samchain/econo-pairs-v1 huggingface dataset:
In a market with a sufficiently large share of such deep-pocketed arbitrageurs, it can be argued that the development of house prices relative to incomes can be largely accounted for by the substantial decline and then flattening out of the real risk-free interest rate over this period. Miles and Monro (2019) apply such a framework to demonstrate this. However – as I will go on to describe – this relationship does not fully explain house price moves over shorter time periods, which may be affected by credit conditions. 6  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  6  decisions (as housing is also an asset). In this literature, expectations of future income, future interest rates, and future house prices and can all play a role. There is some evidence that current interest rates and current house price growth have an important influence on expectations (Charts 4 and 5). All of these factors were likely at play during the pre-Covid decade. Chart 4: Momentum in annual asset price growth 1.0  Regression coefficient on lagged asset price inflation using annual data  0.8 0.65 0.6 0.33  0.4 0.2 0.0 House prices  FTSE all share  Sample uses annual data from 1971-2020 for house prices, from 1977-2020 for FTSE allshare.

  Bank research showed that highly indebted households in the UK cut consumption more sharply over 2007 to 2009 (Chart 1).11    And during the global financial crisis, countries with higher aggregate debt levels relative to incomes had deeper falls in aggregate consumption and hence deeper downturns (Chart 2). Chart 1. Change in consumption relative to income by LTI between 2007-09  (a)(b)(c)  Chart 2. Higher household indebtedness was associated with sharper falls in consumption during the crisis  Percentage point change in consumption to income ratio  Adjusted consumption growth 2007-12(a), per cent 0 -5 -10 -15 -20 United Kingdom -25  0 to 1  1 to 2  2 to 3  3 to 4  ≥4  Mortgage LTI ratio Sources: Living Costs and Food (LCF) Survey, ONS and Bank calculations. (a) Change in average non-housing consumption as a share of average posttax income (net of mortgage interest payments) among households in each mortgage LTI category between 2007 and 2009. (b) LCF survey data scaled to match National Accounts (excluding imputed rental income, income received by pension funds on behalf of households and FISIM). LTI ratio is calculated using secured debt only as a proportion of gross income. (c) Repeat cross-section methodology used, with no controls for other factors, or how households may have moved between LTI categories between 2007 and 2009.
Second, it may have led to the systematic under-pricing of liquidity services to banks’ business unit, fuelling excessive growth and/or risk-taking. Tackling these risks would require banks’ treasury operations to cease being profit centres and to execute effective internal transfer pricing. 6. Conclusion  The financial sector has undergone an astonishing roller-coaster in the course of a decade. The ascent to heaven and subsequent descent to hell has been every bit as dramatic as in the 1930s. In seeking to smooth next time’s ride, prophylactic public policy has a key role to play. Of the many initiatives that are underway, this paper has highlighted three which may warrant further attention in the period head:   First, given its ability to both invigorate and incapacitate large parts of the nonfinancial economy, there is a strong case for seeking improved means of measuring the true value-added by the financial sector. As it is rudimentary to its activities, finding a more sophisticated approach to measuring risk, as well as return, within the financial sector would seem to be a priority. The conflation of the two can lead to an overstatement of banks’ contribution to the economy and an understatement of the true risk facing banks and the economy at large. Better aggregate statistics and bank-specific performance measures could help better to distinguish miracles and mirages. This might include developing more sophisticated risk-adjustments to FISIM and a greater focus on banks’ return on assets rather than equity by investors and managers.

The rational discount uses an average risk free rate from our cross sectional data sample (1.085). This is illustrated even more clearly if we consider payback periods. Under rational discounting, payback occurs in 9 years (Chart 7). Under upper bound myopic discounting, the investor today would erroneously assume that payback would never be made. These differences have the potential to alter radically project choice. The net present value of this  12  BIS central bankers’ speeches  project evaluated over 50 years falls from $ under rational discounting to a loss of $ under extreme myopia. In other words, a NPV-positive project would be resoundingly rejected. To put the point more starkly, Table 7 asks at what point in the future the residual value of a future cash-flow hits a level of 10%, 1% and 0.1% of its face value, under rational and myopic discounting. Under rational discounting, cash-flows even 50 years ahead retain more than 1% of their face value. Under strong myopic discounting, this residual threshold is reached after 25 years. Virtually zero weight – less than 1000th of the face value of the cashflow – is placed on projects with income streams much beyond 35 years. The long is dramatically shortened. This is a market failure. It would tend to result in investment being too low and in longduration projects suffering disproportionately. This might include projects with high build or sunk costs, including infrastructure and high-tech investments.
28  BIS Review 111/2010  Table 3 A Leaning Against the Wind Policy  Policy Rate (% change from 2003Q1) Base  Real Stock of Credit  Real House Prices  (% change from 2003Q1)  (% change from 2003Q1)  Output (% change from 2003Q1)  LATW Base LATW Base LATW Base LATW scenario scenario scenario scenario  United States 2004Q1  1.0  2.9  5.9  5.3  5.5  4.2  4.1  3.7  2005Q1  2.5  4.9  12.2  10.5  13.8  10.0  7.6  6.3  2006Q1  4.5  6.9  19.3  16.4  21.1  14.0  10.9  8.5  2007Q1  5.3  7.0  28.1  23.9  22.2  12.1  12.5  9.0  2008Q1  3.2  3.0  34.7  30.1  16.2  5.0  14.8  10.8  United Kingdom 2004Q1  3.9  5.6  9.7  9.4  17.5  15.3  3.6  3.4  2005Q1  4.8  7.1  21.1  19.7  26.7  18.3  5.5  4.7  2006Q1  4.5  7.1  38.2  34.3  34.7  15.1  9.1  7.3  2007Q1  5.3  7.4  45.3  39.7  43.0  15.0  11.6  9.0  2008Q1  5.3  6.0  55.4  47.2  41.1  5.8  13.7  10.1  BIS Review 111/2010  29  Chart 1 Deviation of Policy Rates from Taylor Rule  5  Percentage points Euro area  4  UK  3  US 2 1 0 -1 -2 -3 -4  -5 2000  2001  2002  2003  2004  2005  2006  2007  2008  2009  Source: OECD.

Philipp M Hildebrand: The international monetary system Opening remarks by Mr Philipp M Hildebrand, Chairman of the Governing Board of the Swiss National Bank, at the High-Level Conference on the International Monetary System, Zurich, 11 May 2010. * I. *  *  Introduction  Good morning, Ladies and Gentlemen. It is a pleasure and special privilege to welcome you to this conference on the international monetary system. I am delighted that, together with the IMF, we have succeeded in bringing together such an outstanding group of policy makers and academics. I want to thank you for taking the time to join today’s discussion at this critical juncture for the international monetary system. I am especially grateful that the Managing Director of the IMF is with us today. Dominique, a very warm welcome to you. I know I speak on behalf of everyone here today when I say that we really appreciate your presence. Conferences on the international monetary system are held with great regularity, particularly in the wake of financial crises. It is therefore not surprising that the recent crisis has brought renewed attention to the functioning of the international monetary system. But as Herb Stein noted more than 40 years ago, it is not easy to define the international monetary system. Where does the international monetary system end and domestic economic policy begin? Did the recent crisis have its roots in shortcomings of domestic policies or in shortcomings of the international monetary system?
However, given that the controls on money laundering risks implemented at the financial institutions are increasingly tightened, there is this emerging consequence that DNFBPs, particularly the legal professionals, are increasingly becoming more attractive for the criminals to launder their ill-gotten gain. According to the report published by the FATF on money laundering involving legal professionals, key among those factors are the perception that the involvement of legal professionals provides a further step in the chain to frustrate investigation by law enforcement authorities. Thus, it is imperative for DNFBPs to increase their awareness and understanding on how their industry can be susceptible to money laundering and takes necessary measures commensurate with the money laundering and terrorism financing risks faced in offering such business activities. We hope that with higher awareness among the DNFBPs, we will be able to see higher number of submission of suspicious transaction reports from the DNFBPs. As the industry is aware, Bank Negara Malaysia is finalising the revised AML/CFT policies for DNFBPs and we are targeting to issue the policy before end of October. I would like to take this opportunity to thank the various associations and self-regulatory bodies who had provided comments and feedbacks to the draft policy papers that we had issued earlier. Bank Negara Malaysia will continue to support and partner the financial institutions to weather the challenges in fighting emerging trend in financial crimes. For this purpose, I would like to reinforce your attention that Malaysia’s AML/CFT regime will be undergoing the 3rd Mutual Evaluation Exercise commencing August 2014.

But the steep rise in implied future yields five years ahead suggests that inflation is expected to be higher in the medium term. That could be associated with expectations of softer macro-economic discipline, perhaps more specifically reflecting market uncertainty about EMU in the light of the ongoing debate about prospective membership and about how far the ECB will in practice be free to pursue its statutory task of maintaining price stability. It may, on the other hand, simply reflect some kind of market imperfection. The same analysis can be applied to Italy and Spain, for example, to try to assess market expectations about their possible membership of EMU as part of the first wave. It shows that notwithstanding the recent falls in short-term interest rates in those countries - which can largely be explained by their improved economic performance - 5 years forward yields remain significantly higher than those in Germany and France suggesting that early EMU membership is not at all certain in the eyes of the markets. BIS Review 22/1997  -4-  What can we conclude from all this, Mr. Chairman? Well, the conclusions that I draw are essentially threefold and hardly very surprising. I conclude, first, that markets at present are reasonably persuaded that the world economy as a whole will remain relatively stable at least by comparison with much of the post war period.
It would definitely be an important reference for the SMEs. 2  BIS central bankers’ speeches

The changing face of talent, the new generation of talent coming on stream and its different nature and character also presents new challenges for human capital management. It calls for a transformation of human resource strategies. Given that in this new environment human capital has become a key factor that will drive results, it is therefore not only the investment in talent that has become key, but also their management. Human capital management therefore needs to be a top priority in organisations. Certainly this is the case for financial institutions for which the demands and expectations are high. New approaches and strategies for human capital management will be required. These strategies need to be aligned with the strategic objectives of the organisation. A vital part of this is the capacity building of the human capital management team itself to ensure that they will best serve their organisation. There also has to be strong engagement between the leadership and the human capital management team. There has to be an acute awareness of how the forces of change and the new environment is reshaping the demand and supply of talent and how the existing talent needs to be transformed to meet the objectives of the organisation in a highly dynamic environment. Human capital management is no longer about the efficient delivery of support services. It is now about the management of talent in the organisation to strengthen and enhance its performance.
In fact, the more one reads of this stuff, the more puzzling it becomes that policies aren’t more often coordinated. Economics is a positive as well as a normative science. Much of it seeks to explain why things are as they are. And if there’s only upside to policy co-ordination, why isn’t there much more of it? Why, indeed, isn’t there just one, all-powerful decision maker in charge of everything? In the case of international co-ordination, perhaps the answer’s obvious: only countries are wholly sovereign. That hasn’t prevented all sorts of other mechanisms for joint decision making, whether in trade, 10  All speeches are available online at www.bankofengland.co.uk/speeches  10  defence or environmental policy, to name a few. But in some areas there are limits to the extent to which national sovereignty can be compromised and, as the current debates in the euro area illustrate, fiscal policy may be one of them. When it comes to decisions about fiscal and monetary policy, we know there’s a positive reason for separation. It’s harder for governments to commit to a fixed nominal objective. Because the gains from commitment are significant, it makes sense to delegate monetary policy to an independent body. (Though it happened later than in many other countries, I would argue strongly that its separation from the government – first via the introduction of inflation targeting in 1992 and then thanks to the creation of an operationally independent MPC in 1997 – has led to much improved monetary policy in the UK.)

The financial crisis clearly demonstrated that high quality and up-to-date statistics are indispensable to policy makers and market participants alike. Thank you very much for your attention. Now, the Director General Statistics, Mr. Steven Keuning, will present more detailed features and the first results of the new statistics. Following his presentation we stand ready to answer your questions. 2  BIS Review 165/2009
If the financial sector ceases to mediate payments efficiently, it could have very serious consequences for economic development. One of the Riksbank's tasks as established by law is to promote a safe and efficient payments system. It is not as easy to see the direct usefulness of the modern financial system as it is to realise the importance of energy and transport. However, the functions of the financial markets - financing, risk management and mediation of payments - are as necessary in an advanced industrial and services society as the supply of energy and a functioning transport system. In advanced societies, savings are at least partly separate from investment activities. The financial sector has the important task of balancing savers' need of security and liquidity against investors' need of long-term financing. It often takes a long time from investment until production results come onto the market. Households that save money could suddenly find themselves in need of access to their money, which is made possible by selling their savings in the form of, e.g. shares and bonds on secondary markets for these securities. A company like Stora Enso wants long-term financing for a new paper machine, which it might not be possible to sell in a couple of years' time should the company be forced out of the investment. The company's issues of shares and/or bonds provide this long-term investment, partly because the securities can be sold on a market without having to be redeemed by the company issuing them.

This was the mechanism that made it impossible for us to keep the fixed exchange rate regime in 1992. At the time of the deregulation, Sweden had a history of high inflation and other imbalances. Doubts  BIS Review 9/2002  1  regarding the stability of the Swedish economy led to capital outflows, rising interest rates and a shrinking foreign currency reserve. Despite massive supporting purchases of the Swedish krona and a drastic defence involving a 500 per cent daily lending rate for banks borrowing from the Riksbank, the defence of the exchange rate failed. This meant that the general public had to live for a period with a 25 per cent interest rate for long-term mortgages! Lottery with a good chance of winning Financial capital is very transient, if not "restless". It is difficult to obtain good statistics on capital flows, but I have managed to find the following observations. Cross-border trade in shares and bonds in the USA more than doubled as a percentage of the US GDP between 1970 and 1993. During the same period, the corresponding volume rose from almost zero to 10 times GDP in the UK. A fixed exchange rate offers speculation at no risk, if there are signs that the currency is over-valued. This was the situation in Sweden in the early 1990s. The fixed exchange rate regimes signalled to speculators that the exchange rate could only weaken.
Finally, I am not yet convinced that breaking up large, complex firms is the right approach. In particular, these firms presumably exist, in large part, because there are scale or network effects that allow these firms to offer certain types of services that have value to their global clients. These benefits might be lost or diminished if such firms were broken up. In addition, the costs incurred in breaking up such firms need to be considered. Finally, the breakup of such firms would not necessarily result in a significant reduction in overall systemic risk if the resulting component firms were still, collectively, systemic. As always, what I have to say reflects my own views and not necessarily those of the Federal Reserve System. Defining the too big to fail problem The root cause of the too big to fail problem is the fact that the failure of a large, complex financial firm is likely to generate significant, undesirable externalities. These include disruption to the ability of the financial system to provide credit and other essential financial  BIS central bankers’ speeches  1  services to households and businesses. When this happens, not only is the financial sector adversely affected, but its troubles spill over and harm the real economy. Although there are negative externalities associated with the failure of any financial firm, these externalities are disproportionately more damaging in the case of large, complex and interconnected firms.

SPEECH DATE:  3 April 2020  SPEAKER:  Governor of the Riksbank Stefan Ingves  VENUE:  www.riksbank.se  SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11) Tel +46 8 787 00 00 Fax +46 8 21 05 31 registratorn@riksbank.se www.riksbank.se  The Riksbank’s measures to mitigate the effects of the corona crisis on the economy These last three weeks have been some of the most dramatic Sweden has experienced in modern times. On 10 March, we told the Parliamentary Committee on Finance that the assessments described in the Monetary Policy Report from February had become entirely irrelevant.1 We already knew then that the Swedish economy would be affected by the coronavirus. What we did not know, however, was the force and extent of the impact. Our message then was that the Riksbank was ready to act to mitigate the negative effects on the economy. Since then, we have spoken to both companies and banks, and we have implemented a number of measures. Today, I’d like to talk about what we have done and how the measures are contributing to the ongoing economic crisis management effort. “Everything has changed in two weeks” “Everything has changed in two weeks” This was one of the quotes from the companies we have interviewed on account of the corona pandemic2. The fact is that the situation is changing so rapidly that it is difficult to form an idea of exactly how bad things are in the economy.
But it’s key to remember that this GDP growth is taking place on a backdrop of historically low unemployment, and low, stable inflation. Unemployment is at 3.8 percent and inflation continues to run just under 2 percent. 1/3  BIS central bankers' speeches  The Fed is tasked with two goals: Low and stable inflation and maximum employment. From the perspective of monetary policy things are going very well. And the economic fundamentals indicate that slower growth is—far from a sign of doom and gloom—what we should expect. The Economic Fundamentals The 3 percent growth of 2018 was boosted by a number of tailwinds. Strong global growth, fiscal stimulus, and accommodative financial conditions all helped drive GDP growth and a tight labor market. These tailwinds have calmed, and in fact reversed in some cases. Three developments contribute to this view: a downturn in global growth, heightened geopolitical uncertainty, and the effects of tighter financial conditions. If you strip away these factors you’re left with the underlying drivers of potential growth, which are demographics and productivity growth. Both of these have slowed significantly. Baby boomers are retiring and fertility rates have come down, which has significantly slowed labor force growth relative to past decades. Productivity growth has also fallen considerably from the boom years of the late 1990s and early 2000s. I put the potential growth rate of the U.S. economy at about 2 percent, which is in line with the forecasts we’re seeing for this year. Of course, a number of different scenarios could play out.

You know the customers in your community because you are an integral part of the community. You represent an essential part of our financial system and economy. But I know you didn’t come here today to hear me tell you what an important job you do. What I hope is that I can give you some insights that will be useful going forward. I know interest rates play a vital role in your businesses, so I’d like to spend a bit of time talking about the outlook and what that means for monetary policy. But before I do, I need to give the standard Fed disclaimer that the views I express are mine alone and do not necessarily reflect those of the Federal Open Market Committee or anyone else in the Federal Reserve System. Where Things Stand For the last decade we’ve all had our focus on recovery from the Great Recession. The path to getting back on track has been a long one, and there is a sense that the economy has now fully recovered. GDP growth came in at 3 percent in 2018 and I expect it to be around 2 percent this year. The difference between last year’s numbers and this year’s forecast has caused some concern, and that’s where I’m going to keep my focus. Many people are hoping for GDP growth of 3 or 4 percent, similar to what we saw in the late 1990s. Less optimistic forecasts for 2019 growth are therefore, understandably, a source of worry.