samchain/econo-pairs-v1 huggingface dataset:
The latest IMF forecasts released in early October illustrate the extraordinary impact the pandemic has already had on economic growth globally and the incomplete nature of the ongoing recovery. 1  In particular, the baseline scenario of these forecasts suggests that, following growth of 2.8% in 2019, global GDP will shrink by 4.4% in 2020. This contraction will be more acute across the advanced economies than in the emerging countries (with declines of 5.8% and 3.3%, respectively) and, among the former, it will bear down particularly on the euro area, where output is expected to fall, according to the IMF, by 8.3% this year. In 2021, the IMF expects activity to pick up relatively strongly in virtually all economies, entailing growth of 5.2% globally. However, in most countries, despite this recovery, the level of GDP in 2021 would still be below that recorded in 2019 before the outbreak of the pandemic. The gap in the advanced economies as a whole would be about 2 percentage points (pp). In the case of the euro area, the contraction in economic activity has been across the board in the year to date, despite the partial recovery posted in the summer months following the easing of the lockdown measures deployed in the first half of the year. Euro area GDP in Q3 was thus still 4.3% lower than in 2019 Q4. In the four biggest euro area economies, the loss in output was more marked in Spain (9.1%) than in Italy, France or Germany (4.5%, 4.1% and 4.2%, respectively).

Increased employment and a good development of real disposable income, not least as a consequence of low inflation, are grounds for households’ optimism. The duration of this trend is, however, uncertain, as it was last autumn. One question lies in the differences between households and firms in their assessments of the future. Negative news from the corporate sector could make households more pessimistic. Recently, moreover, there have been certain tendencies for households to become somewhat less optimistic about their own economic future. The picture of total resource utilisation suggests that the Swedish economy still has unutilised resources. This in turn acts as a damper on inflation. The weaker activity in manufacturing has led to a fall-off in net exports. If earlier cyclical patterns still hold, stockbuilding may be heading for a downturn. Moreover, if manufacturing remains weak, there could be some slackening of investment later this year. The rate of GDP growth this and next year will thus depend on the extent to which domestic demand makes up for the development of foreign trade and industrial activity. When assessing future inflationary pressure, however, a point to bear in mind is that the past year’s comparatively sharp fall in market interest rates is exerting a stimulatory effect on the Swedish economy. Since January last year the 10-year bond rate has moved down almost 2% and the shortterm interest rate has fallen more than 1%.
This clearly points to one possible mandate for macroprudential supervision that, it were feasible, would be both pragmatic and legitimate: to avoid bubbles. Bubbles are not always triggered within the financial system. They may have roots in productivity shocks, for instance. But they cannot develop unless permissive financial conditions prevail. There are good reasons to prevent bubbles. They impose significant costs on the real economy. They may place an undue burden on monetary policy. They raise important questions of fairness in the distribution of income. Such a simple definition of the objective of macroprudential supervision is quite attractive. However, simplicity comes at a price. Avoiding bubbles present enormous challenges, to which I turn now. The challenges of macroprudential supervision Analytical challenges The first – and most important – challenge is analytical. Bubbles are difficult to detect. Asset price boom-bust cycles become clearly apparent only after the event. Moreover there is little regularity in the business cycle, which makes it difficult to identify with certainty long lasting deviations of asset prices from fundamentals. Looking at the path of asset prices, how do we know ex ante if we are confronted with an inflexion in the trend, a one-step adjustment in equilibrium levels, or the start of a bubble? There is no simple or mechanical answer to that question. This is one of the reasons why "early warning" mechanisms have not really worked.

Let me focus in the minutes I have at my disposal on several economic issues. Our debate is so more important for it takes place at a time of some economic slowdown all over Europe and of an erosion of multilateralism, of spreading trade conflicts. The prospect of a hard Brexit is very annoying for all of us and I still very much hope that such a denouement would be avoided. Likewise, it is high time to strike a deal on the Multiannual Financial Framework so that the great challenges the Union is facing (protection of borders, cyber fare, climate change, conflicts in near and more remote neighborhoods, etc.) find proper conciliation with the need to preserve the cohesion of the Union and avoid further fragmentation. I also trust that EU leaders will find the right balance to address key institutional and policy related weaknesses of the Euro area. I mention this, for Romania, like other Non-member States, is bound by EU accession treaties to join the single currency area eventually. And hopefully, this will happen in the not too distant future. In this regard I wish to mention that two major documents on Romania’s path to the Euro area (an analytical report and a Plan of action) have been recently completed and have been subjected to the scrutiny and approval of the political parties and the Parliament. I was one of the vice-chairs of the National Commission which guided the completion of the two documents.
2/4  BIS - Central bankers' speeches  In addition to its foreign-based scientific collaborators, the Committee has also reached out to other countries and international institutions in order to learn from their own experiences. The Central Bank of Austria and the Central Bank of Portugal have already been approached within the framework of close technical collaboration that the CBC agreed with certain national central banks Governors of the euro area, soon after I took over as Governor here in Cyprus. As envisaged, the Committee is currently in the process of drafting the National Strategy proposal aiming towards the promotion of financial literacy for the population as a whole, as well as for specific target groups. The initial draft is expected to be ready towards the end of the year, while the Committee is expected to submit the complete proposal to the Council of Ministers for endorsement soon thereafter. Objectives and challenges ahead Any big change in society requires bold decisions. There may be obstacles to overcome in order for the National Strategy in Cyprus to be fully implemented and it will take some time before we see the anticipated impact on society. These hindrances may be related to conflicting views of some stakeholders which should be carefully and appropriately addressed. Another important factor which might generate difficulties, is the securement of credible and long-term sources of funding since the estimated cost for such an endeavour is envisaged to be high.

For instance, it confirmed the rather worrisome result that financial knowledge amongst young persons of age 18-29 years in general is rather low. In particular, they score 4.4 out of 7 compared to 5.3 out of 7 for the 40-49 age group. Econometric evidence also shows they are 3.2 times less likely to achieve the minimum score of 5 out 7 in knowledge questions than the 40-49 age group. According to the international literature, it is crucial for policymakers to intervene and ensure that financial literacy is taught as a course in the school curriculum early on when children are active, keen learners and more willing to get educated about new concepts. Therefore, schools as an environment conducive to learning, play an essential, if not the most important role, in the formulation of a National Strategy in order to address the problem of financial illiteracy early on in an individual's life. Further to the analysis undertaken by CBC staff in support of the work of the Committee, online meetings and regular contacts have taken place between the Committee and a team of distinguished scientific collaborators, who have specialised and international expertise in the field. Namely, Dr Adele Atkinson (Atkinson Financial Research and Policy, formerly from the OECD), Dr Maria Demertzis (Deputy Director at Bruegel), Prof. Michalis Haliassos (Goethe University Frankfurt), Prof. Alexandros Michaelides (Imperial College London), and Prof. Dennis Philip (University of Durham) whom I have already mentioned.
The IFSB has also paved the way for greater awareness on issues relating to regulation and supervision of Islamic finance through its active organisation of international conferences such as the IFSB Summits, seminars, workshops, meetings and dialogues that have been staged in many countries in different parts of the world. The milestones and achievements of the IFSB in the modern history of Islamic finance is a culmination of various collective wisdoms that have charted the path of the IFSB. In a decade, the IFSB has had the opportunity to be under the stewardship of all nine Founding Members that have successfully held the Chairmanship of the Board. As a Founding Member, it is indeed an honour to witness the crystallisation of ideas that had been envisioned to build a robust and sound Islamic financial system. The journey of the IFSB in these ten years was however not without its challenges. As we continue our journey ahead, the forces of globalisation, financial liberalisation, technological advancements, intensified competition, financial innovation and internationalisation of Islamic finance would create new risks that are more complex and with more profound systemic implications. It has therefore become more demanding and challenging for prudential regulation and supervisory oversight to manage these risks. In cognisant of this increasingly challenging environment, the role of the IFSB remains instrumental and a more robust and forward looking IFSB would indeed contribute towards a more effective policy response.

The initiative of the IFSB to establish the International Islamic Liquidity Management Corporation (IILM) in 2010 is also a major breakthrough in strengthening the liquidity arrangements for the international Islamic financial system, particularly in facilitating more efficient cross-border liquidity management by Islamic financial institutions. The Islamic Financial Stability Forum (IFSF), set up by the IFSB in 2010, is another milestone in strengthening collaborative efforts amongst IFSB members by providing a platform for constructive dialogues for regulators to deliberate on issues relating to financial stability. Seven meetings have been organised since the first IFSF held in Khartoum, Sudan in 2010. A wide range of common issues pertaining to risks to financial stability of the Islamic financial system have been deliberated, all of which have the potential to further solidify global efforts in the areas that will contribute towards safeguarding financial stability. A joint initiative between IFSB and the Islamic Research and Training Institute (IRTI) to develop the Ten-Year Framework and Strategies for the development of the Islamic financial services industry that was released in 2007 has also provided guidance to national authorities in their initiatives to develop Islamic finance within their jurisdictions. A review of the framework was conducted in the recent IFSB-IRTI Roundtable Discussion in Doha and in the Pre-Summit Event of the 10th IFSB Summit two days ago. It is hoped that the assessments would provide further synchronisation to the implementation of the strategies.
In 2003 it was able to raise its profits substantially in spite of a mixed macroeconomic and financial environment. Thanks to these profits, banks were able to bolster their capital significantly, thus enhancing their capacity to absorb shocks. The resulting capital ratios in the banking sector are high both in historical terms and by international standards. This impression of pronounced robustness in the Swiss banking sector is corroborated by the relatively low level (in historical terms) of the stress indicator. This is a new indicator calculated as a synthesis of different stress symptoms. The indicator considers in particular the capital ratios, profits, share prices and risk premiums on bonds in the Swiss banking sector. As far as the outlook is concerned, we believe that the macroeconomic environment and the financial markets do not present any significant threat to the stability of the Swiss banking system. The forecasts for 2004 point to a rebound in economic growth in Switzerland and the European Union along with a continuing upswing in the United States. Moreover, the rise in prices on the Swiss real estate market has remained moderate by both historical and international standards. It is thus unlikely that this market will see any abrupt downward adjustment - traditionally a major stress factor for the banking sector. And finally, the available indicators suggest that the major global banking sectors are  BIS Review 39/2004  1  also relatively robust. At present, therefore, the risk of contagion - i.e. of a crisis having repercussions on Switzerland - is remote.

The first objective is to obtain the securities at competitive and appropriate prices for the Federal Reserve, as doing so will ultimately benefit the U.S. taxpayer. The second objective is to minimize any negative effects that the purchases might have on the functioning of financial markets. As I noted in a speech in October 2010, the liquidity and efficiency of the Treasury market provide tremendous benefits to our economy, and the Desk was intent on designing a purchase program that would not diminish those benefits in any meaningful way. 3 To achieve these objectives, the Desk relies on a system in which it purchases securities through reverse auctions with a set of established counterparties called the primary dealers. 4 The securities that are eligible for each operation and an indication of the total size of the operation are announced in advance. 5 Dealers then submit offers to sell those securities, either for their own accounts or on behalf of their customers, over a 45-minute period on the morning of the operation. Those offers are assessed by the Desk based on two criteria: their proximity to market prices at that time, and an internal methodology for comparing the relative value of the securities at the offered prices. 6 This process occurs over a proprietary trading system called Fedtrade under the oversight of Desk staff, and the results are typically finalized and published within a few minutes of the close of the operation.
As the NPSO’s supervisor we will watch closely to ensure the underlying resilience of the payment systems is maintained. NPA: Resilience at its core As I have said on many previous occasions, resilience is key. This is true both for the current systems being run by the NPSO, but also as it thinks about its journey to a new payments architecture. One of the NPSO’s key priorities will be designing, developing and facilitating the safe and secure transition to this new architecture that will underpin retail payments in the UK. The NPA is intended to replace the three separate systems with an integrated framework which facilitates competition, innovation and interoperability. When I last spoke to this Forum I discussed the PSF’s vision for an NPA based on a Simplified Payments Platform and highlighted several key themes from a financial stability perspective. The NPSO inherited this blueprint for the NPA and it is now at the behest of the NPSO to decide how it will take these plans forward. And this responsibility becomes even more demanding in the face of rapid change. Especially since the design and build of the new architecture will pose its own challenges. The NPA design must be driven by a strong business case; and resilience and security need to be built into every step of the NPSO’s process from inception to any ultimate transition from one system to another. The smooth operation of payment systems must remain a priority.

Besides, as technology advancement permeates into all businesses, all lifestyles, and all sectors, if we also could ensure that households and small businesses that make up the majority of our economic agents can practically apply and benefit from the new technology, while being aware of its associated risks, then we could significantly raise their standards of living. Ladies and gentlemen, That brings me to the end of my talk today. To aspire for a better standards of living for all citizens of Asia for the next half century and more, we, all of us, must collectively do our part to ensure inclusive and sustainable growth. In so doing, banks and financial institutions, as the blood vessels of our economy, have important roles to play to prevent the blood from being infected as well as to ensure the well-functioning of our blood circulation for more productive, better immuned, and more inclusive economies in Asia. Thank you very much for your kind attention. 6
These extra protection measures include audio recording of the marketing process, segregation of investment corner from the main banking hall or counters, and a mandatory 2-day pre-investment cooling off period for vulnerable and inexperienced investors. (b) Banks must take extra care in marketing and distributing investment products to their customers. They must remain vigilant throughout the entire distribution process, from product due diligence, risk assessment of the products, suitability assessment of the customers, training for the frontline staff and control and governance of the sales process. Universal banking vs. narrow banking 8. Let me move to the second issue, with a different meaning attached to the phrase “universal banking”. Here, “universal banking” refers to a business model in which banks are allowed to conduct their own proprietary trading and market making in addition to trading on behalf of their customers and offering other traditional banking services and products. This is another area which has attracted heated debate and a diversity of views. 9. We’ve seen the Volcker Rule in the US and we’ve heard the Governor of the Bank of England speak out in favour of narrow banks. Their concerns spring from the potential ability of the universal banks to leverage their cheaper sources of funds obtained from public deposits for risky ventures to raise the return on equity and to meet ever rising shareholders’ expectations.

Recognizing this inherent risk, the HKMA, in seeking to nurture the universal banking model in Hong Kong, must continue with its long standing conservative supervisory approach with even greater emphasis on prudence under-pinned by proactive and forward looking supervision. 20. Ladies and gentlemen, this is a rather long speech and I thank you for your kind attention. Thank you! 4  BIS central bankers’ speeches
4 [25]  Steering the interest rates worked well during this period, despite the Riksbank using a very small toolbox when conducting its monetary policy. We went from doing to mostly talking about monetary policy. But the fact that this works is based on the Riksbank having built up credibility on the market and that it is ready to use its balance sheet if market rates were to deviate from the desired levels. On Wall Street there is an expression “Don’t fight the Fed” – which means it is not a good idea to take positions based on the assumption that the central bank will fail to attain the interest rates aimed for. Steering interest rates is also based on the fundamental transmission mechanism functioning – that other interest rates in the economy actually change when the shortest money market rates the Riksbank affects are changed. How well this functions depends on different conditions in the financial sector that can be state-dependent. A similar development took place in many countries during this period – the central bank's job conducting monetary policy was relatively simple. But below the calm surface, two interlinked problems were bubbling up – a trend fall in real interest rates and rising debts. I have talked about these problems on several occasions. 5  Falling interest rates Over the past 30 years, interest rates around the world have fallen heavily.

Moreover, households’ interest rates may rise without the Riksbank raising the repo rate – if problems arise in the banking sector that mean the banks’ financing costs rise. If the global tendencies that have pushed down the real interest rate are reversed, this would most probably push up interest rates in Sweden too. And one should remember that it is easy to increase the debt when the interest rate is low, but more difficult to reduce it when the interest rate is high. Figure 4: Indebtedness as a percentage of GDP  Note. Per cent of GDP. Source: Statistics Sweden  Almost all major financial crises have been preceded by a large increase in credit volumes. 7 There is no consensus on why this is the case, but I believe that increased leverage means increased risks. Moreover, if short market financing becomes more common when credit grows rapidly, the risks linked to banks’ short-term liquidity management increase. The global financial crisis concludes the Great Moderation The dream of a world where fine-tuning monetary policy eliminates cyclical fluctuations and leads to an entirely stable economic development was definitely  7 See, for instance, Jorda et al. (2013). 7 [25]  burst by the financial crisis 2008-2009. In the United States, the foundation for the crisis was created when borrowers with weak debt-servicing ability were given the opportunity to take large loans with their homes as collateral.