samchain/econo-pairs-v1 huggingface dataset:
Other factors will add to the inflationary pressures in the medium to long run. Without elaborating too long on them today, I want to mention in particular population ageing and climate change. The ageing of the population will lead to a significant increase in public spending, for retirement pensions and health expenditure. At the same time, the growth in public indebtedness during the past twenty years will require an adjustment at some point. Both issues will lead to a mix of economic policy decisions and there may be a conflict between firms and employees about the final burden sharing, with risks of a wage-inflation spiral. Climate change could also have both a direct impact on prices, through disruptions in production, and an indirect impact, through policy measures to curb down carbon dioxide emissions. Climate change, through unusual weather outcome – temperature, rain or unusual seasonality – or disasters, would disturb climate sensitive productions such as food products or electricity (e.g. hydroelectric energy). Scarcity of these products would then lead to temporary overshooting in their prices. Measures to curb down carbon dioxide emissions will have a direct impact on prices through increases of indirect taxes and an indirect impact through the necessary adjustment of the production process. This adjustment will involve heightened tensions on production capacities, as part of the equipment stock will have to be discarded due to changing regulations or due to increases in its operating costs with higher taxes. Some temporary impact on inflation may therefore be expected during this process.

On the demand side, should emerging countries decouple to a large extend from the United States, their contributions would then be sufficient to maintain a significant pace of commodity prices growth. On the supply side, unexpected climate or geopolitical disruptions may lead to shocks on production, as in the past few years. On top of both factors, in the current context of raising inflation and troubled financial markets, commodities attract a growing part of investment, speeding up sometimes rather artificially their price increases. Second, the triggering of possible second round effects is a well known source of concern for the Governing Council of the ECB. The common desire of firms and households to offset  BIS Review 32/2008  1  profit margin and purchasing power losses stemming from inflationary shocks may lead to a wage-inflation spiral, ending in deteriorated output prospects and welfare losses to all parties. One should however note that nothing significant has materialised at this juncture. On the contrary, remunerations have remained well in line with productivity gains with, to take an example, reference wages increasing by 0.3% in France during the fourth quarter of last year. From this point of view, protracted shocks to food and commodity prices put the anchoring of inflation expectations and the credibility of monetary policy to the test. The recent upward trend in European household and market expectations may be of some concern.
2/8  BIS central bankers' speeches  All the countries that experienced an acute crisis – Greece, Ireland, Portugal and Spain – now have budgets with deficits below 3% of GDP and a positive primary balance in their current account, with the exception of Spain. Last year, Spain still had a primary deficit of 0.5%, but this year it is very likely that they will also make a surplus. In some cases, this adjustment in the primary balance was in the double-digits, which is huge. Our analysis, and the IMF’s, shows that the positive current accounts that all of these peripheral countries have built are the result of a structural adjustment. This is not about lower imports and weaker demand; it is about the improved performance of exports and structural adjustments. And that’s very important. Second, in terms of the banking sector, the capital level of banks everywhere has increased and the average common equity ratio of banks here is 14.3%. There is no bank below 11% in the euro area. That also represents a huge reduction of risk. Then, third, there is the BRRD [Bank Recovery and Resolution Directive], which rules that if there will be any collapse of banks, then no bailouts by the public sector can be engineered – at least before there is a private bail-in of 8% of the total assets of the bank. So that’s a big risk reduction for national government budgets and for taxpayers. Banks are also building up their bail-in-able securities.

At the same time, an increase in life expectancy for each cohort will reduce the annual pension. This motivates the individual to remain in employment and to ensure that the system is sustainable. The National Insurance Scheme’s expenditure is financed directly over the central government budget. Decisions about national insurance benefits have a substantial influence on future taxpayers. These costs are not transparent when the budget is decided. Developments since 1967 show that such a pay-as-you-go system is not robust. Benefits change over time and costs can easily be pushed into the future. The alternative is a system where pension expenditure is covered by accumulated capital, i.e. a funded system. In a funded system, a decision to increase pensions or reduce the age of retirement will require the allocation of capital today to cover future expenditure. Such a fund provides a measure of the cost of increasing pension expenditure. Our pension system is complicated. In addition to the National Insurance Scheme, many other operators, including the central government, have established additional pension schemes. There are different rules for coordination and entitlement. Any shift to a fund-based system for the National Insurance Scheme will probably require transitional rules for many years ahead. However, I believe that it will be possible to find solutions to these practical problems. Distributional and practical considerations imply that minimum benefits in the pension scheme cannot depend on earlier employment, but should apply to everyone.
These factors explain why French banks' CDS premiums remain lower on average than those of banks in the United States, the United Kingdom and the rest of Europe. At the European level, the banking authority – the EBA with the SSM – will carry out new stress tests in 2023 on the resilience of EU financial institutions. The underlying scenarios will need to be sufficiently severe and credible in the current environment of uncertainty and volatility. But we see nothing at present that justifies an industry-wide restriction on dividend payouts, such as that imposed temporarily in 2020. There is,  2/4  BIS - Central bankers' speeches  however, a need for everyone to show prudence in terms of the future trajectory of capital, and in particular regarding share buybacks, which furthermore have to be explicitly authorised by the supervisor. 3. Are there any non-bank risks that could potentially trigger a crisis? The first area we need to pay close attention to is the less regulated players: while we have largely reinforced banks and insurers, we still have a long way to go on non-bank financial intermediaries (NBFIs). All episodes of financial instability in the last three years have been caused by the non-bank, non-insurance sector: from the money market fund "dash for cash" in March 2020 to UK pension funds in September. The vulnerabilities stem from excessive use of leverage, insufficiently controlled exposure to margin calls, or liquidity mismatch in open-ended funds which leaves them vulnerable to large and sudden capital outflows.

I would like to conclude by coming back to Newton's experiment, where he split white light into the colours of the spectrum using a prism, and then recombined them using a second prism. After breaking the challenges of financial stability down into a spectrum of five questions – which are not exhaustive – I would like now to recombine them into a single certainty: we, as supervisors and regulators, we the ACPR, will do everything within our power to safeguard financial stability in the new macrofinancial landscape. I shall give the floor now to Dominique Laboureix: I would just like to congratulate him on his appointment as Chair of the European Single Resolution Board, and thank him warmly for his powerful work as Secretary General of the ACPR for the past three years. 1 Those subject to Solvency II. 2 The ECB Blog, Bitcoin's last stand, 30 November 2022. 4/4  BIS - Central bankers' speeches
Mainstream thinking supports the use of this unconventional monetary easing on the grounds that weak growth post-crisis is mainly the result of a lack of aggregate demand and thus the solution is to boost demand generally by reducing the cost of borrowing and inducing investors to shift from low-yielding government bonds to riskier assets in search of yields. 12. While there was general agreement on the need and efficacy of action taken by central banks during the crisis period to stabilise the markets, the same cannot be said for using the extremely accommodative monetary easing by the advanced economies to support economic growth and job creation. Looking beyond mainstream thinking, there are some sound analyses by renowned economists, such as Bill White of the OECD and Dr Rajan, the former IMF Chief Economist and newly appointed Governor of the Reserve Bank of India, that suggest these unconventional monetary policies are now in “uncharted waters” and may create unintended consequences and risks to the global financial system. At this point, I will mention three key costs or risks of these unconventional monetary policies. (a) First, these policies punish the savers and pensioners: The suppression of interest rates at close to zero is helpful to debtors, but I should hasten to add that only those debtors who can refinance themselves at the lower rates can benefit.

On a number of occasions in recent years I have expressed the view that although there were many factors leading to the Global Financial Crisis and the European Debt Crisis, the root cause of our present predicament is the excessive leverage and indebtedness built up over the past two to three decades in the household, corporate and government sectors in the advanced economies. During this period, the indebtedness of many industrial economies, such as the US, the UK, France and Germany increased steadily from 160% or 1.6 times of GDP to over 320% of GDP. Japan, of course, ranked the highest in this “league table” with over 450% of GDP. This is alarming not just because the stock of debt was rising, but the speed of the increase outpaced the economic or income growth of these economies by 100% over this period. What is even more depressing is that the aggregate public and  BIS central bankers’ speeches  1  private sector indebtedness ratios actually increased even further after the financial crisis in most advanced economies except for Germany. 6. The increases were mostly due to a sharp pick up in public debt in most advanced economies after the Global Financial Crisis, as substantial amounts of public funds were deployed by the crisis-hit countries to salvage their financial systems, while the real economies were suffering from falling fiscal revenues with slow growth and rising public spending.
In the second quarter, sickness absence stood at 6.5 per cent of contractual person-days, although there are substantial occupational and geographical variations. In Rogaland, sickness absence is 1.4 percentage points lower than the national average. If sickness absence in the rest of the country falls as low as in Rogaland, nearly 30 000 additional person-years would be available for productive activity. Reduced sickness absence and reduced outflows into social security schemes – particularly among young people – would result in substantial economic gains. Economic developments The Norwegian economy is in a period of strong expansion after a marked upturn since summer 2003. The upturn followed a period of slow growth since 1998 and a mild slowdown in 2002 and into 2003. Growth in the mainland economy has been high since then, and higher than expected. When the key policy rate was reduced in 2003, demand and output picked up quickly. The upturn was supported by strong productivity growth, reflected in exports, petroleum investment and, after a period, public demand. So far in the cyclical upturn, the mainland economy has grown by an average of just over 4 per cent annually. The upturn is now in a mature phase. Even though output increased rapidly, it took a long time for employment to edge up. The increase in employment was for a long period slower than in the upturns in the 1980s and 1990s. Employment only began to pick up towards the end of 2005, and has since risen sharply.

Thus, now more-than-ever, macro-surveillance process, early warning models, stresstesting, ever more vigilant risk-based supervision, and strong internal risk management by financial institutions will be instruments crucial for safeguarding our financial stability. In closing this introduction, I am certain that this seminar will be extremely useful and provide an important opportunity for building a close network amongst supervisors in SEACEN, as well as for fostering a closer cooperation between regulators in our region and the US-OCC. So, without further ado, let me declare the second SEACEN-OCC Advanced Seminar on Quantitative Techniques for Macro Surveillance and Determining Resilience of the Banking Sector open, and wish you all every success in this seminar, as well as in your career, and have a pleasant stay in Thailand. Thank you. 2  BIS Review 98/2007
For example, from 1993 to 2008 the total assets of a sample of what we call global systemically important banks saw a twelve-fold increase (increasing from $ trillion to just over $ trillion). But the capital funding these assets only increased seven-fold, (from $ billion to $ billion). Put differently, the average risk weight declined from 70% to below 40%. The problem was that this reduction did not represent a genuine reduction in risk in the banking system. To take an even more concrete example from my own country: during the past twenty years or so, the risk weights for retail mortgages in the major Swedish banks have decreased from 50% to 35% with the adoption of Basel II (from Basel I) and further, to about 6% when banks themselves were allowed to model risk weights. In equity terms, this means that instead of SEK 17,000 of their own equity to fund a mortgage of 1 million, banks’ models implied that SEK 1,200 was enough.1 In retrospect, it is clear that the decrease in risk weights did not reflect actual risks and banks therefore needed more capital. Furthermore, although it is a historical fact that banks’ problems often start in the form of liquidity constraints, there were no global liquidity regulations for banks prior to the crisis. This meant that banks could rely heavily on very short-term market funding to finance highly illiquid and long-term assets.

Here in Malaysia, buildings consume almost half (48%) of the electricity generated in the country. In response to this, green buildings were conceived, prioritising environmental and health concerns as well as resource efficiency throughout their life cycle. In the process, they also respond to the changing preferences of an increasingly environmentally conscious population. As a country, Malaysia has committed to the target of reaching Net Zero emissions as early as 2050. In line with this and the priorities laid out in the 12th Malaysia Plan, state and city councils have increasingly stepped up efforts to spur the greening of their respective jurisdictions. DBKL for instance has issued the Kuala Lumpur Climate Action Plan 2050, which details out the actions necessary to achieve the goals of the Paris agreement. While we will be mainly focusing on green housing at this event, it is important not to forget that this is a cross-cutting agenda that requires many different parts of the ecosystem to work effectively. With climate change, however, we are not simply pursuing an aspirational goal. We are dealing with an existential treat for which bold and decisive actions are needed to correct what has been described as the “greatest market failure the world has ever seen”. Central to these actions is the remarkable capacity of the private sector to innovate solutions that will move us closer to our climate goals, and our collective responsibility to harness that capacity. Physical risks associated with climate change are already with us and are rising.
Exceptional lending above this presumptive limit would be possible in order, to provide operational flexibility in extreme cases – for example, those threatening systemic stability. That is why the framework is one of presumptive limits rather than strict rules. But granting exceptional access should require much greater ex ante justification and ex post accountability. For example, exceptional access programmes should be automatically referred to the new Independent Evaluation Office of the IMF. This would raise the hurdle for granting exceptional access and provide greater clarity to debtors and creditors about the support countries could expect from the official community. The logical consequence of limited official finance is that inevitably there will be times when a reprofiling of sovereign debt may be necessary for some countries. Some have argued that sovereign debt restructuring or default is potentially too disastrous to contemplate, for the country or indeed for the world economy. The Russian default in 1998, and the disruption to world markets that followed from it, is often cited as evidence for the prosecution. More careful analysis suggests two rather different conclusions from the Russian experience. First, the Russian default was disruptive in part because it came as a surprise to market participants. Private creditors had planned on one assumption – exceptional IMF financing, or the "moral hazard" play as it was labelled by the market – and were surprised when their comfort blanket was removed. Greater clarity and stronger presumptions about the size and form of Fund financing would have reduced the surprise and the accompanying contagion.

The expansion of private capital flows was gradual, and, until about ten years ago, was primarily concentrated on flows among the developed economies. It is only in the past ten years that the explosion of private capital flows to emerging market economies has taken place. Data from the World Bank suggest that annual capital flows to emerging markets were less than $ bn in the early 1970s, rising to around $ bn in the late 1990s. At their peak, capital flows to emerging markets were around 5% of those countries' GDP. Unfortunately, capital flows on this scale can reverse themselves as suddenly as they appear. The result of such sudden and large reversals of short-term capital flows has been a series of international financial crises, in Mexico in 1994-95, Asia in 1997-98, Brazil in 1998-99, and, more recently in Turkey and Argentina. The frequency and scale of these crises, if they were to continue, would be a serious impediment to the evolution of the international capital market. Unless we can both reduce the frequency and severity of such crises, and improve our techniques of crisis resolution, then the demonstrators against globalisation will be provided with unnecessary ammunition. The costs of recent crises have been large. Between 1996 and 1998, the reversal of private capital flows to the five Asian countries primarily affected (Indonesia, Korea, Malaysia, the Philippines and Thailand) was almost $ bn, equivalent to about 15% of the pre-crisis level of GDP.
Our forecasts of inflation and other components, like the interest rate decisions, are based on a forecast of the future repo rate path. These forecasts change as new information is received, but we report our current views of the future every time we publish a monetary policy decision. The Riksbank is governed by an Executive Board The year 1999 is a natural starting point when describing the process for monetary policy decision-making. This was when the price stability target was prescribed by law and the Riksbank was given a more independent position with regard to our principal, Sveriges Riksdag (the Swedish parliament). This entailed a major change with regard to our decisionmaking and the way we work in relation to the General Council of the Riksbank. As you already know, the work at the Riksbank has been headed since 1999 by an Executive Board consisting of six members, one of whom is Governor of the Riksbank and Chairman of the Executive Board. The members are appointed for a period of six years at a time. Normally the periods of office for the different members overlap to create continuity in the work of the Bank. Previously it was the Governing Council of the Riksbank, whose members are appointed by the Riksdag, who governed the Bank together with the Governor. Today the General Council has more of a controller function. They appoint the members of the Executive Board, but do not have any influence over, for instance, the decisions on the repo rate.

But before the minutes are published it is the majority line that applies when we Executive Board members make speeches outside of the Riksbank. After that we members are each free to describe our personal differences of opinion regarding the interest rate decision. Constant assessment means that we are always prepared for change Let me round off. Today I have talked about the major changes in recent years in the way we produce material used as a base for our interest rate decisions. Some of these have come about because the methods of making forecasts in general have developed, something that also affects other central banks. Other changes have been shaped by the specific conditions that apply in Sweden. The Riksbank’s independent position makes demands on us to be open and clear, what economists usually term transparency. The Riksbank’s decision to begin publishing its own forecasts for the repo rate is a step in the work on increasing transparency and further improving our analysis. 10 The new assumption for the repo rate has led to the Executive Board becoming more involved in the forecasting process. We are constantly evaluating our forecasts to see how successful they are at capturing developments. This also means we are constantly striving to improve our ways of working. If we make any major changes that have significance for our forecasts we will of course let you know.