samchain/econo-pairs-v1 huggingface dataset:
I think we need both in a well organised financial system because as banks have a predominance of deposit liabilities with the characteristics I described earlier they are not on their own natural equity providers. This brings me to the last part of the story, namely the growth of non-bank asset management in its broadest sense as the size of bank balance sheets has tended to reduce post-crisis. It is striking that if you were familiar only with a chart of the evolution of global assets under management over the last twenty years, you should be excused for failing to spot that a global financial crisis had occurred. It follows from what I have said that this shift from banks to non-banks makes sense as we seek to achieve a clearer demarcation of the types of liability or funding contracts and the assets best suited to go with them. But it only makes sense if a few conditions are met, two in particular. First, that there is no lack of clarity about the nature of the assets held under management. Thus the label on the can is an accurate description. Take as an example the recent failure in the US of the Third Avenue Focused Credit Fund (focused on what a comedian might say). The purpose of the Fund was to invest in high yield debt. The label seems to have made that clear, and it wasn’t therefore in the form of a AAA label which obscured the reality.

With regard to inflation, one may ask “how much is too much?”. I  believe that the answer does not lie in pinning down certain numbers, but in the commitment to maintain a relatively low and stable inflation in the medium and long run. Experience has taught me that inflation is an insidious disease that should not be treated carelessly. With respect to real convergence, a question raised by many is “how fast is  fast enough?”. Again, I would not look for a certain figure; I would tackle this issue by approaching real convergence not as a race where the fastest track is also the right one, but rather as a complex process giving the steady runner (a marathoner rather than a sprinter) the opportunity to reap most of the potential benefits, while avoiding excessive risks. Much like the fable about the turtle and the rabbit, which we all know how it ends... Beyond targets and levels, and irrespective of the convergence gap an economy faces or the monetary policy regime a central bank opts for, what matters for both real convergence and price stability (as part of nominal convergence) is the consistency and the sustainability of the effort. In other words, being and staying on the right track. Thank you. 3/3  BIS central bankers' speeches
European Central Bank: Press conference – introductory statement Introductory statement by Mr Jean-Claude Trichet, President of the European Central Bank, and Mr Vítor Constâncio, Vice-President of the European Central Bank, Frankfurt am Main, 13 January 2011. *  *  *  Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference. Let me wish you all a very Happy New Year. I would also like to take this opportunity to welcome Estonia as the seventeenth country to adopt the euro as its currency. Accordingly, Mr Lipstok, the Governor of Eesti Pank, became a member of the Governing Council on 1 January 2011. Following the adoption of the euro by Estonia there are now 331 million citizens using the euro as their currency. We will now report on the outcome of today’s meeting, which was also attended by Commissioner Rehn. Based on its regular economic and monetary analyses, the Governing Council confirmed that the current key ECB interest rates still remain appropriate. It therefore decided to leave them unchanged. Taking into account all the new information and analyses which have become available since our meeting on 2 December 2010, we see evidence of short-term upward pressure on overall inflation, mainly owing to energy prices, but this has not so far affected our assessment that price developments will remain in line with price stability over the policy-relevant horizon. At the same time, very close monitoring is warranted.

More recently, wide publicity has been given to Chapter 11 of the United States Bankruptcy Code which allows a debtor to continue its operations under a re-organization plan. Similarly, the Indian government initiative in the form of Sick Industrial Companies (Special Provisions) Act was passed with the objective of ensuring timely detection of sick and potentially sick industrial companies, to expedite the revival of potentially viable units and closure of nonviable units is noteworthy. We are informed that India is also re-examining the provisions of this law. The prevailing labour laws and parate execution powers make it difficult for financially troubled enterprises to restructure and continue business operations. The exercise of parate execution powers lead only to closure of enterprises, although the law provides for restructuring. The purchase of the mortgaged properties by the bank at the auction sale through the exercise of rights of parate execution has resulted in another undesirable phenomena, that is the accumulation of foreclosed assets on the balance sheets of banks. Undoubtedly, the closure of enterprises results in great cost to the economy by way of loss of output, loss of employment, defaults to creditors and low return to entrepreneurs. It is therefore, vital to have a sound procedure in place to assist ailing enterprises to overcome their problems, provided the enterprises are commercially viable and the problems are of a temporary nature.
In the light of this information from the two pillars of the monetary policy strategy, the Governing Council reduced the key ECB interest rates twice by 50 basis points, first on 17 September, in the immediate aftermath of the events of 11 September, and then again on 8 November 2001. After these decisions, the minimum bid rate on the main refinancing operations stood at 3.25% and the rates on the deposit facility and the marginal lending facility stood at 2.25% and 4.25% respectively, 150 basis points lower than a year earlier. Let me also report that at its meeting of 8 November 2001, the Governing Council decided that it would henceforth – as a rule – assess the stance of the ECB's monetary policy only at its first meeting of the month. Accordingly, since November 2001 interest rate decisions have only been taken at such meetings. In addition, I should mention that in the context of its regular review of the reference value for M3, the Governing Council confirmed in December 2001 the value of 4½% for the annual growth of the broad monetary aggregate M3. I would now like to turn briefly to the analysis of the current economic situation. Over recent weeks we have seen a slight weakening of monetary dynamics, which might be a first indication of a gradual unwinding of the factors that led to the increase of M3 growth in the second half of last year, and a continuation of the decline in credit growth.

This has been the case not just because a number of currencies replaced by the euro played an important international role in the past but also because the euro has become the currency of an economic area which roughly equals the United States in terms of economic size and external trade, and which has the world’s second largest capital markets. Let me emphasise at this juncture that the Eurosystem has no exchange rate target vis-à-vis other major currencies. We are also not participating in a formal exchange rate arrangement with third countries outside the EU, for instance with the United States, and we believe that this situation will continue in the future. It is important to mention that according to the Treaty the single exchange rate policy has to respect the primary objective of price stability. As the representative of a large economic area, the Eurosystem can best meet its overriding objective to maintain price stability in the euro area if it is not constrained by an exchange rate target. However, for smaller, very open economies, setting an exchange rate target may be a very reasonable decision. Against this background the ERM II exchange rate mechanism was created for those member states which have not yet joined monetary union but are willing to do so in the near future. Experience with the European Monetary System (EMS), the predecessor of ERM II, has shown that participation in a system of this kind may facilitate the fulfilment of other convergence criteria.
A summary of such proposed revisions are: •  Debt Recovery Law: to expedite the recovery process and create a creditor friendly environment  •  Asset Management Company Law: to enable the speedier resolution of non performing loans of a failed bank  •  Credit Information Bureau Act: to widen the scope of the Credit Information Bureau and to provide greater (including positive) credit information  •  Computer Crimes Law: to reduce any potential risks that may arise through computer frauds. •  Micro Finance Institutions Act: The proposed Act envisages to bring all micro finance institutions under the regulatory framework. The licensing and supervising authority will be the Monetary Board while arrangements will be made to delegate the supervisory functions to agents. •  Finance Leasing Act: The finance leasing law will be amended to permit strongly capitalised leasing companies to mobilise funds from the public through the issue of debt instruments. This will enable them to broaden their funding sources and to expand their operations prudently. •  Finance Companies Act: The law will be strengthened to bring in more stringent provisions for dealing with unregistered businesses and persons carrying on finance business, in contravention of the laws. •  Business Recovery Law: Law proposed to provide a procedure for the resuscitation of sick industries. 7. Policies for strengthening the economy  Among the fundamental requirements in strengthening the economy are high savings and investment.

Private sector external debt, which accounted for about 80 percent of foreign liabilities, increased by 5 percent to $ billion due to revaluation changes in non-us dollar denominated loans predominantly in the electricity, manufacturing, information and communication as well as real estate sectors. Esteemed invited guests, in terms of flows, overall net foreign liability outflows of $ million 1/3  BIS central bankers' speeches  were recorded in 2020 against net inflows of $ million in 2019. This was due to loan repayments to non-affiliates by the mining, manufacturing, electricity as well as wholesale and retail trade sectors, and the reduction in currency holdings by non-residents in domestic deposittaking corporations. However, FDI liability inflows amounted to $ million compared to $ million in 2019. Reduced re-invested earnings and debt repayments, largely by the mining and quarrying sector, accounted for the decline in FDI inflows. Canada continued to be the major source of private sector foreign liabilities. Ladies and gentlemen, the stock of private sector foreign liabilities declined further in the first half of 2021 to $ billion due to loan repayments mostly by the mining and quarrying sector as well as revaluation effects on equity. However, a net inflow of about $ million was recorded against net outflows of $ million a year ago. This was due to the upswing in FDI inflows on account of higher reinvested earnings by the mining, deposit-taking corporation, manufacturing, electricity, as well as information and communication sectors.
For example, Canada did not have a wage adjustment during the first historical period, but it experienced one during the second period. We refer to the latter as the second episode of wage adjustment in Canada. Peak years are country-specific; hence they are not the same in all countries. This means that the first wage adjustment episode, including the peak years, may have lasted, for example, 7 years in Italy, 8 years in Germany and France, 9 years in US, 20 years in Korea or 28 years (and counting) in Japan. Of the 35 countries analysed, 21 countries experienced the first historical episode of wage adjustments, 33 countries experienced the second historical episode of wage adjustments and only 2 countries experienced the third historical episode of wage adjustments. This is why the total number of observations is much higher for the second wage adjustment episode, compared against the first wage adjustment episode. In the case of the third wage adjustment episode, the total number of observations is much lower. And now we move to the juicy part. We present the graphical representation of our results for all OECD countries which experienced wage adjustments (21 countries for the first wage adjustment episode and 33 countries for the second wage adjustment episode). The results are statistically significant and with the expected sign for the first two adjustment episodes. For the third adjustment episode, the sign of the relationship is as predicted, but the number of observations is too limited to have statistical significance.

True, any non-observable variable becomes visible at some point in the form of a disequilibrium in other observable variables, among which the twin deficits (budget deficit and current account deficit). Yet, when this happens, it is usually too late for monetary policy. Therefore, we drop the non-observable variables such as output gap, inflationary expectations and NAIRU – at least when the task at stake is to explain inflation in a post-crisis environment. Instead, we choose to use observable variables only. Since wage is a measurable, reliable, accounted for, and comparable indicator, we focus on a wage Phillips Curve where consumer prices inflation rate is explained by the difference between past wages and current wages. Second, we should make a fundamental change of paradigm from flow to stock. To understand the consumers behavior, which in turn influences inflation, we introduce the concept of a cumulative wage gap – meaning the cumulative gap between current wage and a peak reference wage value in the past. The permanent income hypothesis is fundamentally flawed in times of crisis, because of uncertainty of future income. The only certain reference value lies in the past, not in the future: and that is why current consumption is influenced by past income. Third, we should allow for the Phillips Curve to be non-stationary: it moves over time, and it is absolutely normal to do so.
If we were to decide that the existing state of affairs is not acceptable in financial stability terms, there are two broad paths we could follow. The first option would be to take steps to curtail the extent of short-term wholesale finance in the system. In principle, regulators across a broader set of institutions and markets could take steps to directly limit the use of short-term wholesale funding to finance longer-term assets, and take actions that reduced the amount of maturity transformation associated with securitization markets. In other words, regulators could require that a greater proportion of market-based finance be funded by longer-term debt. Alternatively, additional legislation or regulatory changes could be implemented to reduce the volume of wholesale-funded, capital markets activities. It is also true that some of the measures under debate in the area of limiting the scope of activity or the scale of certain financial institutions, three of which were explored by my colleague Federal Reserve Governor Dan Tarullo in a recent speech, would likely have the effect of reducing the use of short-term wholesale funding relative to the current status quo.17 For example, if regulators were to cap the size of a bank’s overall liabilities relative to gross domestic product (GDP) not only would this have the effect of capping the size of individual firms, but it also would likely limit the use of short-term wholesale funding by the largest institutions.

Both elements will mitigate the risk of financial fragmentation due to non-coordinated measures taken by the different authorities, namely, “ring fencing” initiatives. Spanish G-SIBs fully comply with the pre-conditions to be considered “Multiple Point” groups: they are organised through local retail banking subsidiaries; critical economic functions, e.g. payment systems, are organized at the local level; subsidiaries are selfsufficient in capital and funding; and they rely on separate firms detached from the bank for operational support, for instance, on information systems. So, although there are still many issues to be clarified, we think that the most realistic resolution approach for the Spanish international banking groups is the “Multiple Point” strategy, provided that, in the event of resolution, their organisational and financial structures are suitable for healthy parts to be sold or maintained as a surviving group, split from their distressed sister companies, using other resolution tools such as asset transfers or bridge banks. Now, I will go to the second main element of the new framework, the bail-in instrument. BIS central bankers’ speeches  3  Next year, most of the FSB work on resolution will focus on preparing proposals on the adequacy of G-SIFI loss absorbing capacity in resolution, namely, what we call “gone concern loss absorbing capacity” or GLAC. This concept is similar to the Minimum Requirement of Eligible Liabilities (MREL) set up in the EU Bank Recovery and Resolution Directive.
Each has a potentially important bearing on systemic resilience and hence on the social benefits of restrictions. (a)  Modularity  In 1973, Nobel-prizing winning economist Robert Merton showed that the value of a portfolio of options is at least as great as the value of an option on the portfolio. 15 On the face of it, this seems to fly in the face of modern portfolio theory, of which Merton himself was of course one of the key architects. Whatever happened to the benefits of portfolio diversification? The answer can be found in an unlikely source – Al’Qaeda. Although the precise organisational form of Al’Qaeda is not known with certainty, two structural characteristics are clear. First, it operates not as a centralised, integrated organisation but rather as a highly decentralised and loose network of small terrorist cells. Second, as events have shown, Al’Qaeda has exhibited considerable systemic resilience in the face of repeated and on-going attempts to bring about its collapse. These two characteristics are closely connected. A series of decentralised cells, loosely bonded, make infiltration of the entire Al’Qaeda network extremely unlikely. If any one cell is incapacitated, the likelihood of this undermining the operations of other cells is severely reduced. That, of course, is precisely why Al’Qaeda has chosen this organisational form. 15  6  Merton (1973). BIS Review 40/2010  Al’Qaeda is a prime example of modularity and its effects in strengthening systemic resilience.

In this regard, the euro area is seriously lagging behind: equity capital amounted to only 68% of GDP at end-2016, compared with 128% in the United States. And yet, resources are abundant: the excess of savings relative to investment is around EUR 350 billion per year, which is more than 3% of GDP. It is therefore crucial for the euro area’s economy to better steer these savings towards productive investment across borders, notably by shoring up equity which is the key to an innovation economy. Start ups are well aware of this, but our European scale-ups, midcaps and SMEs also need greater access to equity leverage. The insurance sector has a key role to play since it is the largest institutional investor in the euro area, with total assets of close to EUR 7,800 billion in the second quarter of 2017. In practice, what is the way forward? A large part of the solution lies at the European level. The efforts so far are going in the right direction, but work should now be accelerated with what I call a “Financing Union for Investment and Innovation”. This Financing Union is the microeconomic accelerator that we need to make concrete progress towards a genuine Economic Union in the euro area.
Very high growth in demand for oil is one of the factors behind record high oil prices. In the first half of this year, the price of Brent Blend fluctuated for the most part between USD 45 and USD 55 per barrel. Oil prices have risen further this past summer, gradually reaching more than USD 60 per barrel. In the last few days, prices have been falling. Oil futures have also increased. Little excess production capacity in OPEC countries, combined with the prospect of lower production in non-OPEC countries, has probably influenced oil prices. At the same time, there are prospects of continued strong growth in demand in important oil-importing countries, such as China and a number of other emerging economies. Rising or persistently high oil prices may gradually dampen growth among our most important trading partners. The slowdown may occur gradually and will not necessarily be very pronounced, but there are now growing concerns that high oil prices may result in higher inflation and inflation expectations. High oil prices have a different impact in Norway than in oil-importing countries. A rise in oil prices improves our terms of trade. Other countries perceive this as an externally imposed tax. As a result of persistently high oil prices and expectations that oil prices will remain high, investment in the petroleum sector may reach record levels this year. The investment intentions survey for the petroleum sector points to very high growth. The scale and spillover effects of petroleum investment are highly uncertain.

2  BIS Review 13/2003  If we look at the period from 1986 and compare developments in nominal oil prices with the return on a fund managed according to the Petroleum Fund's investment strategy - a global portfolio containing bonds and equities in a 60-40 distribution - we see that the fund would have yielded a far higher annual return. What about the risk? How is it affected by a conversion from oil to financial wealth? History provides us with a clear, if somewhat surprising answer. A conversion from oil to financial wealth increases the return and at the same time reduces the risk. This is because wealth under the seabed (somewhat simplified) only consists of one asset, petroleum, while broadly invested financial wealth is highly diversified in many instruments whose return fluctuates at different rates. Today the distribution between financial wealth (the Petroleum Fund) and petroleum is about 20-80. If we venture to base our assessment on historical relationships, it is fairly clear that we have, relatively speaking, too much oil in our portfolio and that the current conversion to financial wealth is to our advantage. We have no guarantee, of course, that history will repeat itself, but relying on the opposite requires considerable courage. The Petroleum Fund can be invested in two main types of instruments; bonds and equities. The international bond market is about the same size as the equity market. Government bonds are a relatively safe investment, but the return is low.