samchain/econo-pairs-v1 huggingface dataset:
For each currency, there is a designated panel of contributing banks that each submit an estimate of its own borrowing costs for each maturity. For each panel, these estimates are aggregated to form LIBOR. The LIBOR rates are then used as a basis for financial contracts ranging from adjustable rate mortgages to interest rate swaps and futures. To make sure that the submitting banks have sufficient expertise in the funding trends in a particular currency, it is important that they be actively involved in that market. For this reason, the contributing banks are the large banks that have been active in the London market and the panel of submitting banks varies across currencies. The LIBOR reference rates were intended to capture on a daily basis borrowing costs along each currency-maturity combination based on the experience of the submitting banks. The actual process for fixing LIBOR each day is quite straightforward. Each morning the submitters from each contributing bank answer the following hypothetical question: “At what rate could you borrow funds, were you to do so by asking for and then accepting interbank offers at a reasonable market size just prior to 11 a.m.?” The transmitted submissions are ordered by rate for each currency and maturity pair. The ordered rates for U.S. dollar LIBOR, for example, are then trimmed by generally dropping the top and bottom 25 percent of submissions to remove any influence of outliers. The average of the remaining individual submissions is calculated and then posted.

How LIBOR worked in practice Now that I have described how LIBOR was intended to work in concept, how did it work in practice? It turns out that unappreciated design weaknesses and incentive structures at certain large submitting banks, in combination with the phenomenal success of reference rates, undermined the system. Conflicts and problems emerged both at the bank level and at the individual submitter level. Investigations are on-going to determine the scale and full extent of these problems, but I would like to discuss a few of the well-documented problems. Let’s start at the level of banks that submit estimates. The enforcement actions and investigations into potential LIBOR manipulation have shown that, at times, individual institutions faced incentives to understate their hypothetical borrowing rates in order to avoid the perception that they might have higher counterparty credit risk. Some of the reported misdeeds occurred during the heart of the financial crisis when market participants faced considerable uncertainty about the health of particular institutions. This uncertainty was manifest in a wide range of financial market prices for financial institutions – low and volatile equity prices, record CDS spreads and greater variation in borrowing costs across different LIBOR-submitting banks. At that time, the BBA was publishing firm-specific contributions to LIBOR from submitting banks. Given this publication process, some of the submitting banks reportedly became concerned about reporting a rate that would suggest that they were being treated by the market as a greater counterparty credit risk than their peers.
Even though the unemployment rate has declined by 2.7 percentage points from its peak of 10 percent in October of 2009, there are still many people that want jobs but are not counted as unemployed because they are not actively looking for work. An alternative measure of labor market conditions, the employment to population ratio, which is not influenced by changes in the number of these workers, has shown limited improvement. Job loss rates have fallen, but hiring rates remain depressed at low levels. Taken together, the labor market still cannot be regarded as healthy. Numerous indicators, including the behavior of labor compensation, are all consistent with the view that there remains a great deal of slack in labor markets. Nevertheless, as I have stated in earlier speeches, I see persuasive evidence of improving underlying fundamentals for much of the private sector of the U.S. economy. Key measures of household leverage have declined and are now near the lowest levels they have been in well over a decade. Household net worth, expressed as a percent of disposable income, has increased back to its average of the previous decade, reflecting rising equity and home prices and declining debt. Banks have eased credit standards somewhat recently after a prolonged period of tightness. As a result, we are now experiencing a fairly typical cyclical recovery of consumer spending on durable goods. For example, light-weight motor vehicles sold at a seasonally-adjusted annual rate of nearly 16.1 million in August, close to the number sold in 2007.

All I can add today is that a gradual process is no longer sufficient. The seriousness of the situation requires the adoption forthwith of a reform that draws our labour market closer to the levels of job flexibility and security prevailing in most European countries. Reform of our labour institutions is very necessary for many reasons. First, to put an end to the personal and family drama that unemployment entails. But also to help reduce the budget deficit. Indeed a more efficient labour market, that gave us unemployment rates similar to those of other countries, would permit the costs of unemployment – which in Spain amount to around 4% of GDP – to be reduced, and would increase government receipts from income and consumption taxes without tax rates having to be raised. A reduction in unemployment and an increase in employment are also very important for the banking system. First, because high rates of unemployment eventually lead to higher default rates. Second, because a reduction in unemployment is essential to reverse a trend that is having very serious effects on banks, namely the fall in solvent demand for credit. That said, at present, owing to the worsening of the sovereign crisis, supply-side factors are also contributing to the decrease in lending to households and firms which, as usual in this type of situation, affects small and medium-sized firms disproportionately.
Timothy F Geithner: Reflections on the Asian financial crises Remarks by Mr Timothy F Geithner, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Trends in Asian Financial Sectors Conference, Federal Reserve Bank of San Francisco, San Francisco, 20 June 2007. *  *  *  It is a pleasure to be here at the San Francisco Fed and to join you in looking back at the Asian financial crises. Many people in this room played critical roles in the drama of that time. We did not always completely agree, but we usually found a way to work together on a common strategy. The crises hit with remarkable speed and force, with substantial effects on the world economy as a whole. The collapse in confidence led to substantial and sustained outflows of capital, forcing large exchange rate devaluations, a sharp fall in asset prices and leaving entire banking systems virtually insolvent. GDP fell by between 10 and 15 percent. The crises forced substantial changes in the IMF’s instruments for crisis resolution and a major international effort to strengthen financial systems. Even after a decade, the crises are a subject of debate and controversy. For many, they represented a failure of financial globalization, a dramatic demonstration of the perils of openness to capital flows.

The policy consensus that has emerged from this experience has a more cautious view of the benefits of financial integration, a greater awareness of the damage caused by creating incentives that distort the composition of flows and a greater appreciation of the importance of having in place a strong set of institutions, in the financial system in particular. It has also fostered a greater skepticism within governments of their ability to sustain and adjust a set of limited controls on capital flows, once an economy has passed a certain point of relative openness. Money tends to move around these controls with progressive ease, and it becomes more difficult over time to counteract this force with acceptable costs to other objectives. For this basic reason, many emerging market governments that were early proponents of selective controls have moved to eliminate them. Faced with the challenges of managing policy in an increasingly integrated world economy, the dominant instinct of officials is often to try to shield the economy from volatility. But the crises of the 1990s helped demonstrate why this approach can be both futile and counterproductive. As economies become more open to capital flows, policies designed to insulate an economy from external shocks, whether they be fixed exchange rate regimes or selective capital controls and restrictions on international transactions, rarely offer durable stability, and they bring additional risks. These risks come in the form of additional distortions that might undermine future growth or magnify vulnerability to future financial volatility.
Looking back over the past twelve months, nearly 400,000 jobs have been created across the economy as a whole – which compares very favourably with the rate of job creation in the decade before the recession.1 Chart 1 UK employment in recessions and recoveries Numbers employed rebased to 100 at cycle peak 102 101 100 99 98 97 96 95  1977 Q4 - 1983 Q4 1988 Q2 - 1994 Q4 2006 Q2 - 2011 Q1 *  94 93 92  -8  -6  -4  -2  0  2  4  6  8  10  12  14  16  Number of quarters from cyclical peak  *: Numbers employed for Q1 2011 proxied by that between Dec 2010 and Feb 2011. Source: ONS Labour Force Survey  As Chart 1 shows, the performance of UK employment has been much stronger through the recent economic cycle than we saw in the early 1980s and early 1990s – reflecting the flexibility of the labour market, the resilience of businesses through the recession and the impact of the recovery in demand over the past eighteen months. According to the latest estimates, UK employment is about one per cent down on its peak level in early 2008, compared to a reduction of 5–6% at the equivalent stage of the previous two economic cycles.

Since the economic expansion began in 1992, annual output growth has averaged just less than 3% while the rate of inflation has averaged just under 2 ½%. The number of people in employment last year(on the LFS measure) continued to rise fairly steadily to an all-time high; the number of unemployed people fell to below one million (on the claimant count measure) for the first time since December 1975, and the rate of unemployment fell to its lowest in more than 25 years in the United Kingdom as a whole, and to its lowest for more than 20 years in every individual region. But, my Lord Mayor, even if – as I at least continue to believe – we are living on an island, that does not make us immune from developments abroad. In particular, we are bound to be affected by current developments in the United States, both directly, and indirectly, through the knock-on effects on third countries, with those effects on the Eurozone particularly important for us. By this time last year it had become clear that, even on the most optimistic view of improving underlying productivity – as the application of new information and communications technologies spread through the American economy – the rate of growth in the US, of over 5%, was unsustainable in the light of increasing domestic and external imbalances. The pace of US domestic demand growth needed to slow – as of course it has.
As I mentioned at the outset, every act of misconduct starts with an individual’s decision – and that individual should be accountable for that decision. But that decision is also heavily shaped by the environment or “the barrel” that individual works in – by the standards or norms established by regulation, market practice and firm-level expectations; by the extent to which responsibilities are clearly allocated and governed; by the incentives that an individual is given, financial or otherwise;  6  BIS central bankers’ speeches  by the perceived probability of being caught; and by the expected penalty if he or she is caught. The recent speeches by Bill Dudley 5 and Dan Tarullo 6 of the US Federal Reserve at a workshop on reforming culture and behaviour in the financial services industry set these issues out very nicely. 4. Standards of market practice  We start with standards or norms of market practice. On one view, the existing regulatory provisions and voluntary codes – and there are many of the latter – provide a sufficient guide to expectations of market practice. If that is the case, the main priority should be enforcement actions against those who are in breach, and a parallel process of ensuring that all FICC market participants understand the implications of those provisions. The Review explores a number of ideas for deepening that education process and encouraging more of Kahneman’s “System 2” type thinking.

Moreover, it would lend support to Government’s efforts for the achievement of the Millennium Development Goals. In this connection, plans are well underway to implement two key strategies within our financial inclusion mandate. They are mobile banking and financial literacy. The Bank believes that the introduction of mobile banking in the domestic economy will be hugely beneficial. It will allow better financial access to our low-income community in the rural and remote areas as well as to improve and speed up our payments system. Furthermore, it has great potential to address some issues specific to the economy of Samoa like the current relatively high costs of remittances. 6. Conclusion  In conclusion, I just want to say that when I first received the invitation from your President to be the guest speaker tonight, I asked myself the question, why me? 4  BIS Review 49/2010  Is it because of my position as the Governor of the Central Bank for all these years? I think maybe not, judging from the bored looks on many faces after listening to that last part of my address on the economy. Central bankers are generally regarded as very boring anyway. Is the reason for my invitation due to my age, I asked? Most probably not, as there are others who are older and wiser than me. The answer was clear to me yesterday when I came across a definition of an “economist”, which is the term used for people in my profession!
Issuance of Euro denominated non-government 4 bonds has more than tripled between 1998 and 2002. It is quite difficult to isolate the specific impact of European Monetary Union, due to the fact that large issuances during the 1999-2001 period were also linked to the refinancing needs arising from intense merger and acquisition activity. Looking ahead over the medium-term, growth in the bond market is likely to be driven by such elements as the development of pension fund assets, while retail savers may move away from bank deposits to invest in other savings products. In turn, the design of savings products will benefit from the standardisation and diversification of fixed income 5 issuance. The integration of interest rate markets in the euro area has been accompanied by a new phase in the development of derivative markets. The proportion of worldwide open interest contracts traded on 6 European derivative exchanges went from less than 1% to more than 15% in 15 years. As derivative  2  BIS and IMF statistics - quoted in RAJAN and ZINGALES - 2002. 3  OECD - Debt management and Government securities in the 21st century - 2002. 4  From about EUR 100 bios in 1998 to about 300 bios in 2000, 2001 and 2002 - source Bondware. 5  RAJAN and ZINGALES - 2002 - Second ECB international banking conference. 6  RAJAN and ZINGALES - 2002 - Second ECB international banking conference .

I would say that price stability can be regarded as the bedrock of financial stability, while financial stability is critical to the efficiency of monetary policy. Let me elaborate further on these two points. First, why is price stability the backbone of financial stability ? Financial stability can be achieved on a sustainable basis if financial resources are not misallocated. Past experience, as well as a large number of economic studies provide evidence that inflation brings about distortions in the allocation of resources. For instance, the calculation of returns is biased, due to the fact that the replacement cost of fixed assets is structurally underestimated. This may result in sub-optimal investment decisions, and over-optimistic credit risk assessment. Conversely, in the case of deflation, the solvency of indebted companies may be jeopardized, as the value of cash flows decreases over time, while the face value of debt remains stable. Second, why does financial stability matter for the efficiency of monetary policy? The efficiency of monetary policy relies on the effectiveness of the transmission channels of monetary policy. Central banks have direct control over short-term interest rates only. The impact of monetary policy decisions on prices goes through various channels - acting directly on the anticipations of economic agents, influencing banking credit conditions, the exchange rate and other asset prices. Uncertainty may arise when these channels do not act in a predictable way nor with relatively stable time lags. In this respect, financial instability may affect the transmission channels of monetary policy.
1  Based on the increase in the general price level since 1775, £ at the time of Austen’s birth would be equivalent to £ in 2016. See Thomas, R and Dimsdale, N (2017) "A Millennium of UK Data", Bank of England OBRA dataset, http://www.bankofengland.co.uk/research/Pages/onebank/threecenturies.aspx. 2 Crosby and Co. subsequently decided against publication, and sold it back for the same price. Jane revised the novel, retitling it Northanger Abbey. It was published posthumously in December 1817. 3 In economic terms, money serves three values: it is facilitates trade, stores value and provides a unit of account. 4 F.R. Leavis. 2  All speeches are available online at www.bankofengland.co.uk/speeches  2  Austen’s novels have a universal appeal and speak as powerfully today as they did when they were first published. Indeed, in using her writing to highlight the barriers placed by society to the independence of women, she was ahead of her time. “Give a girl an education and introduce her properly into the world, and ten to one but she has the means of settling well, without further expense to anybody.”  5  For an author who received some critical praise but little recognition during her brief lifetime, the reach of her work today might have been a surprise. Austen’s books have been translated into over 40 languages. 6  There have been countless film and television adaptations.

And her stories have served as the inspiration for new fiction, ranging from faithful imaginations of the future lives of Austen’s characters (Death Comes to Pemberley by PD James) to modern re-workings (Bridget Jones’s Diary by Helen Fielding) and even more fanciful retellings that feature the living dead (Pride and Prejudice and Zombies by Seth Grahame-Smith). Banknote design What might Jane Austen have made of the new £ note had she been able to join us today? She might not have immediately recognised it as money. Banknotes have changed almost beyond recognition since Jane received her £ for Susan. Back then, the Bank of England was issuing partly printed notes for completion in manuscript. The £ sign and the first digit were printed but other numerals were added by hand, as were the name of the payee, the cashier’s signature, the date and the number. Notes could be for uneven amounts – it wasn’t until 1745 that notes were part printed with set denominations, with the first £ issued only 18 years before Austen’s birth. You can see an example of a note that Austen may have received on the screen behind me. Remarkably, the new £ is not the first banknote on which the Austen name has appeared. That award must go to Jane’s brother Henry. Henry was, for a time, a banker, with interests in Hampshire and London. In the Austens’ times, many banks were small and local, and could issue their own banknotes. And so it was with Henry.
An important part of our new supervisory approach is a focus on business model analysis. This might come across as a bit of a fad, but it isn’t meant to be. Instead it is grounded in such basic questions as: where does the firm make money; are the revenue streams sustainable; how well does the firm stand up to tests of stresses on its balance sheet; does it generate cash flow to cover dividends; is the leverage of the firm sustainable; what are the risks from competition on premium income; are there conduct risks which could pose a prudential threat? These are basic questions, but in another field, if the answers to such questions had prompted action in the past by banks, history would be different. What I have just described is judgemental supervision that must be forward-looking to the risks that may arise. This is crucial, and was not properly a part of the pre-crisis approach to supervision. Let me give a few current examples of this for insurers. We are focused on the impact of very low interest rates staying with us for a protracted time, and when I say this I am offering no view whatsoever on the likely course of monetary policy. Likewise, we want to know that the prudential position of firms also captures the possible impact of an unexpected upward shift in the slope of the yield curve, and again I am offering no view on monetary policy.

We represent the public interest with objectives given to us by Parliament, for which we are accountable to Parliament. We must be, and no doubt will be, held to high standards as we seek to balance our pursuit of the public interest with a properly functioning market economy. 2  BIS central bankers’ speeches  We have set out how we supervise insurance companies in our approach document. We are a judgement-based supervisor, based on evidence and against a framework of rules. Judgement must be forward-looking as we have to assess risks to our objectives. I know that this emphasis on judgement can ruffle feathers – it can make us seem intrusive. I want our use of judgement to be always focussed on the key risks to our objectives. We are though conscious of the need to be proportionate in our approach and to take account of the regulatory burden we are placing on firms. In order to do so, insurers are divided into five categories of impact. Category one insurers pose the greatest risk to the PRA objectives through their size, interconnectedness, complexity or business type and category five insurers pose the least risk. Every firm has been told which category they are in and this should provide an indication of the level of supervisory interaction they can expect from the PRA. Moreover, we are not aiming to be a “no firm failure” regulator; rather, we aim to minimise adverse consequences if a firm fails.