samchain/econo-pairs-v1 huggingface dataset:
One aspect that indeed needs further thinking is the issue of financial cycles and how they could be mitigated and whether monetary policy should play a role in doing so. Let me say a few words about this. Before I became involved in central banking I was state secretary in Sweden’s Ministry of Finance in the early 1990s and dealt, among other things, with the management of our nation’s banking crisis. Being in the middle of a crisis like that was indeed a frightening experience. Financial crises would seem to evolve from excessive optimism. That is, credit expansion (domestic or foreign), which feeds into asset prices, lowers the cost of capital, stimulates investment and subsequently leads to an economic boom. Eventually, the investments are found not to be sustainable in that they do not generate profits. The whole structure may ultimately collapse, the economy moving from boom to bust, often followed by banking or currency crises or a combination of the two. The most severe bubbles have historically been those that involve rapid credit expansion in the banking system. Economic history books are full of examples of this process. Also, the 1990s provided many illustrations of similar events. The discussion about financial cycles is far from new. One example is the major debate of the 1920s and 1930s between the Austrians (Hayek, etc.) on the one hand, and Keynes on the other.

Whether improved prudential regulations, supervisory practices and risk management techniques will suffice to avoid financial cycles in the future remains to be seen. Our experience so far does, however, leave some doubts about this. This brings us to a possible third line of defense that could at least in principle be used to prevent large financial cycles. I am of course thinking about monetary policy The argument is that since we live in a fiat money system, there is no exogenous constraint on the supply of credit except through monetary authorities. If those reactions are geared exclusively to controlling inflation, then the monetary anchor may not counter a build-up of credit that does not immediately lead to inflation in the price of current output. Hence, there is little to prevent the emergence of cycles in the prices of real and financial assets that are not included in the measure of inflation. In addition, experience has taught us that price stability is not, by itself, sufficient to ensure financial stability. So why don’t central banks simply change the way they conduct monetary policy and also try to prevent financial cycles? Well, the conventional view is that they should not. There are some very powerful arguments against a central bank trying to respond to credit expansion and “misalignments” in asset prices that do not lead to inflation in goods and services. First, how do we know that a bubble is a bubble and not a reflection of fundamental values?
Joseph Yam: Changes in Asia – a brief look at the dynamics within the region Statement by Mr Joseph Yam, Chief Executive of the Hong Kong Monetary Authority, and Alternate Governor for Hong Kong, China in the Asian Development Bank, at the 40th Asian Development Bank Annual Meeting, Kyoto, 6 May 2007. *  *  *  I would like to thank the Government of Japan and the people of Kyoto for their hospitality in hosting this year’s Annual Meeting of the Asian Development Bank (ADB). I would also like to congratulate Mr Kuroda on his re-election as the President of the ADB. This year marks the 40th anniversary of the ADB. Over the past four decades, Asia has achieved remarkable development, particularly in terms of economic growth and the reduction of poverty, and clearly the ADB has contributed significantly to this achievement and has established itself as a regional financial institution of strategic importance. Asia has undergone remarkable changes too over the past four decades and in many ways, in particular in terms of the economic dynamics within the region, and between the region and the rest of the world. Changes have been particularly marked in the past decade or so, under the influence of globalisation and the revolution of information technology. There has, for example, been rapidly increasing trade integration, encouraged obviously by the high degree of freedom in international trade, and consequently increasing economic interdependence within the region. Changes always present new challenges and opportunities.

And for the new challenges to be met and the new opportunities to be exploited, there is often the need for new approaches and new initiatives, at both the national and international levels. There is a view, for example, that trade integration in the region has not been adequately served by financial integration, given restrictive controls on capital mobility still being practised in selected jurisdictions. As a result there is some doubt as to whether the long term development potential of the region has been maximised and whether the rapid economic growth the region is experiencing is sustainable. There is further concern from the point of view of the maintenance of monetary and financial stability. New approaches and new initiatives are indeed necessary to promote greater financial integration in the region. I am sure there are many other areas concerning development of the region in which new approaches and new initiatives may be desirable. Being a regional financial institution of strategic importance, it is obvious that the ADB has a significant role to play. I would argue that this should be a role of increasing significance, or even a pivotal role, given the increasing interdependence among jurisdictions within the region and therefore the greater need for regional co-operation. The ADB has the right institutional framework for promoting such co-operation, and I am glad to see that under the leadership of the President there has been increasing involvement of the ADB in regional financial cooperation recently.
Before 1960, the Beatles was still a struggling high school band. However, through some strange connections, Beatles got invited to play at some night clubs in Hamburg in 1960–1962. Within a year and a half’s time, the Beatles played in these Hamburg clubs for 270 nights. These Hamburg clubs were not the kind of music halls in which proper concerts are conducted. They were more like drinking clubs where lots of people came in and went out constantly as live entertainment on stage was performed. The Beatles had to perform 4, 6 or even 8 hours each night. Because of so many live performances of very long hours, the Beatles had greatly improved their stamina and team work. Moreover, they had to try out different varieties of music and songs in order to satisfy the customers. So, by the time the Beatles made their celebrated US tour in February 1964, they had already done an amazing 1,200 live performances. This is an astonishing and unusual number. In those days and even now, very few rock and roll bands are able to do that many live performances in their entire careers. Again the question that I have is: Would the Beatles be just as good and as talented without Hamburg? There was an enlightening study conducted by Ericsson in the 1990s.

To understand this debate, its origins and undulations, it is worth starting at the very beginning. Although book-keeping has far earlier antecedents, modern accountancy is believed to have begun in the Italian cities of Genoa, Venice and Florence in the 14th century. It is no coincidence that modern banking emerged at precisely the same time in precisely the same cities. Banks emerged to service rapidly expanding commercial companies. And double-entry book-keeping became an essential means of recording and tracking who owed what to whom, oiling the wheels of finance. It is no coincidence, too, that the first-known description of accountancy was provided by an Italian, Luca Pacioli, in the late 15th century. 2 Pacioli was not your typical accountant. A wandering Franciscan monk, tutor and mathematician, he was friend and sometime collaborator of Leonardo de Vinci. Although comfortably the less famous of the two, Pacioli is still known today as the father of modern accounting. From those beginnings, double-entry began to spread north within Europe during the Middle Ages: to Germany in the 15th century, Spain and England in the 16th century and Scotland in the 17th century. By the late 18th century, Goethe had called double-entry “among the finest inventions of the human mind”. 3 Some people are easily impressed. Despite that, the progress of double-entry was surprisingly slow. At the start of the 19th century, there were only eleven Londoners who listed their occupation as “accomptants”. Imagine. The 19th century marked a turning point. In the UK, joint stock companies began to spring up.
Groups will be permitted to use simplifications, simplifying assumptions and proxies, although we would expect that need to reduce as the monitoring period progresses. The Bank of England supports the development of international regulatory standards, such as the ICS. As both a home supervisor of UK insurance groups with businesses around the world and a host supervisor of branches and subsidiaries of insurance groups from many different countries, I also welcome the monitoring period approach. It will give regulatory colleges a common language for measuring group risk and defining capital. No capital framework is perfect and ICS will be no different. But having agreement on common metrics will be a big step forward. It should further enhance supervisory cooperation and help build trust. Over time, it might reduce the need for multiple overlapping practices in measuring the same risks and help to limit fragmentation of capital requirements. 1  The IAIS identifies an Internationally-Active Insurance Group as being an insurance group that has total assets of at least USD 50 billion or gross written premiums of at least USD 10 billion (on a rolling three year average basis). In addition, its premiums are written in three or more jurisdictions and at least 10% of the group’s total gross written premium is written outside the home jurisdiction.

It could possibly be helpful in such situations to also show expected CPI inflation in a time perspective that is long enough to allow all temporary effects to have dissipated fully. It would then be clearer that the analysis of inflationary developments in terms of different adjusted measures was being done for instructive reasons. In that way it should be possible to avoid the risk of interpretations that we had “changed target variable.” Such an approach would also be consistent with the clarification from 1999, which says that the Riksbank should explain in advance how large a deviation from the inflation target defined in terms of the CPI that can be justified one to two years ahead. It would be possible to illustrate clearly both the size of the target deviation during the normal forecast horizon and the fact that inflation was expected to be back on target in the not too distant future. Allow me to elucidate my train of thought with an example. Suppose that as a result of some shock the inflation rate after 1.5 years is forecast to rise from 2 to 3 per cent. The shock is assumed to be such that it, after its occurrence, affects inflation for only one year. One example of a shock with such a time profile is an expected rise in VAT, which raises the price level permanently but only affects the 12-month change in the CPI one year ahead. Another example is an increase in an excise duty, for example tobacco tax.
Yves Mersch: The European banking union – first steps on a long march Speech by Mr Yves Mersch, Member of the Executive Board of the European Central Bank, at the Finanzplatztag, Frankfurt am Main, 27 February 2013. *  *  *  Dear Mr Padberg, Ladies and Gentlemen, I am well aware that many of you are concerned that the European Central Bank’s assumption of the supervisory role might overburden monetary policy. However, if well designed, set-up and managed, the banking union will eventually ease the burden on monetary policy. This will not happen by itself, though. Numerous stumbling blocks need to be cleared in the preparatory phase. But let me start without further ado. The success of monetary policy rests on integrated financial markets that operate efficiently and smoothly. They are: 1.  the basis for the equal transmission of monetary policy across member states in a monetary union;  2.  a key channel for the proper transmission of the monetary policy stance to the real economy – and hence for the ability of monetary policy to deliver price stability. However, the crisis has brought the flip side of financial integration to the fore, namely interconnectedness and increased risks to financial stability. Indeed, an integrated financial and economic system is more prone to contagion from large adverse shocks. Financial turbulence can more easily spread across markets and regions. This is particularly true if no institutional safeguards – such as euro area-wide crisis management arrangements – are in place.

Mario Draghi: ECB press conference - introductory statement Introductory statement by Mr Mario Draghi, President of the European Central Bank, and Mr Vítor Constâncio, Vice-President of the European Central Bank, Frankfurt am Main, 21 July 2016. *  *  *  Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference. We will now report on the outcome of today’s meeting of the Governing Council, which was also attended by the Commission Vice-President, Mr Dombrovskis. Based on our regular economic and monetary analyses, we decided to keep the key ECB interest rates unchanged. We continue to expect them to remain at present or lower levels for an extended period of time, and well past the horizon of our net asset purchases. Regarding non-standard monetary policy measures, we confirm that the monthly asset purchases of € billion are intended to run until the end of March 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim. Today we discussed developments since our last monetary policy meeting in early June. Following the UK referendum on EU membership, our assessment is that euro area financial markets have weathered the spike in uncertainty and volatility with encouraging resilience. The announced readiness of central banks to provide liquidity, if needed, and our accommodative monetary policy measures, as well as a robust regulatory and supervisory framework, have all helped to keep market stress contained.
[10]Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the ECB concerning policies relating to the prudential supervision of credit institutions (SSM Regulation), OJ L 287, 29.10.2013, p. 63. [11]The provisions of Article 130 TFEU are also mirrored in Article 7 of the Statute of the ESCB, which is annexed to the Treaty as Protocol Number 4. [12]Similar classifications are used in the in  ECB convergence reports, adopted on the basis of Article 140(1) of the Statute of the ESCB , which assess the progress made by non-euro area Member States in fulfilling their Treaty obligations regarding the achievement of economic and monetary union. [13]Case C-62/14 Gauweiler and Others v Deutscher Bundestag, para. 75 (ECLI:EU:C:2015:400). [14]The ECB has its own capital, which is paid up by the national central banks (Article 28 of the Statute of the ESCB) and other assets, including claims relating to the allocation of euro banknotes within the Eurosystem, securities held for monetary policy purposes, foreign reserves and other financial assets. The ECB’s accounts are audited by independent external auditors recommended by the ECB and approved by the Council (Article 27.1 of the Statute of the ESCB) and the competence of the European Court of Auditors (ECA) is limited to examining the operational efficiency of the management of the ECB (Article 27.2 of the Statute of the ESCB). [15]BVerfG,  2 BvR 2728/13, 14 January 2014.

Multiple one-off factors had significant effect in the past year, which include the abrupt increase in the prices and volumes of oil imports, and the sweeping floods, which troubled our exports in the third quarter of the year. This year, the current account deficit is expected to drop below 11 % of GDP, mainly due to the slowed down growth of imports, and the recovery of exports growth, which has been evidenced since the last quarter of the previous year and the beginning of 2006. In January, the exports of goods increased by 27.5% on annual basis, and exports, excluding energy goods, increased by 17%. The continuing implementation of the reforms in the labour market and education, and the improvement of the business environment, including a significant improvement in the operation of the judiciary, are of key importance for maintaining competitive advantages and ensuring sustainability of the country’s external position, as well as preserving the interrelation between salary growth and productivity of labour. As we are well aware, the revenues from tourist services influence considerably the country’s balance of payments (15% of the country’s exports of goods and services in  2  BIS Review 22/2006  2005), which necessitates the very fast elimination of all existing obstacles to the development of this industry. Before I conclude my presentation, I would like to focus on inflation dynamics. At first sight, this variable does not seem to be such a great challenge for us, compared to the issues discussed above.
They danced a happy jig while they decorated their balance sheets with cheaper debt and improved their margins and earnings per share  4  BIS central bankers’ speeches  through share buybacks. Slowly they began to hire new workers, and the ship of the economy started gathering momentum to steam along at an improved clip. As Act IV came to an end, the FOMC evaluated the utility of its navigational tactics, and having tentatively decided that it was on course to its desired destination, began cutting back on the amount of fuel it was pumping into the financial system. Initially, it fumbled the dialogue, but eventually the articulation of its intention was accepted, if not applauded, by its audience. Now we have entered Act V. Not until the final scene will we know whether we have achieved the auspicious outcome of arriving at the desired port of an economy that grows sufficiently to bring about full employment without giving rise to inflation. With Shakespeare, the most pleasant plays typically end in marriage. The happy outcome to our economic predicament would entail the marriage of sensible fiscal policy with prudent monetary policy, carrying the American economy to new horizons, allowing the Fed to emerge a hero. One can envision less-pleasant outcomes, however, some of them tragic.

That characterization applies, in spades, to the unorthodox policy we have pursued at the zero bound, in terms of achieving full employment and hitting our 2 percent inflation target. Together with the healthy rejuvenation of the balance sheets and equity prices of investment grade companies, we have seen what I consider to be a manifestation of an indiscriminate reach for yield, a revival of covenant-free lending, and an explosion of collateralized loan obligations (CLOs), pathologies that have proved harbingers of eventual financial turbulence. Noticeably affected by QE3 have been the nominal yield levels of subpar credits and their spreads relative to investment-grade issues. Some 40 percent of newly issued CCC credits have negative cash flows. 2 And yet “junk” bonds have been trading at or near record historic low yields both in absolute terms and as measured by spreads over investment-grade credits. I worry about this as a risk that has been propagated by QE3, though I do not believe it is the Fed’s job to rescue reckless investors from the errors of their ways. The stock market bottomed in March 2009 and had already more than doubled by the time we initiated QE3. It has since risen by another 40 percent; equities have, all-in, tripled in price since the lows of 2009. Only time will tell if stocks have risen to unsustainable heights and, if so, how deep a correction might be needed to bring them back to sustainable valuations.
Lars Nyberg: The Riksbank and the inflation target Speech by Mr Lars Nyberg, Deputy Governor of the Sveriges Riksbank, at Nordea, Copenhagen, 19 May 2005. *  *  *  Thank you for the invitation to come and speak at Nordea about Swedish monetary policy! Today I shall mainly concentrate on the content and interpretation of our inflation target. One special aspect of the inflation target and monetary policy that I shall discuss towards the end of my speech is the household sector’s growing debt burden and house price increases. A clear framework for monetary policy Sweden is currently enjoying what is usually described as an economic boom. Growth last year was almost 3.5 per cent, one of the highest figures in 30 years, and households’ real disposable incomes are expected to rise by around 3 per cent this year. Inflation is at its lowest point in living memory, as are interest rates. However, there is a problem. Employment has not risen at all as most forecasters, including the Riksbank, expected. We therefore find ourselves in a discussion of whether interest rates should possibly be even lower. Given the intensive debate on this subject, I consider there is good reason to describe and discuss our monetary policy framework and its significance for the way we work. It is well known that one of the Riksbank’s fundamental objectives since the beginning of 1993 has been to maintain price stability. This is inscribed in the Sveriges Riksbank Act of 1999 and is thus a parliamentary decision.

I wish you a productive and joyful conference ahead. 5