samchain/econo-pairs-v1 huggingface dataset:
Time and again, we have seen public discussions about the state of the economy that are based on a particular observation, which shortly down the line has a significant reversal that renders lots of pages of study useless. The case of last September offers a good example. The Imacec of that month was strongly influenced by the so-called calendar effect, which is given by the number of working days in a month and its composition (how many Mondays, Tuesdays, and so on). In Box III.1 of this Report we note that in 2018 the month of September had two peculiarities that extended the calendar effect beyond the estimate: two less working days than September of last year and a distribution in national holidays that led many people to take the full week off. This produced a significant drop in manufacturing activity, which also reflected in energy consumption and the hours worked in the month (Figure 2). After some people attributed it to a more permanent economic phenomenon, the October Imacec data, released this morning, shows the transient nature of the September calendar effect on manufacturing. Actually, measured in twelve months, non-mining activity grew 5.1%, where the higher growth is explained by the performance of manufacturing and trade, the two sectors that appeared to have retreated in September. In this way, the strong fluctuations that the calendar effect may cause in particular months underscore the need to carefully analyze the evolution of high-frequency activity indicators.

The first panel will be moderated by Mr. Liviu Voinea, Deputy Governor and will approach the theme of investments and investment finance in 2018. The second panel will be moderated by Ms. Lara Tassan Zanin, Head of The European Investment Bank Office in Romania and will focus on the support of sustainable growth in Romania, shifting from consumption to investments. Ladies and gentlemen, Romania and the European Investment Bank share a long and fruitful cooperation that started in 1990. It got closer in 2007 when Romania became a member of European Union and implicitly of European Investment Bank. This joint partnership has boosted investments in Romania in areas of significant importance for the national economy, such as the infrastructure, small and medium enterprises, environment and innovation. These coordinates are totaling more than 13 billion EUR allocated to around 130 projects financed by the European Investment Bank, besides other 70 projects financed by the European Fund for Strategic Investments. These figures alone speak about the priorities, however I would like to point out that the financial impact transcends beyond the sum of total loans. There is significant potential for development and improvement. Romania is a net beneficiary of EU funds, the latest data showing a positive aggregate balance with more than 32 billion EUR as net received funds.
Forecasts for a low inflation level in the period ahead have dictated the implementation of an accommodative monetary policy in the last quarters. The policy rate cuts have already been passed through to interest rates in the interbank and deposits market, and to most of government securities’ yields. Interest rates on loans have also reflected the expansionary stance of the monetary policy of the Bank of Albania, but they continue to contain high risk premiums for credit risk and other risks related to long-term investment. The slow performance of the economy is also reflected in the monetary indicators. Money supply continued to increase at low annual rates, standing at 2.1% in March. This performance has reflected the decrease in credit to the private sector and the lower financing needs of the public sector. Credit to the private sector shrank 2.4% in March. Besides the weak demand from businesses and households, the sluggish performance of credit reflects the banks’ conservative lending policies. This approach is reflected not only in the interest rates on loans, but also in other lending standards applied by the banking system. In this regard, the Bank of Albania deems that the banking system in Albania has room for and should adopt a more appropriate behaviour towards crediting the Albanian economy. The country’s economic and financial reality, on-going monetary policy easing and our liquidity-injection operations, as well as the adaptation of our regulations to the market situation provide the premises for faster crediting to the economy.

Today’s key interest rate cut aims at providing a further boost to consumption and private investments, creating premises for lower financing costs in the banking sector. Data on public sector performance refer to the first four months of the current year. Revenues increased 9.1%, in annual terms, while spending shrank 5.9%. This performance materialised in the budget deficit of about 73.1% lower than a year earlier. A similar dynamics, though less intensive, is expected to persist in the months ahead. Consistently,  BIS central bankers’ speeches  1  the Bank of Albania has been in favour and has endorsed the consolidation path of fiscal policy, deeming that such policy contributes to the reduction of risks in the economy. Developments in the external sector led to an annual expansion of the trade deficit by 8.7%, during the first quarter of 2014. Albanian exports grew 11.6%; yet, the trade deficit expansion was determined by a 10.1% annual increase in imports. A more detailed analysis of trade developments shows that trade deficit expansion was attributed almost entirely to the increase in electrical energy imports. Albanian exports’ growth, however, was driven by the gradual improvement of foreign demand and depreciation of the real exchange rate over the past years. A steady improvement in this area should be anchored in structural reforms supporting the increase in productivity, development of Albania’s comparative advantages and reduction of vulnerabilities in certain sectors of the economy.
Unlike macro-prudential policy, micro-prudential supervision – the supervision of individual financial firms – is not at all new. But it has changed materially. I recall quite clearly from my time at the Treasury, in charge of financial regulation in the early years of this century, the underlying belief among the regulatory and supervisory authorities that the management and boards of firms had an even stronger reason than the supervisor to control risk and the safety and soundness of their firm – and that they had the capacity and capability to do so. The crisis revealed a very different picture in many institutions worldwide. We have learned from this experience. In the UK, the Prudential Regulation Authority’s new and more intensive supervisory approach reflects this. There is also a much more intensive focus on the firms that pose the greatest risks to financial stability than was the case before the crisis. This more intensive approach involves a higher reliance on judgment based supervision and a more forward looking and proactive stance. Supervisors are empowered to use their judgment. They no longer need to wait for a problem to occur to take action. An example is the UK stress test I referred to earlier which is carried out jointly by the FPC and PRA: firms who do not meet the standard will be required to take action.

In the wholesale and retail trade sectors, hourly labour productivity significantly accelerated in the US from 0.7% to 2.6% over the periods 1980-1995 and 1996-2004, while at the same time it decelerated in the euro area from 2.3% to 1.3%. In the financial sectors, over the same periods, hourly labour productivity growth has also accelerated in the US and has been roughly 4 times higher than the growth rate observed in the euro area over the period 1996-2004. Several causes have been mentioned to explain this downward trend in the euro area. Specific policies aiming at increasing employment particularly in the unskilled segment of the labour market may have contributed to the observed slowdown in labour productivity growth. However, this apparent trade-off between labour utilisation and productivity is likely to be a temporary phenomenon that should progressively fade, when the economy reaches a higher “equilibrium” labour/output ratio. There is another major reason that explains the big difference in the rate of labour productivity growth in Europe compared with the US, which in my view is a major policy issue, namely the fact that the European economy, being more inflexible, does not fully take  2  OECD Employment Outlook. Data for 2006 are partly estimates. 3  There is in particular considerable scope to raise the employment rate of young people and further reform needs to be undertaken to achieve the more ambitious long-term objective of a 75% overall employment rate.
The brain rebooted humans from Version 1.0 to Version 2.0. The rest is (human) history. Fire, for reasons unforeseeable at the time, appeared to play an important supporting role in this extraordinary evolutionary story. Creative Destruction As it is creative, fire also has the potential to be destructive. No-one associated with this great institution needs any reminding of that. Nor do the residents of Paradise, California where many people tragically perished in the recent wildfires. These events are the latest in a long line of devastating and destructive fires over the millennia. 7  Clark (1969). Ford, J.L. (1994). 9 Beckert and Bronk (2018). 8  6  All speeches are available online at www.bankofengland.co.uk/speeches  6  Monument is a five-minute walk from the Bank of England and a minute’s walk away from Pudding Lane, where the Great Fire of London started on 2 September 1666. As destruction goes, this one takes some beating. One-third of London was destroyed, including 80% of all churches. 100,000 people were made homeless, around 25% of the city’s population.10 The cost of the damage amounted to £ million, or almost a thousand times the annual income of London at the time.11 Yet the often untold part of this story is what happened next. The response to the destruction caused by the Great Fire of London is every bit as much its legacy as the Monument that stands by the banks of the Thames.

That might sound like a rather niche characteristic, like having a good sense of humour or an upbeat personality. But in fact imagination appears to have been foundational for humans and transformational for their evolution. How so? Imagination allows us to conceive of a future different to any seen previously. Humans’ progress was now as limitless as their imagination. But imagination alone is not sufficient. Imagination without action is day-dreaming. What set humans apart was the ability to create their imagined future. The imagined was made real. That is what is meant by creativity. Imagination with action is creativity. Knowledge and imagination are different creatures. To have knowledge is to know about things that exist. To have imagination is to conceive of things that don’t yet exist. And to be creative is to make real those imagined things. Knowledge is vital for school exams and pub quizzes. Imagination is vital for ideas and innovation. And creativity is vital for human progress. Einstein put it thus: “Knowledge is limited. Imagination encircles the world. Logic will get you from A to Z. Imagination will get you everywhere”.6 Animals possess plenty of knowledge, often genetically encoded, sometimes learned through experience. The squirrel in my garden is genetically encoded to gather food for winter. It has also learned from experience that an effective way of doing so is to befriend my daughter who provides a daily supply of nuts.
Worth noting is that, similarly to Thailand, many Asian economies have also capitalized on the opportunities to lessen monetary policy easing during the period of good economic performance since the latter part of 2010. The main objective has been to preserve fiscal and monetary policy space for potentially more difficult times ahead. For Thailand, I believe that our policy space remains appropriate. But, any higher public spending should be done with special care. At this juncture, the need to increase government consumption is less urgent and the fiscal focus should be put on public investment to expand our potential output. 2  BIS central bankers’ speeches  Therefore, the stimulus should be prioritized and carefully planned to leave some policy space for future needs. Ladies and gentlemen, I would like to end my talk today by stressing that we now live in a different and difficult world. Current global risks from the slowdown in advanced economies have clearly heightened. Given good economic fundamentals, the Thai economy should be resilient enough to cope with such risks. I would like to urge investors not to swing between over pessimism and over-confidence and behave in a herd-like manner. Instead, all parties, public and private, should be cautious and prepared for the global risks in moving the country forward. It is my firm believe that protecting domestic purchasing power and let everyone have equal chance to benefit from the economic growth can strengthen the future well being of the Thai economy in a sustainable manner in years ahead.

Conference Banque de France ”Opportunities and challenges of the tokenisation of finance: which role for central banks?”  Tuesday 27 September 2022  Concluding remarks by Denis Beau, First Deputy Governor  Let me first start by thanking you all for attending this conference, both online and in person. I believe this large audience speaks to the significance of the issues that we have discussed together today and the depth and quality of today’s exchanges, which covered a wide variety of topics, were impressive. It is a tall order to summarise such rich discussions in so little time. I will only try to highlight three lessons I take away from each of the roundtables and chart a possible way forward. The first lesson I take away from this conference is that we could be at a turning point in the development of the crypto-asset ecosystem. • Over the past few years, the crypto-asset landscape has experienced a significant growth, buoyed in part by the low interest rate environment. It has expanded its initial scope and started offering more sophisticated products, getting increasingly complex and interwoven with traditional finance, with the emergence of DeFi. • However, recent tensions in the crypto-asset ecosystem, amidst a normalisation of monetary policy, raise questions about (i) first, its correlation with other types of risky assets and (ii) second, their sensitivity to changes in the monetary policy stance. The ongoing stress in the crypto-asset market is also altering the dynamics of the ecosystem, sparking bankruptcies and leading toward greater concentration.
This fragmentation was affecting the whole economy of the area, and a banking union has been proposed in order to re-establish a smooth transmission of monetary policy and ensure that the credit supply meets the real economy’s needs. Some evidence on the fragmentation of the banking system First of all, let me give you some evidence on the fragmentation of the banking system. BIS central bankers’ speeches  1  The ECB has been continuously monitoring the degree of integration in the euro area financial markets. The latest Financial Integration in Europe report, published in April 2012, showed several indicators pointing to rising fragmentation in various market segments as the sovereign debt crisis has escalated. In addition to the price-based indicators highlighted in the report, quantity-based indicators also continue to point to a further and significant renationalisation of euro area banks’ funding markets. Banks located in peripheral countries continued to lose market funding, while those in some other countries retained it and managed to issue bank debt at attractive yield levels. The market for secured bank funding has also been affected by the increased tensions in some euro area government bond markets. Differences between bank lending rates offered to non-financial corporations and households in euro area countries reflect divergences in bank funding conditions that go beyond country-specific economic conditions. Let me give you a few examples. The coefficient of variation across euro area countries of the short-term cost of borrowing for non-financial corporations has been increasing towards all-time highs.

Part II of the Foreword explicitly recognises that ‘the steps that different Market Participants take to align their activities with the principles of the Global Code will necessarily reflect the size and complexity of the Market Participant’s FX Market activities, and the nature of the Market Participant’s engagement in the FX Market.’ The Code is also a living document, which allows it to be strengthened or clarified where necessary, including in areas of particular interest to the buy-side, such as last look and disclosures. In December 2017, Principle 17 of the Code was updated to make it clear that market participants should not undertake trading activity that utilises information from a client's trade request during the last look window. Though I know this remains a topic that can arouse real passions in a room full of asset managers, it does show the commitment of the Global FX Committee to ensure that the Code responds to buy-side concerns. And it’s working: a recent report from Nex suggested that hold times and reject rates have fallen materially since the change.7 Similarly, on sell-side disclosures regarding service levels and protections – another contentious and uneven area of the market in the past – the Global FX Committee is preparing to publish new guidance aimed at improving transparency.8 I hope this will have a similarly positive effect on market norms, and the Global FX Committee will be critically monitoring its impact in due course.
I do not intend to go into the research literature, but just note that it entails investigating a number of effects and trying to weight them against each other: How effective the policy rate is in counteracting the build-up of financial imbalances, how effective other tools are and for how long they are effective – that is, how easily they can be circumvented7, how much of a negative impact a higher policy rate has on the rest of the  4 It is worth pointing out that in Sweden the boundary between macroprudential policy and supervision of indi-  vidual banks, microprudential policy, has never been particularly distinct because of the market structure we have, with a small number of large, dominant banks. If the stability of one of these banks is threatened, it also entails a threat to the stability of the financial system as a whole. To this extent, one can say that we in Sweden have actually been conducting macroprudential analysis for quite a long time. 5 Sometimes, the problem is turned round and asks whether macroprudential policy should help stabilise the business cycle. This is something I am sceptical of. 6 Caballero and Simsek (2019). 7 Conversely, a major challenge for macroprudential policy is how to prevent “leakage” from regulations in a particular sector to other sectors not covered by the regulations. Macroprudential policy measures can be seen as a shadow interest rate for a particular sector of the economy, which can be related to the policy rate set in monetary policy.

The oil price futures used in our forecasts turned out to be poor predictors in volatile oil markets.2  1  2  A recent BdF working paper argued that short-term unemployment is more meaningful than total unemployment when looking at the Phillips curve in the US. Cf. Ferrara L. and Sestieri G. in Banque de France, Quarterly Selection of Articles, No. 36, Winter 2014-2015. Bec, Frédérique and Annabelle De Gaye (Nov. 2014), “How do oil price forecast errors impact inflation forecast errors? An empirical analysis from French and U.S. inflation forecasts.” Banque de France Working Paper 523. BIS central bankers’ speeches  1  But downside surprises also occurred for core inflation suggesting the need for complementary explanations. One candidate is the continuous appreciation of the euro between mid-2012 and the beginning of 2014, which has lowered prices of many imported non-energy industrial goods. One can expect this impact to be transitory as the euro has subsequently depreciated since the middle of 2014. This depreciation reflects the differences in the growth cycle between the euro area and its main partners and accordingly the differences in monetary policy. Those explanations do not account for the slowdown in domestic prices, which must then be attributed to an increase in domestic slack. For the European Commission the output gap widened from −2% in 2012 to −3% in 2013.
The problem became rather apparent thanks to the GFC, which witnessed cases in which bank managers took excessive risks or otherwise breached the trust of their customers in the pursuit of profit and bonuses. In some infamous cases, such as AIGFP and Merrill Lynch, sizable bonuses, funded by taxpayers’ money, were still paid to managers even though their actions had arguably contributed to the failure of the firms. This “heads I win, tails you lose” regime in modern banking is clearly a recipe for disaster and can do very little to help enhance the trust and reputation of bankers. 8. Another material change in banking from the “good old days” is the problem of what I call “short-termism” amongst some bank shareholders (“impatient capital” focused only on bolstering their own short-term returns). It has also become increasingly common for senior bank managers, especially at the top levels, to be hired on contract basis. While this might be justifiable from the point of view of hiring the best talent available in the market, it could have the unfortunate side effect of cultivating short-termism amongst senior bankers if they only work for a contract or two and therefore must deliver tangible and quantifiable financial results within a short period of time, such as a target RoE. In essence, like football managers, they survive on their reputation for delivering fast results during the current league season. The problem has been exacerbated by two more factors.

But countries are staring down the barrel of increasing expenditures and decreasing revenues… Countries will experience a deep recession that will have an impact on their public finances. This will entail greater funding needs, of between € trillion and € trillion, an amount the likes of which we’ve probably never seen before. They will also issue public debt to finance themselves, which is precisely why the ECB’s intervention in the bond markets aims to avoid fragmentation at an extremely difficult time. The ECB balance sheet is overflowing with debt from euro area countries. Where will this end? Is it possible that in the future this debt could be forgiven or written-off? Debt levels in the euro area are sustainable and when this crisis is over, economic conditions will get back to normal. We are not looking at any scenarios where this debt is a problem. It’s not a scenario I’m considering. Nevertheless, EU institutions are going through a severe crisis as they finance the cost of the pandemic. At the most recent EU summit and last Eurogroup meeting, we saw unprecedented clashes involving EU founding members, such as Italy. Europe currently has three main instruments at its disposal. First, the EIB guarantee fund that I mentioned previously, with € billion made available to provide support of up to € billion.