samchain/econo-pairs-v1 huggingface dataset:
Moving from finance to economics, the dominant approach over recent decades to modelling the macro-economy has probably been the Dynamic Stochastic General Equilibrium (DSGE) model (Smets and Wouters (2003)). In its plain-vanilla form, this comprises a set of representative, optimising households and firms. This model gives rise to an equilibrium which is unique and stationary, and dynamics around that equilibrium which are regular and oscillatory. Various knobs and whistles have been added to this workhorse framework, often involving market frictions in price-setting, competition and credit provision. These add colour to the model’s dynamics but, by and large, leave intact its properties – stable, stationary, oscillatory. It is not just among academics that this workhorse 5  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  5  framework has found favour. The majority of central banks also take the DSGE framework as their starting point, including the Bank of England (Burgess et al (2013)). The DSGE approach has many of the hallmarks of Newtonian physics. As every action has an equal and opposite reaction, every shock has an equal and proportional reaction in DSGE models. The economy’s dynamics exhibit the same damped harmonic motion as Newton’s pendulum, or if a rocking horse were to be hit with a stick. The rocking horse metaphor is apt, as it was first used by Swedish economist Knut Wicksell almost a hundred years ago to describe the business cycle motion of an economy (Wicksell (1918)).

It has fat-tails, with the probability  25 20  mass of big rises or falls larger than implied by a normal distribution. For example, the  15  probability of a 10% movement in house prices  10  in any given year is twice as large as normality  5  would imply. 0 -5  Capturing these cyclical dynamics, and fattailed properties, of the housing market is not straightforward using aggregate models. These models typically rely, as inputs, on a small number of macro-economic variables, such as incomes and interest rates. They have  -10 1846 1866 1886 1906 1926 1946 1966 1986 2006 Source: Hills, Thomas and Dimsdale (2016); Bank calculations. Notes: The chart shows the Hodrick-Prescott trend in annual house price growth data (where lambda=6.25). Data during WWI and WWII are interpolated. a mixed track record in explaining and predicting housing market behaviour. One reason for this poor performance may be that the housing market comprises not one but many sub-markets - a rental market, sales market, a mortgage market etc. Moreover, there are multiple players operating in these markets - renters, landlords, owner-occupiers, mortgage lenders and regulators – each with distinctive characteristics, such as age, income, gearing and location. 27  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  27  It is the interaction between these multiple agents in multiple markets which shapes the dynamics of the housing market. Aggregate models suppress these within-system interactions.
I am strongly in favor of the UK remaining within the EU; yet, irrespective of the outcome of the British referendum, the Eurozone can and should pursue further integration. The euro crisis has revealed how unprepared we were. The expected dynamics between peer pressure and market discipline did not work, as markets did not believe in the no-bailout principle, and as national authorities did not really accept peer pressure, nor the implementation of the rules. BIS central bankers’ speeches  1  The absence of coordination has a genuine economic cost. It includes the cost of crises and assistance programmes, as well as the impact on growth due to uneven compliance with budgetary rules before the crisis and rigidity of the rules during the crisis. Several studies point to a significant cost of non-coordination, in the order of 2 to 5 % of GDP since the crisis. To take the debate forward, three principled choices have to be made: First: making parallel progress on both domestic reforms and European coordination. This is the cornerstone of any French-German agreement: to be fair, the French call for Germany to support coordination, and the German doubt about French reforms, have been and are still well-founded. This requires overcoming distrust between countries and putting both aspects under the same umbrella, namely a common institution. Second, we must recognize that institutions with a mandate are superior to rules without institutions. To bolster policy consistency and coordination, we admittedly need simpler rules.

Major banks and insurers are accelerating their digital transformation and ramping up hiring in application development, data science, and artificial intelligence. Example: OCBC Bank recently announced that it plans to hire 1,500 technology staff over the next 3 years, with the majority of those positions to be based in Singapore. Bank of America has based one of its two overseas global cyber security centres in Singapore. The bank currently has more than 800 headcounts in Singapore focusing on technology. Another example is Shanghai Pudong Development Bank, which set up its first overseas innovation centre in Singapore. Likewise, global insurers like SCOR have established innovation labs in Singapore. Local insurers have invested heavily in technology too. Singapore has made a name for itself as providing one of the world’s most conducive environments for financial innovation. We are now home to over 50 global and regional innovation labs and more than 1,400 FinTech firms. Last year, we saw record high FinTech investments of $ billion last year, up from $ billion in 2020 [2] . Leading players at the forefront of digital asset innovation have anchored their operations in Singapore. JP Morgan has partnered DBS Bank and Temasek to establish Partior, which is a multi-currency, cross-border settlement platform, leveraging blockchain technology. R3, a global distributed ledger technology provider with roots as a banking consortium, has grown its innovation hub in Singapore to become the regional headquarters for Asia.
We therefore need to facilitate a discussion on the economic policy framework and the long-term conditions for the Swedish economy over the next 30 years. I hope that our discussion today can be a starting point. References Attinasi, Maria Grazia, and Mirco Balatti (2021), “Globalisation and its implications for inflation in advanced economies”, Economic Bulletin 4/2021, European Central Bank. Auer, Raphael and Andreas M. Fischer (2010), “The effect of low-wage import competition on U.S. inflationary pressure”, Journal of Monetary Economics 57, pp. 491-503. Breman, Anna (2022), “Inflation and monetary policy in the shadow of a war”, speech at Sveriges Riksbank, 23 March, Sveriges Riksbank. Economic Commission (1993), “Nya villkor för ekonomi och politik”, SOU 1993:16 (Lindbeck Commission report), published in English as Turning Sweden Around, MIT Press 1994. Ingves, Stefan (2015), “The housing market and household indebtedness from a central bank perspective”, speech at the SNS − Centre for Business and Policy Studies, Stockholm, 19 November, Sveriges Riksbank, Jansson, Per (2021), “Is it time to review the division of roles in macroeconomic policy?”, speech at Sveriges Riksbank, 8 December, Sveriges Riksbank. Lundvall, Henrik (2020), “What is driving the global trend towards lower real interest rates?”, Economic Review 2020:1, Sveriges Riksbank. Ohlsson, Henry (2022), "Monetary policy and inflation in times of war", speech at the Department of Economic History, Uppsala University, 17 May, Sveriges Riksbank. Wetterberg, Gunnar (2009), Money and power – the history of Sveriges Riksbank, Sveriges Riksbank and Atlantis.

The development of financial technology has always been an important driving force behind changes in the financial sector and it has often entailed new challenges for financial stability. Now and then, it has also given central banks reason to consider how they can best do their job. During the latter part of the 20th century and the beginning of this one, we have seen several innovations that have changed consumers’ methods of payment. 11 In recent years, the amount of payments made with the aid of smartphones and mobile bank ID has risen very rapidly. The Riksbank has actually contributed to the latter by giving Bankgirot access to a special account in the Riksbank's payment system RIX that enables secure payments with a mobile application. 12  Use of cash declining rapidly in Sweden All of this has contributed to the volume of outstanding cash in Sweden declining from around 10 per cent of GDP at the beginning of the 1950s to around 1.5 per cent of GDP today. The largest decline in the use of cash has taken place in recent 11 Some examples of innovations that have changed our way of making payments over the years include cheques, ATMs, credit and debit cards and bank transfers – initially as paper forms and later as direct transfers over the Internet. 12 Today 97 per cent of all citizens in Sweden have access to some form of payment card. 85 per cent have access to on-line banking and 80 per cent have access to direct debiting.
Congress learned of the availability of the transcripts shortly after this, and in February 1995, insisted that they be published with a five-year lag. Once committee members became aware that their meetings were being recorded, the structure of the discussion appeared to change. Before 1995 meetings had begun with prepared speeches followed by a freeflowing debate characterised by a frank exchange of ideas. But after 1995, there appears to be a much greater tendency for meetings to become an exchange of prepared statements, and some of the colour of the previous discussion may have been lost. Explanations of decisions in the form of press statements issued at the time of the announcement of decisions on interest rates have become less frequent. But this is principally because there have been fewer interest rate changes recently. In its first three years, the Committee moved rates 16 times and issued press statements on 14 of those occasions. It also issued two statements when it had not moved rates. Over the past two years the Committee changed rates seven times, accompanied by six statements, with no statements when rates were left unchanged. The purpose of a press statement is to explain a decision reached, by definition by a majority of the Committee. Because it is brief it cannot do justice to the richness of the discussion at the Committee, and the balance of views is not represented.

By structural, I mean that the deficits are projected to be persistent – absent changes in tax and spending policies – even after the individual economies have recovered and the unemployment rates in these countries have fallen as low as is possible, consistent with price stability. Fiscal stimulus measures undertaken to support demand have been responsible for much of the recent deterioration in the structural budget deficits. For example, in the United States,  4  BIS Review 28/2010  the Congressional Budget Office estimates that the structural federal budget deficit rose by nearly $ trillion between fiscal 2007 and fiscal 2009, to $ trillion or 7.3 percent of potential GDP. Obviously, different people have different views as to how much stimulus was needed and the form of that stimulus. But to me it is clear that an accommodative fiscal stance was the appropriate policy response given the circumstances. In the case of the United States, without substantial fiscal stimulus, the economy would have been even weaker and the unemployment rate considerably higher. Given the fact that the federal funds rate could not be pushed any lower, fiscal stimulus was indeed important in stabilizing the economy. Going forward, however, market participants are worried that many countries are now on unsustainable fiscal paths. By unsustainable, I mean a scenario in which persistently high deficits cause the amount of outstanding debt to rise relative to GDP indefinitely, even if the economy performs well in the future.
The fraction of students from London studying economics between ages 14 and 18 is roughly twice the national average. A student from the North-East of England, where I was born, is around five times less likely to study economics than one born in London. The fraction of the population of the North-East who is likely never to have had any education in economics could be as high as 98%, similar to levels in Wales and Northern Ireland. This is a “good news/bad news” story. There are encouraging signs that economics is gaining in popularity in the upper tiers of the educational pyramid. But this pyramid is widest towards the top and narrow at the bottom, with a pronounced (societal and regional) slant. Such a structure is unlikely to be a strong and stable educational foundation for most people. Little wonder economics is perceived as remote and elitist. Perhaps a reasonable question to ask – and even if it is unreasonable I am going to ask it anyway – is why the essentials of the economy and finance are seen as so much less essential than literacy and numeracy. Is financial literacy so different than general literacy, in its impact on people’s lives and everyday decision-making, that it justifies such a different educational pyramid? Gandhi is often claimed to have said: “Be the change you want to see in the world”. I love that quote. 59  Through its public understanding role, there is change the Bank can effect in the area of economics education.

Chart 5: Sterling three-month interbank rates relative to future expected policy rates  Chart 6: Oil prices  Sources: Bloomberg and Bank Calculations  Sources: Bloomberg and Thomson Datastream  8  BIS Review 145/2008  Chart 7: CPI inflation projection based on market interest rate expectations  BIS Review 145/2008  9
However, at present debt accumulation is high only in the household sector. There is little borrowing activity in the enterprise sector. House prices are rising, but non-residential property prices are stable. Prices for office premises are, however, stable. The analyses in the inflation reports indicate that inflation will remain low this year, picking up thereafter. The krone depreciation since January 2003 is expected to push up prices for imported consumer goods. Overall, mainland GDP growth is projected to pick up markedly this year and remain relatively high in 2005 and 2006. GDP growth is projected to reach 3¼ per cent in 2004 and 2005, followed by a slight decline to 2¾ per cent in 2006. With this path for total output, the output gap, as measured here, will shift to slightly positive in 2005 and 2006 from slightly negative this year. Projections are based on the technical assumption that the interest rate will move in line with forward rates. The assumption implies that the interest rate will be somewhat lower in the near term, but that it will rise gradually from the summer, largely in parallel with the increase in interest rates among our trading partners. The krone is assumed to follow the path of the forward exchange rate, which indicates expectations of a fairly stable exchange rate in the period ahead.

Jörg Asmussen: Exchange of views with the Economic and Monetary Affairs Committee of the European Parliament on financial assistance to Cyprus Introductory statement by Mr Jörg Asmussen, Member of the Executive Board of the European Central Bank, at the European Parliament, Brussels, 8 May 2013. *  *  *  Dear Madam Chair, Honourable Members of Parliament, Thank you for inviting me to this exchange of views on financial assistance to Cyprus. The substance of the decisions, and process of how they were taken, have been debated controversially – also in this House. I am therefore pleased to be given the opportunity to provide the ECB’s views and to participate in a public debate on this matter. Initial conditions in Cyprus  Before discussing the key elements of the EU/IMF adjustment programme, it is very important to understand how Cyprus got itself into such difficult situation in the first place. Why were imbalances of such magnitude allowed to develop? What made the nature of the challenges faced by Cyprus so exceptional? I find these essential questions that I hope we can address during our exchange of views today. Let me focus here on the banking sector. In the 2000s, the Cypriot economy evolved towards a rather unbalanced business model with an inordinate weight for the financial industry. The country aimed to become leading provider of international banking services. Cypriot banks attracted large inflows of foreign deposits. They expanded their balance sheets dramatically over recent years, both domestically and externally.
The flexibility of credit and liquidity that banks provide - stemming from this unique capacity to create transaction account liabilities - is vital to the smooth development and growth of market-based economies. Other essential functions This money-creating capacity also enables banks to perform other essential functions. For example, banks serve as the primary and back-up source of liquidity for other classes of institutions, financial and non-financial. Even in advanced financial systems, the capital markets rely heavily on the banking system to meet day-to-day cash flow needs and to provide standby financing facilities. In addition, the banking system is the mechanism, or transmission belt, by which the policies of the central bank regarding money and credit creation are implemented, and the pace of economic activity determined. Simply stated, without an effectively functioning banking system for encouraging, collecting and deploying society’s savings, providing the means for quick and reliable payment, and performing these other essential functions I’ve just mentioned, there would be little hope for any economy to mobilize the real resources necessary for economic growth and stability. If money and credit are the lifeblood of a market economy - and they are - the banking system is its beating heart. Public confidence - the key to intermediation But banks’ ability to collect and mobilize society’s savings by attracting deposits is only half of the story. Their ability to retain those deposits is just as critical. This may seem an obvious point, but the retention side of the banking equation is too often forgotten or overlooked.

2  BIS central bankers’ speeches
Under this scenario, at the time that asset purchases came to an end, the unemployment rate likely would be near 7 percent and the economy’s momentum strengthening, supporting further robust job gains in the future. As I noted last week in our regional press briefing, a few points deserve emphasis. First, the FOMC’s policy depends on the progress we make towards our objectives. This means that the policy – including the pace of asset purchases – depends on the outlook rather than the calendar. The scenario I outlined above is only that – one possible outcome. Economic circumstances could diverge significantly from the FOMC’s expectations. If labor market conditions and the economy’s growth momentum were to be less favorable than in the FOMC’s outlook – and this is what has happened in recent years – I would expect that the asset purchases would continue at a higher pace for longer. Second, even if this scenario were to occur and the pace of purchases were reduced, it would still be the case that as long as the FOMC continues its asset purchases it is adding monetary policy accommodation, not tightening monetary policy. As the FOMC adds to its stock of securities, this should continue to put downward pressure on longer-term interest rates, making monetary policy more accommodative. Third, the Federal Reserve is likely to keep most of these assets on its balance sheet for a long time.

The potentially large number or companies, SMEs in particular, that may be affected by these solvency problems in the current crisis plus the fact that the public sector can be an important creditor as well, given the generalised use of public guarantees during the crisis, introduce additional difficulties or specificities that should also be taken into account. In sum, withstanding the negative consequences of the COVID-19 crisis on the solvency of viable firms, is currently a major challenge for economic policymakers. Swift policy action taken since the start of the crisis allowed a liquidity crisis to be avoided and has helped translate the medical advances against the disease into more positive macroeconomic scenarios. However, we must now be ready to react to these solvency risks in order to prevent the current crisis from developing a financial component which, as we painfully know from recent experience, would only make the crisis more lasting and socially and economically more costly. Thank you for your attention. 2/2  BIS central bankers' speeches
William L Rutledge: Basel II - risk management and financial stability Remarks by Mr William L Rutledge, Executive Vice President of the Federal Reserve Bank of New York, at the Central Bank of the Republic of Turkey’s International Conference on Financial Stability and Implications of Basel II, Istanbul, 17 May 2005. *  *  *  Let me begin by commending the organizers for pulling together such a timely and important conference - Basel II promises to be a watershed event in global financial stability, and giving a full airing of the issues associated with its introduction is particularly important as we draw closer to implementation. I am very pleased to be able to participate in the discussion of those issues - the views I offer will naturally be my own rather than necessarily those of the Federal Reserve. The Federal Reserve has major roles both as a bank supervisor, and, more broadly as a central bank, for fostering financial stability. Basel II has direct and significant implications for these several roles; it will clearly be an integral part of our supervisory approach going forward, and its emphasis on strong risk management practices also supports our broader financial stability mandate. My comments will set to the side calibration issues and focus particularly on what I believe are two major ways in which the basic structure and operational requirements of Basel II should enhance the stability of the financial system.

Firms are required to have a much more comprehensive definition of what constitutes operational risk, including not only processing errors, but also business disruptions, legal and compliance risks and fraud, whether from internal or external sources. As with market and credit risk, firms are expected to supplement the management of operational risk at the business line level, with an independent operational risk management function that is responsible for establishing firmwide policies for measuring and managing operational risk. Finally, firms are required to bring together quantitative elements, such as internal and external loss data, with qualitative elements, such as control self assessments and scenarios, to arrive at a reasoned assessment of their exposure to operational risk losses across the firm. Internal rating systems, credit risk mitigation and operational risk measurement are merely a few of the examples of how Basel II has already spurred improvements in bank risk management and how final implementation will bring further discipline to risk management practice. Supervisors also will have to make judgments about the effectiveness of the models and associated procedures that banks intend to use for regulatory capital purposes. A key element in making such judgments is the so-called “use test” which requires that banks’ regulatory capital models build on the models that they use for internal risk management purposes. This is a necessary condition for supervisors to have confidence in the integrity of banks’ regulatory capital models. Additionally, Pillars II and III give added impetus to comprehensive improvements in bank management practice.