samchain/econo-pairs-v1 huggingface dataset:
In any case, there are differing appreciations about how it will resolve the tensions between the dynamics of the real sector, inflation and exchange rate conditions in the US economy. In Japan, the UK and Europe, the markets expect policies to remain as expansionary, or be even more so, considering their weak economic growth rates and projected inflation exceeding their central banks’ targets. 2 / 14  BIS central bankers' speeches  In this context, the fraction of fixed-income assets—including long term—with negative rates has increased considerably around the world. I draw your attention to this fact, because it was unimaginable some years back. Thus, higher risk appetite and the search for yield have pushed the prices of risky assets up, squeezing sovereign spreads and appreciating currencies vis-a-vis the dollar (figure 7). In any case, the intensity with which this change in financial conditions will impact activity or commodity prices is not so clear. In the baseline scenario, global activity projections do not change significantly. For the 2016–2017 biennium average growth in the world economy is expected to stand at 3.2%, while Chile’s trading partners should grow by 3.0%, also fairly unchanged from June. The terms of trade will deteriorate less over the projection horizon, although the trajectories foreseen for the prices of copper and oil are similar to those of June, expecting prices in 2018 of $ per pound of copper and around $ per barrel of oil (table 1). Locally, second-quarter data for domestic activity and demand confirmed bounded economic growth.

The availability of  longevity reinsurance has limited any drag on growth in the bulk purchase annuity market. Although one possible effect has been to make it more expensive for pension schemes with a high 5  The Chancellor’s letter to the Governor of 8 March 2017 setting out recommendations to the Prudential Regulation Committee (PRC) about aspects of the economic policy of the government to which the PRC should have regard when considering how to advance its statutory objectives includes “The government wishes to ensure financial services markets make a positive contribution to sustainable economic growth in the UK economy in the medium and long term, through the facilitation of finance for productive investment and as a productive sector of the UK economy.” 5  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  5  proportion of younger members to achieve an insurer buy out. This is because reinsurers have had a lower appetite for deferred than in-payment annuities. Although I hear that this might have changed recently. As Sam Woods wrote to Nicky Morgan in June of last year6, the PRA does not currently see a durable way to implement a change in the risk margin with sufficient certainty for insurers to be able to rely on it for pricing, capital planning and use of reinsurance. We continue to keep this position under review. Current issues Despite the diversification into direct investments, corporate bonds are likely to remain the largest category of assets backing U.K. insurers’ annuity liabilities.
Within that first section there are two points I’ll try and get across. One is the distinction between the price of what we buy (consumer prices) and the price of what we sell (mainly wages). For the moment it’s the first that’s fallen not the second: the drop in inflation has been driven largely by something that has significantly boosted real incomes (the sharp decline in commodity prices). It is what some have termed “good” deflation and, while it is unlikely to go on for that long, it is positive, not negative, for demand and output. There is a risk that the fall in prices becomes more generalised and more sustained. If so – and this is the second point about the economics – what matters is not deflation per se but the capacity of monetary policy to respond to it. There are circumstances, in particular when the appropriate or “neutral” real interest rate is clearly positive, and when it’s not entirely unexpected, in which mild deflation wouldn’t pose a problem. I think Britain was in precisely that position for much of the classical gold standard period, during the second half of the 19th century (you can see from Chart 1 that periods of deflation were common at that time; as we shall see, they didn’t appear especially damaging for output growth). Deflation becomes a problem if, in conjunction with the zero lower bound on nominal interest rates, it prevents the monetary authority from setting a real short rate that’s sufficiently low to ensure stable growth.

Although the interbank rates, that is, the rates banks pay when borrowing from one another, have fallen they are still much higher than the average rate in recent years. The TED spread in the United States and the euro area is for example three times higher than the average. The housing market in the United States has not yet bottomed out. If new large loan losses arise in the financial system again this may shake market confidence once again. Over the past few days a large amount of new information has been received regarding the situation in the US economy. Inflation in the United States remains high. This is largely due to the increasingly high food prices, as well as high energy prices. However, the rate of wage increase has slackened. Inflation in the euro area is also affected by the higher energy and food prices. However, growth appears to have been stronger than we had expected for the United States in the most recent quarter, as well as in the euro area, particularly Germany. At the same time, there are indicators for both the United States and the euro area pointing to a slowdown in the second quarter. International developments affect us all, both you as entrepreneurs and Sweden as a whole. We have assumed that foreign trade will slow down in the future, as world growth is expected to continue slackening. Orders from the export market have so far declined in 2008.
I cannot stress enough the importance of having a future generation of workforce that is capable and flexible enough to accommodate changes in production technology. In addition, fostering close collaboration with the private sector could also be an essential part of the solution, and it is very encouraging to see more involvement from large Thai corporates in the process of recruitment and training as of late. (2)  Engineering a “transformative” upgrading of the supply side  In addition to relieving constraints in the labor market, the second reform focus I would like to discuss is the urgent need for a “transformative” upgrading of the supply side. Pursuing growth from labor-intensive activities is no longer a viable option, due to the fact that Thailand would not be able to compete with lower-wage competitors, and also the fact that such strategy is simply unsustainable from a long-term perspective. More importantly, failing to upgrade now will cost us an inestimable amount in the form of missed opportunities. Indeed, it was precisely the inability to engineer a large-scale upgrading, when the time was ripe, that separated our path from peer countries like Taiwan and Korea that started out at a relatively similar income position several decades ago. By using the word “transformative”, I mean that the upgrading process needs to go beyond mere efficient use of workers and capitals. It has to support firms to move up the value chain to higher value-added activities.

Consumption needs to be less dependent on perceived wealth gains, and investment to be more diversified, well beyond the construction sector. This will make participation rates more sustained. For what concerns the Spanish financial sector, it has long been a source of strength and national pride for this country. In many respects, Spain can be a leading example for global financial reform. I will say more on this later in my talk. Spain’s financial system has proved resilient to the shock in the early stage of the crisis. Supported by prudent regulation and supervision, the banking system in this country has built dynamic provisioning cushions during good times. And the traditional role of banking, founded on long-term relationships with customers, has largely been preserved. Looking forward, this is an important asset. But a solid future calls for some areas of adjustment in the way the financial industry behaves. The exceptional support of public policies will, at some point, have to be withdrawn. Private sector confidence in the future will need to replace policy intervention as the main spur of growth. The Asociación de Mercados Financieros and its members are an important link in the chain through which confidence will build and transmit to your customers. The obvious prescription for a sustainable return to stability is for many of you to simply look back at your past of prudent and sound management.
Fluctuations in equity markets are less pronounced but are still wider than before the market turbulence began. Expected corporate earnings have not changed substantially since March 2009. It is likely that the recovery in equity markets primarily reflects a reduction in uncertainty and lower risk premiums. Oil prices have doubled since the trough in December 2008, reflecting OPEC production cuts and concerns in non-OPEC countries about supply further ahead. In addition, a number of  BIS Review 115/2009  1  market participants expect that oil demand ahead will increase at a more rapid pace than assumed as global economic activity picks up. Expectations of future economic growth are pushing up oil futures prices. Oil consumption is now rising in China but has been very low in western economies. OPEC spare production capacity is still increasing and oil inventories in advanced economies are high. Oil prices have nonetheless held up. Keeping large inventories is profitable when oil futures prices are high. However, the scales are easily tipped. If expectations of higher demand deteriorate, futures prices will fall and, in turn, prices for immediate delivery. Large oil inventories may then push down prices even further. The krone is floating and fluctuates somewhat. The krone tends to appreciate in good times and depreciate when negative shocks occur in the Norwegian economy. Fiscal policy and the petroleum fund mechanism, however, contribute to maintaining the stability of the krone.

With few exceptions, all the advanced economies were already in a net debt position and many are now facing funding problems related to an aging population. If the global economy is to recover from the crisis, government debt must be stabilised fairly soon in order to prevent a string of crises in state finances. Norway is in a unique position due to government petroleum revenues. Monetary and fiscal policy have stimulated domestic demand and output. Growth in mainland GDP was higher in the second quarter than projected in the June Monetary Policy Report. Household consumption seems to be picking up again. Petroleum industry activity has also had a stabilising effect on the Norwegian economy. There are plans to develop a number of oil fields on the Norwegian continental shelf in the years ahead, but it is likely that these investments will require an oil price of more than USD 60–70 per barrel to be profitable. BIS Review 115/2009  3  The events of September 2009 spread rapidly to the firms in Norges Bank’s regional network. In August 2009, manufacturing enterprises reported that growth would hold up. In November, the turnaround was described as a “heart attack”. Norges Bank established its regional network in 2002. Regular interviews provide information about enterprises’ assessment of the economic outlook before other official statistics are available. This information is therefore an important part of the decision-making basis in the formulation of monetary policy. Statistics Norway’s quarterly national accounts are available about 50 days after the end of the quarter.
Statistics Norway’s business tendency survey indicates continued favourable prospects for Norwegian manufacturing. Activity is expected to increase in service industries and the construction sector in the near term. Capacity utilisation in the Norwegian economy now appears to be close to a normal level. In manufacturing, capacity utilisation is close to its historical average. According to Norges Bank’s regional network, about 40 per cent of companies will have some or considerable difficulty in increasing production. Even though growth in the Norwegian economy has been high for a long period, substantial pressures have not yet emerged in the labour market. The rise in the number of employed in the first half of the year was fairly modest in relation to output growth. This may be due to lagged effects of the sharp fall in sickness absence through 2004. In many companies, the large increase in available person-hours was probably not fully utilised immediately. A considerable share of output growth may be the result of improved utilisation of company workforces. According to the quarterly national accounts, employment rose by 0.5 per cent from the first half of last year to the same period this year. Measured by the  1/7  Labour Force Survey (LFS), the number of employed rose by 12 000 from May to June and by a further 2 000 from June to July. The use of foreign labour has increased in the year that has passed since the enlargement of the EU.

Mugur Isărescu: Unconventional monetary policies and financial stability – implications for banks and financial markets Address by Mr Mugur Isărescu, Governor of the National Bank of Romania, at the joint CIGI (Centre for International Governance Innovation) – Oliver Wyman conference, Rome, 15 December 2015. *  *  *  The address was presented by Governor Mugur Isărescu during the panel session “Unconventional monetary policies and their impact on financial markets”, which also included the following members: • • • • • •  Domenico Lombardi, Director of the Global Economy Program, CIGI Malcolm Knight, Distinguished Fellow, CIGI (former General Manager of the BIS) Lorenzo Bini-Smaghi, Chairman, Société Générale (former Vice-President of the ECB) Lorenzo Codogno – Professor in Practice European Institute, LES Pierpaolo Benigno, Professor of Economics, LUISS University Carlotta de Franceschi, Co-Founder and President, Action Institute  Participants included, among others: • • • • • • •  Robert Ophèle, Deputy Governor, Banque de France Dimitar Bogov, Governor, National Bank of the Republic of Macedonia Korbinian Ibel, Director General, Micro-Prudential Supervision IV, ECB Margarita Delgado, Deputy Director General, SSM, DG1, ECB Matthew Elderfield, Head of Compliance, Lloyds Bank Carlo Corradini, Member of the Supervisory Board, Intesa Sanpaolo Pierre Siklos, Senior Fellow, CIGI  Ladies and Gentlemen, It is an honour for me to address the audience during this conference on unconventional monetary policies.
More emphasis will have to be given to keeping costs in check and to risk and asset-liability management. Perhaps banks will spend more of their resources on attracting deposits and a little less on selling loans. In any event: Keep an eye on your earnings. Thank you for your attention. BIS Review 115/2007  17

See Anne Case and Angus Deaton, Mortality and Morbidity in the 21st  Century, Brookings Papers on Economic Activity, Spring 2017, in which they document declining life expectancy for middle-aged, less-educated non-Hispanic whites in the United States since the year 2000. 2 United Nations, World Populations Prospects: Key Findings and Advance Tables, 2015 Revision. 3 Antonin Bergeaud, Gilbert Cette, and Rémy Lecat, Productivity Trends in Advanced Countries between 1890 and  2012, Review of Income and Wealth, Volume 62, Issue 3, pp. 420–44 (September 2016). 4 Robert J. Gordon, The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War,  Princeton University Press, Princeton, New Jersey, 2016. 5 Carlos Carvalho, Andrea Ferrero, and Fernanda Nechio. Demographics and Real Interest Rates: Inspecting the  Mechanism, European Economic Review, Volume 88, pp. 208–26, 2016; Etienne Gagnon, Benjamin K. Johannsen, and David Lopez-Salido. Understanding the New Normal: The Role of Demographics. Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System, 2016; and Gauti B. Eggertsson, Neil R. Mehrotra, and Jacon A. Robbins, A Model of Secular Stagnation: Theory and Quantitative Evaluation, National Bureau of Economic Research, Working Paper 23093, 2017. 6 Shigeaki Fujiwara, Yuto Iwasaki, Ichiro Muto, Kenji Nishizaki, and Nao Sudo Fujiwara, Developments in the  Natural Rate of Interest in Japan, Bank of Japan Review, October 2016; Kathryn Holston, Thomas Laubach, and John C. Williams, Measure the Natural Rate of Interest: International Trends and Determinants, Journal of International Economics, Volume 108, Supp. 1, pp. S59-S75. (2016).
Every small country should be able to seize the opportunity if policymakers get a few fundamental things right. I am now going to name four of these fundamentals. Four cornerstones of competitiveness The first, if not the most important, cornerstone of competitiveness is society’s openness to new ideas, its willingness to communicate and ability to adapt. Of all factors that support economic growth, openness is universally considered the most important. Openness to ideas allows better understand and make use of the global marketplace. Policy-makers can do a lot to promote openness. Efficient telecom infrastructure and Internet penetration serves as one way to do it. Market liberalization and competition are the keywords here. Another equally important factor is the country’s ability to attract highly mobile professionals. Consequently, issues like security, quality of public and social services, language skills and clean environment are also becoming increasingly relevant in ensuring competitiveness. The second and equally important factor in supporting innovative society is the spirit of entrepreneurship and culture of risk-taking. Openness makes the world and its ideas accessible to people. However, you need an entrepreneur to make use of these opportunities and ultimately bring benefits to the whole society. Today, competitiveness is directly and positively correlated to the ease of doing business. There are several areas where policy developers can encourage risk-taking. For instance, better access to public services is one of the most instrumental ways to reduce red tape and increase the efficiency of business environment, either by means of the Internet or any other means.

Uncertainty is part of the cause as well: the exact date of the euro adoption is not known and there is no time to look deeper into the matter against the background of everyday life. Nevertheless, Estonians are one of the most pro-EU nations in the whole Union. More than 70 per cent of us hold positive or very positive views on the EU. However, the origins of euro scepticism and EU optimism are the same. The European Union and EU membership represent common European values, economic prosperity and security for our citizens. Our own currency stands for the same values: credibility, prosperity and economic security. The Estonian kroon represents these values for a very specific reason. Namely, our currency has been pegged to the euro for already 15 years. I cannot resist joking that from the monetary policy perspective we are one of the oldest members of the euro area. A whole generation of Estonians has grown up without having to ask what the interest rate of Eesti Pank is. Instead, they know that the value of the kroon will not change and interest rate changes come from Europe. Most probably, what matters for Estonians is that while being part of Europe we still wish to retain something our own. This is not the most convenient situation for Eesti Pank. On one hand, we should be proud of the trust we have earned at home. On the other hand, we know that joining the euro area is beneficial and necessary for the whole country.
Eventually, central bank money would no longer be seen as “safe” and this would undermine the confidence in and acceptability of the settlement asset. This brief historical overview demonstrates that the development of the core functions of central banks – monetary and financial stability – has been closely linked to their role in the provision of the ultimate settlement asset in the payment system. It is therefore important for central banks to have a thorough understanding of how these links work. Let me share some thoughts with you in this regard. Payment systems, monetary policy and central bank actions in the recent financial market developments Central banks provide liquidity for different purposes. 2 To achieve their primary objective of price stability, monetary authorities supply base money to the economy. By matching the demand for base money with the supply that they control, central banks steer short-term interbank interest rates, which, via the transmission mechanism of monetary policy, have an impact on the price level. Another objective of central banks is to ensure the smooth functioning of the payment system. Central banks provide intraday liquidity to bridge the timing mismatch between banks’ incoming and outgoing payments during the day. This not only facilitates intraday liquidity management of banks, but also makes payment gridlocks less likely and therefore contributes to financial stability. Payment systems clearly matter for monetary policy. Monetary policy implementation today means steering short-term interest rates.

Against this background, some further work needs to be done on the harmonisation of the oversight framework for securities clearing and settlement in the European Union. The continuous absence of such a harmonised oversight framework generates a number of undesirable effects. However, after the recent ECOFIN decision, I am very optimistic that we will soon see the finalisation and adoption of the ESCB-CESR recommendations for securities clearing and settlement. •  The relevance of collateral for liquidity issues has been clearly recognised by central banks. During the past ten years, central banks have – especially in the context of the Committee on Payment and Settlement Systems and other Basel committees – focused jointly their attention on the use of collateral in financial transactions,  6  BIS Review 130/2007  including the cross-border use of collateral. 4 Cooperation in this respect is very useful and, especially for emergency situations, I would think that central banks –by enabling the cross-border use of collateral – could make a positive contribution to financial stability. Ladies and gentlemen, let me now close my introductory remarks by once again welcoming you all and by thanking all of those who have been involved in preparing this conference, in particular Daniela Russo and Mark Manning. 4  CPSS report on “Cross-Border Collateral Arrangements”, Bank for International Settlements, Basel, January 2006. BIS Review 130/2007  7