samchain/econo-pairs-v1 huggingface dataset:
Lars Heikensten: What is happening in the United States and how will it affect us? Speech by Mr Lars Heikensten, First Deputy Governor of the Sveriges Riksbank, to the Swedish Shareholders' Association, Malmö, 9 March 2001. *  *  *  First I want to express my thanks for the invitation to speak to you here. It is always a pleasure to visit Malmö at this time of the year; the signs that spring is approaching are more numerous and clearer down here. The current focus for forecasters — around the world, I would say — is the U.S. economy. As usual when activity is turning, opinions among economists differ greatly. This reminds me of the remark someone made to the effect that if you placed all the economists in the world in a long line, they still would not reach a joint conclusion. That I think catches the mood at present among economists, though assessments do seem to be following a pattern. American economists generally appear to be considerably more optimistic than economists with an outside view of the United States. The United States has unquestionably been acting as an economic engine for global growth for almost a decade. It is equally clear that to a large extent it is the U.S. economy’s future path that will steer international economic activity and thereby the conjunctural situation in Sweden. Against this background I shall be considering a number of questions to do with the American economy and outlining some conceivable outcomes.

In my view, however, the technical innovations are not the only explanation. The deregulations that began in the 1980s, as well as the consolidation of the federal budget during the 1990s, should also be mentioned as major factors. The deregulations have helped to strengthen America’s corporate sector and the improvement in the federal finances led to increased confidence among households and firms as well as somewhat lower long bond rates. Low interest rates and higher productivity growth then paved the way for the massive wave of investment. The U.S. economy’s growth rate shot up and unemployment dropped to levels that hardly anyone believed could be combined with low, stable inflation. As outcomes proved earlier forecasts wrong, assessments of how strong demand’s long-term growth could be without generating rising inflation were adjusted gradually upwards. Turning then to share prices in the United States, in the first place the Nasdaq exchange with its predominance of high-tech companies, we can see that expectations of corporate profits rose rapidly  BIS Review 20/2001  1  to levels that had not been seen since the 1930s. The trend peaked last year with share prices at record levels and a GDP growth rate above five per cent, in some quarters even higher. The reverse side of the medal lies in the imbalances that have built up during this period. The United States has been living on borrowed money; even though the federal budget was first consolidated and then generated a growing surplus, investment exceeded aggregate saving.
In fact, adding up the net specific provisions made for loan losses since the beginning of 2008, the general provisions also used to cover impaired assets, and the charges to reserves by savings banks involved in the aforementioned restructuring processes, write-downs in the last three years by the Spanish banking system amount to about € billion, or around 9.5% of GDP. Moreover, in that same period, thanks to FROB resources, but also, especially, to the efforts by banks, the latter have increased the capital held in excess of minimum requirements by approximately € billion, or roughly 5% of GDP. A key factor in the sector restructuring strategy has been the decision to increase the transparency of the Spanish banking system as much as possible. Whenever the general perception is more negative than the reality, the best policy is to present all the data clearly. For that reason the Banco de España announced last June that it would conduct stress tests,  BIS central bankers’ speeches  3  which it was later agreed should be carried out at the European level under the coordination of the CEBS. Although these tests were severely criticised after the collapse of some banks in other countries which had successfully passed them a few months earlier, the rigour and transparency of the exercise carried out by the Spanish supervisor must be emphasised. Demanding criteria were used and, unlike in other countries, all listed banks and savings banks were tested and much more detailed information on their portfolios was offered.

Thus it is not only the regional authorities who must avoid any action which may deflect banks from their essential objective of serving households and firms; also, those who are now at the helm of savings banks must hasten the reform of their corporate governance because very likely the market will not lend again to anyone unable to give it an assurance of professionalism and corporate governance on a par with that of commercial banks. Going back to the economy, we must be patient. Immediately ahead of us, the adjustment phase will continue. True, there has been a notable correction in some of the main imbalances in recent years. But it is still too early to say that the Spanish economy is at a stage where it can once again resume robust growth. Further effort will be needed to digest the excesses of the housing boom, and it will be some time before net job creation gains momentum, unless ambitious reforms are implemented. The structural reforms launched in the past year represent positive progress. At present it is essential to persevere with these measures – such as the fiscal consolidation process – and maintain the pace of reform, tackling the reforms needed in areas which are essential for competitiveness and for boosting the Spanish economy’s potential growth. The key issue now is not to stop, but to push ahead with the reforms, with all of them, including of course the restructuring of the savings banks, which has been the subject of my speech.
Urban Bäckström: The business cycle and interest rate policy Speech by Speech by Mr Urban Bäckström, Governor of the Sveriges Riksbank and Chairman of the Board of Directors and President of the Bank for International Settlements,.at the Euroforum’s Conference, Örebro, 10 October 2001. *  *  *  First a word of thanks for the invitation to discuss matters to do with the business cycle and interest rate policy here with you in Örebro. We are living at present in turbulent times. Political events on the world stage have considerable economic and other repercussions in Sweden. Today I shall be saying something about my view of the business cycle’s current phase and also try in some measure to look into the future. Weaker activity in the rest of the world Global economic growth slackened appreciably in the first half of this year. The downward phase has lasted longer and become deeper than many observers had counted on at the beginning of the year. For the first time in over a decade we are experiencing a synchronous slowdown in all the leading economies. The terrorist attacks on 11 September have accentuated the risk of the downward phase being more pronounced and protracted. At the same time it should be underscored that the attacks can hardly be expected to disrupt the conditions for growth in the longer run, either in the industrialised countries or in what are commonly referred to as the emerging markets.

But the dilemma goes further - given that it is rational for others to expand their budgets it becomes rational for your own country to do so too - even if your instinct is not to “free ride”. Otherwise you might rationally expect to end up among the small minority that does not expand and at the same time still have the tighter monetary policy that results from everyone else expanding. This is the classic “prisoner’s dilemma” from game theory. The conclusion is that it is necessary to have rules for fiscal policy that limit deficits and debt when monetary policy is united and fiscal policy divided, and that these rules need to be followed. But the conclusion is also that the pressure to over-expand is as strong during an upturn as during a downturn. In fact this is what we have seen in the euro zone during the heyday of the late 1990s - a much too expansionary fiscal stance in some euro zone countries, which led to tighter monetary policy and thus an incentive for others to weaken fiscal discipline. The euro zone then started the downturn with large deficits, considering the earlier boom, instead of surpluses. What the Pact then required, a 180-degree turnaround in fiscal policy to a tighter stance, reinforcing the downturn, was considered by some as stupid. In fact it was the lack of savings during the boom that was stupid.
High and fluctuating inflation, on the other hand, disrupts the signalling function of the pricing system and can more easily lead to bad economic decisions. In an environment with low inflation, the price system can do a better job in allocating resources to uses where they will do most good. In a broader sense, one could see an efficient pricing system as part of an efficient payment system – it ensures that the transactions made are based on the best information possible. Price stability can also be justified for reasons not immediately connected with the efficiency of the payment system, such as the fact that high and fluctuating inflation tends to give rise to undesirable distribution effects. For instance, inflation appears to hit poor people hardest as the rich usually have better opportunities to protect themselves, or even to benefit, from the effects of inflation 2 . This could be because, for instance, poor people often have no other opportunity than to retain a large part of their limited assets in the form of money or because they are to a greater extent than the rich dependent on public subsidies that are not fully indexed. Keeping inflation low and stable is currently the most obvious – and definitely the most noticed – task for modern central banks. The reason for the focus on price stability is of course the negative experiences of the high and fluctuating inflation many countries experienced in the 1970s and 1980s.

This was the case with the Swedish krona and several other European currencies at the beginning of the 1990s. With regard to inflation targeting, I am of course somewhat biased and for obvious reasons find it easier to point to advantages than disadvantages. One advantage is that a central bank which conducts inflation targeting is not tied to maintaining a particular exchange rate relationship, but can be more directly aimed at focussing on what is happening in the domestic economy. Another, partly related advantage – which I believe has been very important in Sweden’s case – is that inflation targeting means that one specific authority is given a clear responsibility for maintaining price stability. During the 1970s and 1980s it was not entirely clear where the responsibility for this lay in Sweden. One could say that the responsibility in practice had been delegated to the social partners, but that the total economic policy tended at the same time to be so expansionary that it became difficult to maintain wage and price increases at reasonable levels. A further advantage of inflation targeting is that the task of monetary policy, in the same way as with a fixed exchange rate regime, is easy for the general public to understand. If I am to try to find a disadvantage with inflation targeting, it could be that it is more difficult from a purely operational point of view for a central bank to steer inflation towards a particular level than to maintain a particular exchange rate relationship.
François Villeroy de Galhau: The euro - 25th anniversary of the Maastricht Treaty Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Osservatorio Permanente Giovani-Editori, Florence, 7 February 2017. * * * Ladies and gentlemen, I wish to sincerely thank the Osservatorio Permanente Giovani-Editori and its Chairman, Andrea Ceccherini, for inviting me. I am delighted to be with you this afternoon, with the young people of Italy, in a country that I love. A country that is at the heart of Europe and that has often marked its history, as illustrated by your magnificent city of Florence, and the glory of its Quattrocento, cradle of the whole European Renaissance. But a country that currently has doubts about Europe. I stand before you, following in the footsteps of Ignazio Visco, Jean-Claude Trichet, Jens Weidmann and Klaas Knot, as both a central banker and a committed European. And, on this 7th of February, I want to speak to you about the euro: today is the 25th anniversary of the signing of the Maastricht Treaty. The euro has existed now for 18 years and for the past 15 years it has replaced the Italian lira and the French franc in our wallets. I want to start by saying what the single currency has brought, in concrete terms, to the Europeans and then reply to four doubts that we often hear about the euro. Lastly, I want to talk about what remains to be done collectively in the future.

Long taken for granted, this has become the holy grail of banking regulation and supervision. And it has become the ultimate goal of all the relevant reforms that have been undertaken since the crisis. And much has been done. We have revamped the global standards for capital and liquidity – Basel III. Rules for banks are now much stronger than they were before. And the same is true for supervision. Just think of European banking supervision, which was set up in 2014. All this will help to make banks more resilient, so that they can reliably serve the economy. But there is one thing which neither rules nor supervisors can do. They cannot prevent each and every bank from failing. And in my view, we should not even try to. The possibility of failure is inherent to any kind of business, and it is a core element of well-functioning market economies. 1/9  BIS central bankers' speeches  No, it is not the job of supervisors to keep individual banks alive. We, in particular, must not lower our standards to cater for the weakest bank. It would also be wrong to assume that each bank, even the weakest, just needs time to sort itself out. It would be wrong to assume that the local economy just needs to grow for a few more years for the bank to recover. The result would be weak banks that stagger on, zombie-like, barely able to survive in good times.
Competition is a part of Hong Kong’s free market ethos. It is already strong in the banking sector here. We have witnessed it in particular – and occasionally with some concern – in the mortgage war and in the provision of credit card and other consumer services. Competition is being sharpened and stimulated by globalisation, which opens up hitherto restricted markets to businesses that are able to export their strengths, and by technological advance, which puts a premium on innovation and ingenuity. BIS Review 55/2001  1  For the economy as a whole, competition promotes efficiency in the allocation of resources and strength and flexibility in the face of change or crisis. In the banking sector, greater competition strengthens both individual banks, by forcing them to focus on their own core competence, and the banking system as a whole, by weeding out inefficiencies. For the consumer, competition promotes choice, quality and efficiency in products and services, and more reasonable costs. But competition, by its very nature, produces winners and losers. It also complicates the relationship between banks and customers, as services and fee structures become more complex and more sophisticated products proliferate. The general government policy on competition in Hong Kong is to adopt a sector-specific approach. We are not disposed to the idea of a general, overarching competition authority, since each sector of the economy has its own special needs and concerns.

I would now like to turn briefly to the experience of the Central Bank of Malta in dealing with these policy issues over almost 50 years of its existence. Malta is an extremely small, open economy, highly dependent on international trade for its prosperity. The Bank’s monetary policy objective was initially set as the promotion of “the orderly and balanced development of Malta and a rising level of employment and income consistent with the maintenance of monetary stability in Malta and the external value of the currency”. In practice, among these multiple objectives, the Bank gave priority to maintaining stability in the external value of the Maltese lira (or pound as it was initially known). An exchange rate peg was seen as necessary to support foreign trade and inward investment from abroad. Moreover, given Malta’s  2  For an account of the euro area’s exchange rate policy during the first decade of its existence, see Lorenzo Bini Smaghi, “The euro area’s exchange rate policy and the experience with international monetary coordination during the crisis”. Speech delivered on 6 April 2009 in Brussels. 2  dependence on imported goods to satisfy domestic consumer demand, the peg was also seen as a prerequisite to safeguard domestic purchasing power. 3  Throughout its existence, therefore, the  Bank’s monetary policy orientation was always focused on a fixed exchange rate as the nominal policy anchor.
The financial sector assessment program jointly carried out by the IMF and the World Bank in 2003 and updated in 2007, together with the associated technical assistance, contributed to strengthening Bank of Algeria’s supervisory tools. As of 2002, the supervisory framework also benefited from the adoption of a regulation on internal control of banks and financial institutions, which requires them to establish an internal control system for their activities and associated risks in order to improve risk assessment, management, and control. The emergence of excess liquidity in the money market since 2002 led to the introduction of new monetary policy tools in order to mop it up effectively. Based on a comprehensive regulation adopted by the Council on Money and Credit in 2005, important progress was achieved in 2006 in modernizing the payment systems, including the real-time gross settlement system for large value and urgent payments and the clearing system for retail payments. The efficiency and safety of transactions occurring through these systems have been strengthened since then, in line with international standards. To improve bank financing of private enterprises, especially SMEs, the government initiated reforms regarding loan guarantees in the 2000s. These include an increase in the level of guarantee (from 50 to 250 million dinars) provided by the Guarantee Fund for Investment Credits (CGCI), the creation of the national investment fund and regional investment agencies, and the introduction of an interest rate subsidy on investment loans.

It is expected to begin operations soon. Conclusion Let me conclude. Financial regulation remains work-in-progress. We must press on with the reform agenda and see it through to full, timely, and consistent implementation. At the same time, we must evaluate the effects of the reforms put in place and make adjustments where appropriate, to maximise their effectiveness and minimise their costs. We must strengthen the foundations for sound risk management and good conduct by working with the industry to embed deeply a culture of responsible risk-taking and ethical conduct. 6/7  BIS central bankers' speeches  We must prepare our regulatory and supervisory frameworks for the technological changes sweeping the industry - addressing new risks while promoting innovation, harnessing the benefits of technology, and promoting growth and opportunity in our societies. Thank you. 7/7  BIS central bankers' speeches
The outlook for 2012 and 2013 depends, for instance, on developments in international economic activity and on the result of the coming wage bargaining rounds in the labour market. The financial markets during the summer Developments in the financial markets have been dramatic over the summer. Share prices, government bond yields and exchange rates have fluctuated substantially. This turbulence is one factor that could have significance for future forecasts. This is essentially due to renewed concern over sovereign debt problems in the euro area and the United States. Focus has primarily been on four issues: public finances in Greece, the risk of problems spreading to Spain and Italy, potential problems in the European banks and the management of the debt ceiling and public finances in the United States. New support package for Greece At the beginning of the summer there was particular concern over developments in Greece. After a series of meetings of various policy-making bodies within the EU as well as a vote of confidence and a decision on budget-strengthening measures, structural reforms and the sale of state-owned companies in the Greek parliament it was decided in mid-July that Greece would receive a further support package from the euro area and the IMF. This led to a slight fall in the yield on Greek government bonds from their extremely high levels (see Figure 11).

Spain and Italy in the danger zone At the beginning of August concern increased that the problems would spread to other countries than Greece, Portugal and Ireland, who were already receiving support. Market participants focussed on the sovereign debt situation in Spain and Italy, which caused government bond yields to rise in these countries. Both countries have problems with their public finances, but in different ways. Italy has a very large national debt, but not such a large deficit in public finances, while Spain has a smaller national debt but larger public finances deficit. Both countries have suffered declining competitiveness over the past ten years. Recently, the lack of confidence has also begun to affect France. The banks managed the stress tests There is also concern that the sovereign debt problems will spread to the banking sector. On 15 July the European Banking Authority, EBA, reported the results of the stress tests of 91 European banks, which together account for 65 per cent of the EU’s banking sector. This showed that all the banks but 8 had sufficient resilience to manage a deterioration in the  4  BIS central bankers’ speeches  scenario for the period 2011–2012, but that a further 16 banks almost did not pass the tests. However, all four major Swedish banks passed the stress tests with flying colours. The results were received with some scepticism, as they were not considered to be sufficiently credible, but the markets nevertheless calmed down.