samchain/econo-pairs-v1 huggingface dataset:
Shocks can be divided into demand shocks and supply shocks, depending on whether demand or supply is developing unexpectedly. The economic impact of the war in Ukraine can be described as what textbooks call a negative supply shock. This means that activity in the economy is declining, at the same time as prices are rising. In other words, the effect will be stagflationary, that is, we will have a combination of lower growth and upward pressure on inflation.23 Earlier examples of negative supply shocks are the oil crises in the 1970s. In addition, the war in Ukraine was preceded by another supply shock – the pandemic – when large parts of the world economy closed down and distribution chains were broken. As I just described, war does not always entail a negative supply shock. In connection with the Korean War, for example, there was talk of the ‘Korea boom’, because inflation was then largely due to increased demand for Swedish goods. 22 Jonung (1999). 23 There is broad agreement among economists regarding this conclusion. The IGM Forum at Chicago Booth regu-  larly asks a panel of leading economists in Europe and the United States to what extent they agree or disagree with different statements. The survey published on 8 March included the following statement: “The fallout from the Russian invasion of Ukraine will be stagflationary in that it will noticeably reduce global growth and raise global inflation over the next year”. A very large majority agreed, while nobody thought that would not be the case.

At the same time, tax financing may be politically difficult to implement.4 In the short term, the politically easiest way of financing war, but in the longer term perhaps the most harmful, is through the printing of money, as this almost inevitably results in higher inflation. A fairly large share of the literature on the effects of war on inflation is about the financing of war. A review of the effects on inflation of the United States’ wars from the American Revolution to the First Gulf War shows that when the US has been involved in more limited wars, they have usually been financed through higher taxes or increased borrowing or a combination of these. However, in the case of major wars, the point where these two methods of financing have been considered exhausted has often been reached, and the government therefore turned to the printing press. The result has often been a considerably higher inflation rate.5 The two world wars are examples of this. After a war, sovereign debt has often increased considerably. At the same time, it may be difficult to raise tax revenue in the same way as before the war. This may be because the political situation has become more unstable or the economy's production capacity has declined. In such a situation, there may be a great temptation for a government to try to alleviate the situation by using the printing press to finance current expenditure and pay off the loans.
Whilst it is true that this event was over in less time than it would have taken me to buy my regular morning latte, and as the BIS report noted, no systemic financial institutions appear to have incurred material losses, the reality is that our ability to describe how the flash unfolded doesn’t mean we can explain why it happened on 7 October. The events immediately after the referendum and on 7 October paint sharply different pictures about market functioning. As I noted above, the FX market functioned very effectively during the first episode, enabling the sterling exchange rate to act as an important initial shock absorber to the referendum news. But functioning in the second event was poor, with as large a move in sterling but without a fundamental trigger, creating a dearth of liquidity and for a short period of time the absence of a functioning two-way market for sterling. 3 4 5  And by 9% on a trade-weighted basis. The Amihud measure of price impact calculates the ratio between price moves and volumes traded. http://www.bis.org/publ/mktc09.htm 3  All speeches are available online at www.bankofengland.co.uk/speeches  3  The proximity of these events points to a nuanced conclusion about market functioning. Modern, highly electronic markets can facilitate a rapid and orderly reaction to significant news, but resilience might depend importantly on preparation. Moreover, the events of 7 October also highlight the vulnerability of such markets to seemingly unprompted flash price movements.

As the level of competition in the corporate bond market is much lower, a key priority in the design of these operations was to encourage strong participation from market makers. Accordingly we decided to adopt a uniform pricing method for these auctions, in which the Bank pays the same (highest) price for all the accepted offers to sell us a given bond. Our judgement, was that this approach would help incentivise participation and therefore competition, as participants do not need to make firm judgements about the overall market level, but can instead focus on their own valuations. This effect may be particularly important for increasing the likelihood of smaller or less informed market participants taking part. This increased participation should in turn increase the likelihood of the Bank achieving competitive pricing in its purchases. By contrast our gilt auctions allocate on a receive-your-offer (‘discriminatory pricing’) basis. This works well when broad participation is assured. Third, the relative value of offers is judged in a different manner in our corporate bond operations. For gilts, we allocate relative to representative market yields at the end of our auctions – this enables participants to accurately anticipate the competitiveness of their offers. If a similar approach had been applied to our corporate bond operations, where there is considerably less certainty around the prevailing executable market price , the Bank would have risked allocating against stale market prices, or prices that could easily be influenced by participants in the auction.
The Inflation Reports contain different measures of how households and companies expect the rate of price increase to develop. Pricing on the financial markets can also provide some information here. A further type of inflation expectation is reflected in the various forecasters’ assessments of developments. The Riksbank bases its estimations on a total assessment of these different measures of inflation expectations. Stable and low inflation expectations affect both companies’ pricing behaviour and wage formation, as well as having a beneficial effect, as far as monetary policy is concerned, on how consumers react to price changes. Companies’ pricing behaviour is based partly on the development of marginal costs, the competitive situation, demand and inflation expectations. If a company has confidence in the Riksbank’s monetary policy, its prices will not be affected as much by temporary changes in, for instance, supply, demand or the exchange rate. In this situation, the company can assume that inflation will return to the longterm trend once the effects of the disturbance subside. A credible inflation target can thus contribute to maintaining the monetary policy target at lower cost in terms of fluctuations in demand and interest rates. One means of inspiring confidence is to show a high degree of openness and clarity with regard to how monetary policy is conducted. The fact that the Riksbank describes the considerations regarding economic prospects that form the basis for the interest rate decisions makes it easier for external analysts to understand and predict monetary policy.

The risk management role of helping identify, evaluate, monitor, manage and control or mitigate these risks has become a crucial role in modern-day banking. Indeed, it is probably not exaggerating the importance of this to say that the quality of a bank's risk management has become one of the key determinants of a success of a bank. Basel II recognises the importance of these risks - and of the quality of risk management - by means of what is known as "Pillar 2". Under Pillar 2, there is an assessment firstly of all the risks a bank is running and, secondly, of its ability to manage these risks. This can lead to the bank being required to hold more capital to cover these risks, or to make improvements in its risk management. Pillar 2 therefore encourages banks to improve risk management, and gives capital incentives to do so. 1/5  I will say some more about this later on, but it is probably time at this point that I said a little about how Hong Kong is implementing Basel II. Hong Kong implementation We took a strategic decision early on in the Basel II process that Hong Kong should implement Basel II in accordance with the timetable recommended by the Basel Committee of Banking Supervision for its own members. This means adoption of most of the approaches under the new framework from the start of 2007, and the more advanced approaches from the start of 2008.
That should include, in addition to exchange rates, rules of the game for controlling capital inflows, plans to raise saving in the deficit countries, structural reforms to boost demand in the surplus countries, and even the role and governance of the international financial institutions. What is needed now is a “grand bargain” among the major players in the world economy. A bargain that recognises the benefits of compromise on the real path of economic adjustment in order to avoid the damaging consequences of a move towards protectionism. Exchange rates will have to be part of such a bargain, but they logically follow a higher level agreement on rebalancing and sustaining a high level of world demand. A natural forum in which to strike such a bargain is the G20. But to turn the regular round of international meetings into a real agreement will require a revolution, different in nature but no less significant, than that which put the Black Country on the map. Landlocked though the Black Country may be, our local economy has always been linked to a wider world – by canal, rail, road, and air, even fibre-optic cable. So the manner and speed with which the global imbalances unwind will have a direct impact on the Black Country and the UK economy as a whole. Such developments in the real economy are important also for the Monetary Policy Committee, because they are an important influence on our primary goal of ensuring inflation is on track to meet our 2% inflation target.

2  BIS Review 91/2001  Responses by central banks and banking supervisors While responsibility for financial stability remains vested in the national authorities – even in the countries participating in Stage Three of Economic and Monetary Union (EMU) – the need for co-operation among national authorities has increased because of the concerns I have just mentioned. In fact, EU authorities have shown awareness that close co-operation is essential both for a strategy of risk reduction and for the prompt and effective management of any problematic events. Let me refer to some of the main issues pertaining to the activities of central banks and banking supervisors. First, as to the Eurosystem responsibilities, the operational tools established for the common monetary policy allow market-wide liquidity shocks to be dealt with. The quick and successful reaction to the consequences of the terror attacks in the United States was a sign that the institutional framework is able to address the consequences of common shocks. Already in the evening of 11 September, the ECB announced that it was ready to provide additional liquidity. Indeed, the euro money markets showed some signs of tension on 12 September, because of banks' caution about lending funds due to uncertainty regarding their own liquidity needs. The ECB ensured the availability of adequate liquidity through a quick tender operation, restoring a normal functioning of the market, in the same way as, for instance, the Federal Reserve accomplished this for the dollar money market.
The mediation of payments is perhaps the most difficult to understand function of the financial market. But bear in mind that less than 10 per cent of all payments in Sweden are made with banknotes and coins. The remainder are through giro payments in various systems for small, mass transactions and large payments between banks and companies. If we were forced to use banknotes and coins, it would require a huge transport apparatus and considerable productive time to implement payments. New technology in this field is being developed all the time. Just consider charge cards and e-money, where payments is through book-keeping in different accounts, without any physical money being in circulation. Millions of transactions of this type are made every day within Sweden and across our borders. Globalisation, the freedom to make financial transactions across national borders, creates conditions enabling the financial systems to become more efficient in all of their functions. The possibility to find high yield investments increases, the possibility to spread risks increases and a large market also increases liquidity. When the financing costs become lower, there will be more investors all around the world, while savers will be able to obtain greater return for a given risk. It is for these reasons that the PPM (Premium Pension Authority) and the AP funds (National Pension Funds) invest a large part of our pension money abroad. Because the Swedish institutions managing pension funds are now able to invest money in foreign shares and bonds, there is less risk for our future pensions.

The banks restraint over crediting is a result of several factors. One is the economic crisis in the Euro area, the deceleration of our economy last year, the banks prudency, the rise of the bad placements. Another very important factor is the condition in the parent banks of some of the owners of our banks, you know that they mainly come from the Euro area, some of them have serious problems in their own countries and they face with serious challenges, although their banks in Macedonia have extremely good quality and they are in good condition, since the strategy is developed at the level of the group, the problems in the parent bank prevail so they can have conservative strategy also in our country. This exactly was the reason that caused panic in the public, that some banks have problems in their main offices. Has the situation been stabilized a little in this regard? The situation here is mainly stable. Although there are occasional rumors in the public, the data do not mirror that, and we did not have registered, in any moment, that the deposits plunged with the banks the main offices of which are facing with problems. The deposits, generally, were increasing during all these past several years.
As has happened under different circumstances, any movements of the exchange rate away from the trend assumed as a working assumption is possible in a floating regime, and its potential effects on the financial system, output or employment will be considered by the Board as inputs for their future decisions. Summarizing, for the rest of this year, annual CPI inflation is expected to return to figures around 3% to then move to the upper limit of the tolerance range for some months. This short-term trajectory is influenced by one-time effects, which will eventually revert, permitting inflation to hover around 3% throughout 2011 and to the end of the relevant projection horizon, this time the third quarter of 2012. Y-o-y CPIX1 inflation will describe a more gradual convergence to 3%, largely because the shorter-term effects on inflation are concentrated in items outside the CPIX1. Private expectations are not very different from this (figure 10). The Board estimates that it will continue withdrawing the monetary stimulus at a pace that will depend on how domestic and external macroeconomic conditions unfold. This process of MPR normalization was begun in June and continued in the meetings of July and August – with increases of 50 basis points each time – taking the MPR to 2% y-o-y. Going forward, the market has internalized a process of withdrawal of the monetary stimulus in the coming quarters. This is consistent with the progressive normalization of credit conditions, which is visible in various markets and indicators.

8  BIS Review 126/2010  Figure 6 Stock market volatility (percent)  Long-term interest rates in developed economies (3) (percent)  120  120  6  6  100  100  5  5  80  80  4  4  60  60  3  3  40  40  2  2  20  20  1  1  0  0  0  0  07  08  09  10  Developed markets (1) Emerging markets (2)  05  06 U.S.  07  08 Japan  09  10 Eurozone  (1) Uses VIX volatility index. (2) Estimated volatility of the MSCI index in dollars. (3) 10-year government bond interest rates. Sources: Bloomberg and Morgan Stanley Capital International. Figure 7 Output gaps (*) (percent)  6  6  4  4  2  2  0  0  -2  -2  -4  -4  -6  08  09 June 2010 Report  10  11  -6  September 2010 Report  (*) Gray area shows forecast as from the third quarter of 2010. Source: Central Bank of Chile.
I believe that one can require from both authorities and politicians – in all of the countries concerned – that they should be able to agree on a slightly better way of winding up a bank in distress than cutting it up along national boundaries. But if this becomes an overly heavy political burden we must expect the countries concerned to quite simply take over the part of the bank that is in their own country – even if this solution will be much more expensive in total for the tax-payers. Now, however, there is hope. Just a few weeks ago the Financial Stability Board, which consists of ministries of finance, central banks and financial supervisory authorities in the G20 countries, published new norms for managing crises in cross-border banks. For instance, they discussed how to make bondholders bear their share of the costs in the event of a crash. When all of this has been translated into legislation that is applied by all of the countries, we will have managed important problems faced in winding up large, cross-border banks. But it still remains to be seen whether one can actually find princples for how the costs should be allocated between the different countries. In the current debate on how much capital the banks need, it may also be worth remembering that the better legislation one has for winding up banks in distress, the less capital they will need to hold.

The Commission has set up a working group with EU authorities and industry to address the issues involved and to facilitate the transfer of derivatives contracts denominated in euro or other EU currencies to EU CCPs. From a supervisory perspective, UK CCPs have been recognised as third-country CCPs by the European Securities and Markets Authority (ESMA).3 And two UK CCPs have been recognised as being systemically important for the EU (Tier 2 CCPs). In line with the provisions of the European Market Infrastructure Regulation, this means that they are subject to ESMA’s supervision. This set-up helps to ensure that Tier 2 CCPs comply with EU regulatory standards. During this 18-month period of equivalence, ESMA will assess whether this set-up is sufficient to address risks to EU financial stability emanating from these two systemically important UK CCPs. As part of its responsibility for issuing the euro, the Eurosystem – which comprises the ECB and national central banks of the euro area – will develop its own stance on the matter and will contribute to ESMA’s assessment. At the end of this process, ESMA may recommend that the Commission deny the UK CCPs recognition to provide certain clearing services or activities in the EU if they pose excessive risks to financial stability. If this recommendation were to affect eurodenominated clearing services, the Eurosystem’s agreement would also be required.
I am glad that, true to private sector entrepreneurial spirit, you have opened a branch in Luangwa where there was no bank representation from pre-independence days. In spite of the not - so reliable electricity supply to the area and the not – so good road to Luangwa, you did not see these as impediments to bringing banking services to Luangwa but rather you have looked at them as challenges to be overcome. Mr Managing Director, the step taken by your bank is to be lauded. I take this opportunity to appeal to the entire management to take the findings of the FINSCOPE Survey as a serious challenge to the Banking Industry to reduce the percentage of the unbanked population. 6. Planned move to the Listed Tier of Lusaka Stock Exchange  I am informed that due to the phenomenal growth of the Bank, Management and shareholders have agreed to move the Bank up the ladder to the Listed Tier of Lusaka Stock Exchange very soon. This has become necessary in order to raise more requisite capital and enhance the bank’s profile and oversight. This is an important step as it will mean that the bank will broaden public participation in its ownership and other public institutions will now participate as well. I therefore call upon Zambians and parastatals to take up shares in the bank. I am told that the Bank is about to venture into new products such as Women Empowerment loans and Islamic Banking.

Dynamic leadership  Your role in Investrust Bank Plc is very crucial. As the Management team, you are providing leadership. Your way of doing things must be exemplary, inspirational, and analytical, with drive and with integrity. Keep abreast with current affairs. As Financial Intermediaries in the economy, the public looks up to you for innovative and effective products. 2. Customer focus  The Bank of Zambia is keen to see that the Zambian public is offered quality service by the Banking industry. We wish to see more innovative products introduced on the market. I am glad to note that Investrust Bank Plc is part of some banks who teamed up under ZAMLINK to offer ATM services to their clients. Such collaboration is commended. It is in the same spirit that you have supported the RTGS and DDACC products. I will be pleased to learn that this conference will deliberate and resolve on how best the Bank will improve service delivery to greater heights. You need to develop financial products that reflect the country’s level of development and not just ape what is being done in developed countries. 3. Sound practices  In recent years, we have read of how “big” institutions have been brought down due to unprofessional conduct by their senior executives. I urge Investrust Bank Plc to pro-actively propagate Corporate governance standards at all levels of Management. I commend the Bank for the newly created dedicated function of Risk Management in its structure. This will provide prudential guidance in the other areas of operations.