samchain/econo-pairs-v1 huggingface dataset:
(3) Knowing that our own individual judgement is worthless, we endeavour to fall back on the judgement of the rest of the world which is perhaps better informed. That is, we endeavour to conform to the behaviour of the majority or the average. The psychology of a society of individuals each of whom is endeavouring to copy the others leads to what we may strictly term a conventional judgement”. This suggests that it is very hard to take a truly independent view – especially a contrarian one that recognises the possibility that improbable but conceivable events could result in  2  BIS Review 32/2009  large losses. In other words, the sheer difficulty of forecasting the future makes it hard for contrarian investors without substantial net worth to survive in the market. As a result the market is vulnerable to “sudden and violent changes”. As Keynes put it, “the forces of disillusion may suddenly impose a new conventional basis of valuation. … At all times the vague panic fears and equally vague and unreasoned hopes are not really lulled, and lie but a little way below the surface”. So a conventional wisdom that leads to a speculative mania, can quickly collapse as sentiment turns on its head. But a speculative mania is not the product solely of the creative imagination of financial engineers. It requires the willing collaboration of gullible investors, who may not fully appreciate the risks that they are taking.

Rare events, even when dramatic at the time, lose their power to shape policy as memory recedes. The role of institutions is to retain a collective memory and to resist the temptations of the present. That is one of the most important roles of a central bank. It is accepted as such in the domain of monetary policy. And there is an equivalent role in financial stability. The introduction of simple and robust policy tools into a regulatory regime based on the exercise of constrained discretion would make it easier to resist overly rapid expansion of financial institutions. In particular, the authorities should maintain a clear focus on the issues that matter when the worst occurs – liquidity and leverage. It should be intrusive, in the sense of knowing what is going on, but not bureaucratic. A system in which it is easier for a large bank to expand and then destroy its balance sheet than for an individual to open a bank account has lost focus. That is not the fault of regulators, but a reflection of the pressures and incentives they have faced – from all of us. As a Kennedy Scholar at Harvard, I have always treasured Harold Macmillan’s words in his tribute to John F Kennedy. He was, said Macmillan, a man “whose eyes were on the horizon but whose feet were on the ground".
Looking at the last two decades, at one end there is the original Financial Services and Markets Act2 (FSMA) 2000 model, which gives most discretion to operationally independent regulators. Only statutory objectives and the general framework for rule-making (including obligations to “have regard” to particular matters) are set out in legislation, and regulators have wide powers to make rules which comprise the regulatory regime. At the other end of the spectrum is the way in which rules are made in the EU, which we have imported through the “on-shoring” process as part of Brexit. Under this approach a significant amount of technical detail, including calibrations, are set out in legislation. In between these two, there are various other options, including in recent UK experience the approaches adopted for the Senior Managers and Certification Regime (SMCR) and ring-fencing. Both of these contain significantly less detail in legislation (rather than regulators’ rules) as compared to the EU model:   SMCR. Certain core aspects of the regime (e.g. the framework for regulatory approval processes and the fitness and propriety test, relevant offences, and introducing the concept of conduct rules and statements of responsibilities) are set out in legislation. But regulators were given considerable discretion in filling in the detail of the framework – including what functions required approval, the content of the conduct rules, and the detailed systems and controls requirements that apply to firms.   Ring-fencing.

Stylish regulation Speech given by Sam Woods, Deputy Governor for Prudential Regulation and Chief Executive Officer, Prudential Regulation Authority  At the UBS Financial Institutions Conference, Lausanne Thursday 16 May 2019  1  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  I met recently with the head of a large foreign bank, who was in London following a visit to the continent. He had been advised by some of our EU colleagues that with the departure of the UK from the EU, the British public would become alarmed at the size of the financial sector relative to the size of the economy and would therefore demand ever-tougher financial regulation in order to assuage their sense of unease. Thus it was put to him that it would be sensible for him to move more of his operations to Paris, Frankfurt or Dublin, where things would be easier. A noisy pro-Brexit demonstration taking place in the next door street seemed to support his case. But I told him that I thought it somewhat unlikely that the public would take much interest in the size of the financial sector unless it blew up again, and that ten years on from the financial crisis we have largely implemented the reforms and are moving into more of a business-as-usual phase.
Marine insurance had become a necessity for trade – without protection, a bad storm could overturn the entire fortunes of merchants. But a lack of safeguards paved the way for abuse. One particularly spectacular example involved John McDougall, a Glaswegian merchant, who arranged to have a ship called Friends (whose cargo was valued at £ deliberately shipwrecked off the coast of Denmark – but not before insuring his own stake in the voyage in five separate policies for £ and insuring the ship and other goods for £ in a further three policies. In total, he obtained eight policies on the same risk – spreading the deceit between unsuspecting underwriters across Glasgow, Dundee, Hull and London. In doing so, McDougall (and others like him), introduced a speculative spirit that threatened the more sober motives crucial to indemnification contracts 9. 7  4 Statutes of the Realm 978 (1547-1624). 8  Lewin (2003). 9  Clark (2004). 4  BIS central bankers’ speeches  Practices such as those described above ultimately led Parliament to take action. This first took the form of the Marine Insurance Act 1745, which rendered void marine policies made without an insurable interest. A similar provision was subsequently applied in relation to life insurance under the Life Assurance Act 1774. These Acts did leave a gap – namely, nonmarine indemnity policies. However this was filled when gambling contracts were rendered void by the Gambling Act 1845, as the existence of an insurable interest served to distinguish insurance contracts from gambling contracts.

Third, I will examine how the British state has involved itself in the affairs of insurance companies over the past 500 years. Finally, I will ask what – if anything – we can learn from this as we enter the Solvency II era. My main conclusion, which may make me unpopular with many colleagues and members of the insurance industry, is a simple one: Solvency II is a big and important change, but – when viewed in the context of history – we are still sailing the same ship, in broadly the same direction. Why do we regulate insurers? Individuals and institutions give money to insurance companies to transfer the cost of risks they could not otherwise bear. In doing so, they trust that the insurer will make good on its promise in the event that the insured risk crystallises. Indeed, the word policy comes from the Italian “polizza”, which meant a promise or an undertaking. Like banks, insurers invest policyholder funds directly onto their balance sheet thereby exposing customers directly to the risk inherent in those balance sheets. Our job at the PRA is to make sure that insurance companies keep their promises to pay policyholders and do not let them down, often when they need that money the most.
This step-up in energy and food prices has raised inflation for electricity and noncooked food and is feeding into transportation and food services inflation. The combination of domestic and external factors has led to a significant rise in inflation in Singapore. Core inflation picked up to 3.6% year-on-year in May, from 3.3% in April and 2.5% in the first quarter of the year. CPI-All Items inflation, which includes private transport and accommodation costs, rose to 5.6% year-on-year in May. Inflation is expected to get worse before it gets better. Core Inflation is projected to increase to a peak of 4.0-4.5% in Q3. It will then level off, and slightly ease towards the end of this year, though still around 3.5-4.0% - much higher than what Singapore has been used to. For the whole of 2022, core inflation is forecast to come in at 3.0–4.0%. As car and accommodation cost increases are likely to remain firm, CPI-All Items inflation is expected to come in at 5.0–6.0%. Inflation is expected to ease further in 2023 but will remain well above the 1.5% rate averaged since 2000. This inflation outlook is not without upside risks. The projected profile of inflation is based on two assumptions: some stabilisation of global commodity prices and unwinding of global supply chain constraints; and a strong pick-up in inflows of non-resident workers that helps to alleviate domestic labour shortages.

The Committee currently is in the final stages of preparing a paper on how the supervisory review of capital can be implemented effectively. The third pillar of the new capital adequacy framework, market discipline, will serve to reinforce capital regulation and other supervisory efforts to promote safety and soundness in banks and financial systems. The Committee, in January of this year, issued a paper on bank disclosures, covering banks’ capital structures, risk exposures and capital adequacy. Currently, our Transparency Group is considering whether it is possible to establish a set of core disclosures that would bolster market discipline. This will involve drawing upon our existing disclosure recommendations, and reviewing the extent to which disclosure in new areas - the internal ratings-based method, external ratings or internal assessment of other risks - might be appropriate. I hope that this overview has given you a sense of the key points the Committee has learned from the consultative process, and where we are headed. In the near-term, we are completing our work and expect over the next few months to make progress in a number of areas, including greater risk differentiation in the standardized approach and the development of supervisory standards for internal ratings. As we continue to fine-tune the new capital adequacy framework, we also are striving to avoid getting bogged down in secondary issues that could slow down the overall process. As I have often remarked, the perfect cannot be the enemy of the good.
This was not actually a  BIS central bankers’ speeches  9  great problem in Sweden, but rather in the United States and some other parts of Europe. We have also underestimated the strength of the contagion risks that arose as a consequence of the connections between different agents in the financial system. If the banks are to be equipped to deal with their losses themselves we should endeavour to draw up capital requirements that reflect the banks’ real risks. Reactions and effects As always, when stricter regulations are introduced, a certain amount of resistance can be expected. The most usual criticism of the new banking regulations is that they will come at a high cost, both in terms of actual expenses and in terms of efficiency. I am very aware that stricter regulations entail certain costs. But these costs are worth incurring if they mean we will get a new regulatory framework that does what it is designed to do. What we want is a safer financial system. Having seen the results of many financial crises internationally and two in Sweden, I can also note that the costs of a deep and wide-ranging banking crisis can be exceptionally high. Looking back, we can see that financial crises are usually drawn-out processes that are followed by long periods of high unemployment and low GDP growth. Situations like this should be avoided, although of course not at any price.

Lower real interest rate trend since the 1980s As the process of financial and economic integration in the global economy has increased, common factors such as global growth and global saving have played an increasingly large role with regard to interest rates.1 Real interest rates have fallen around the world which justifies calling this a global real interest rate. The fall is in the order of 4–5 percentage points since the 1980s.2 As Sweden is a small, open economy, the long-term global real interest rate can be regarded as an anchor for the Swedish real interest rate. During brief periods, the real interest rate in Sweden may deviate from the global real interest rate, but over longer periods of time the Swedish real interest rate will be determined by global factors. Figure 1 shows how the long-term real interest rate has developed in Sweden and the United Kingdom since the mid-1980s. More specifically, the figure shows the 10-year yield on Swedish and British real government bonds. From the mid-1980s and ten years onwards, the real interest rate varied around almost 4 per cent in the United Kingdom, while in Sweden it was much more volatile and at a higher level. This was followed by a trend decline that has continued until today. At present, the Swedish real interest rate is around –0–5 per cent, while the British one is around –1 per cent.
In the last months, a positive factor observed, and encouraged by the Bank of Albania was the write-off of non-performing loans having no hope of recovery from banks balance sheets. Beyond its statistical effect in the short run, cleaning the banks’ balance sheets is part of a complex process of non-performing loan portfolio management. If implemented efficiently and actively, in the long run, this process may establish the premises to release lending capacities in the economy and recover healthy credit increase. The monetary indicators analysis attests to weak monetary inflation pressures in the economy. Annual growth of monetary supply decelerated significantly, to 2.7% in August. The deceleration was driven by the weaker performance of foreign currency inflows and lower demand for borrowing from the private sector. On the other hand, increased lending to the public sector through the banks supported the growth of money in the economy. 2  BIS central bankers’ speeches  Economic growth is expected to be weak for the rest of the year, in the presence of sluggish foreign demand and absence of the fiscal stimulus. Meanwhile, available data insofar do not signal recovery of consumption or investments in the near future. Below-potential growth of the economy will condition contained consumer price rise in the period ahead. In the absence of unexpected supply-side shocks, one-year ahead annual inflation is expected to range between 0.4%–3.1%, with 90% probability. Taking into account the above forecasts, the stimulating nature of the monetary policy will continue in the quarters ahead.

Ardian Fullani: Overview of Albania’s latest economic and financial developments Speech by Mr Ardian Fullani, Governor of the Bank of Albania, on the Monetary Policy Decision-Making of the Bank of Albania’s Supervisory Council, Tirana, 30 October 2013. *  *  *  Today, on 30 October 2013, the Supervisory Council of the Bank of Albania reviewed and approved the quarterly Monetary Policy Report. Based on the most recent monetary and economic developments in Albania, and following the discussions on their outlook, the Supervisory Council of the Bank of Albania decided to keep the key interest rate unchanged, at 3.5%. The Council notes that the inflationary pressures deriving from the real and financial sectors of the economy are weak and will continue to remain so. These circumstances require the stimulating monetary policy to persist in the period ahead. The monetary stimulus, transmitted through the low key interest rate and continuous injection of liquidity, provides the required conditions for meeting our medium-term inflation target. Let me now proceed with an overview of the economic developments and key issues discussed at today’s meeting. *** The Albanian economy was characterised by slow economic growth and weak inflationary pressures throughout 2013. Economic growth slowed down to 1.1% in the second quarter, while available information suggests weak economic activity will continue in the third quarter. The weak private demand offset the increasing positive impulses generated by the fiscal stimulus and foreign demand, in the first half of the year.
We gladly assess that the topics presented fulfil the standards of a true scientific research, correctly addressing the hypothesis, and their validation is based on the application of contemporary research methodologies, while employing the statistical data in a correct and structured manner. As a result, reaching conclusions and the implications to decision-makers are analysed based on a diligent investigation work on various economic and financial events. After analysing the topics presented, the Assessment Commission has reached a unanimous decision on the winners of the first three prizes of "Governor's Award for the Best Diploma Thesis, 2022". Before awarding the prizes, I would like to congratulate and commend all the participants in competition for their interest, ideas, methods and conclusions, which were based on correct methodologies. The submitted materials are of a high level and the Assessment Commission was hard-pressed when selecting the winners. However, the three topics that will be presented stand out from the rest because of their importance and coherence, as well as for having fully employed the methodology, and diligently having applied and described the assessment methods, and the interesting findings. I encourage the winners and all the contestants in the competition to preserve and nurture the same passion and commitment further in their professional careers as shown in the submitted research works. Let's go ahead and present this turn winners.

The dynamic of current developments in the global economy coerces both, the Bank of Albania in one side and the media on the other one, to be more responsible and more devoted in informing the public in a prompt, transparent and open manner. I wish that our cooperation, which is at the service of best public interest, will continue to follow the same model in 2023 as well. You will find that our institution remains a loyal and transparent partner, which is available to share the necessary information and clarifications. Our policies and decisions and their impact, as well as the situation regarding the financial soundness of the banking system and the financial sector, overall, will be at the heart of our ongoing communications. Honourable participants, Financial literacy and research are at the focus of the Bank of Albania's undertakings. They help us to successfully draft, implement, and convey policies and decisions in order to safeguard price and financial stability in Albania. Education and scientific research are conducted to understand economic events, as well as to enhance Bank of Albania's trustworthiness and expand communication with the economy, financial market, and the public. In a broader sense, researching, comprehending and interpreting the economic and financial events are a precondition to ensure the socioeconomic prosperity of Albania and increase the well-being of its citizens. The universities and academia play a key role in both these fields.
But the focus of this presentation is that some of these measures entail major consequences for the Riksbank’s balance sheet. It is therefore important that the Riksbank has sufficient freedom of action to formulate an appropriate monetary policy. In addition, the risks that the Riksbank may have to bear on its balance sheet mean that we must have financial buffers to ensure sufficient financial independence, a subject to which I shall soon return. The other question I find particularly interesting concerns the possibilities for coordination of fiscal and monetary policy when the policy rate has reached its lower bound. More research is needed here, together with a practical dialogue between central banks and finance ministries on the form of such cooperation. This is, of course, a sensitive matter, as we have the ban on instructions and our independence to consider. But these well-meaning rules cannot be allowed to form an obstacle to conducting an appropriate discussion on the mix of policies that is appropriate in the extreme situations we must consider. The Riksbank Inquiry – opportunities and limitations Over a fifteen-year period, three different inquiries and a proposal referred to the Council on Legislation have considered various changes to the Sveriges Riksbank Act. The most recent inquiry was presented in November. 20 The main origin of the two first inquiries was criticism from the ECB of the Riksbank’s financial independence.

There are also open economy aspects to this issue, as it is hardly a coincidence that almost all countries applying some form of inflation targeting policy have chosen an inflation target of almost two per cent. It seems likely that any movement towards a higher inflation target should be the result of an international discussion in which Sweden will hardly be the country to go first. Make up strategies for better automatic stabilisation of shocks Another idea discussed is that of changing the central bank's targets so that a certain measure of history-dependency is built into the monetary policy strategy. For example, the US central bank has initiated a review of its monetary policy framework where one alternative being discussed intensively is a target for average inflation. 10 The idea is that the participants in the economy understand that, if a shock to the economy pushes inflation down, the central bank will, in the future, compensate (make up) for this by allowing slightly higher inflation later on. If prices are sluggish, there will not be such great incentive to cut prices as a response to the shock and inflation will therefore become higher. Such a monetary policy strategy could, therefore, theoretically give better automatic stabilisation of shocks and lead to less of a need to adjust the interest rate, something that is particularly interesting when the policy rate is close to its lower bound.