samchain/econo-pairs-v1 huggingface dataset:
Germany is growing rapidly, led in part by an expansion in exports to the booming Asian economies. The countries of the periphery are, however, struggling in the face of significant fiscal and structural challenges. While the countries of the euro-area periphery are each confronted by specific challenges, they all need to restore their competitiveness without the option of devaluation. Instead, in the absence of effective structural reform, they face the prospect of sustained low growth in order to drive down wages and prices. That itself makes the task of stabilising public debt harder. Support to Greece and Ireland from the IMF and rest of the European Union has given those countries a breathing space in which to undertake the necessary adjustments. Financial support for other countries may or may not prove necessary – only time will tell. But the important thing for us is whether an intensification of the difficulties in the euro-area periphery could also derail the recovery here. 2  Analysis of the earlier phases of quantitative easing both here and in the United States suggest that purchases of the order of 12–14% of GDP have lowered longer-term government and corporate bond yields by around 70–100 basis points relative to where they would otherwise have been.

Tightening policy sharply in order to deal with the currently elevated level of inflation would simply have put a brake on the recovery unnecessarily and would have made inflation more likely than not to fall below the target in the medium term. If all goes to plan, however, and private final demand continues to pick up the baton as the fiscal consolidation proceeds, then the margin of spare capacity will shrink and it will at some juncture become appropriate to begin withdrawing the current extraordinary degree of monetary stimulus. And, when that point comes, the MPC will aim to do so in a timely, but measured, fashion. As 2010 draws to a close, the good news, then, is that the recovery, here and more widely, has remained on track, following the sharpest downturn in activity since the Great Depression. Such an outcome was by no means guaranteed twelve months ago; for that we must be grateful. But there remain significant challenges for the year ahead. In many developed countries, the after-effects of the financial crisis still linger, in the form of banks that are still overly reliant on official support, fragile household and business confidence, and bloated public sector deficits and debt. Moreover, the rapid recovery in emerging markets  BIS Review 169/2010  5  has reawakened global inflationary pressures. And here in the United Kingdom, inflation has been running above the MPC’s 2% target for an uncomfortably long time. It may be some while yet before normality is restored. Thank you.
At the same time, it remains our priority to reinforce the stability of financial institutions by strengthening capital base and improving risk management, to cushion against potential shocks under adverse circumstances. This year, we will establish a licensing framework for foreign commercial bank subsidiaries, with a view to enhancing the competitiveness of the banking industry as envisaged in the Financial Sector Master Plan Phase 2. Meanwhile, a guideline will be laid out allowing domestic commercial banks to expand and integrate into the Qualified ASEAN Banks (QABs) network under the AEC. This integration offers an opportunity for Thai banks to step up their efforts to fortify their strategic strengths and prepare for a fiercer competitive environment. Stronger institutions could seize the opportunity to expand internationally and diversify their risks. A balance must be struck between the three objectives of increasing financial service efficiency and access, safeguarding financial system’s integrity, and strengthening consumer financial protection. Payment systems policy The priority this year will be to expand the coverage of the ICAS across the country, to speed up the provincial cheque collection from 3–5 business days to 1 business day. The initiative will help promote a more efficient payment system, enabling fast, safe, and secure economic transactions as well as promoting a substitution of electronic for cash payments.

The impact of the second minimum wage hike on inflation is expected to be limited, as most businesses manage to keep a lid on cost via increased production efficiency, encouraged in part by a highly competitive goods market. The BOT will however continue to closely monitor any inflationary impact of the wage increase. Policy challenges for 2013 While it may seem that the worst is behind us, one must continue to be vigilant of risks. It is crucial for policy to be forward-looking and proactive, quickly adjusting to changing environment and shifting challenges. As I have mentioned, the key immediate challenges is to preserve the right balance of policy mix, in order to ensure that each policy’s effectiveness is maximized and grounded on the basis of sustainable economic well-being, as well as safe and sound financial system. Toward these goals, the BOT has a number of functions to perform. Monetary policy and exchange rate policy The overriding objective of monetary policy continues to be the safeguarding of economic stability, which encompasses the dimensions of growth, inflation, and financial stability. This year, a key challenge will be in striking the right balance between providing sufficient support to growth while ensuring that financial stability is also preserved. In particular, a prolonged accommodative monetary policy may pose risks to financial stability if it  2  BIS central bankers’ speeches  encourages excessive debt accumulation, or induces overinvestment in risky assets as investors search for higher yields.
To address these problems the European Commission last fall initiated a fundamental overhaul of the EU supervisory structure. A group chaired by the former head of the IMF, Mr. Jaques de Larosière, was mandated to come up with proposals for needed reform. The recommendations made by the group were broadly embraced by the EU member states and we are now at that stage in the process where final details are being negotiated. The new supervisory structure will rest on two pillars. The first pillar – micro prudential supervision The first pillar consists of several initiatives to strengthen micro prudential supervision in the EU. Regulatory measures at the EU level shall ensure strengthened and more consistent  BIS Review 134/2009  1  supervisory powers at the national level. Supervisory colleges will be mandatory for all the major cross-border firms in the EU. Differences in national laws will be indentified and removed. All these reforms will take place within the new European supervisory network, the European System of Financial Supervisors (ESFS). The main element of this reform is the transformation of the three existing EU supervisory committees into independent EU authorities. These authorities will form a central hub of the European supervisory community and will be equipped with both regulatory and supervisory powers. The day-to-day supervision will still be a national responsibility and carried out on a decentralised basis. The new authorities are therefore primarily to be seen as a complement to the national regulators and supervisors and not as a replacement.

In particular, downside risks to the achievement of our employment and inflation goals amid very low interest rates were compelling arguments for a relatively cautious and predictable approach to policy. This proved its worth: The U.S. economy continued to expand at a healthy pace even as the Fed raised rates numerous times. For those who follow the Fed closely, you’ve noticed that the FOMC has been slimming down its statements of late and using less forward guidance about the future path of policy. In this vein, the FOMC in its recent statement removed language indicating that monetary policy remains accommodative.3 Let me make clear, these more concise statements do not signify a shift in our monetary policy approach. Instead, they represent the natural evolution of the language describing the factors influencing our policy decisions in the context of the strength of the economic outlook and inflation being near our 2 percent longer-run goal. These changes in our communication of policy views are a sign that we are nearing the end of the process of normalizing monetary policy and are inching closer to conducting normal monetary policy. Arguably, it’s been a long time since monetary policy was normal, so it’s worth describing what “normal” looks like in some detail. At its most basic level, monetary policy-making will remain the same: The path of interest rates will continue to be guided strategically by our dual mandate objectives and shaped tactically by the data and their implications for the economic outlook.
Few doubt that there are challenges to defining and calibrating the indicators used to determine when capital buffers should be triggered, and by how much. However, to quote Borio, “while calibration is  17  Assenmacher-Wesche and Gerlach (2010). 18  Hott and Monnin (2008). 19  For examples of models which illustrate downward spirals, please refer to Markus Brunnermeier and Lasse Pedersen (2009), Stephen Morris and Hyun Song Shin (2004). BIS central bankers’ speeches  5  not straightforward, the difficulties can be overstated”.20 To support his claim, Borio notes that traditional monetary policy also confronts such challenges when interest rates are set on the basis of indicators, such as output gaps or natural interest rates which are unobservable and difficult to measure accurately. It is however commonly accepted that central banks have, to a large extent, surmounted these difficulties. Of course, countercyclical buffers cannot be implemented without inflicting some costs to the economy, but the trade-off involved seems significantly more favourable than is the case with “leaning against the wind” policies. A 2011 study by the Bank of International Settlements estimates that, by reducing the probability of a severe crisis, the benefit of countercyclical buffers is on average 10 times higher than their costs in terms of real output growth per year. V.  The Swiss case  Every central bank in the world faces its versions of the challenges I have mentioned. The Swiss National Bank is no exception.

Much high quality work has already been done on this subject by local experts. However, they thought it might be helpful for the New York Fed, as an independent third party, to evaluate what might be done to promote competitiveness and productivity on the Island. I readily agreed that we would do so. I commissioned a team of economists from our Research group and other experts from our international and outreach teams, to analyze the challenges facing Puerto Rico. I asked them to put forward some recommendations on how to capitalize on the Island’s strengths and restore growth. The report released today on the competitiveness of Puerto Rico’s economy, is the product of their work and extensive consultation with local, national and international experts. I have  BIS central bankers’ speeches  1  read it closely and commend it to your attention. The report is intended as nonpartisan technical analysis and should be viewed in that vein. Even those who do not agree with every aspect of the analysis, I hope, will acknowledge that this is a serious, good-faith effort to examine, in detail, a number of important issues that deserve attention. Of course, many of these issues can only be considered as part of the political process. It is for the people of Puerto Rico to judge the appropriate trade-offs involved – not me, certainly, or my staff at the New York Fed. In a few moments Jamie McAndrews, executive vice president and director of research, will summarize the report and its recommendations.
They attempt to harmonize legislation and the regulatory tools which become imperatives, worldwide, against financial crime and terrorist financing. At the same time, let us not forget that terrorists too, learn from each other. Sometimes the learning and co-operation may be direct. At other times, it could be indirect. Perhaps they too, have workshops like what we are having today. On 31st January 1996, Tamil terrorist suicide cadres drove a 500 kg. explosive laden commercial truck into the Central Bank of Sri Lanka building. About 5 ½ years later, on 11th September 2001, Al Quaeda terrorist suicide cadres piloted 2 jet fuel laden commercial air crafts into the WTC Twin Towers in New York. The scale and the means employed may have been different, in the two instances. But the method was similar. So, let us remember that terrorists and terrorist financiers will also surely learn from each other and wreck havoc in our respective societies, and they too, must be, obviously trying their best to be ahead of us. Regulators need, therefore, to be constantly abreast of these methods, if not be ahead of them. We need to equip ourselves for this purpose by enhancing our capacity and processes to effectively meet the challenges of terrorism and terrorism financing. I am happy to say that Sri Lanka has made considerable headway in this regard.

If unchecked, it may only be a matter of time, before terror groups in other parts of the world also emulate these dastardly attacks. It is therefore, vital that all countries quickly assist Sri Lanka to eradicate this threat, as otherwise, it may only be a matter of time, before this too becomes a new tool in the armoury of terrorists. Today, combating terrorism cannot be considered the sole responsibility of single governments or of single sets of soldiers who fight at the front at the risk of their lives. We must all get involved in an international effort if we are to defeat this menace. In these efforts, financial institutions and all other corporate entities, especially, NGO’s must also actively help prevent the funding and the flow of goods and services to terrorist organizations. We must all be wise to the type of trade we are engaged in, and be mindful of the impact it can have in facilitating terrorist activity. It therefore becomes imperative that any loopholes in banking which can be identified as facilitating the financing of terrorism and strict adherence to regulations to prevent such financing, receive the immediate attention of the regulatory institutions. The aftermath of natural disasters also often provide happy hunting grounds for money launderers and terrorists. Sri Lanka’s experience post-tsunami is ample testimony to this reality. Organisations and individuals emerged from nowhere after the Tsunami, with absolutely no track record of humanitarian work, to descend on us in the guise of humanitarian relief.
Why and how supervision and resolution authorities should work more closely with one another Let me now turn to the way in which the two completed pillars of Banking Union, namely supervision and resolution, could become more consistent with one another and work more closely together. Cooperation between the SRB and the ECB does exist, and is formalised by a Memorandum of Understanding. This provides for ex-ante cooperation in calm times, and close cooperation in early intervention and resolution phases. Thanks to this tremendous ongoing preventive work conducted by the SSM and the SRB, and to continued efforts from banking institutions, recovery plans have significantly improved in recent years. Page 4 sur 5 Beyond the current areas of cooperation, which could still be enhanced in practice, greater coordination on policy issues appears desirable. In particular, policy decisions that pertain to own funds have a very concrete impact on European banks’ competitiveness, and therefore on the level playing field with foreign banks. Here, we must find a trade-off between safety and competition issues, with efforts needed on both sides. For instance, the SSM could further consider a risk-based approach rather than a flat-rate approach to estimate post-resolution Pillar 2 requirements. This entails a need to take into account a forward-looking approach and the expected risk reduction that follows a resolution. This should be acknowledged in the calibration of external minimum requirements for own funds and eligible liabilities (MREL): banks are not at the same stage today as they were seven years ago.

This is where we should bring our Ziel, our strategic objective, into our field of vision. And even more so since MREL requirements in the European Union are, on the whole, far more stringent than the TLAC international standards and their translation into other jurisdictions’ regulations. * ** Let me conclude by saying that, in 2022, after the first seven years of existence of the single resolution mechanism, it may be time to recall what Clausewitz rightly identified as the greatest difficulty: “to adhere steadfastly in execution to the principles which we have adopted.” That does not mean showing rigidity in technical implementation, on the contrary. It means taking a risk-based approach and conducting a balanced analysis of the best way forward in order to serve these principles in a relevant way. I will end my speech with another phrase of Roman wisdom: in medio stat virtus, virtue lies in the middle. I thank you for your attention.
An investor such as the Government Pension Fund – Global will earn more in the long term because of wide fluctuations in equity values. Many investors have suffered losses on equities. As a result of this experience, required returns will be higher in the future. Under the Fund’s investment strategy, more equities are purchased when equity prices fall and fewer when prices rise. Thus, the Fund purchased a large volume of equities in the period 2001-2003 and is buying a considerable volume now. Of the equities now held, 40 per cent were acquired in 2008 when prices were falling. The Fund’s average ownership share in international equity markets was ¾ per cent at the turn of the year, with allocations to equities accounting for close to 50 per cent at that time. The Fund has a longer investment horizon than the vast majority of other market participants. The important question is therefore how sound today’s investments prove to be in the long term. The government now owns a fair share of the global business sector. This represents real value that will provide a return reflecting both global economic growth and the risk related to fluctuations in equity prices. The financial crisis is having a broad impact and most forms of investment are falling in value. State ownership in the Norwegian business sector and its share of subsea petroleum reserves on the continental shelf have declined in real value. For large investors, there have been few places to hide from the panic that has gripped financial markets.

Certainly I seriously underestimated the scale of the downside risks from a potential financial crisis, and that implied overrating the ability of monetary policy to offset this shock. I will return later to the question of how a more long-term perspective might sometimes alter the desirable approach to policy. Before that, I want to discuss some issues around the MPC’s inflation projections and how we assess uncertainty. The balance of demand and supply The MPC’s projections for inflation, absent external shocks, are determined to a significant extent by our judgements about inflation expectations and about the likely developments in the pressure of demand on supply (this phrase is a better description than the more usual “output gap” – however I will now use the latter as a convenient shorthand). During my stint  4  Large (2005). 5  Gieve (2009). 2  BIS Review 27/2010  on the MPC, the way in which we have chosen to assess the output gap, as reflected in the assumptions underlying our main macro-model, has changed on a number of occasions. Of course, one model has never been the sole guide to our projections – a number of other models are also drawn on as appropriate. And the final shape of the fan charts published in the Inflation Report is the product of the MPC’s judgement including on the insights from these models.
It is thus possible to collect information on new economic and financial developments, such as the impact of recent changes in the price of oil. Other attractive features of online surveys are the ease of incorporating graphics and other visual refinements and the ease of conducting randomized interactive experiments to analyze the updating of expectations and the links between expectations and behavior. A second key design element of the SCE is that it uses a rotating-panel sample design, with approximately 1/12 of respondents rotating in each month, after which they stay in the panel for up to 12 months and then rotate out. In addition to keeping the sample representative over time, this rotational structure allows us to track the changes in individuals’ responses over time. In other words, we can compute changes in expectations over time after differencing out individual idiosyncratic effects. This design contrasts with repeated crosssectional surveys in which an entirely new sample is drawn each month. The panel structure of our survey, with a more stable sample composition, therefore reduces volatility in summary statistics due to a changing sample and increases the signal-to-noise ratio. Finally, it is possible to use the panel to link short-term expectations to actual realizations, and measure individual-level forecast accuracy and its implications in real time.

1 See Article 127 of The Treaty on the Functioning of the European Union. 2 Jean-Claude Trichet, 2014: “Central Banking in the Crisis: Conceptual Convergence and Open Questions on  Unconventional Monetary Policy” Business Economics, Palgrave Macmillan; National Association for Business Economics, Vol. 49(2), pp. 74–84, April. www.perjacobsson.org/lectures/101213.pdf 3 Kydland, F. and E. Prescott (1977) “Rules rather than discretion: The inconsistency of optimal plans”, Journal of  Political Economy, 85(3), pp. 473–92. 4 Alesina, A. and L. Summers (1993) “Central bank independence and macroeconomic performance: Some  comparative evidence”, Journal of Money, Credit and Banking 25(2), pp. 151–162. 5 December 2018 Eurosystem staff macroeconomic projections for the euro area. 6 OECD Economic Outlook, November 2018. 7 Bank for International Settlements: Credit to non-financial corporations from all sectors at market value –  Percentage of GDP. March 2006 – June 2018 (unconsolidated data). 8 “The cost of deficiencies in euro-area economic policy coordination” Quarterly Selection of Articles No. 46,  Banque de France, summer 2017. 9 Address given by Pierre Werner, Luxembourg Prime Minister and Foreign Minister, on 30 September 1965 to the  Belgian Chamber of Commerce in New York. 6/6  BIS central bankers' speeches