samchain/econo-pairs-v1 huggingface dataset:
Second, the possible changes in the sectoral structure of employment, discussed previously, make it advisable to boost lifelong learning, which in itself is desirable in the current environment of rapid population ageing.14 Lastly, the current extent of working from home for some occupations as an emergency solution during the pandemic may not be merely temporary; in this event, firms will be required to invest in resources and knowledge to ensure that the productivity of these workers is as high as possible. 13  See, for example, Banco de España (2019), “The Spanish economy and the more uncertain global environment. Recent developments, outlook and challenges”, Annual Report 2018, Chapter 1. 14 B. Anghel and A. Lacuesta (2020), "Ageing, productivity and employment status", Analytical Articles, Economic Bulletin, 1/2020, Banco de España. 38  The aforementioned labour market duality has significant implications for the economy’s productivity in aggregate terms, as it hinders the accumulation of human capital by workers, who go from one temporary contract to another. All of these reasons make it advisable to undertake an in-depth review of the range of contract types in Spain with a view to aligning the level of protection afforded to the various groups of workers. Crucially, the high weight of temporary contracts in the Spanish economy is not due to its sectoral specialisation. Indeed, certain services sectors with a relatively limited level of occupational skills account for a high proportion of Spain's productive structure.

This is why the Banco de España opted, in its publication on 20 April, to prepare several alternative scenarios using different analytical tools.2 In any of the scenarios considered, confinement would translate into a very severe contraction in Spanish GDP in 2020, all the greater the longer the period during which it is necessary to retain the restrictions on economic activity, and with greater risks that the 2  See Banco de España (2020), “Reference macroeconomic scenarios for the Spanish economy after Covid-19”, Analytical Articles, Economic Bulletin, 2/2020. 11  liquidity problems many economic agents are currently facing will lead to situations of insolvency. Looking ahead to next year, these scenarios outline a recovery in activity and employment which, nonetheless, would be insufficient for GDP to attain its pre-COVID-19 trend level. Specifically, in the two scenarios recently published by the Banco de España that seem most realistic at present, having ruled out the third which projected a shorter and more moderate recession, GDP is expected to fall by 9.5% and 12.4%, respectively, in 2020 (and post subsequent increases of 6.1% and 8.5% in 2021).3 The figures in the first of these scenarios do not differ significantly from those reported by other national and supranational institutions, public and private alike. Thus, for example, the Spanish Government, the International Monetary Fund (IMF) and the European Commission have recently projected declines in our economy of 9.2%, 8% and 9.4% for 2020, respectively.
Understanding and Trusting Central Banks  Even if the empirical literature is sparse, the great leaps forward in central bank openness over recent years would be expected to have earned them a transparency dividend among the harder-to-reach general public. That dividend might take the form of improved trust in central banks by the public and an improved understanding of their functioning. There is disappointingly little evidence of either. Trust in institutions generally has taken a body-blow over the past few years. The Edelman global survey suggests that public trust in businesses, government, NGOs and the media has fallen sharply. In 2016, only around half of the general public trusted these bodies. In the UK, fewer than 30% of the population trusted these institutions in the latest survey, down from over 40% a few years ago (Chart 10). The source of dwindling trust is itself revealing. It reflects a widening gap between trust in institutions among the elites (which has held firm) and among the general public (where it has fallen). This trust gap between elites and the general public averages 15 percentage points globally, having been around 9 percentage points as recently as 2012. In the UK and US, this gap is around 20 percentage points. 41  What is true of institutions appears to be true too of the economics profession. A recent poll by YouGov in the UK asked the general public how much they trusted various professions.

Third, we decided to launch a new series of quarterly targeted longer-term refinancing operations (TLTRO-III), starting in September 2019 and ending in March 2021, each with a maturity of two years. These new operations will help to preserve favourable bank lending conditions and the smooth transmission of monetary policy. Under TLTRO-III, counterparties will be entitled to borrow up to 30% of the stock of eligible loans as at 28 February 2019 at a rate indexed to the interest rate on the main refinancing operations over the life of each operation. Like the outstanding TLTRO programme, TLTRO III will feature built-in incentives for credit conditions to remain favourable. Further details on the precise terms of TLTRO-III will be communicated in due course. Fourth, we will continue conducting our lending operations as fixed rate tender procedures with full allotment for as long as necessary, and at least until the end of the reserve maintenance period starting in March 2021. Today’s monetary policy decisions were taken to ensure that inflation remains on a sustained path towards levels that are below, but close to, 2% over the medium term. While there are signs that some of the idiosyncratic domestic factors dampening growth are starting to fade, the weakening in economic data points to a sizeable moderation in the pace of the economic expansion that will extend into the current year. The persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets appears to be leaving marks on economic sentiment.
It is now up to other policy makers to do theirs, starting with the fiscal authorities. As Mario Draghi pointed out yesterday in front of the European parliament, “We need a coherent economic strategy in the euro area that complements and enhances the effectiveness of monetary policy”. 1.2  Specific Challenges for Monetary Policy  Page 4 sur 11 This is not however a call for self-congratulation: we have to do our homework on some renewed research questions, where we cannot live with our old metrics and our present lack of knowledge. For that, we need more than ever your research and our dialogue. First, the measurement of key structural determinants remains surrounded with uncertainty. I mentioned the uncertainty surrounding the trend in R*. But similar uncertainty pertains to the measurement of potential output and the natural level of unemployment U* iv. We should also intensively work on the economic effects of climate change as a long-term but significant shock, and its interaction with monetary policy. How to best measure inflation expectations is a second key issue. We know that expectations are key determinants of inflation, but it remains unclear what the most relevant measures of inflation expectations are. Expectations of professional forecasters (at 1,7 %) and market-based measures (at 1,3 %) have received most of the attention until now, but the expectations of firms as well as households – which can be significantly higher – matter at least as much for aggregate demand and price-setting.

The policy strategies pursued need not be identical across countries and regions and the required size of the economic stimulus and the nature of the other measures taken need not – and should not – be the same, as structural and conjunctural conditions differ. Nevertheless, a similar orientation and consistency is warranted. 1  See International Monetary Fund, Global Financial Stability Report Market Update, 28 January 2009, p.2. 2  Based on data available up for January 2009. BIS Review 38/2009  1  Since the intensification of the financial crisis in September 2008, central banks and governments globally have acted in a decisive and concerted manner to contain the adverse effect of the financial crisis on the real economy and promote its recovery. In the euro area, the actions taken by the ECB and the Eurosystem are unprecedented in size and scope. Government support for financial institutions in the form of recapitalisations, guarantees on bank debt and, more recently, asset relief schemes, have been significant and the pertinent measures are progressively being implemented. And the fiscal stimulus packages of euro area governments are substantial, amounting to a total of about 2% of euro area GDP over this year and the next. The immediate priority of macroeconomic policies and bank support schemes is to promote the economy’s recovery and preserve price and financial stability.
Luis M Linde: “The Financial System ahead of the Banking Union” Opening speech by Mr Luis M Linde, Governor of the Bank of Spain, at the 5th edition of the Expansion – KPMG Financial Forum, Madrid, 23 May 2014. *  *  *  Ladies and Gentlemen, It is for me a pleasure to open this fifth edition of the Expansion – KPMG Financial Forum and to introduce Ms Sabine Lautenschläger, member of the Executive Board of the European Central Bank and Vice-Chair of the Supervisory Board of the Single Supervisory Mechanism. Sabine Lautenschläger – I hope my German pronunciation is approximately correct – is a very well known and respected European expert in banking supervision and central banking. After graduating in law at the University of Bonn, she joined the German Federal Financial Supervisory Authority, Bafin, in 1995, where she held relevant positions, serving as Chief Executive Director of Banking Supervision. She was also a member of the Basel Committee of Banking Supervision and of the European Banking Authority’s Management Board. In 2011 she joined the Executive Board of the Deutsche Bundesbank as its Deputy President. Let me turn now very briefly to the topic of this event, namely The Financial System ahead of the Banking Union. It is indeed a very timely issue as the ECB is currently immersed in the preparatory work to assume its new banking supervision functions, within the framework of the Single Supervisory Mechanism (SSM), on 4th November.

This underscored how important it is for Boards of Directors to understand products and carefully weigh the risk-versus-return paradigm. Here in Malaysia, parallels have also been drawn with the 1997 Asian Financial Crisis, but interestingly the similarities are arguably few in nature. Correspondingly, the regulatory and policy response at the time was also suitably crafted towards addressing relevant issues and to achieve specific objectives. Today, the consolidation of the banking sector and the significant advances in risk management infrastructure and practices are also firmly in place and institutionalized. Payoffs from these efforts are evident as Malaysian financial institutions are now on a stronger foundation to venture into new businesses and countries, undertake more complex risks and withstand shocks. Their enhanced capabilities are now backed by stronger balance sheets, with the risk-weighted capital ratio of the banking sector at 13.4% and net non-performing loans ratio of 2.2% as at 31 March 2009. Our financial institutions have also continued their lending activities despite the global slowdown. Total aggregate outstanding loans have grown by 12.0% to RM727.0 billion during 2008 and by 11% yoy as at end-March 2009. Dealing with financial risks – from regulatory perspective On the regulatory front, Bank Negara Malaysia has and is now in the process of conducting another series of stress tests to gauge, from a capital standpoint, the collective soundness of the banking sector in absorbing potential losses. Complementing this is the liquidity stress tests conducted to assess specifically the capability to withstand market wide liquidity shocks.
Finally and most importantly, following monetary policy decisions, the President and VicePresident of the ECB hold a press conference followed by an open discussion with journalists, the transcript of which is published on the ECB’s website. It should be recalled that the ECB was the first central bank to adopt such a procedure, which provides a unique opportunity to fully explain and comment monetary decisions immediately. On the other hand, the Governing Council of the ECB has chosen not to publish the minutes of its meetings. The publication of these minutes would indeed present some drawbacks: -  first, governing council members may “speak for the minutes” when these are very detailed, while, when they are not detailed, may not convey more information than a plain communiqué;  -  second, the publication of the minutes might also create more difficulties for moving from initial positions to new ones in the light of the arguments developed;  -  finally and most importantly, in the case of the euro area, the analysis of the votes could be read and interpreted as reflecting national interests or preoccupations,  2  BIS Review 113/2007  which would be misleading and could jeopardise both the independence of the members of the Governing Council and the credibility of our decision-making processes. The Eurosystem is based on operational decentralisation The third imperative, operational decentralisation is an essential feature of the Eurosystem.

The Struggle to Fill Jobs In the current environment, filling jobs can be a challenge. Employers-including those here in Columbia and Greene Counties-are facing significant worker shortages. Many are struggling to hire people, especially at the entry level-in construction, nursing, and manufacturing. The skills gap is a big obstacle. In 2020, more than half of available job seekers in Columbia and Greene Counties had a high school diploma or less, and only a quarter had an associate degree or higher.1 Employers, especially those in trucking and the trades, grapple with developing a pipeline of skilled workers. An aging population is another issue. Over the past 20 years, the size of the workforce here has declined as the population has stagnated. Residents here are older-the median age is late 40s, as opposed to late 30s for all of New York State. In some cases, residents don't need more training-they need retraining so they can obtain new jobs. 1/3  BIS - Central bankers' speeches  The Jenga Tower Whenever I talk about economic prosperity, I like to use the analogy of a Jenga tower: Each piece is critical to the stability of the whole. Take one piece out, and the tower becomes unstable. Take the wrong piece out, and the whole tower can collapse. Our Jenga tower encompasses a whole host of important pieces. Job training is one. Workers need skills that employers are looking for, and job training needs to be accessible. Transportation is another.
Extraordinary growth in practices such as securitisation and in the use of sophisticated derivative products allowed banks to transfer credit risk in ways that the 1988 Accord does not capture. In addition, some banks began to manage their exposures to operational risk separately and as a comprehensive practice comparable to the management of credit or market risk. By the late 1990s, it became increasingly clear to leading banks and their supervisors that the original Accord no longer provided meaningful measures of risk for the most sophisticated banking organisations. As a result, the Basel Committee and others began to discuss ways to revise the existing capital rules to account for these advances. Supervisors sought more than a simple revision of the existing framework. We wanted to align our capital requirements more closely with the best measures of economic risks that banks actually face. We sought furthermore to fortify the stability of the banking sector so that banks could continue to serve as a source of credit through good years and bad. In our view, promoting financial stability will benefit not just banks, but also other businesses and consumers as well. To incorporate the latest advances in risk management, and to develop a more forward-looking approach to supervision, the Committee embraced a “three-pillar” approach to capital requirements. Rather than simply setting out a static minimum requirement for capital levels, the new capital framework will rely on three mutually reinforcing policy approaches.

This leads to my second topic this morning, namely how supervisors will complete the “virtuous circle” by adopting regulations that foster continued improvements in the measurement and management of risk. In the insurance sector, this movement is visible in the European Union’s “Solvency II” project. The IAIS’s initiative to establish a new international insurance regulatory framework will likewise be significant to the industry in the new future. But certainly a lot of attention has been paid to the work that the Basel Committee and other supervisors are undertaking to reform the international bank capital adequacy framework under Basel II. Basel II represents one of the most important reforms in banking supervision. For the past few years, central bankers, bank supervisors, and the industry have been discussing ways to revise the 1988 Basel Accord, which constitutes a cornerstone of the bank regulatory framework. The 1988 Accord was a landmark achievement in its own right. It represented the first internationally accepted “yardstick” for determining the adequacy of a bank’s capital. It was relatively simple to apply and, perhaps as a result of its simplicity, was adopted by supervisors in over 100 countries. But its simplicity may have led in some ways to its gradual decrease in relevance for sophisticated banks and systems. Leading banks made substantial improvements in their measures of risk. As the Joint Forum reported, industry leaders introduced integrated risk management functions and raised their standards for quantifying and aggregating various risks.
If we add account-related revenues and interest rate and penalty fees from credit cards, the figures increase further. With this growth rate and potential revenue, it is no wonder that the retail payments market attracts so much attention. There are other factors that help explain why so much has happened over the last few years and that continue to drive the development. The rapid techno-logical development of smartphones, tablets, and high-speed Internet connection is one of the most important factors. Today, approximately half of all adults in the world have a smartphone and this share is likely to increase significantly. Some 40 percent of the global population use Internet. This technology is widespread and accessible at a reasonable cost and it has changed the way we shop. We purchase goods and services in new ways and because of this we also demand payment services that are suited to this new type of interaction. E-commerce is the prime example. This year some 38 billion e-commerce transactions will take place. We interact with e-merchants who we have no previous relationship with. We download or stream music and movies. We order taxis through a smartphone app. To maximize convenience, we demand tailored payment solutions increasingly often. Businesses are in a similar situation. In e-commerce the purchase is often aborted if the payment method is not quick and convenient enough. They want to be able to offer payment alternatives that customers want to use.

In this case, low implied volatilities on interest rates and exchange rates can support cross-border carry trades because the yield pick up looks attractive when you can hedge the worst risks quite cheaply [Chart 11]. The continued smooth financing of global imbalances through these carry-trades in turn leads to low volatility. But this can of course work in reverse. Foreign exchange volatility has jumped up since the US Thanksgiving Day holiday. If this volatility were to persist the perceived risks in the carry trade would increase. The common characteristic of these examples is that low implied volatilities reduce the apparent riskiness of portfolios and can encourage investors to take on more risk. And if implied volatilities are not a good measure of future volatility, they will end up bearing more risk than they expected. Avoiding this pitfall requires diligent risk assessment by investors and other counterparties. That is what is needed for market discipline to do its work. It requires both adequate disclosure of risk-relevant information and its effective use in investment decisions. In the case of the hedge fund sector, for example, it seems likely that greater institutional investor interest will continue to raise the bar on disclosure requirements, particularly for those generating returns using complex products where traditional measures like value-at-risk (VaR) may fail to capture fully the underlying risks. Conclusions To conclude, our overall assessment remains benign. The financial sector is strongly capitalised and well placed to handle even large shocks like Amaranth.
Risk modelling became high fashion for the pointy-heads, haute-couture for the anoraks. The past two years have rather changed all that. The sub-prime market has played the role of the child in the fairytale, naively but honestly shifting everyone’s perceptions about how threadbare the financial system had become. The madness of crowds, as Charles Mackay so vividly put it, became visible to all. The resulting unravelling of the Golden Decade has been little short of remarkable. 2  BIS Review 18/2009  Asset prices have collapsed – for example, world equity prices have lost more than threequarters of their gains during the Golden Decade. Prices of banks’ shares have fared even worse, losing almost 60% of their value and are now lower than at the start of the Golden Decade. In the face of these falls, risk management systems across virtually all institutions have been found badly wanting. A survey of 500 risk managers by KPMG in October last year found that 92% intended to review their risk management practices. Estimated losses within the financial sector since the start of the crisis lie anywhere between a large number and an unthinkably large one. Today, managers of risk – the authorities just as much as banks – find themselves struggling to preserve their dignity, with risk management systems a combination of sack-cloth and fig-leaf. This year, stress-testing conferences like this one are more doghouse than catwalk.

Measures of kurtosis – the fatness of the tails – of UK house price inflation are 6 times larger over the full sample than over the Golden Decade; for UK bond yields 10 times larger; and for UK equity returns 16 times larger. To bring these stylised facts to life, consider the distribution of equity returns in Chart 7. If we assumed the Golden Era distribution was the true one, the three worst monthly returns in history – the bursting of the South Sea bubble in September and October 1720, and Black Monday in October 1987 – would have been respectively 12.7, 6.9 and 6.5-sigma events. All three would have appeared to be once in a lifetime – of the universe – events. Underestimation of risk, whether variances or tail outcomes, has consequences for the risks facing both individual firms and for the system as a whole. As an example of the former, Chart 9 plots some unconditional 90th percentile VaRs for a selection of UK banks, based on their equity returns up until end-July 2007 and then extended to include the present crisis. 3 These unconditional VaRs for UK banks increase, on average, by almost 60% once the sample is extended; and for some banks these risk measures more than double. For the system as a whole, one way of illustrating the consequences of underestimating risk is to translate it into “fair value” insurance premia. For example, consider a financial firm offering insurance against moves in future equity prices by writing put options in mid-2007.