samchain/econo-pairs-v1 huggingface dataset:
Andrew G Haldane: On microscopes and telescopes Speech by Mr Andrew G Haldane, Executive Director and Chief Economist of the Bank of England, at the Lorentz centre workshop on socio-economic complexity, Leiden, Netherlands, 27 March 2015. *  *  *  The views are not necessarily those of the Bank of England or the Monetary Policy Committee. I would like to thank Thibaud de Barman, Lucy Canham, Chiranjit Chakraborty, Jeremy Franklin, Rashmi Harimohan, John Hill, Bradley Hudd, Ben Kempley, Lu Liu, Katie Low, Anna Jernova, Carsten Jung, Damien Lynch, Yaacov Mutnikas, Tobi Neumann, Paul Robinson and David Ronicle for their assistance in preparing the text. I would also like to thank Stephen Burgess, Oliver Burrows, Pavel Chichkanov, Nicholas Fawcett, Bob Hills, Ronan Hodge, Glenn Hoggarth, Catrin Jones, Vas Madouros and Simon Whitaker for their comments and contributions. Accompanying charts and the table can be found on the Bank of England’s website. At least since the financial crisis, there has been increasing interest in using complexity theory to make sense of the dynamics of economic and financial systems (Newman (2011), Arthur (2014)). Particular attention has focussed on the use of network theory to understand the non-linear behaviour of the financial system in situations of stress (Gai and Kapadia (2011), Haldane and May (2011), Gai, Haldane and Kapadia (2011)). The language of complexity theory – tipping points, feedback, discontinuities, fat tails – has entered the financial and regulatory lexicon.

Where they exist, that’s  2017-19 Average  consistent with the current pattern of forward prices,  350 300 250  as you can see from both Chart 1, for wholesale  200  gas, and Chart 12 for shipping costs. (For what it’s  150  worth, the spot price of shipping containers, plotted  100  as the red line in Chart 10, has actually declined in  50  recent weeks, down nearly 30% from its peak in mid-September.) It’s therefore quite possible that, in a couple of years, the contribution of some of these items to UK inflation will be not only smaller but negative. Sources: Baltic Exchange and Bank calculations. Panamax is a sub-index covering mid-sized vessels travelling on 5 of the 23 shipping routes of the full index. It co-moves closely with the overall Baltic Exchange Dry Index. Having said all that, there’s no doubt that the path of these global goods prices is highly uncertain. Even if it’s still the right judgement that recent inflation rates are “transitory”, in the sense I defined earlier, that doesn’t mean our central forecasts are an inevitability. In the last Monetary Policy Report the MPC produced two forecasts for inflation, one in which gas prices followed the full path priced into financial markets, and therefore fell steeply throughout the next three years, another in which they stabilised at a relatively high level.
Two sources of potential stress should, however, be mentioned. First, a slowdown in the economy which, though unlikely, is still conceivable - could have negative repercussions on the quality of loan portfolios and on stockmarket prices. Second, in the more likely event of a sustained economic upswing, a sharper-than-expected rise in interest rates could also worsen the quality of loan portfolios by increasing the interest burden on households and companies more than expected. Analysis of the various scenarios suggests that sufficient capital is available in the Swiss banking sector to withstand even a substantial deterioration in the economic or stockmarket climate or a sharp rise in interest rates. Nevertheless, some banks have announced that they now have an increased appetite for risk. A general rise in risk acceptance would render the banking sector more sensitive to deteriorations in the macroeconomic or stockmarket environment. System oversight At the media conference in December last year, I reported in detail on the background to system oversight, i.e. the oversight of payment and securities settlement systems. Today I am limiting myself given the recent publication of the Financial Stability Report - to a briefing on the current situation. The day on which the new National Bank Act took effect - 1 May 2004 - also saw the entry into force of the new National Bank Ordinance. Among other things, the Ordinance contains the implementation provisions for system oversight.

Caleb M Fundanga: Zambia’s Financial Sector Development Plan Welcome remarks by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the Financial Sector Development Plan (FSDP) Phase II Consultative Meeting, Lusaka, 20 October 2009. * • • • • • •  *  *  The Honourable Minister of Finance and National Planning; The FSDP Steering Committee Chairman & Secretary to the Treasury; Co-operating partners; Chief Executive Officers and Representatives from Banks and Non Bank Financial Institutions; Distinguished Invited Guests; Ladies and Gentlemen. It gives me great pleasure, on behalf of the Bank of Zambia, to welcome you all to the Financial Sector Development Plan (FSDP) Phase II Stakeholders’ Consultative Meeting. Honourable Minister, this very important forum is a demonstration of the recognition, by Government and various stakeholders, of the strategic importance of the financial sector to the country’s development and poverty reduction efforts. Distinguished invited guests, there are a number of strategies currently being implemented by both the private and public sectors to make the financial sector more inclusive, thereby increasing the benefits for the average citizen to participate in the formal economy. The Financial Sector Development Plan is one such Government initiative. The FSDP was aimed at realising the vision of a financial system that is sound, stable and market-based and one that supports efficient resource mobilisation necessary for economic diversification and sustainable growth. Ladies and Gentlemen, various countries have established specific programmes to strengthen their financial sectors.
10  Neild (1964) and the National Economic Development Office (1965) used questionnaire-based evidence. A large proportion of firms in the sample claimed to use a pay-back criterion and of these the modal pay-back period was 3–5 years. Census evidence from this period indicated that the average useful lifespan of machines was over 15 years. The distribution of plant and equipment lives in Dean and Irwin (1964) implied a mean economic life of 34 years. 11  Sumner (1974) reaches similar conclusions. 2  BIS central bankers’ speeches  mid-1970s, it was doused by a torrent of papers testing – and typically failing to reject – the efficient markets hypothesis. This new wave swamped empirical finance for the better part of a decade. In the late 1970s and early 1980s, the efficient markets paradigm appeared all-conquering as a description of asset price movements in practice.12 Research on the inefficiencies of capital markets became something of a backwater. The voting machine appeared to be delivering outcomes both democratic and socially beneficial. But beginning in the 1980s, a whole sequence of “puzzles” in empirical finance began to emerge. These were puzzles only in the sense of being deviations from efficient markets.

Short-termism estimates which are statistically significantly below unity (at the 5% confidence level) are shown in red. The simple average of x across the 20-year period is very close to one (0.9935). On the face of it, this does not suggest that short-termism has been a particular problem among this crosssection of firms. Chart 4  Chart 5  Short termism estimates over time  Industry estimates  Source: Bank of England. Source: Bank of England. Notes: Bars show the estimated x parameter for regressions for the UK and US pooled data. Estimates where the 95% confidence interval spans 1 are coloured grey. Notes: Bars show the industry estimates for the sample split into (1) 1985–1994, and (2) 1995–2004 for each industry. S&P and FTSE industry classifications were used. Bars are coloured based on the significance of the estimates at the 5% level. But this masks some important within-period variation. In 13 of the 20 years, x is lower than 1. And in 9 of these years, x is statistically significantly below unity. Moreover, there is evidence of a rising tide of myopia: 8 of these 9 years occur in the final decade of the sample. To illustrate, Table 5 shows point estimates of x over two decadal sub-samples (1985–1994 and 1995–2004) and over the full sample. Estimates are significantly below unity in the second sub-sample, but not the first.
Since the introduction of the QDII scheme, about $ billion worth of investment quotas have been granted up to September 2010. It is likely that a significant portion of these moneys is managed out of Hong Kong. In fact, over 40 Mainland companies providing fund management, securities and futures, insurance, and other services have already established a presence in Hong Kong to manage the funds flowing out of the Mainland and engage in fund advisory businesses. We expect the process of financial liberalisation in Mainland China to be a gradual and controllable one, as it has always been. It is however important to note that this process has begun and Hong Kong is bound to be a key destination as well as the management hub for the expected gradual increase in portfolio flows from Mainland China. This is a trend that financial services providers should not ignore in their business planning process. The wider external use of the RMB Now, let me move on to the second important trend: the wider external use of the RMB. Since the global financial crisis, Mainland China has taken steps to promote a greater use of RMB outside the Mainland. The rationale behind this policy move is easily understandable. At present, much of the cross-border trade and investment between the Mainland and other jurisdictions are conducted in US dollars.

Today I will highlight two aspects that I believe are key drivers for Hong Kong’s growth in the next few years. The first is the gradual financial liberalisation in Mainland China and the second is the wider external use of the renminbi (RMB). The gradual financial liberalisation in mainland China In the gradual financial liberalisation process in Mainland China, we can observe three key patterns: inflows being de-regulated before outflows, direct investment flows being liberalised before portfolio investment flows, and collective investment schemes being relaxed before individual investors. Specifically, during the early stages of Mainland China’s reform process, in the late 1970s and early 1980s, only Foreign Direct Investment (FDI) was encouraged. Hong Kong has been the largest source of FDI for the Mainland, accounting for more than half of the total amount in 2009. In the opposite direction, Mainland China’s Overseas Direct Investment (ODI) has also been liberalised gradually over the years. Hong Kong has been the largest recipient of ODI flows from the Mainland. At present, about 60% of ODI from the Mainland has gone to Hong Kong or via Hong Kong to other places. The significant share of Hong Kong in Mainland’s FDI and ODI underscores the unique role of Hong Kong as a gateway for foreign enterprises to access the Mainland market, while at the same time being a springboard for Mainland institutions to gain exposure to international markets. With respect to portfolio investment flows, market attention has been focusing on portfolio flows from advanced economies towards Mainland China.
Case Study 5: The establishment of the Deposit Insurance Scheme Let me now illustrate yet another example of harmonization. This is in relation to the establishment of the Deposit Insurance Fund and Scheme. My colleagues at the Central Bank have told me that discussions in connection with the setting up of a Deposit Insurance Scheme had been taking place at various times, over the past two decades! However, there was no consensus reached on a suitable mechanism,  10  BIS central bankers’ speeches  particularly because the large initial capital that was required for the establishment of such a scheme, could not be allocated by the Government for many years due to the intense pressure upon the need to allocate funds for other more pressing needs of the state. Nevertheless, it was considered vital that such a fund and a scheme should be established, and hence an innovative method had to be structured, without placing an additional burden upon the Government coffers. In 2010 too, internal discussions were once again taking place with regard to the possible setting up of a Deposit Insurance Fund. At that time, we noted that the abandoned properties of the banks, which constituted the dormant account balances of over 10 years, had risen to a sizeable amount, and according to the law, those funds had to be placed by the banks with the Government for safe keeping.

In order to address this situation, one of the objectives in the Sixth  BIS central bankers’ speeches  1  National Development Plan is to enhance the capacity of women to participate in national development”. 1 The Report further states that “due to weak economic position such as lack of collateral required by most financial institutions, most women, especially the rural women, are unable to access investment capital to engage in business and other economic activities as individuals”. Access to affordable financial services – especially credit and insurance – enhances livelihood opportunities and empowers women and other marginalized groups to take charge of their lives as well as improve their social and economic equity. This is why financial inclusion is considered to be critical for achieving inclusive growth and poverty reduction. What do we mean by financial inclusion Women’s financial inclusion has been described as “a state in which women as individual, members of households and entrepreneurs, have access to the full range of financial products and services from convenient responsible formal service providers, offered effectively, responsibly and sustainably and at a reasonable cost to clients” These products include payments, savings, credit, insurance and pensions. The Finscope survey of 2005 and 2009 showed that access to financial services in Zambia has been low with results indicating only a marginal increase from 33.7% in 2005 to 37.3% in 2009. This signifies that further efforts are required.
But others are also arising as a result of this crisis. The globalisation of production The crisis has highlighted some of the vulnerabilities associated with globalisation and the risks arising from protectionism. Set against this, Spain should play a leading role in defence of a global trade model, based on multilateral rules and free competition. Let us not forget that Spain has increased its external openness very significantly, which is essential for our growth but also makes us more sensitive to any reversal in international trade. Digitalisation  9  The crisis might also accelerate the ongoing digitalisation of the economy. It has demonstrated the possibilities of remote working, whose use in Spain was limited prior to this crisis. Developing teleworking will mean its positive aspects must be boosted and its shortcomings mitigated. In particular, there is evidence that, if the right conditions are not in place, remote working productivity might be lower than that involving workplace attendance. Training policies are thus needed enabling the employment opportunities arising as a result of the more intense use of teleworking to be harnessed. Headway in e-commerce during the lockdown, building on its extraordinary growth in recent years, might step up in the future. In that case, it will be essential to understand its implications in terms of business competition and price dynamics, and, if it were necessary, to pursue measures minimising any potential adverse effects. 4.8.

Following the shutdown, a second phase now ensues in which the economy is gradually beginning to recover, in step with the lockdown-easing measures. Some key characteristics mark this second phase. First, uncertainty remains very high. There are still many unknowns as to how the disease will unfold. This uncertainty will adversely affect consumption and investment decisions and international trade. Second, minimising the risk of a second wave of the disease will mean retaining certain restrictions and health safety measures for some time. These circumstances will have a bearing on normal economic activity and will unevenly affect the different productive sectors. Third, we will also be able to see in this phase to what extent, despite the economic policy measures applied, the crisis is causing more lasting damage to different sectors, firms and population groups. Finally, signs are emerging that the pandemic may cause some structural changes, although these are difficult to define at present. In this second phase, the economic policy response must combine two objectives: to support the recovery (which advises not withdrawing the support measures prematurely, as that would increase the risk of economic growth enduring more lasting harm); and to help the economy adjust to the post-pandemic scenario. 1  This extraordinarily complex setting also necessitates the definition of a reform agenda aimed at tackling our economy’s structural challenges, which have become more pressing with the crisis. Lastly, nor should we forget that, after the pandemic, we will have our highest level of public debt in many decades.
The key policy rate is set with a view to keeping inflation close to 2.5 percent over time without triggering excessive fluctuations in output and employment. Monetary policy also seeks to be robust and take into account the risk that financial imbalances in the economy build up. Even though the objectives differ, both of these instruments work through banks’ responses. The level of the countercyclical buffer may therefore affect the conduct of monetary policy. Increased buffer requirements may induce banks to increase their lending margins or restrict access to credit in other ways. Tighter lending growth curbs economic activity and inflation. This suggests, in isolation, a lower key policy rate. Other developments in the economy may amplify or dampen this effect. Although increasing lending margins in isolation point towards a lower key policy rate, a period of strong economic expansion, with prospects for high inflation and a risk of a build-up of financial imbalances, might indicate that the key policy rate should be raised while at the same time tightening capital requirements for banks. Conversely, in a sharp downturn with higher bank losses, it may be appropriate to reduce both the key policy rate and the countercyclical buffer. Chart: Credit cycles and business cycles in Norway Having more economic policy instruments available can make it easier to achieve several objectives at the same time. But the countercyclical capital buffer is not a new stabilisation policy instrument on par with monetary policy.

Ardian Fullani: Recent developments in the Albanian banking system Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at a meeting organised by Raiffeisen Bank with business representatives and its major clients, Tirana, 14 June 2011. *  *  *  Dear Minister of Finances, Dear Mr. Lennkh and Mr. Hodell, Dear Mr. Canacaris, Dear Ladies and Gentlemen, Today’s meeting organised by the Raiffeisen Bank with the business community is very significant. Firstly, it shows a well-defined strategy of the Raiffeisen group to increase its market share in Albania through dialogue with business partners. Secondly, such forums serve also as a platform to generate development ideas and projects of national, and why not, regional importance. Thirdly, I think that today’s meeting is indicative of the maturity and rising awareness of the banking system and the business community. Personally, I would wish that such meetings be intensified in the future: they should also be more structured, oriented towards a constructive debate, and involve the entire system and all sectors of the economy. In short, banks and businesses need to sit together for the best. Dear Ladies and Gentlemen, We are in mid-2011 now, which is a complex year in terms of its challenges for objective reasons owing to the international financial dynamics of the past 3–4 years. Whilst our economy has posted positive growth, it continues to operate below its potential. The international setting is filled with uncertainty for a group of advanced economies, while agricultural products and raw materials prices remain high.
As president Trichet explained in the press conference following the April policy meeting, there were arguments on both sides. We took the decision not to rewiden the interest rate corridor to its normal size at the April meeting. However, going forward, I would argue in favour of normalising the width of the corridor sooner rather than later. In my view, it is increasingly harder to justify the non-standard width of the corridor as time goes by. I don’t think there is any mechanical link between the decision as to when to phase out specific non-standard measures that have been introduced during the crisis. Q. On bond buying programme. What is your point of view with Greece, Ireland and Portugal being in the hands of the EU and IMF? Does it give rise to the need for the ECB to intervene? It is increasingly hard to justify the continuation of the SMP in light of the fact that it was introduced in order to alleviate some of the dysfunction in the monetary policy transmission mechanism in some markets, and I do not think that those conditions hold at the moment to the same extent. Q. Do you think it should be stopped completely or just be there in case the need arises again? The mere presence of the programme, even if no purchases at all are made for a very long time, can be a stabilising force in the markets in case additional tensions appear on the horizon.

We have seen a spike in borrowing costs in past few days. Do you believe that this debate about restructuring can become a selffulfilling prophecy? In the case of a euro area member state, and Greece is a euro area member state, talk of restructuring cannot become a self-fulfilling prophecy in the same sense that could have been the case for other countries that are not part of the European Union. The reason for that is very simple; in the European Union a member state can count on political support and solidarity from other member states. It would take a political decision against supporting a member state in need in order to force a restructuring in the sense you describe. So in my view, to the extent the Greek government continues to implement the programme of structural reforms that it is implementing right now, and to the extent that it recognises that a restructuring would be undesirable and unnecessary, then restructuring can be avoided so long as the Greek government enjoys the support of other member states in the European Union. Under these circumstances the support from other member states is critical. BIS central bankers’ speeches  3  Q. Greece is expected to go back to the markets next year. Do you think this could still happen or do you think there is a need to extend the programme? I think this will be evaluated as time goes by.