samchain/econo-pairs-v1 huggingface dataset:
As a result, an attempt to prick a bubble may lead to an intervention that puts a halt to “a good boom” which would have pushed the economy towards a higher level of development. The cost of such unwarranted interventions in the form of foregone growth could be substantial.5 How to deal with the cyclical dimension of systemic risk – a macroprudential approach The immense cost of the global crisis has led to a thorough rethinking of this traditional view on financial regulation and macroeconomic policy. For instance, estimates have been provided suggesting that the cumulated output loss incurred by the recent crisis could amount to 90% of 2009 world GDP.6 Naturally enough, the afore-mentioned approach of “benign neglect” is no longer seen as an acceptable way to deal with potential excesses building up through the financial cycle. Given that the cost of inaction when imbalances develop in the credit market can be huge, a more precautionary approach is indispensable (slide 3). In general, its goal should be, first, to enhance the resilience of the financial system to adverse shocks, and second – to the extent possible – to try and preventively contain the build-up of systemic risk. This is the thrust of the macroprudential approach. For instance, in order to address the root cause of cyclical systemic risk directly, the goal of this approach should be to reduce the procyclicality of financial agents’ behaviour. Can we hope to achieve this with monetary policy instruments, or do we need new specifically designed instruments?

And also recall the words of ECB chief economist, Mr Otmar Issing. When he departed the institution, in front of 400 strong audience Mr. Issing reminding us that “Euro is an unfinished project”, stressing that it relied on the monetary pillar, while enhanced fiscal policies and economic cooperation were still needed. Therefore, as the recent developments also show, a more effective economic governance in the EU and the euro area is within reach through fiscal discipline, broader economic oversight, closer coordination, a more robust framework for crisis management, stronger institutions and a decision-making based on clear and strict rules. In the particular case of the interdependent economies across the EU, enhanced governance will boost economic growth and job creation. At the same time, developing a culture of values and professional conduct and ethics can make a very important contribution to the smooth functioning of markets and this is a prerogative of the corporate sector, the private sector in general. I’m confident Europe will find the right way to move forward, given the common cultural values, with measures and policies that should avoid both asymmetric and side effects. We all know how harmful sudden and large capital swings are. Europe’s governance raises also the issue at a more global level. In fact, international affairs and corporate governance are an integral part of this picture.
It is the system that provides payment services, converts savings into financial resources for investment and consumption, and contributes facilities for managing risk. In other words, the financial system performs a number of important social functions. If any of these functions were to be disrupted, the social costs could be very high. The damage inflicted by a disruption would probably be particularly great if it involved a vital component of the payment system. This is readily understood when one considers the enormous flow of payments. In Sweden, for instance, the payment system has a daily turnover of around SEK 500 billion, which means that the equivalent of our annual gross domestic product has to be handled in less than a week. Studies show, moreover, that in the past fifteen years there have been more than a dozen crises which cost the countries concerned at least 10 per cent of their GDP. So there are good reasons for state supervision of the financial system. The Riksbank has a function here in that the Riksdag (Sweden’s parliament) has made us accountable for promoting a safe and efficient payment system. A major ground for making us responsible for efficiency and stability is that, along with the banks, the Riksbank is a central player in the payment system and provides means of payments. The banks distribute notes and coins, keep transaction accounts linked to giro systems and operate credit card systems. The Riksbank in turn provides accounts in the payment system, RIX, that is available for large-value interbank payments.

to promote price stability, it was granted full independence to use its instruments, its financial independence was ensured and legal requirements were made for transparency and accountability, along with other points. I think it is fair to say that the new Central Bank Act generated interest internationally, not least for the speed at which the legal review was made and the broad consensus achieved on the reforms. The Central Bank Act authorises the declaration of a numerical target for inflation, subject to the Prime Minister’s approval. This provision incorporates into law the policy introduced on March 27 this year when the monetary framework was changed and the flexible fixed exchange rate was replaced with an inflation target and floating exchange rate. Despite very detailed discussion of the framework changes and the fundamental principles of the new policy, the Bank has often noticed widespread misunderstandings. I shall therefore outline the broad principles of monetary policy. Inflation is a monetary phenomenon The Central Bank was assigned a specific inflation target in the joint declaration which it issued, with the Government, on March 27. This stipulated that the Bank should aim for a rate of inflation as close as possible to 2½%. Tolerance limits were also set, 1½% higher than the inflation target and 1½% lower. The inflation target was defined as the twelve-month rise in the CPI. If inflation exceeded the tolerance limits, the Bank would be obliged to bring it back within them as quickly as possible.
The Bank of Canada already regularly does this, and the Federal Reserve is currently undergoing a review of its framework and strategy.8 Absent such changes, central banks will be severely challenged to achieve stable economies and well-anchored inflation expectations. Outside of monetary policy, there are a number of avenues by which fiscal authorities can enhance the resilience of economies to negative shocks. One is to strengthen the “automatic stabilizers” that provide a boost to the economy during a downturn. A second is to align debt management decisions more with monetary policy. For example, during a downturn, the fiscal authority could choose to shorten the duration of debt issuance to reinforce the effects of central bank quantitative easing. Third, regulatory and supervisory policies that support the resilience of the financial system can limit the economic effects of negative shocks. Finally, fiscal and other economic policies can attack directly the sources of slow growth and low r-star. This includes raising public and private investment in human and physical capital, infrastructure, science and technology, and policies aimed at removing barriers to participation in the labor force and the economy more broadly. Conclusion The facts have changed, and so it is time our change our minds also. It is often said that change is hard. But, experience teaches us that it is better to prepare for the future than wait too long. Ultimately, failure to prepare often means preparation for failure. 1 This is not true for all population groups.

7 Thomas M. Mertens and John C. Williams, Tying Down the Anchor: Monetary Policy Rules and the Lower Bound  on Interest Rates, Federal Reserve Bank of San Francisco, Working Paper Series, May 2019. 8 Richard H. Clarida, Vice Chair of the Board of Governors of the Federal Reserve System, The Federal Reserve’s 3/4  BIS central bankers' speeches  Review of Its Monetary Policy Strategy, Tools and Communications Practices , speech delivered at the Federal Reserve Bank of Minneapolis, April 9, 2019. 4/4  BIS central bankers' speeches
Chart 3: Price impact of individual trades in GBP/USD on 24 June and 7 October  Chart 4: Change in gilt yields-to-maturity and OIS  (a)  curve on 4 August 2016  Amihud measure (5 min moving average) 16  Greater price impact  14 12 10 8  6 4 2 0 00:00:00  00:30:00  01:00:00  01:30:00 Hours (BST)  02:00:00  24-Jun  3-6 Oct avg  07-Oct  02:30:00  03:00:00  (a) The Amihud measure of price impact calculates the  Note: The Bank of England does not purchase gilts with  ratio between price moves and volumes traded. maturity below 3-years. Sources: Bloomberg and Bank calculations  Sources: Thomson Reuters and Bank calculations.

We also have an expenditure ceiling and a surplus target in the fiscal policy area, which are designed to prevent public finances being undermined or savings having to be made in inappropriate situations. Sweden has been one of the countries in the front line, both in reforming the framework of monetary policy and that of fiscal policy. Many other countries have later made changes similar to the ones we made. It is also worth noting that  4  BIS Review 149/2010  the most recent crisis, and the public finance problems it has entailed, have triggered a new wave of interest in fiscal policy regulation. 3 The stable frameworks for monetary policy and fiscal policy have in many ways functioned as “shock absorbers” in this crisis. Unlike during the previous crisis, economic agents have been able to assume that inflation will be fairly stable and that public finances will remain under control. This creates a security which I believe is particularly valuable during periods like this, when there is considerable uncertainty in general around the world. I imagine, for instance, that households in countries with weak public finances are much more concerned about the future. …and make it easier to stimulate the economy The stable frameworks have also made it easier to stimulate the economy strongly during the crisis without anyone questioning the credibility of the inflation target or the sustainability of our public finances.
Christian Noyer: Lessons from the European experience with exchange rate and monetary policy co-operation Speech by Mr Christian Noyer, Vice-President of the European Central Bank, at the Third Asia-Europe (ASEM) Finance Ministers' Meeting, held in Kobe on 14 January 2001. *  *  *  Ladies and gentlemen, I am delighted to be given the opportunity to participate in this ASEM meeting today in Kobe. This is the second time that the ECB is taking part in this event of increasing importance for the economic and financial co-operation between Asia and Europe. I will discuss today with you which lessons of relevance to Asia might be drawn from the European experience in exchange rate and monetary policy co-ordination. 1. Institutional background One crucial aspect of the ongoing process of globalisation is that, on average, international trade and financial flows are growing at a faster, sometimes a much faster pace than world GDP. This has posed and will continue to pose unique policy challenges. In particular, individual countries are increasingly susceptible to external developments and shocks. This implies an increased need for international cooperation, both at the global level and at the regional level, in order to mitigate the effects of the potential negative externalities associated with globalisation. In this context, the various processes of regional integration (e.g. EU, NAFTA, MERCOSUR, ASEAN) should be seen as integral parts of broader multilateral co-operation, and not as a weakening of global surveillance.

Elvira Nabiullina: Speech at congress of Association of Banks of Russia Speech by Ms Elvira Nabiullina, Governor of the Bank of Russia, at congress of Association of Banks of Russia, 28 May 2021. * * * Good afternoon, dear congress attendees, The pandemic is slowly but abating, there are signs that life is returning to normal, and in-person conferences are gradually coming back. All the same, we are lacking in real-life communication, so I am very glad to welcome you here today. Of course, there are changes taking place not just in how we communicate. We can see that the actions taken as part of our anti-crisis agenda are gradually being replaced by those on a development trajectory, as before. With account for the fact that the pandemic has had a serious impact on society, on the economy as a whole, and on the financial sector, we must think about the future, and about how the financial sector will help the development of the economy. Last year, the banking sector made a positive contribution amid pandemic conditions. It supported the economy, its clients, and, I am sure, will be able to further support the development of the economy. I would like to take this opportunity to thank the entire banking community for their wholly responsible behaviour during the pandemic. It is thanks to you, really, that we managed to greatly mitigate the negative effects of the pandemic.
It said “an Economist is someone who did not have enough personality to become an Accountant”. I said to myself, maybe your President thought that by being here tonight among these many distinguished accountants, I could end up having some kind of personality after all. I wish you, the new Members of the Institute, all the very best as you embark on your careers as fully fletched Accountants. Your future is how you make of it. Work hard, be honest and avoid being “overly creative” in the way you keep and look after your clients accounts. Thank you for attention. BIS Review 49/2010  5

It is crucial to ensure, however, that this does not result in unchecked increases in risk appetite or compromises the quality of risk management practices. What was once a “black swan” event has increasingly become more common due to the high inter-linkages between international economies. As such, we need to be vigilant and ensure all potential risks are addressed and comprehensive risk management measures are adopted, both at the macro and micro levels of the economy. Regulatory reforms in line with risk management Let me turn now to the regulatory reforms in line with the risk management practices. The global financial crisis has exposed weaknesses in the existing international financial architecture and highlighted the fragmentation of regulatory rules across different jurisdictions. It has been a wake-up call for the world to come together to implement regulatory reforms to strengthen the foundations of financial stability and address the issues in the international financial system. For Malaysia, the recent global developments will not alter much the fundamental tenets of Bank Negara Malaysia’s approach to the regulation and supervision of the financial institutions. During the past decade, we have developed and implemented our Risk Based Supervisory Framework and our Risk Based Capital regime. Under these benchmarks, regulatory capital requirements and Bank Negara’s expectations in terms of governance and risk management are already well aligned with the specific risk profiles of individual institutions. The risk assessment and supervision of individual institutions are also further complemented with macro-prudential assessments to monitor the aggregation of risks in the financial system.
I believe that the EU negotiations process will establish the best conceivable framework not only for the continued reform process, but also for the new reforms within the framework of convergence to the EU. The membership will act as a much needed reform anchor for Turkey. The membership process is expected to show its very first impact on increase in predictability, or in other words, decrease in uncertainty in policies and the economy. In a parallel manner, there are two more important benefits of the EU membership process for Turkey. The first one is institutionalisation of policies and the second one is improvement in governance indicators in the country as a whole. Developments in these areas together with increase in credibility would carry the Turkish economy to a better macroeconomic equilibrium point to operate. In the area of trade, though tariffs on both sides were abolished with the completion of the Customs Union, the accession process and the membership would bring about the elimination of non-tariff, administrative and technical barriers and so foreign trade relations with the EU would further develop.22 This would clearly result in welfare gains not for only Turkey but also for the EU due to trade creation effect.

10  All speeches are available online at www.bankofengland.co.uk/speeches  10  TABLE 2 BANK OF ENGLAND FINTECH ACCELERATOR PROOFS OF CONCEPT Cohort  Project area Cybersecurity  Cohort 1  Data analysis Distributed ledger technology Machine learning  Cohort 2  Cohort 3  Cybersecurity  PoC  Status  BitSight  We wanted to understand if we could get a view of a firm’s cyber resilience based on publically available data. Completed  Privitar  This PoC explored a tool to desensitise data with the aim of being able to share data more widely within the Bank. Completed  PwC BMLL Anomali ThreatConnect  We built a multi-node scalable distributed ledger environment in-house that enabled the transfer of ownership of a fictitious asset. Experimented with the alpha version of a machine-learning platform that used cloud computing to evaluate patterns in data from a number of trading exchanges. Both firms were asked to create a searchable database where intelligence on cybersecurity threats could be optimised and stored. They helped enable the automation of what was a very labour intensive analysis process. Completed Completed Completed  Data analysis  Enforcd Limited  In this PoC we wanted to understand the benefits in viewing publically available enforcement action from different perspectives and the high level trends. Machine learning  Mindbridge Analytics Inc  The firm was asked to prove the value of their analytical tools for detecting anomalies in anonymised regulatory data collected from a sample of credit unions.
We did so not because we wanted to help the firms, but because allowing them to collapse in a disorderly fashion in the midst of a global crisis would have harmed households and business throughout the United States. All the Fed’s loans were collateralized and we are confident they will be repaid in full. Second, we took aggressive steps to ease monetary policy in order to support economic activity and employment. By the end of 2008 we reduced short-term interest rates to virtually zero – the lowest level in the history of the Fed. In order to provide still further support for the economy, we bought more than $ trillion of long-term assets – principally mortgage bonds guaranteed by Fannie Mae and Freddie Mac with the support of U.S. Treasury – between December 2008 and March 2010. When the Fed buys long-term assets, it pushes down long-term interest rates. This supports economic activity in a number of ways, including by making housing more affordable and boosting consumption in households that can refinance their mortgages at lower rates. In addition, low long-term rates reduce the cost of capital for businesses, thereby fostering more hiring and investment spending (on equipment, construction and machinery, for example) for any given economic outlook. National economic conditions So where are we today? Let me start my discussion of economic conditions with a few comments about national economic conditions. As I discussed in a recent speech, the Great Recession has been followed by a tepid recovery.

The rise in home prices helped support more borrowing as households used lines of credit and second mortgages to tap into their rising home equity. This also fueled a strong boom in home construction. But house price increases could not be sustained without limit. When home prices peaked and started to turn down, the dynamic linking house prices, credit and consumption went into reverse. Let’s consider first what this means for consumption. Consumption of goods and services rose at a slow 2 percent annual rate over the first half of 2010 and with no sign of a rebound. Several factors are inhibiting families from spending, including: job or income losses, low confidence and declines in wealth as real estate and stock prices dipped. Households have been saving more and paying down their debts. Of course, lenders have also reinforced this tendency with tightened underwriting for credit relative to prerecession standards. Have households completed their deleveraging, so they will soon spend more? Although we believe that substantial progress has been made, it is hard to tell how much further this process has to run. Now, let’s consider why housing market activity – both new construction and sales – remains depressed. One reason for this is that many existing homes stand vacant. We estimate that there are roughly 3 million vacant housing units more than usual. This stock of vacant homes will shrink when foreclosures fall and more empty homes are sold or rented out.
As explained in Mishkin (2008): “given that financial market disruption can pose significant risks to the macroeconomy, risk management is crucial in formulating the appropriate response of monetary policy… the design of monetary policy ought to reflect the public’s preferences, especially with respect to avoiding particularly adverse economic outcomes.” Furthermore, he adds that “the most likely outcome – referred to as the modal forecast – for the economy may be fairly benign, but there may be a significant risk of more severe adverse outcomes. In such circumstances, the central bank may prefer to take out insurance.” In other words, the Fed is preventing large and disruptive consequences of the current credit crisis in the economy. In emerging market economies the main risk is inflation, that is, the propagation of inflationary shocks to high and persistent inflation. Indeed, past experience shows that when  10  BIS Review 39/20086  inflation goes up there is an increase in indexation practices, which make inflationary shocks more persistent or more difficult to fight. In addition, the persistence of relatively high inflation is likely to diminish the degree to which expectations are anchored. On the one hand, inflation expectations may increase, making it costlier to bring it back down. On the other hand, medium and long term inflation expectations are likely to become more sensitive to shocks, introducing undesired volatility to the economy with the associated costs of said volatility.

Adhering to the Special Data Dissemination Standard – Plus indicates to the local and foreign investors, the rating agencies, the international financial institutions and all other users that the quality and reliability of the statistical data that are used to make important macroeconomic and business decisions are up to the highest international statistical requirements. In conclusion it could be stated that the country has achieved considerable progress in the implementation of financial and payment services innovations. Of course there are still a lot of challenges in relation to the requirements of information and communications technologies development, and the enhanced requirements to the payment infrastructure and payment instruments related to the Single Euro Payments Area. In our work we will keep striving towards these standards and best practices. I wish successful, interesting and constructive work to the forum participants! 2  BIS central bankers’ speeches