samchain/econo-pairs-v1 huggingface dataset:
Chart 2: The ‘dash for cash’ in US Treasuries  Chart 1: US equity prices and bond yields UST 10y yield (RHS)  UST 30y bid/offer spread (RHS) UST swap spread 30y, inverted (LHS) UST 10y cash-futures basis (LHS)  S&P 500 (LHS)  Brent Crude (LHS) 9 Mar: Start of ‘dash for cash’  Per cent 5  Basis points 10  Basis points 15 Mar: USD 3.2 swapline rate and maturity enhanced 2.8  Basis points 140  0  -10  120  -5  -30  100  23 Mar: Federal Reserve announces further measures  2.4  -10  -50  80  -15  -70  60  1.6  -20  -90  40  1.2  -25  -110  20  0.8  -30  -130  0  0.4  -35 Jan 20  Feb 20  Mar 20  Apr 20  May 20  -150 Jun 20  Sources: Bloomberg Finance L.P. and Bank calculations. Displayed as changes year to date. -20 Jan 20  6 Mar  2  0 Feb 20  Mar 20  Apr 20  May 20  Sources: Bloomberg Finance L.P, Eikon by Refinitiv.and Bank calculations. Bid/offer spreads are 5 day moving averages. Moment 2: a global response to dollar shortages  Monday 9 March was another day of turmoil in financial markets: oil prices fell by 30%, equity prices by 8% and there were further sharp moves in UST yields.

And by the time the CCFF and the MPC’s second round of asset purchases got under way in earnest, the UK-wide lockdown was underway – and nearly all of us were working from home. Table 1: The Bank’s operations since 1.3.20  Funding Schemes  Asset Purchases  Liquidity Facilities  GBP bn (as at 27 May)  Change Stock since 1 outstanding March  Chart 15: The Bank’s balance sheet (%GDP)  Peak stock level since 1 March  ILTR  28  +21  28  1 & 3 Month CTRF  6  +6  11  USD swaplines  23  +23  37  APF Gilts  556  +121  556  APF CBPS  14  +5  14  CCFF  19  +19  20  TFSME  12  +12  12  TFS (closed)  107 -  107  FLS (closed)  2-  2  Total  769  Per cent 40 Banknote Covid-19 convertibility to gold crisis 35 reinstated Amalgamation of Treasury and Bank note issues Failure of Lehman Brothers  Banknote convertibility South to gold Sea suspended bubble  WW1  30 25 20  WW2  15 10 5  +207 0  Source: Bank of England  1700  1750  1800  1850  1900  1950  2000  Source: Bank of England, available here. Dotted line extends series to mid-2020, assuming completion of current asset purchase programme.
This worked fine during the Great Moderation, but unfortunately with the collapse of Lehman Brothers another old truism suddenly came to life: “markets function the worst when you need them the most”. Against this background, it is quite embarrassing that so few could see the crisis coming. From a regulatory point of view, all the ingredients were there, or rather they were lacking. And this is the first point I want to make – the regulatory framework was unsatisfactory and becoming more so the more complex the financial system became. Then, turning to my second point, which is: The costs of financial crises are huge. This is true in general, but especially so for the recent one. For example, according to a recent study by  1  2  The figure SEK 17,000 =1,000,000*50%*3,4%, where 3,4% is the implied minimum core Tier 1 capital requirement under Basel I. The risk-weight for mortgages was 50% during this period. Under Basel II the implied minimum core Tier 1 capital requirement fell from 3,4% to 2% of risk-weighted assets, and was 2% in 2011–2012 when banks’ internal average risk weights for mortgages was 6%. SEK 1,200 SEK = 1,000,000*6%*2%. For more information see Sveriges Riksbank (2013) Financial Stability Report 2013:2, November, pp 21–24. BIS central bankers’ speeches  IMF economists, in a sample of countries representing just over 50% of world GDP, the total amount of government recapitalisation, asset purchases and guarantees during the period 2007–2011 amounted to nearly $ trillion.

It raises the prospect of LIBOR continuing under a new methodology as “synthetic LIBOR,” at least in some currencies. But the FCA itself has warned that whatever it does will not be an alternative to firms’ transition efforts, and that any synthetic continuation of LIBOR will still not be deemed to be a representative rate.10 The FCA has said that any action it takes will be focused on contracts that cannot feasibly be amended by the parties to mitigate the effects of LIBOR cessation. It will not provide a solution for new contracts. And even at that, it will not necessarily address every LIBOR setting or currency. For those it does reach, users will be giving up control of the economics of their contracts to whatever the new methodology may be. In short, if you rely on these new powers to take care of your LIBOR contracts, you may not get what you want, and you may not like what you get. The message is clear: you must still do everything you can, right now, to anticipate the end of LIBOR and take control of your own risks. https://www.newyorkfed.org/newsevents/speeches/2020/hel200929  2/6  30/09/2020  The LIBOR Countdown Has Not Stopped - FEDERAL RESERVE BANK of NEW YORK  In the European Union, there is draft legislation that is similar in approach to the ARRC’s proposed New York law.
Semantic data and semantic search techniques have a rich pedigree in other social sciences, such as sociology and psychology. But, so far, their application in 43  economics and finance has been relatively limited. Like other social sciences, economics and finance involves human choice. And we know humans often rely on heuristics or stories, rather than statistics, when making sense of the world and when making decisions. Capturing these stories, semantically, is thus important for understanding human behaviour and decisions. As an example, the Bank has recently begun looking at the language it uses when communicating externally, whether to financial firms or the public at large. For example, Michael McMahon at the University of Oxford and I have recently assessed how the simplification of the Monetary Policy Committee’s (MPC) language in 44  the Inflation Report at the end of last year boosted public understanding of monetary policy messages. A second example considers a far less well-explored aspect of the Bank’s decision-making – its supervision 45  of financial firms. This draws on a text-based analysis of the Bank’s confidential Periodic Summary  Meeting (PSM) letters to financial firms. These are arguably the single most important letters the Prudential Regulation Authority (PRA) regularly sends to firms, setting out supervisors’ assessment of firms’ risks and requested actions to mitigate these risks. Using a machine learning technique called random forests, the research analyses these letters and extracts data on their tone and content. This type of analysis has a number of policy applications.

BIS Review 46/2009  1  This Conference is therefore, aimed at enhancing financial inclusion by equipping practitioners and regulators with tools to promote financial literacy and to expand the provision of financial services. Chairperson: Allow me to give some highlights of the status of financial inclusion in Zambia. Like in many other developing countries, the financial sector in Zambia still faces a number of challenges. The joint IMF/World Bank, Financial Sector Assessment Programme (FSAP) Report of 2002, highlighted a number of these, including limited access to financial services by the rural and peri-urban population and doubtful sustainability of financial services in Zambia. In light of these findings, and in recognition of the strategic importance of the development of the financial sector in contributing to sustainable economic growth and poverty reduction, the Government of the Republic of Zambia developed and launched the Financial Sector Development Plan (FSDP) in 2004. The FSDP is a comprehensive five year strategy to build and strengthen the financial sector infrastructure to enable it to support economic diversification and sustainable growth. Under the FSDP, two important studies, namely, the FinScope™ Surveys of 2005 and 2007, on the demand for and supply of financial services in Zambia have been undertaken. These studies have augmented the earlier findings of the FSAP with respect to the key developmental challenges for the financial sector in Zambia.
The ASEAN region, having one of the highest savings rates in the world, therefore has the immense potential to meet some part of the region’s massive requirements for financing, particularly for large investment projects and infrastructure development. Financial integration will facilitate channelling part of such surplus funds towards productive investment opportunities in the region. It will also allow for more efficient risk diversification of assets to include foreign assets from within the region. This will not only reduce vulnerability to external developments but will contribute to achieving more stable conditions in the regional financial markets. ASEAN’s Approach towards Greater Integration Turning to the approach we have taken for ASEAN integration. Like most regional blocs, the integration process for ASEAN seeks to promote greater regional connectivity which will in turn expand and reinforce the region’s growth potential. For ASEAN, this integration process has, however, followed its own distinct path. While ASEAN has drawn lessons from the European experience of monetary and financial integration, the approach taken by ASEAN is distinctly different in order to be consistent with the circumstances of the region. Unlike the European Union, in which the formation of a monetary union with a single currency represents a major element in realising its economic integration, the ASEAN region had come to a decision in early 2000s, based on a study by the ASEAN Central Banks that a common currency would not be pursued.

Some of this deficit was covered by direct foreign investment, but the greater part of it was financed by borrowing, as a result of which by the end of 1994 the net external debt had reached 46% of GDP and the exceptionally high level of more than 160% of exports of goods and services and unrequited transfers. 2. I have not yet seen the full 1996 figures, but estimates based on the first eleven months suggest a current account deficit of around (or even less than) $ billion. This looks much more reasonable, not only because it was more than covered by foreign direct investment but also because of what lies behind this improvement. The $ billion drop in the current BIS Review 16/1997  -2-  account deficit between 1994 and 1996 was made possible (a) by a 35% increase in exports, accompanied by a modest increase in imports of about 14%, and (b) by the steady and rapid increase in services income, mainly (but not exclusively) derived from tourism. 3. Since there was also a sizable inflow of foreign direct investment in 1995 and 1996, the country’s net external debt dropped from $ billion at end-1994 to about $ billion at end-1996. Net external debt declined to 31.2 expressed as a percentage of GDP, and to 71.6 as a percentage of exports of goods, services and unrequited transfers.
Ireland and the dynamic Asian economies grew 9-10 per cent a year during their most intense catch-up phase. But the largest of the new member states - Poland, Hungary and the Czech Republic - are only growing a few percentage points faster than the average for the old countries; an average that furthermore is being pulled down by the poor performances of Germany, France and Italy. From this we can come to at least two conclusions: Firstly, Poland, Hungary and the Czech Republic, which already have fairly substantial public expenditures for their income level, should take care not to end up in the same situation as Germany, France and Italy, with high expenditures, large deficits and considerable needs for reform. Secondly, both new and old countries need a broader injection from the enlargement for their economic performance. Mobility for goods has been one of the key factors behind the new member states' growth. When the process towards EU entry was initiated in the mid-1990s, the majority of the EU’s barriers to trade for the future member states were abandoned through the Europe agreements. This resulted in one of the most dramatic and least publicised changes in trade in modern time - far more significant for most EU countries than, for instance, trade with China today.

Throughout the postwar history of the UK economy, policy-makers have had to strike a balance between the impact of the external value of the currency on the competitiveness of exports and its potential effect on inflation through import costs and the pricing climate. In my view, we have allowed the pound to depreciate more than is necessary or desirable to support the growth of manufacturing and exports. For example, allowing sterling to rise by about 10% from its current level against the euro £ = € would still leave it at a relatively competitive level by historical standards £ = € The very significant fall in sterling from mid-2007 to early 2009 probably helped to support manufacturing industry and exports and hence stabilise the economy in the depths of the recession. But now the world economy is recovering, exports and manufacturing activity are being strongly boosted by the growth of world trade. Meanwhile, worries about deflation have been replaced by the concern that the UK economy now faces a sustained period of relatively high inflation which is endangering our track record of price stability. In these circumstances, our approach to the value of sterling needs to strike a different balance from the view we took in the depths of recession.
In my view, a future code of conduct or a set of guidelines must cover two central issues if they are to be effective. First, to quell the concerns of recipient countries with respect to politically motivated investments, a code of conduct must contain governance prescriptions that ensure that the investment decisions of SWFs are not driven by political objectives. I believe the institutional design of modern central banking can offer some clues as to the appropriate form of these governance prescriptions. Central banks and SWFs obviously pursue fundamentally different objectives. But, in principle, they are both at risk of being hijacked by governments for political aims. In the case of central banks, this problem has been successfully addressed by the adoption of an institutional design based on two powerful features. Central banks have a clear mandate, typically focused on or around price stability. Moreover, they have generally been given statutory independence from governments in pursuing their mandate. This simple institutional design has become best practice and has made an important contribution to keeping politics largely out of monetary policy. Second, to preclude a resurgence of state ownership in our economies, SWF guidelines need to spell out upper limits to investment stakes in foreign private companies. It is difficult to determine what such limits should be. As I alluded earlier, it is not just a matter of preempting majority stakes of SWFs in foreign companies. “Cross-border nationalisation” of private companies is simply the most extreme version of a broader unwelcome trend.

As you know, the GIC recently committed to subscribe to CHF 11 billion of a mandatory convertible bond which will be issued by UBS in an effort to raise capital in the aftermath of losses on large sub-prime mortgage positions. Subject to the UBS shareholders’ approval, the GIC will in due time become a significant shareholder in UBS. In the process, UBS will significantly strengthen its balance sheet and thereby maintain a substantial capital cushion relative to the regulatory minimum. A strengthened capital cushion is to be welcomed. First and foremost, it serves as a confidence-building measure. Moreover, in uncertain times, a solid capital cushion provides insurance against a further potential deterioration in the global macroeconomic environment. Who is this new Asian investor in the largest Swiss bank? The GIC was set up in May 1981 with an original seed capital of several billion dollars from the Monetary Authority of Singapore (MAS). 28 The central bank reserves had grown steadily throughout the 1970s as a result of public sector surpluses. The GIC’s objective was to invest the portion of foreign reserves, which was surplus to the needs of the central bank for its monetary policy management, in longer-term assets. The mandate of the GIC is to preserve at a minimum the international purchasing power of its assets against inflation and global exchange rate risk. The objective of the GIC is commercial, focusing on long-term investment returns. In many ways, it is similar to the objectives of the large European public pension funds.
However, there have been a lot of challenges and lessons have been learnt from the experiences we have undergone through as a country. These lessons must be turned into a platform to design and implement more effective medium and long-term policies. It is also important to note that one of the challenges confronting developing countries such as Zambia is the need to reduce inflation and ensure affordable credit through low lending interest rates. In this regard, I wish to appeal to professional bodies, like yours, to come up with options or ideas on how the issue could be tackled within the existing liberal financial environment. Although significant steps and progress have been made in improving the performance of the foreign exchange market, a number of challenges still remain. The main challenges in this area remain that of maintaining a stable and competitive exchange rate as well as diversification of the export base in order to tap into alternative sources of foreign exchange. Zambia’s continued reliance on the mining sector as a major source of foreign exchange has contributed to volatility in the exchange rate. Hence, there is an urgent need to explore all possibilities of diversifying the export base. To this effect, the different exchange rate regimes implemented since independence have provided us with good lessons upon which we can build our foreign exchange market and contribute to the buoyancy of our external sector.

8  12  14  16  18(f) 20(f)  Figure 5 Total, trend, and potential GDP (1) (annual change, percent)  6  6 Total GDP (2)  5 4  4  Trend GDP  3  5  3  Potential GDP  2  2  1  1  0  0  -1  -1 12  13  14  15  16  17  18  19  20  (1) For more details on trend and potential GDP, see "Trend growth: Medium-term Forecasts and Analysis of its Fundamentals", published in Spanish together with the September 2017 Monetary Policy Report. (2) Total GDP uses actual data up to 2017 and for subsequent dates the forecasts contained in the March 2018 Report. Source: Central Bank of Chile. Figure 6  Parities with respect to the US dollar (index, 2017-2018=100)  110  110  106  106  Latin America  Chile  102  102  98  98 Commodity exporters  94  94  90 1717  90 17 Mar. 17 May  17 Jul. 17 Sep.  Sources: Central Bank of Chile and Bloomberg. 9  17 Nov.  18 18  Mar.18  Figure 7  Nominal exchange rate (*) (pesos per dollar)  680 660  680 JAN-MAR 2018 Avg. DXY=90.2 670 Avg. copper=316 2018 growth (EES)=3.3 660  650  650  640  640  630  630  670  620  620  JAN-JUN 2017 Avg.
BIS central bankers’ speeches  5

In this way, we aim to ensure that price stability is not endangered in future. The monetary policy decision The economic and monetary situation has developed in the way we anticipated. The inflation outlook prior to today’s decision was largely in line with the figures presented at the last monetary policy assessment. For 2006, however, we forecast a slightly higher level of inflation to that presented in the last assessment. This is due to revisions made to certain figures that point to a higher rate of utilisation in the economy. In view of this inflation outlook, what is the justification for our decision to increase the target range for three-month Libor by 25 basis points? While we anticipate falling rates of inflation next year, this decline is not relevant in terms of monetary policy. Recent inflation levels of over 1% are probably largely due to the rise in oil prices which began in the first half of 2004. At the time, we decided not to take this increased inflation into account in our monetary policy decisions, due to the fact that its consequences could not be neutralised through monetary policy measures. It seems logical, therefore, not to take account of a decline in inflation attributable to subsiding oil prices, particularly since this drop also results from a statistical effect. A number of inflation components are likely to persist at a low level, even in 2006.
And will that mean that they can no longer be described as the most hazardous economic institutions known to man? This development has come further in the United States, where market financing is considerably more important than in Sweden or the rest of Europe. So what would a similar trend, where the current predominantly relation-based lending is replaced by market funding, imply for the cyclical supply of credit in Sweden? Stronger focus on aspects of efficiency A third driving-force that most clearly affects the financial system is the stronger focus on aspects of efficiency. Permit me to touch on this briefly. Improvements to the financial infrastructure in recent years have made this safer and more robust in various ways. For example, the settlement routines used by both BGC and VPC are considerably more secure that before. Every component of the infrastructure now has better solutions for continuity, which means that operations can be ensured even in connection with more extreme events. Now that the most serious shortcomings have been rectified, the focus has shifted to enhancing efficiency in the given framework for safety. Considerable social gains are to be had by making the infrastructure more efficient. This applies to the central settlement systems and perhaps even more to the different payment instruments. Increased automation and a greater use of electronic payments instead of paper-based instruments and cash can generate large savings for society in general.

In autumn 1997 the Riksbank accordingly presented its first more cohesive public analysis of financial stability. The new report was intended to signal the importance the Riksbank attached to work on stability and it also helped to focus and develop the internal efforts. The experience of work on the Inflation Report had been encouraging, so it seemed natural to build up the work on and communication about issues to do with stability in the same way. By launching the Financial Stability Report or, as it was called initially, the Financial Market Report, the Riksbank was the first central bank to issue a public account of its appraisal of financial system stability. Its example has been followed to date by about thirty other countries. Recurrent financial crises have made it clear that there will always be problems which the authorities are obliged to address in some way and it may therefore be of some assistance to have a clear, structured presentation of the approach to financial stability. This has led the International Monetary Fund, for example, to pay growing attention to these issues. Since 1999 the IMF and the World Bank are engaged in joint evaluations of national financial systems in what is called a Financial Sector Assessment Program. Matters to do with stability are also on the agenda almost every time I meet my colleagues from other countries. BIS Review 53/2003  1  Principles for financial system oversight First I should perhaps reiterate what we mean by the financial system.