samchain/econo-pairs-v1 huggingface dataset:
The sheer size of the economy in the monetary union will encourage the use of the Euro instead of the US dollar in trade and foreign exchange transactions. This process would further be accelerated by the fact that the use of a single currency will remove the not negligible cost of transactions. According to a study conducted by the IFO Institute in Munich, “the transaction costs for the inter-European currency management may be in the order of nearly 60 billion ECUs, or nearly 1% the GNP of the European Union”. Also it is likely that central banks will use the Euro rather than the US dollar in foreign exchange interventions. In turn, this will encourage non-EU central banks to switch an increasing proportion of their reserves into the Euro. This process will take time and the Euro will not usurp the role of the US dollar in the short term. However, the trend is likely to be persistent and eventually the current importance of the US dollar in the foreign exchange markets should be replaced by the joint importance of the US dollar and the Euro. One factor which will affect the speed of this change is the outlook for the Euro based on the fundamentals of the monetary policy of the European Central Bank (ECB). Moreover, the creation of a monetary union will prevent exchange rate volatility within the united Europe, the reason being that the Euro area as a whole will be much less dependent on foreign trade.

At the same time the system will strengthen Turkey’s links with the European member countries and will enable it to trade in the same currency as other members, a requirement for participation in the EMU. As far as the technical infrastructure is concerned, Turkey is ready to integrate itself into the EU. I would like to remind you that Turkey has been pursuing a series of liberalization policies since 1980 which are broadly in line with economic tendencies in the world. A wide range of policy measures were put into effect to achieve the restructuring of the economy. Changes in exchange rate and trade policies were the main instruments in this process. This program has brought a radical change in Turkey’s development strategy by increasing its dependence on market forces. In this context, the fixed exchange rate policy was replaced by the flexible one, restrictive control measures on imports were abolished and protection was reduced gradually. Similarly, foreign exchange transactions were thoroughly liberalized, free trade zones were established, foreign investment was further encouraged along with the privatization of public enterprises. As a result of these newly adopted policies, there have been spectacular changes in the Turkish economy, with exports and foreign investments having proved to be responsive to the structural adjustment process; within this process, the Turkish lira has become fully convertible and restrictions on capital movements have been effectively removed.
The global economic recession paved the way for Keynes’ concept of demand management and active government intervention, and the rewriting of textbooks began. After the war, universities produced a new generation of economists filled with ideas of planned economies and regulation. The interest rate was regulated downwards to promote distributional aims. Other regulations had to be tightened to curb the consequences of distorting market prices. And new  1  Odd Nordstoga, Lykkeliten from the album November, Universal in 2010. BIS central bankers’ speeches  1  regulations were then added to alleviate the consequences of the former ones. One regulation came on top of the other and so on. That was the case not only in Norway, but also in many other countries. Detailed regulation – or fine-tuning – prevailed until the 1970s. The scale of regulation was summarised in a speech by Norges Bank Governor Knut Getz Wold at the Norwegian School of Economics in 1972: “Pursuant to the Act relating to access to regulating monetary and credit conditions of 1965, the King can decide to use a wide spectrum of instruments, such as liquidity reserves, foreign exchange reserves, supplementary reserves, investment obligation, direct lending regulation for certain credit institutions, interest rate caps on loans and issuance control in addition to reporting requirements in certain areas.

3  Reinhart, Carmen M. and Kenneth S. Rogoff, “This Time is Different: Eight Centuries of Financial Folly”, Princeton, New Jersey, Princeton University Press 2009. 2  BIS central bankers’ speeches  as described by Thomas Kuhn – do not come about because the defenders of old truths see the light, but rather because they eventually die. 4 If we take a closer look at the Basel III framework, there are still signs of innovation. Macroprudential policy is a new element of the framework, aimed at containing systemic risk in banks and financial institutions. For the first time, international banking regulation includes requirements grounded in the interplay between the banking sector and the rest of the economy. We must acknowledge that in the run-up to a financial crisis, the authorities, banks and other economic agents often confuse good times with normal times. Strong growth in real estate prices, credit and tax revenues are perceived as normal. Statistical filtering methods confirm that trend growth is high and that debt growth is sustainable. This time is different. We should know better – because we have fairly extensive knowledge about the economic background leading to financial crises. Analyses, including our own, show that a rapid accumulation of debt almost always precedes a financial crisis. Empirical studies document that high debt growth increases the probability of a crisis and results in a deeper crisis. 5 Debt is at the core of all financial crises. Real estate prices also rise rapidly ahead of a crisis.
The language of “recovery” simply did not fit their facts. On subsequent regional visits, including this one in Wales, talking to companies, community groups and charities, I have encountered the same conundrum. For many, the economic recovery is visible and tangible – in sales, in jobs, in investment. But for others it is barely visible and for some non-existent. How to reconcile the macro data with these micro accounts? Were these stories outliers? Or was I neglecting an important missing ingredient in the UK’s economic fortunes? Put differently, whose recovery were we actually talking about? These questions have a particular resonance here in Port Talbot. Prior to the crisis, unemployment in the local area was similar to the Welsh and UK average at around 5%. But the region was hit hard by the recession, with unemployment peaking at 13% in 2014. Despite recent falls, it remains at 9% – well above its pre-crisis peak and levels in Wales and the UK. Today, over one in five households have no-one in work. Recent uncertainty about the future of the local steelworks, and the jobs of the 4,000 workers there, has further complicated the picture. Here in Port Talbot, the language of “recovery” may also fail to fit the facts. BIS central bankers’ speeches  1  Against that background, I want today to take a look at the performance of the UK economy over recent years.

Net savings by UK companies currently stand at around 1% of GDP. That means, when we look at household disposable income per head, we find it has essentially flat-lined since 2009 (Chart 4). Even as GDP has recovered, household incomes have essentially stagnated. Even the notion of the “average household” needs careful interpretation. Looking at a different “average” – the household in the centre of the distribution or median – suggests this flat-lining in disposable incomes may have pre-dated the crisis (Chart 4). Half of all UK households have seen no material recovery in their real disposable incomes since around 2005. Or, put more evocatively and provocatively, the majority of UK households have faced a “lost decade” of income. Next let’s look at employment. The aggregate numbers here are hugely impressive, with 2½ million new jobs created since 2010. The UK unemployment rate has fallen like a stone, from 8.5% in 2011 to around 5% currently. And the news gets better. Chart 5 breaks down these new jobs into full-time, part-time and self-employment. It is clear that the lion’s share of the jobs’ increase over the past few years is accounted for by rises in full-time work. This has been not just a jobs-rich recovery, but a full-time, jobs-rich recovery. Yet the nature of work may matter every bit as much as headline jobs numbers. Work is about more than just the money; it adds to life satisfaction and self-esteem and lowers anxiety and  4  4  Bernanke (2011).
So, we cannot just rely on attracting overseas talent to address the issue. 29. A more sustainable strategy is to build a large, deep financial talent pool locally. To do so, we have embarked on a new talent development strategy – “Connecting Talent to the Future” – and a range of new initiatives to address the talent gaps in a more structured and targeted manner. Our objective is to build a strong pipeline of future talent on the one hand, and develop a highly skilled local workforce on the other. 30. Our new strategy is built on three “connect” directions. First, we have to better “connect” our younger generation to the banking industry so that they have a better idea of the abundant 3/4  BIS central bankers' speeches  career opportunities out there, especially in fintech and ESG fields. We hope this would help attract more new blood to the industry. We are now organising a series of outreach and promotional events, like career talks and social media campaigns. We will also launch a virtual resource centre as a “one-stop directory” for various job types, career paths and training pathways in the industry. 31. It is never quantity over quality, as the quality of our future talent is also critical. To ensure our students are “future ready”, it is essential to enrich students’ real-world experience. This can be achieved by forging closer ties between universities and the industry. 32.

HKMA, as both a banking regulator and market facilitator, has the role of creating a conducive environment for this to happen. Therefore, we have launched a new Fintech 2025 strategy recently and will work hand in hand with the industry along this fintech journey. 18. Of course, we are mindful that technology can be a double-edged sword. If done properly, technology can enhance financial inclusion. But there are always risks. For example, the improper use of artificial intelligence and machine learning may lead to biased outcomes and even exclusion. Ill-constructed “model-based” lending could unfairly discriminate against some SMEs. And from a conduct risk perspective, customers could be advised to invest in products not in their best interests. Therefore, it is necessary to properly manage such risks and ensure fairness in the algorithms through rigorous validation and testing. 19. In other words, building a smarter financial system is not just about how much technology content we inject into it. What is more important is whether the outcome for customers is more inclusive and efficient, and whether banks can better manage the risks involved. 20. If we look at another key development priority pursued by the HKMA – Green and Sustainable 2/4  BIS central bankers' speeches  Finance – similar financial exclusion concerns could also arise. It is important that when we gear towards a greener financial system, we should also have financial inclusion in mind. This is the third role of the financial system that I want to talk about. 21.
It would be potentially destabilising of the whole project if countries found themselves obliged to take extremely difficult political decisions in the early years because their fiscal positions had not been properly corrected beforehand. Of course it goes without saying that if a country’s outstanding debt burden is well above the Maastricht guideline it will be much more difficult to achieve a sustainable BIS Review 1/1997  -3-  deficit position, since it will be necessary to run sizeable primary surpluses at high points in the cycle. It is worth recalling that when the Treaty set a figure of 60 per cent of GDP the EU average was 55 per cent. This year it will be over 73 per cent, and only Luxembourg, France and the UK will be below 60 per cent. Any country with a very large outstanding debt to GDP ratio will find the going particularly tough. As far as the UK is concerned, our debt to GDP ratio is relatively low at 56 per cent, but while we have made considerable progress towards fiscal consolidation in recent years, our deficit remains above the Maastricht guideline, even after almost five years of growth. A UK government of any political colour, as it comes to make a decision on our readiness for EMU membership next year, will be bound to take that into consideration. The latest government forecast, after the recent Budget, shows us achieving a figure of a touch below 3 per cent in calendar 1997.

Looking at Europe’s regional economies, it is striking that relativities between them have remained so stubbornly large for so long, even within individual member states. Indeed only in the UK have there been some recent signs that relative unemployment rates, from prosperous to less prosperous regions, have begun to converge. That appears to be related in changes in relative wages which have come about as a result of the dismantling of centralised pay bargaining, and of other labour market restrictions, in the 1980s. Elsewhere in Europe those changes have not been made; without them we would have to enter a reserve on the preparedness of some European economies for the rigours of a single currency. That is another point which, I am sure, any British government will wish to take into account in making its final decision. And we would feel more comfortable about the likely success of EMU as a whole - and I emphasise that the success of EMU is strongly in the British national interest, whether we are in or out were we to see faster progress towards greater labour market flexibility elsewhere in Europe. It may be argued that EMU itself will act as a stimulus to reforms needed in fiscal policy, and in labour markets; indeed that the prospect of EMU is already doing so. We cautious, pragmatic, non-visionary people that we are - would like to see the needed reforms implemented first.
With the 2021 Budget just around the corner I want to take you back to the April 2009 Budget, just under twelve years ago, when, in my role as Chief Economic Adviser to the Treasury, I had to advise on the consequences of the deficiencies in the global and UK pre-crisis regulatory framework. By spring 2009, what had started in the summer of 2007 as a liquidity crisis in global financial markets turned into a solvency crisis for a number of global and UK firms, resulting in the UK government bailing out banks and injecting public  1  For more information see the Bank of England’s written evidence submitted to the TSC’S 2017 capital inquiry 2  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  2  money to the tune of £ to stabilise the financial sector2. The contingent liabilities that the UK government had taken on to support bank funding or to underpin some major banks’ balance sheets dwarfed that sum. At that time, we saw the very serious consequences of the lack of appropriate focus on the safety and soundness of individual banks and the financial system as a whole, including the absence of a credible resolution regime – by which I mean a regime that sets out our aims, to manage the orderly failure of institutions, accompanied with the tools to deliver them.

The UK regulatory regime is not designed to ensure that no firm ever fails. Having a competitive market means lowering the barriers to entry and exit; the orderly failure of a firm with minimal financial stability implications is a natural part of an efficient economy. This is why we have modified insolvency rules for less systemic firms, which include an explicit objective to prioritise the repayment of eligible depositors by the FSCS within seven days, or have their accounts transferred to another firm. These powers also seek to act as a backstop, complementing other important supervisory tools such as having comprehensive recovery and solvent wind-down plans for firms to withdraw from the market before failure. Our disclosure requirements, as part of the RAF, also reflect this proportionality, with only the largest firms currently in scope of our reporting and disclosure requirements. We are also taking a proportionate approach in applying RAF for our international hosted firms20 by looking at whether they can achieve resolvability outcomes which are broadly comparable to our framework. In many cases these firms may be able to rely on group wide capabilities, avoiding unnecessary duplication. By requiring firms to meet outcomes and in not being prescriptive, the RAF also acknowledges that the depth and type of capabilities required to remove barriers will vary by firm and firms may be able to demonstrate that certain capabilities are not relevant to them – simpler firms will need to develop correspondingly simpler capabilities.
First, in our country the women employment rate declined by 1.2 percentage points, while the men employment rate fell less than 1 percentage point, thus further widening the already wide gender gap of 18 percentage points, much higher than in the European Union. That data show that only 38% of the women work, which is significantly lower than the employment rate of men (56%). When we look at the unemployment rate, we see similar developments. Initially unemployment rate increased more for women than for men. Then, as a result of policy support measures, the unemployment rate gradually went back to the pre-crisis level in 2019. However, the adjustment in the unemployment rate is largely related to the increased exit of females from the labor force, illustrated with the fall of their labor force 1/3  BIS central bankers' speeches  participation rate. Of course, this is not the case just in our country. It is a global phenomenon. It is a case in the whole Western Balkan region. For example, participation rate in the region on average declined by 1.5 percentage points to 51%, which is the lowest level since 2016, with a higher drop again for women than for men. Thus the female participation in the Western Balkan region fell to 41%, which means that only 41% of the working age women are part of the labor force in comparison to the 63% of men, although with large variations, from 52% of women participating in Albania, to 22% of women participating in Kosovo.

Labour market policies must seek to facilitate the shift of workers from domestically-oriented sectors facing weak demand to export-oriented sectors, and from depressed regions to resurgent ones. And wages must become more flexible, so that firms can ride out cyclical downturns without losing competitiveness. 47. Next, tax reform. The debate needs to shift from the rate of taxation to the structure of the tax system. The US could do with a broader tax base, simpler tax codes, and less exemptions. In Europe, similarly, there are opportunities to increase the efficiency of the VAT system including in broadening its base. 48. Lastly, pension reform. Government spending in many advanced economies needs to be overhauled in the face of impending demographic challenges. Effective pension reform requires a judicious combination of increases in the statutory retirement age and reductions in the generosity of benefits, with the balance varying from country to country. Emerging Asia: domestic demand, financial deepening, productivity 49. In Emerging Asia, the key structural reforms are in the areas of boosting domestic demand, deepening financial markets, and raising efficiency and productivity. 50. Boosting domestic demand is perhaps the most important medium-term imperative for Emerging Asia. Public and private sector deleveraging in the advanced economies has at least dented, if not extinguished, the export-powered growth model that has been largely responsible for the “Asian Miracle”. Reforms are needed to stimulate private consumption in some Asian economies, and investment in others. 51. In China, the issue is consumption, not investment.
These doubts are reflected in a significant increase in risk premia for sovereign debt in these countries, which has prompted them to establish major cost-cutting programmes. This situation is weighing on financial markets, despite the relatively favourable reports of economic recovery at the global level. Indeed, current market uncertainty has reached a high level, although it remains lower than that observed during the recent crisis. To give an example, the VIX index (which measures uncertainty on the equity market) and the CDX index (which measures credit risk) are both rising again. However, they are still significantly lower than at the end of 2008, i.e. at the peak of the subprime crisis (cf. chart 1). The uncertainty associated with the fiscal situation of certain European countries has also triggered another rise in tension on the interbank market for US dollars. To counter this, several central banks, including the SNB, have reactivated swap facilities in cooperation with the Federal Reserve in order to provide dollar liquidity that may be required for the smooth functioning of the markets. In Switzerland, the interbank market has remained calm. Indeed, the ample supply of liquidity has reduced Swiss franc interbank rates. As can be seen in chart 2, risk premia on the Swiss franc interbank market have also declined. They fell by more than a half in May while, during the same period, US dollar risk premia on the interbank market in the US rose again. Alongside the uncertainty, investor risk aversion has grown over the last few months.

In the first stage, during the crisis, the SNB made use of EUR/CHF swaps, while in the second stage, when it was confronted with the appreciation of the Swiss franc, it intervened on the foreign exchange market. As part of these unconventional measures, the SNB purchased Swiss franc bonds issued by private sector Swiss borrowers and temporarily extended the terms of its repo operations. Today I am going to focus on the impact that the SNB’s interventions have on its balance sheet. In these interventions, the SNB purchased euros as well as, to a lesser extent, US dollars. These acquisitions led to a significant increase in currency reserves, which rose from CHF 95 billion in December 2009 to over CHF 230 billion at the end of May 2010. The foreign exchange acquired through SNB interventions has been placed in securities. The SNB’s investment policy is founded on the criteria of security and liquidity, but also return. In order to satisfy the requirements of security and liquidity, the SNB has focused on the purchase of liquid instruments of first-class quality. All investment activity is carried out according to a strategy based upon diversification, while also taking into account potentially major but low-probability events. A further aim of this strategy is to ensure maximum resilience of the SNB balance sheet. For the sake of completeness, let me add that, given the accumulation of additional dollar reserves, the issuance of SNB Bills initiated in February 2009 to finance the SNB stabilisation fund is no longer necessary.