samchain/econo-pairs-v1 huggingface dataset:
And that’s probably because the UK economy has weathered the squalls of the past few years rather better than both the US and the euro area. Since 2000, we have grown more strongly than the euro area, and more steadily than the US; indeed we are alone among major industrial countries in not having experienced a single quarter of falling output for more than a decade. As a result the UK emerged from the slowdown in the world economy with less slack than other economies. That is the key reason why we were the first to start raising interest rates last November, when world activity started to pick up and demand at home accelerated. Since then, a number of other countries, including the US, have begun to raise their rates to more normal levels. When I joined the Monetary Policy Committee a year ago, both the Fed and the ECB had just cut their interest rates to exceptionally low levels, reflecting real concerns about the strength of the world recovery. Activity picked up sharply in the US last autumn, but the mood only changed decisively early this year, when a million new jobs were created in just three months. It is now clear that a broad based world recovery is well under way, led by the US and Asia, especially China, but spreading to other regions. The news from Japan is more encouraging than it has been for over a decade.

As such, a key lesson from the financial crisis is the need to expand the range of instruments available to policymakers, so they are better equipped to ensure the resilience of the financial system. This missing instrument problem provides the backdrop to the Government’s announcement earlier this year that it intends to create a new policy committee in the Bank – the Financial Policy Committee – which will have responsibility for conducting macroprudential policy. In 2010, quantitative easing was entered into the Oxford Dictionary of English, along with chillax and defriend (don’t ask!). I predict that 2011 may be the year of macroprudential policy. The legislation determining the precise tools and objectives of macroprudential policy is still to be enacted. But as the Governor recently emphasised, the over-riding objective is to ensure the resilience and stability of the banking system. 4 If successful, macroprudential policy will represent a significant advance. As we have seen repeatedly through history and across countries, banking crises come hand-in-hand with deep and costly recessions. Promoting the resilience and smooth functioning of the financial and banking system in bad times as well as good would contribute greatly to our future economic stability. But it would be wrong to conclude from this that macroprudential policy is likely to solve the missing instrument problem entirely. That is for at least three reasons. First, macroprudential policy is not the instrument that will solve the problem of global imbalances.
But even on foreign currency borrowing, a country may find that the spread of the interest rate at which it can borrow over the interest rate charged to "safe" countries, such as the United States, can reach extremely high levels. And where that interest rate is markedly higher than the growth rate of the economy, the debt burden rapidly becomes unsustainable unless the interest rate can be brought down quickly. Before the Russian default and devaluation of 1998, the average spread on emerging market sovereign debt was around 500 basis points, in itself a sizeable addition to the burden of borrowing in international capital markets. That spread then rose sharply to levels of between 1000 and 1500 basis points. At these levels debt burdens were clearly unsustainable. Since then, macroeconomic reform in many of the affected countries, with the help and support of the IMF, has reduced average spreads to a range of between 600 and 800 basis points, although there has been a further rise recently following the difficulties in Turkey and Argentina. Emerging market spreads are currently around 900 basis points over interest rates on US Treasury bonds. It is not easy to reconcile spreads at this level with the fact that sovereign debt defaults on bonds are running at historically low levels. In part, the low level of defaults may reflect the increase in the number of exceptionally large loans made by the IMF in recent years. So what does account for the high level of emerging market spreads?

The vulnerability of countries to financial crises when private capital is freely mobile was uppermost in the mind of officials then, and has recently returned to prominence in the wake of recent crises. Capital flows do, however, bring real economic benefits. They enable savings from around the world to move to those countries with the most profitable investment opportunities, benefiting lenders and borrowers alike. And such capital flows also transfer knowledge and expertise. The most important task of any financial system is to guide the allocation of scarce capital. As Larry Summers, the former US Treasury Secretary, said earlier this year, "If you are looking for reasons why some countries succeed and why other countries do not succeed in the new global economy, a very large part of it goes to the greater success of the successful countries in channelling capital into the right places, and then making sure that it is used in a disciplined way." At Bretton Woods it was thought that post-war reconstruction could be financed by capital provided by the new World Bank, the twin of the International Monetary Fund. Hence it would be possible to finance reconstruction from long-term investment supplied by official institutions, without the necessity of allowing free movement of private capital that might raise the problem of the "impossible trinity". Soon, however, the demand for capital imports exceeded the ability of international institutions to supply loans. Private capital markets came into their own.
2/4  BIS - Central bankers' speeches  In addition to its foreign-based scientific collaborators, the Committee has also reached out to other countries and international institutions in order to learn from their own experiences. The Central Bank of Austria and the Central Bank of Portugal have already been approached within the framework of close technical collaboration that the CBC agreed with certain national central banks Governors of the euro area, soon after I took over as Governor here in Cyprus. As envisaged, the Committee is currently in the process of drafting the National Strategy proposal aiming towards the promotion of financial literacy for the population as a whole, as well as for specific target groups. The initial draft is expected to be ready towards the end of the year, while the Committee is expected to submit the complete proposal to the Council of Ministers for endorsement soon thereafter. Objectives and challenges ahead Any big change in society requires bold decisions. There may be obstacles to overcome in order for the National Strategy in Cyprus to be fully implemented and it will take some time before we see the anticipated impact on society. These hindrances may be related to conflicting views of some stakeholders which should be carefully and appropriately addressed. Another important factor which might generate difficulties, is the securement of credible and long-term sources of funding since the estimated cost for such an endeavour is envisaged to be high.

Davíð Oddsson: The commercial banks are more resilient Opening statement by Mr Davíð Oddsson, Chairman of the Board of Governors of the Central Bank of Iceland, on behalf of the Board of Governors at a Press Conference on the occasion of the publication of the Bank’s Financial Stability 2007, 25 April 2007. *  *  *  In its analysis published in Financial Stability at the beginning of May 2006, the Central Bank of Iceland’s finding was that the financial system was broadly sound, but more challenging waters lay ahead. Two main causes of concern were identified: macroeconomic imbalances and uncertainty about the commercial banks’ refinancing of their foreign borrowing. Refinancing was successfully completed. However, macroeconomic imbalances increased. A year ago the focus was on short-term risks on the liabilities side of the financial companies’ balance sheets, but now it has shifted more to the long-term asset quality. The most pressing economic policy task is to restore stability. The conclusion of large investments in the aluminium and power sectors will automatically reduce imbalances, but other adjustment has been slower than expected. Increased foreign debt service has delayed the unwinding of the current account deficit, which will hardly be brought down to a sustainable level without a substantial contraction in demand. The latest forecast in Monetary Bulletin in March 2007 indicates that such a contraction lies ahead, as growth of investment and private consumption slows down.
10  For example Australia, Canada, New Zealand. 2  BIS Review 46/2006  markets about the steady-state rate of inflation being targeted. In other words, a point target makes communication somewhat more straightforward. Of course, that is not the same as saying that we can guarantee to deliver inflation outturns consistently in line with the target over an economic cycle. Shocks, and even policy mistakes, will cause inflation to deviate from target. Explaining such deviations matters. Especially when being reappointed for a further term, MPC members are typically asked by the House of Commons’ Treasury Select Committee whether the MPC has made any big mistakes 11 . In response, we often talk about luck, diligence etc. But I think that the best test – perhaps the only important test – is whether medium-to-long-term inflation expectations have been dislodged from the target. In the UK, expectations have generally been in line with our target since the Bank was given operational independence. But as the recent slight tick up in some measures illustrates, we have to be constantly vigilant. By contrast, an uncomfortable amount of commentary – academic and in the media – proceeds as if that particular battle is won for all time; the ‘death of inflation’ school of thought. Indeed, seductively, these days ‘victory’ tends to be inscribed in to the economic models used by central banks as an input to their forecasts.

However, as Beck and Gros stressed in an article from 2012, with the rise of macro-prudential regulation as an additional tool, it is not clear whether price and financial stability still conflict with each other. 4  BIS central bankers’ speeches  Another disadvantage is that the reputation and/or the independence of the central bank might be undermined: if its decisions and actions in the area of supervision and resolution are perceived as wrong or suboptimal, this may negatively affect the credibility of the monetary policy, as it is conducted by the same institution. Moreover, the temptation of politicians to capture the central bank may rise, as it has much more power than in the case when its only mission is to deliver price stability. The various arrangements on assigning banking supervision also have a bearing on the design of the national macroprudential authority. Depending mainly on who conducts the supervision of banks, different institutional solutions are adequate for this authority: it may be represented by a committee or board comprising representatives of the relevant institutions, by the central bank or by another authority tasked with financial market supervision. Boards are in place or envisaged in 13 EU countries, the central bank is – or is projected to be – the national macroprudential authority in 13 other EU countries, whereas two opted for – or are considering – entrusting this role to the national supervisory authority.
Ultimately, regulations exist to promote a safe, efficient and sound financial system that is competitive and where consumers’ interest are protected. Regulatory regimes promote the foundation of trust and confidence that is crucial in any financial system. If people do not trust the system, financial intermediation cannot take place in any shape or form. As the modalities for financial intermediation and payments are transformed by technology, regulation should play an 6/7  BIS central bankers' speeches  active role in creating a similar environment of trust to ensure overall financial stability. The boundaries of regulation will evolve to provide the freedom for participants in the Malaysian financial system to innovate and adopt technology to exploit efficiencies and create new and better solutions. Solutions that not only deliver better experience for consumers, but that better align the responsibilities that we all carry as responsible citizens, to lift people out of poverty, provide our fellow Malaysians a decent living standard, eliminate discrimination and protect our environment. Regulation is never intended to make market players ‘boring'. If they feel that way, it only tells us one thing – that they have become too complacent in their comfort zone and should undertake a reality check. Malaysia’s financial institutions especially must not lay idle as innovations will be relentless in accessing and penetrating the traditional market long enjoyed by the banks. Using the disguise of being tied by regulations is not a valid excuse.

The Global  Financial Crisis led to a loss of economic activity equivalent to around £ per person in the UK, based on the net present value of the shortfall in income since 2007 compared to its pre-2007 trend(Brazier 2019). 2 For  example, Acemoglu and Zilibotti (1997), Arestis and Demetriades (1997), and Beck and Levine (2004) provide evidence that the financial sector has a positive role on economic growth. 3 The ‘efficient market hypothesis’ was popularised by Fama (1970). Complete markets were theorised by Arrow  and Debreu (1954). 4 For example, markets could be inefficient due to information asymmetries, transaction costs, market  psychology, sticky prices, monopolistic competition, or credit constraints. 5 Drehmann et al. (2012) and Lang et al. (2020) highlight the importance of cyclical risk for financial stability. 6 Glasserman and Young (2015) and Acemoglu et al. (2015) discuss the risk of contagion in the financial system. 7 Woods (2022) discusses alternative approaches to buffer usability. 8 6/7  BIS central bankers' speeches  8 See Bank of England (2021). 9 See Chatterjee (2022) for a comparison of the UK financial conditions index for the GFC and Covid. 10 Lloyd et al. (2021) shows that foreign shocks are a key driver of domestic macroeconomic tail risks. Bluwstein et  al. (2020) also show that global factors can predict financial crises. 11 See Czech et al. (2021). 12 Bank of England (2021) provides more details on vulnerabilities associated with market-based finance and  liquidity mismatch in open-ended funds, in particular.
The questions I would like to focus on today is what could we learn from the success of the airline industry? And, how will we make this happen in other areas of the service sector that have potentials to serve the region? BIS central bankers’ speeches  1  For the first question, the fast development of the airline industry can be mainly attributed to two factors: the right business model for our market and the enabling infrastructure and eco-system. On the private sector’s part, the low-cost airlines know the region’s untapped market and come to serve the large unmet demand with the right business model. Needless to say, they offer customers with simple products, including no-frills service with a single cabin class. Their business model is successful at minimizing operating costs by using a single aircraft model and by choosing the most fuel efficient plane type to reduce fuel and maintenance costs. The airlines also revolutionized the ticketing system by first offering internet booking, paperless tickets and mobile check-ins for greater convenience and lower costs. Apart from the right entrepreneurial spirit of the private sector, policymakers are to be credited with the creation of the airline network in our region. There are at least five factors policymakers have contributed to the success of the regional airline industry.

Much progress has been accomplished, but there remain many more things that we can and should do to further promote more connected financial system. As we have done in the past decade, the Bank of Thailand will stand ready to work with our CLMV partners in various ways from development of human capital and regulatory frameworks to infrastructure building. If we can build strong domestic financial systems and regional financial connectivity, we will be able to reduce costs and create positive spillovers to several other industries. Livelihoods of our people will improve. Workers and investors can more easily and cheaply remit funds across countries. Merchants will find it easier to trade cross-border. The tourism sector will gain even more momentum. SMEs will be able to utilize e-commerce and e-payment in selling their products regionally and globally. Financing of infrastructure projects can also be supported by long-term financial products with proper risk management features. Furthermore, financial inclusion and financial literacy will equip households and small businesses with the needed resilience to go through the increasingly volatile world. Ladies and Gentlemen, Just ten years ago, the low-cost airlines were still at their infancy. The airlines were not household brands, and it would be difficult for most of us to imagine how fast they would grow only in one decade, not to mention the positive impacts they would create to other industries and the wider public.
With greater certainty over the provenance of the data, financial institutions and corporates are better able to mitigate the risks of greenwashing. Third, data for monitoring commitments. Technology solutions can help financial institutions and project owners in monitoring and meeting their commitments to ESG targets. FinTechs are providing financial institutions with good data and analytics to assess and benchmark ESG performance against peer companies. Intensel, a winner of the MAS Global FinTech Hackcelerator last year, uses artificial intelligence to analyse climate data and satellite imagery and assess the physical risks faced by assets to floods, typhoons, storm surges, and extreme heat. Fourth, data for reporting. FinTechs are offering tools to automate the reporting process, while being nimble enough to adapt to various standards, such as the Sustainable Accounting Standards Board (SASB) and the Global Reporting Initiative (GRI). Matter Analytics, another winning solution at last year’s MAS FinTech Hackcelerator, offers reporting solutions that help asset managers, asset owners and banks automatically generate customised and comprehensive impact reports for their clients. The technologies are promising, but that is not to say there are no challenges in this space. First, the ESG landscape continues to evolve. Taxonomies are still being defined and harmonised. These are important efforts that will take some time. Disclosures and reporting requirements are also being formulated by governments and regulators. But financial institutions cannot adopt a wait-and-see approach. They should not look at ESG only from the lens of regulatory requirements.

I do see the enhancement of international cooperation as a seed towards success in policy preparation for our region. I believe that, in the middle of a dark tunnel, with each of us holding a torch focusing in the same direction, we could see better along the way and can be sure that it is the right way out. Thank you. 4  BIS central bankers’ speeches
22 January 2018  Address to the Club Siglo XXI Luis M. Linde Governor  Introduction Let me begin by thanking the Chairman of the Club Siglo XXI, and my good friend, Chencho Arias, and the management of the Club for their kind invitation to me to join you today. Over the years this Club has seen debate on all – or practically all – matters, and naturally on economics too, which will be our subject today. My address will focus on the European and Spanish economic situation. Situation of the European economy With a decade now having elapsed since the international financial crisis began, we can say that the euro area is finally in a phase of sound and vigorous economic expansion. GDP growth is expected to have posted a growth rate of around 2.5% in 2017, a figure not seen since the early years of the monetary union. The favourable economic situation extends, moreover, to all corners of the area, including the economy that has undergone the greatest difficulties, namely Greece. It is expected that in the coming months Greece may successfully conclude its third financial assistance programme. Further evidence of the soundness of the recovery is the dynamism of business investment following years in which the expansion of household demand, acting as the sole engine of growth, appeared to be decoupled from the need for firms to increase their capital. Reflecting the strength of the expansion has been a notable reduction in unemployment rates, which are generally standing at pre-crisis levels.

According to Statistics Norway’s business tendency survey, the shortage of labour and intermediate goods is now at a higher level than during the booms in the 1980s and 1990s. The strong rate of growth has only to a limited extent fed through to a higher rise in prices for consumer goods and services. Consumer price inflation adjusted for tax changes and excluding energy products (CPI-ATE) has admittedly picked up gradually since late summer 2006, but in relation to the economic situation, underlying inflation remains low. The year-onyear rise in the CPI-ATE was 1.4 per cent in July. Other measures of underlying inflation show approximately the same rise in prices. According to our assessment, underlying inflation is between 1 and 1½ per cent, as it has been for a longer period. The year-on-year rise in the total consumer price index (CPI) has been just under ½ per cent in recent months. This is because electricity prices have been substantially lower this year than in 2006, when unusually high electricity prices due to low precipitation levels pushed up the year-on-year rise in the CPI close to the inflation target. In recent months, electricity prices have been at their lowest level since 2002. There are probably a number of reasons why inflation has been low in an environment of high economic growth. First, Norway’s terms of trade have improved. Prices for oil and gas, freight, fish, industrial commodities and engineering products have increased considerably. In addition, market growth abroad has provided market opportunities for Norwegian export goods.