samchain/econo-pairs-v1 huggingface dataset:
In 1996, both agencies raised Iceland’s rating by one notch and in 1997 Moody’s raised Iceland’s rating again and that time into the double A category, to Aa3. The short-term rating is A-1+ and P-1. Both agencies have assigned ratings to the long-term obligations of the Republic of Iceland in domestic currency, Aaa and AA+. The improved rating demonstrated a welcomed recognition of the progress made in Icelandic economic management in recent years. In our own view, the rating improvements were overdue, first because our economic performance was in quantitative terms fully compatible with that of countries with a higher rating than Iceland, and, secondly, because it seemed obvious that the reception of Icelandic borrowing operations in the markets indicated that financial institutions have consistently assessed Icelandic risk differently from, or one might say more favourably than, the rating agencies. Structural changes Other speakers at this conference will touch on structural changes in the economy, particularly in the financial sector. I only wish to emphasise that it is not an overstatement to say that the Icelandic financial system has undergone radical changes since the middle of the 1980s. The market was deregulated, a stock exchange was established, and new institutions and financial services flourished. Last but not least, all restrictions on the movement of portfolio capital between Iceland and other countries were removed as alluded to earlier. The market is now similar to that in other developed countries, except for volume of course, while the role of the government through ownership of financial institutions stands out.

As time goes by, we will have to consider our options. A review of our future exchange rate policy will be particularly important. The possibility of Iceland at some stage joining a larger currency area should not be precluded, particularly if the political and economic cost of staying outside will be found to outweigh any advantage of maintaining an own currency. BIS Review 117/1999  4  Iceland and America Looking briefly in another direction, Iceland’s relations with the great continent in the West date back a thousand years. In recent decades, we have had important trade links with the United States. However, the relative share of trade with the US has declined significantly, or below 15%, since exports to the US peaked at almost 30% of total exports in the 1970s. Imports from the US also declined significantly from a high level around the middle of the century to around 10% of total imports in the most recent years. The number of American tourists has also declined in relative terms. Although the share of the US in Icelandic merchandise trade and tourism has declined, the US dollar still plays a significant role as a vehicle currency in Icelandic trade and foreign exchange transactions. Recent changes in the geographical pattern of trade and investment reflect the liberalisation of trade within Europe and the increasing globalisation of the world economy. Like other developed countries, Iceland has a most favoured nations agreement with the US and Canada.
You have ageing populations in Japan, Europe and United States, which  BIS central bankers’ speeches  1  means that this baby boom generation, the people who were born just after the second world war were now starting to retire are consuming less and saving more and as a consequence you probably don’t have that space for a consumption led economic impetus that developing countries such as ourselves dependent on for the last 30 or 40 years to grow our economies through an export-led strategy. So my first question is; is that export-led strategy relevant any more given these demographic changes that we see in the advanced economies? And secondly given the fact that the advanced economies are in debt – what happened in the great recession was they nationalized private bad debts in their housing sectors, nationalized it, bought it into the government’s balance sheet and as a consequence that the western economies are effectively net borrowers in the system – do they then have all the gear to stimulate consumption and create another repeat cycle of that export-led boom that really lifted countries like China and other big Asian exporting economies out of the low income status that they had enjoyed for several decades. That to me is a very relevant question that we have to ask ourselves at this conference.

That could potentially create some turmoil for international markets including ours and in the process we could see some potential for dislocation which is why Sri Lanka has decided to reach out to multilateral agencies like the IMF and the World Bank to assist us in terms of sheltering or protecting the economy against any adverse developments that may occur in the near future as a consequence of any turmoil in international capital markets if and when US policy makers decide to raise interest rates. That is one hurdle we have to look at. The second hurdle I would say is the lack of a structural change the way international, particularly developed countries of the world, are managing their economic affairs. A lot of the changes that we have seen in the last 5 years has had to do with monetary policy and the aggressive easing of the monetary policy. But on the fiscal side, you haven’t seen any structural changes in countries like the United States and most European countries that took the world into the great recession in 2008 as a consequence of their housing  2  BIS central bankers’ speeches  bubbles. That structural change in terms of improving productivity, reducing the size of social security programs and retooling their economies to become more productive has still not started and until that happens we don’t have a sustainable basis for global growth to grow apace.
Latest estimates from Statistics Iceland put the figure at 4%, which is somewhat higher than the Central Bank assumed in its updated macroeconomic forecast published earlier this month. Statistical evaluation of output growth in 2003 could still change when estimates are revised, which illustrates the uncertainty that surrounds recent and current economic developments and compounds the uncertainty about the future that monetary policy formulation always faces. Be that as it may, output growth was clearly robust and is explained above all by a rapid increase in national expenditure after two years of contraction. Private consumption growth also picked up and investment soared after a sharp recession, primarily due to the impact of the hydropower and aluminium projects that were launched during the year, along with investment in housing. An interesting comparison can be made between output growth in Iceland and other countries, especially the euro area which is often used as a frame of reference. Roughly speaking, from 1996 to 2001 growth in Iceland was two to three times higher than in the euro area. In 2002 the euro area performed better, but in 2003 growth was estimated at 0.8% in the euro area while it was 4% in Iceland. The difference is even more pronounced between Iceland and the largest euro countries, Germany, France and Italy, whose economies have been sluggish for several years. This large  BIS Review 18/2004  1  difference in growth explains much of the interest-rate differential that has prevailed between Iceland and that area.

Later in the year annual HICP inflation rates are expected to increase slightly while displaying some volatility. Looking further ahead, in 2011 inflation rates should remain moderate overall, benefiting from low domestic price pressures. Inflation expectations over the medium to longer term continue to be firmly anchored in line with the Governing Council’s aim of keeping inflation rates below, but close to, 2% over the medium term. This assessment is also reflected in the September 2010 ECB staff macroeconomic projections for the euro area, which foresee annual HICP inflation in a range between 1.5% and 1.7% for 2010 and between 1.2% and 2.2% for 2011. Compared with the Eurosystem staff macroeconomic projections of June 2010, the ranges have been revised slightly upwards, largely on account of higher commodity prices. Risks to the outlook for price developments are slightly tilted to the upside. They relate, in particular, to the evolution of energy and non-oil commodity prices. Furthermore, increases in indirect taxation and administered prices may be greater than currently expected, owing to the need for fiscal consolidation in the coming years. At the same time, risks to domestic price and cost developments are contained. Turning to the monetary analysis, the annual growth rate of M3 stood at 0.2% in July 2010, unchanged from June. The annual growth rate of loans to the private sector, which has been gradually increasing, rose further to 0.9%, but still remains relatively weak.
The goals of monetary policy If one looks at the 10 years leading up to the onset of the crisis – which were also the first ten years of the Bank’s MPC – the outcomes for inflation and for aggregate economic growth in the UK were good. Inflation was – by historical standards – very low, very stable and close to the target. That had not been achieved at the expense of unusually low growth or high unemployment. In Ireland growth had been much stronger and inflation a bit higher. The aggregate outcomes looked good in both countries (Charts 1–4). In the UK there was a strong consensus that having monetary policy directed at hitting an inflation target was sensible and that it had been successfully implemented. BIS Review 133/2010  1  But if you now view the mess that we are dealing with after the financial crisis as substantially reflecting monetary policy decisions, you would take a completely different view of how well policy had been run. The charge is that policy in the UK was inappropriate given the huge build-up in many asset prices, and particularly in debt, or leverage. The fact that monetary policy could be very successful in terms of hitting an inflation target – and in the UK it was 1 – but not prevent a very serious financial crisis, and one that has been followed by much more variable inflation, is taken by many as a clear demonstration that the inflation-targeting framework is flawed.

BIS Review 133/2010  9  In thinking about variations in the value of the assets held by a bank with a diversified portfolio of loans then variation in real aggregate income is arguably a much better guide than volatility in particular asset classes (eg property, equities). In some simple asset price models the real value of assets which are a claim on a stream of income is proportional to aggregate incomes (see, for example, Barro 2006). If we use that as a rough rule of thumb the Table suggests that occasions when generalised falls in real asset values might be 5% or more occur roughly once every 15 years. Falls in value in excess of 10% might be about once every 40 year events. Declines of 15% or more are once-every-80-year events. This suggests that banks would need far more capital than has been usual in recent years to be truly robust. Why bank capital might not be expensive? Of course if having quite substantially more capital generated much higher cost in intermediating funds through banks – and there are no close alternatives for bank financing – that extra robustness would come at a high price. But calculations undertaken by the Bank of England (2010), the BIS (2010) and academics (Kashyap 2009, and Admati et al 2010) suggest this is not the case. It is worth considering why.
Muhammad bin Ibrahim: Towards proportionality in practice – financial inclusion and implementation of global standards Opening remarks by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Global Symposium on Proportionality in Practice, Kuala Lumpur, 28 May 2015. *  *  *  Ladies and gentlemen, thank you for the opportunity to speak today at the opening of the Global Symposium, with the theme “Towards Proportionality in Practice: Financial Inclusion & Implementation of Global Standards”. Financial inclusion has captured the attention of many decision makers around the globe. We can confidently say that we have been successful in educating the world on the importance of ensuring access and usage of quality financial services by all segments of society. I think it has dawn to the power that be that financial inclusion empowers low income households and SMEs to improve their livelihood and because financial inclusion provides equal opportunities (and hopefully, it appropriately designed, equal outcomes), it also enables the under served to save in a secure manner, invest in productive activities and protect against unforeseen shocks. Financial inclusion, based on empirical evidence also reduces inequality 1, which in turn supports inclusive and sustainable growth, by allowing the poor to stay healthy, stay out of poverty, pay for education and accumulate human capital 2. It is, a very worthwhile agenda to pursue.

Following a strong 2021, foreign equity and bond inflows into onshore markets softened this year on the back of geopolitical uncertainty, Covid lockdowns, and the China-US monetary policy divergence leading to a reversal of onshore bonds’ yield premium. 10. Notwithstanding this, the scale of the decline in foreign purchases and holdings has moderated recently and is relatively small compared to global investors’ total holdings in onshore equities and bonds. We believe that these short-term fluctuations will not reverse the long-term trend of foreign investment in Mainland capital markets. 11. In fact, several key drivers will continue to strengthen interest in diversification into RMB assets over the medium term. These include (i) continued inclusion of onshore equities and bonds into major global indices; (ii) China’s long-term economic growth prospects; (iii) RMB being a stable currency that is increasingly recognised as a reserve currency; and (iv) lower correlation of RMB assets with other global financial market assets. 12. These factors are paving the way for a structural shift which will motivate global investors to think more strategically about their exposure to China. This, in turn, will spur demand for RMB assets and facilitate the further opening up of the onshore capital markets. 13. In the remaining time, I would like to highlight in more detail a few upcoming developments which will be of interest to international investors seeking access to Mainland capital markets. 14.
The emerging economies, although they did not experience the same problems, must take advantage of this opportunity to review their own situation, to draw lessons about what worked well or not, and to advance in the task of perfecting their financial systems. Chile’s institutional arrangements as regards financial stability have generally worked well in recent decades. This is borne out by the present strength of its financial system and the way in which it came through the recent crisis without major problems. But there are pending tasks and challenges. Large financial reforms may not perhaps be required but there is room for improvements in various areas. They include the need to create a mechanism for coordination and communication at the highest level with a focus on financial stability in which the government, the BCCH and the different financial sector supervisors participate. This would allow the BCCH to make its points of view known formally to the relevant authorities. Similarly, in a context in which financial activities have become increasingly complex, the bodies responsible for supervision need to be strengthened institutionally. From this point of view, particular attention should be paid to the resources assigned to them and their capacity to issue norms and regulation in a world that calls for constant adjustments and changes. Finally, it would be advisable for the BCCH to have a more active role in defining prudential regulation. In some cases, this role already exists but could be extended to other norms with systemic implications.

Analysis of the data from the experiment shows that those who moved to lower-poverty areas when they were 12 or younger were found to earn about 30 percent more, on average, in their early- to mid-twenties compared to those who did not move, were 27 percent more likely to have entered college, and 30 percent less likely to be a single parent. The MTO experiment again illustrates the importance of neighborhood effects on child development early in childhood. It also demonstrates that grants to move families to lower-poverty neighborhoods may reduce the intergenerational persistence of poverty. Of course, mobility of the sort that Chetty and other researchers have emphasized interacts in a very important way with the availability of affordable housing. Making high quality neighborhoods accessible to families from all socioeconomic backgrounds is a major challenge for public policy. Of course, illegal racial and other discrimination has played a role in preventing access to high-quality neighborhoods. However, part of the challenge arises from the fact that in a free-market economy, the quality of the environment is reflected in the price of land – and thus housing – in that place. This means that the neighborhoods with the best schools, the best access to jobs, shopping, recreation and other amenities will be the most desirable and will have the highest cost of land and housing. Simply put, families seeking the upward mobility that better neighborhoods can promote may well find that housing in these neighborhoods is unaffordable.
But these same exchange rate regimes were in place when the funds were flowing in, which suggests that they were not viewed as a serious structural flaw by investors at that time. Similarly, the underlying weaknesses in many Asian economies that so many observers (with the benefit of hindsight) now point to — ‘crony capitalism’, inadequate risk management, speculative lending to the property sector — were all present at the time when the funds were pouring into the region. Not only did these weaknesses fail to deter investors on the way in: the abundance of inward investment prior to the crisis tended to exacerbate the problems, rather than act as a corrective force on policies. More recently, we have witnessed what appears to be the start of a new wave of capital flowing back into the region, even though it is far from clear that these structural problems have been fully addressed. I think it is not going too far to say that these ‘hot’ capital flows not only failed to act in a way that policed policies effectively, but actually became a powerful destabilising force in their own right. The huge swings in interest rates and exchange rates that resulted from capital flight in this region did far-reaching damage to corporate, financial, and government sectors, which, in turn, reinforced the initial withdrawal of capital.

I might add here that the currency of Macau, the pataca, has been linked to the Hong Kong dollar since as long ago as 1977. But not all economies are in a position to meet the preconditions necessary for linked exchange rates to endure. In the aftermath of financial crisis in Asia and elsewhere, many economies are searching for new approaches to exchange rate management. The recent trend is clearly towards more flexible exchange rate mechanisms. We cannot ignore a smaller camp, though, that is opting for greater fixity of exchange rates, supported by more robust institutional structures than have sometimes been in place in the past. The integration of European monetary systems in the form of EMU is an obvious example. Similarly, a handful of economies have successfully adopted currency board systems similar to our own. We must recognise, however, that many economies do not currently have the preconditions to make such a regime work successfully. It seems inevitable that they will have to live for the time being with some sort of managed float. The disadvantages of this system are that the lack of a transparent anchor and of a clear commitment to some well-defined policy objective make credibility difficult to establish. These conditions invite over-shooting in financial markets, as speculators attempt to test the limits to which the authorities are willing to let the exchange rate move. How can the authorities anchor policies and expectations in such an environment?
The ECB’s balance sheet is now double the size of the Fed’s as a percentage of GDP:  Page 8 sur 14 Moreover, thanks to our social model and its higher automatic stabilizers, the overall 2020 fiscal stimulus in the euro area has been almost as strong as in the United States:  Yes, President Biden’s American Rescue Plan is significantly bigger for 20212022. But according to many American economists, it could create a risk of the economy running above potential, “making monetary policy more difficult to use in the futureiv”, as expressed by Olivier Blanchard – who is not really known as a supporter of austerity. The new infrastructure bill, to be announced today, could have more positive long-lasting effects in two regards: it strengthens supply, including possibly in education; it could reverse the race to ever more tax cuts in advanced economies. With that in mind, for us Europeans, our main issue now is not the scale of our fiscal response but the speed of its execution. Speed, once more, is our collective handicap. Governments now need to implement the recovery plan to which they have agreed and they need to do so urgently. In other words, we in Europe need to walk our talk. On a structural level, three major crises in the past ten years – 2008-2009, 2011, 2020 – have shown the need to complete the Economic Union in addition to the successful Monetary Union, starting with a permanent fiscal capacity.

Page 15 sur 14 i  Delors J., Speech on the occasion of the opening of the academic year at the College of Europe, “50 ans Collège d’Europe”, September 1999 ii European Commission, Eurobarometer 93, October 2020 iii De Tocqueville A., Democracy in America, 1840 iv Blanchard O., “In defense of concerns over the $ trillion relief plan”, Peterson Institute for International Economics, February 2021 v Gordon R. J., “Is U.S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds”, National Bureau of Economic Research, August 2012 vi PatentSight vii Hanushek E. A. and Woessmann L., “The Economics of International Differences in Educational Achievement”, Handbooks in Economics, Vol. 3, 2011 viii Spain and Italy have the lowest PIAAC scores (respectively 252 and 250) in terms of adult literacy with France third but slightly above (262) vs. Netherlands (284), Norway (278) and Sweden (279). France has a 22% share of low-skilled workers, Spain and Italy around 27%, Sweden and Norway around 13%. Share of high-skilled workers: France 8 %, Spain 5 %, Italy 3 %, Sweden 16 %, Norway 14 %. Based on PIAAC 2012 and OECD 2013. ix The share of high-skilled adults among the population in the Netherlands, or in Finland, is more than twice as large as in France (17% and 19% respectively vs. 8% in France).