible to develop better routines to reduce the need for collateral. A review of traffic patterns (in particular, for government payments) combined with other appropriate measures (such as exposure limits and collective collateral) should make it possible to reduce the collateral requirement substantially. Changes in the rules for collateralisation are the other promising area for achieving noticeable gains. Present regulations hamper ongoing changes in the amount that can be pledged in favour of Norges Bank. Banks are unable to alter the collateral which has already been furnished (the previous day) in favour of Norges Bank. If it turns out on the day of settlement that too little collateral has been furnished, banks are not able to increase the amount of collateral - even though they have securities available in the VPS.13 This sluggish system - resulting from the Act relating to the Norwegian Central Securities Depository - prevents banks from adjusting their collateral throughout the day. It goes without saying that this is not an optimal situation, which we have already pointed out. The matter is under consideration in the VPS legal commission, and we are hoping that a solution is imminent. Let me now turn to the responsibilities and roles of the central bank and the banks in the payment system. 4. Responsibilities and roles in the payment system  The primary responsibility for the development of the payment system lies with, and must lie with, the banks. Self-regulation is still the rule.

They will probably have to satisfy international requirements placed on similar systems. This is not to say that Norges Bank will dictate specific solutions for these systems, but that we will demand that risk be identified and brought under control, and that there be satisfactory solutions for dealing with crisis situations. Several alternative solutions may be possible. The banks will have to decide for themselves within the limits set by sound risk management. 11  BIS Review 7/2000  An example may serve to illustrate this. Risk in net settlement arises primarily because of the time-lag between payment and settlement. It has been common up to now for the payee bank to make funds available to its customer - pending the final transfer of funds from the payer bank in the settlement. This practice can lead to large and unforeseen exposure before settlement is finalised. If the payee bank postpones crediting instead, credit risk will be eliminated from the net settlement, but at the expense of efficiency - because the customers receive funds one (or perhaps two) days later. The advantages of delayed crediting must therefore be weighed against the disadvantages. My point here is that the banks themselves must be responsible for this assessment, while we at Norges Bank must evaluate whether the relevant measures are sufficient for promoting the objective of the law. Let me add that licensing does not mean that Norges Bank has issued a stamp of approval for the technical solutions of the interbank systems.
They involve adopting: a risk based approach for focusing the Fund’s crisis prevention work; a more intensive framework for the surveillance process to provide a stronger anchor for the member’s economic program; a reinforced framework for providing support to countries undertaking a debt restructuring; and a more credible form of financial insurance that creates better incentives for stronger policies in advance of crisis. These proposals do not require amending the Articles of Agreement of the Fund, and can be achieved without major changes in the structure of the institution. They are evolutionary rather than revolutionary. More policy ambition Studies by IMF staff, the IMF’s Independent Evaluation Office, and others catalogue a number of criticisms of the substantive content of the Fund’s policy advice. Many of these studies conclude that the Fund has had insufficient ambition in its prescriptions for reform and in a number of cases was too deferential to domestic political constraints on adjustment and reform. Some conclude it was too supportive of choices by its members to run exchange rate regimes that were incompatible with the rest of the policy framework, that led to substantial appreciation of the real effective exchange rate over time, that encouraged borrowing in foreign currency, and that proved too brittle under stress. Some suggest the Fund was in some cases insufficiently attentive to or ineffective in addressing the increases in debt, particularly foreign exchange denominated and linked debt, that created the balance sheet problems, which made crises so damaging and difficult to resolve.

The Fund can provide a useful voice and a forum for advising the major economies to pursue policies that can contribute better to global economic expansion and financial stability. The Fund can play an important role in considering, from a global or systemic perspective, the exchange rate policies of its members. And the Fund plays a vital role in providing the macroeconomic policy framework that is the critical to sustaining better growth outcomes and the effectiveness of the global development assistance effort for the poorest, low-income countries. I think the Fund is reasonably close to the frontier, the sensible or achievable frontier, in these areas. Some may wish it were more effective in persuading the G-3 to avoid policies that create the risk of abrupt changes in financial market conditions or exchange rates, but it will never be decisive in this arena. And it might do more to further improve the design of macroeconomic policies and institutions in the poorest developing countries. But outside those areas, the challenges to sustained growth in per capita income lie largely in areas beyond the core competence of the IMF. In the emerging market context, in contrast, there is greater distance between the Fund of today and the achievable frontier. This is a timely and critical issue, because of the magnitude of the challenges that still confront many emerging market economies. Let me start with a broad review of the progress made over the past decade across emerging markets in reducing their vulnerability to financial crisis.
A Fine Balance Speech given by Mark Carney, Governor of the Bank of England  The Mansion House, London 20 June 2017  I am grateful to Clare Macallan and Iain de Weymarn for their assistance in preparing these remarks, and to David Bailey, James Benford, Paul Brione, Bob Gilhooly, Jeremy Martin, Eleonora Mavroeidi, Alex Michie, Anisha Tibrewal, Kenny Turnbull, Simon Whitaker and Tom Wise for background research and analysis. 1  All speeches are available online at www.bankofengland.co.uk/speeches  I. Introduction My Lord Mayor, Chancellor, ladies and gentlemen. In recent weeks, we have been reminded of fine balances: in decisions, in parliament, in life. The fine balance between hope and despair. 1  Despair at the murder of Jo Cox. Hope in her remarkable life of service – an inspiration that lives on in her family, friends, colleagues and many admirers. Despair at the terrorist attacks in Manchester, Borough Market and Finsbury Park. Despair at the tragedy of Grenfell Tower. Hope in the heroism, resiliency and the community of the responses. Hope when we recognise our common humanity. The best tribute this City and this Country can give to the memories of those lost is to renew our shared commitment – whatever our differences – to promote the common good. This includes pursuing a Brexit, and building an economy, that works for all. ------------------------------------Since the prospect of Brexit emerged, financial markets, notably sterling, have marked down the UK’s economic prospects.

BIS Review 92/2001  3  Despite the generally positive impact of capital liberalisation on the growth prospects of the accession countries, one should bear in mind that the speed of capital account liberalisation may carry risks for countries with underdeveloped financial sectors, especially in a context of fixed or tightly managed exchange rate regimes. If not carefully sequenced and supported by consistent macroeconomic and structural policies, capital account liberalisation could pose some risks to macroeconomic or financial stability in the accession countries. It is therefore crucial that the right policies are put into place before EU accession. 5. Financial sector structure and functioning  The last issue I would like to elaborate on concerns the structure and functioning of the financial sector in the accession countries. Partly for historical reasons, the financial sector in the accession countries is largely dominated by the banking sector, whereas other financial sector intermediaries still need to be further developed. Over the past few years, significant progress has been made in restructuring and consolidating the banking sector. This progress has been accomplished through the large-scale privatisation of state-owned banks and through the extensive opening-up of the banking sector to foreign ownership. Undoubtedly, this process has contributed to greater integration with the EU and significant efficiency gains. It has also supported the strengthening of financial stability and provided the banking sector with know-how and capital. However, the degree of financial intermediation remains rather low and the challenges ahead are considerable.
An improved corporate insolvency regime facilitates the rehabilitation of viable firms and speeds up the exit of non-viable ones. This would boost banks’ profitability as a result of reduced provisioning needs, while it would also generate gain of output for the real economy arising from more efficient allocation of resources. The authorities have launched a comprehensive review of the judicial system, which is expected to result in a reform that would benefit the banking sector and the overall economy. As I said earlier, the APP has had some positive effects on our economy. However, we need to be vigilant to identify any arising risks from liquidity flows. Accordingly, the Central Bank of Malta, through its participation with the Malta Financial Services Authority on the Joint Financial Stability Board, is monitoring credit developments for any undue credit growth that could potentially lead to the formation of asset bubbles. Should it be required, we will take offsetting macro-prudential measures to safeguard financial stability and maintain the resilience of the financial sector. Given the limited depth of our capital market, the APP has somewhat tightened investment options for the Maltese investor. In this context we need to diversify our capital market further, with securities that are sufficiently backed by assets, such that the integrity of our capital market and the stability of our investors’ base remain intact.

Internationally, the risk of deflation has been the primary concern from a central banking and monetary policy perspective. In a low or negative inflation environment, consumption could be postponed in the expectation of further price reductions, putting pressure on firm revenues. Given the downward rigidity in wages, firms cannot easily adjust through lower wages in a deflationary environment. So a deflationary environment could lead to higher unemployment and stagnation. Also, low inflation increases the burden of servicing debt. Indeed, with deflation the real interest rate starts rising. When nominal policy rates are close to the zero lower bound, higher real rates cannot be corrected by reductions in policy rates. The prolonged period of low inflation in the euro area since 2014 has prompted the ECB to introduce unconventional monetary policy measures (See Chart 6). Chart 6 – HICP inflation  These complement the reductions in the main policy rate so as to maintain an accommodative monetary stance. In January 2015 the ECB announced the launch of the Asset Purchase Programme (APP), first encompassing ABS and covered bonds, and later extended to the purchase of sovereign bonds. At the euro area level, the ECB’s monetary policy strategy has gradually improved financial and credit conditions, as well as the ongoing economic recovery. The non-standard measures have resulted in higher equity and bond prices, higher liquidity and improved lending conditions. Since June 2014 the transmission of policy rates to lending rates has improved, with declines in lending rates becoming more pronounced and more widely distributed across euro area countries.
But the right response is then to get the banks back into a position to lend normally as soon as possible. The array of measures introduced by the Government to support the banking system – injections of new capital, insurance against losses on toxic assets, guarantees on bank debt – plus the Bank’s Special Liquidity Scheme, which allows banks to swap illiquid mortgage-backed securities for liquid treasury bills, have all been aimed at that objective. The second reason to be hopeful lies in the substantial depreciation of the sterling effective exchange rate, which has fallen by around a quarter since the middle of 2007. Prior to that, the MPC had already drawn attention to the need to re-balance the economy away from domestic spending towards net exports and so reduce the UK’s current account deficit. A real depreciation, boosting the competitive position of UK producers in both domestic and overseas markets, is part of the mechanism to bring such a rebalancing about. And an increase in net exports will, of course, help to fill the hole made by the crisis-induced reduction in private and, potentially, public spending. Unfortunately, there is little sign so far of a significant impact of the depreciation on the volumes of exports and imports, which have moved broadly in line with the movements in overall demand abroad and at home respectively (see Charts 4 and 5).

Basel II principles require all banks to address all risks, such as credit risks, market risks, operational risks and others. The principles envisage that banks should have in place systems that would help identify, measure, monitor and make provisions for such risks. The domestic banks are aware of the importance that the application of the new standard should coincide with concentration on risk management in keeping with the best global practices by using the best technological solutions. Reviewing the topics of this Symposium and the quality of its speakers, I see that it broadly covers aspects and all types of applications of banking risk management as Basel II principles seek to highlight and address. In conclusion, I express my deep thanks to the audience and the organizers of this symposium, and we look forward to having positive contributions and outstanding papers, wishing you all success. Al Salumu Alaikum Warahmatu Allahi Wabarakatuh. IS Review 125/2006  1
Durmuş Yilmaz: Globalization and monetary policy Speech by Mr Durmuş Yilmaz, Governor of the Central Bank of the Republic of Turkey, at the conference on “Globalization, Inflation and Monetary Policy”, Istanbul, 21 November 2008. *  *  *  Dear Guests, I would like to welcome you all to the conference on “Globalization, Inflation and Monetary Policy”, organized by the Central Bank of Turkey. This conference will host a select group of central bankers, experts and academics today and tomorrow. It is a great pleasure for us to host this conference and such a distinguished group of participants. During these two days we will have the opportunity to discuss the globalization and monetary policy aspects in the context of current financial turmoil. Dear Guests, We have in the midst of fast changing economic agenda. When invited to an international conference in the Spring of 2008, I was requested to make a speech on inflationist pressures faced by world economies. The title of the session was “Inflation: Is it back to stay?”. In Fall 2008, a few weeks before the start of the conference, the organizers informed me that they had changed the theme of the conference. The new title was “How to cope with deflationary risks?”. In a very short span, the main talking points of the policy makers have shifted from “decoupling”, “high energy prices” and “food inflation” to “deflation”, “recession” and “credit crunch”. Today, international financial system shaped more and more by globalization is on the brink of a crucial stage.

The problems, which started in sub-prime mortgage markets in the United States, have spread the whole financial system and reached a point that threatens the economic stability. Indicators on risk perceptions are at its highest level of all times. We have witnessed some relief in the liquidity shortage after the establishment of temporary reciprocal currency arrangements of Federal Reserve Bank (FED) and Short Term Liquidity Facility established by IMF, which is designed to help member countries that are facing temporary liquidity problems in the global capital markets. However, despite these measures, liquidity squeeze in the credit markets and reluctance in bank’s tendency to lend credit have been unabated. One of the adverse features of the current crisis is the freeze in the private credit and the tendency of capital to flow back to where the current crisis originated. Recent readings on economic activities suggest that ongoing problems in international credit markets have spilled over into the real economy as well. Recent estimates of international institutions point out a prolonged period of recession in developed economies and a sharp slow down in growth rates of developing economies.