samchain/econo-pairs-v1 huggingface dataset:
And the recovery of the euro – including its recovery against sterling – will help to ease the severe imbalance within our own economy between the domestically-orientated sectors which have typically been doing relatively well and those businesses and sectors that are most exposed to competition from the Eurozone and which have been having a rough time. That imbalance is, I know, a real concern up here north of the border, and it has more generally for some time been one of the most difficult issues confronting us in conducting monetary policy. But there are, of course, also major domestic uncertainties. What – as I have often explained before – we are seeking to do through monetary policy – in order to achieve the Government’s inflation target – is to keep overall nominal demand growth more or less continuously in line with the supply-side capacity of the economy to meet that demand. That is a necessary condition for maintaining our steady economic progress. But we cannot directly observe supply-side capacity in either product or labour markets, nor therefore anticipate just how it will develop, with any great precision, nor do we know precisely what is currently happening or is likely to happen to the rate of growth of aggregate demand in the economy anyway. Our forecasts and policy judgements are based upon very careful scrutiny of all the latest data available to us, informed by the best technical analysis we can muster.

But they necessarily remain our best judgements and that, of course, leaves us vulnerable to assertions that we do not give sufficient weight to this or that factor. For what it is worth, at the time of our last forecast in November, our central projection – on the assumption of 6% interest rates – was for output growth of around 2½% over the next couple of years, with RPIX inflation remaining modestly below target this year but rising to 2½% in 2002. There was, of course, a good deal of uncertainty around that central projection, as there always is, for the reasons that I’ve tried to explain. But on the basis of that forecast the short answer to the question: can our steady economic progress be maintained over the next couple of years is a cautious “yes”. Since that forecast was completed things have gone in different directions. The prospect for external demand has somewhat weakened and so too has the oil price. There are mixed messages relating to  2  BIS Review 1/2001  tightness in the labour market, but earnings growth has so far remained reasonably well contained - as it must continue to do. On the domestic demand side, private consumption growth has remained stronger than we had supposed, while the growth in private investment has been weaker; meanwhile it is not clear that underlying public sector demand has – at least yet – picked up as rapidly as planned. The exchange rate has fallen, and so, too, have market interest rates.
In other words, the limit of the entire banking sector’s capability to provide lending to the economy has increased by this amount — ten trillion rubles. Banks thus have opportunities for a further expansion of lending, which is critical at the stage of economic recovery. I will now speak about challenges in the near future and in the longer run. Essentially, all challenges for the banking system are not new, but the pandemic, in our opinion, has accelerated the time when we should give an adequate response to them. As we have discussed it earlier in the course of our multiple meetings, intensified competition — and, moreover, intensified competition coupled with low interest rates — is a drag on bank margins, with many banks doubting business models that existed before this situation. In 2020, bank margins declined only slightly, specifically by 20 basis points, according to our assessments, i.e. remained approximately the same as before the crisis. However, this decrease may be more significant further on due to the factors of tighter competition and new business development models implemented both by large banks and because of rather low interest rates. Actually, we have discussed the topic of business models that could be sustainable in the long run in the course of our multiple meetings. To earn money, it is essential to continuously enhance services, technologies, and products. Banks may also improve their efficiency and competitiveness through banks’ consolidation, although there are very few such examples at the moment.

Probably, the first step is to disclose data, provide information on green social bonds the committees shall offer to market participants. These standards will become effective in autumn 2021. In addition, we are currently developing the rules for verifying financial ESG instruments. Cyber security which has been mentioned by Anatoly Aksakov is also a critical topic that will become increasingly important. Information security is essential in the conditions of digitisation as a key trend impacting the financial industry. Overall, the issue of operational risks and cyber risk resilience will certainly be in the focus of our attention. In this regard, we will be developing an adequate approach to assessing these risks, working jointly with you, so as to ensure banks’ resilience to them. Among other things, it is possible to create joint market-based infrastructure solutions. Wrapping up, I would like to say that, despite the problems and challenges that are important for banks and the regulator, we believe that banks really made their best last year in terms of both their own robustness, so to say, fire resistance at the moment they had to face the crisis, and the support they provided to their clients. The crisis will be over, while these two components will remain as significant.
In the present scenario, pressures on the current account are being reinforced by the steady upward trend in international oil prices. Markets often view wide current account deficits as a sign of vulnerability, thereby fuelling volatility in capital flows. So far, a number of NMS with a flexible currency arrangement have managed such volatility through exchange rate flexibility, a tool which might, however, be progressively lost in the run-up to the adoption of the euro. Developments in financial intermediation may also pose significant challenges in this regard. Thus far there has been a tendency for credit to be relatively low compared to economic activity in NMS, as banks, which are largely foreign-owned in a number of these countries, have been generally averse to advancing a significant amount of credit to enterprises, although tending to step up lending to households. 7 This implies the possibility that with a further internationalisation of the financial sector on account of the introduction of the euro, there could be a more rapid credit expansion through bank borrowing from abroad, with the attendant dangers of overheating and the formation of asset price bubbles. 4  Schadler et al (2005)  5  Begg et al (2003)  6  For example Cipriani (2000), Kovacs (2002) and Mihaljek and Klau (2003)  7  Schadler et al (2005)  2  BIS Review 53/2006  These considerations have important implications for the maintenance of financial stability in the NMS.

In this regard, the challenge would seem to be to strike a balance between, on the one hand, ensuring transparency and a level playing field and, on the other, giving due weight to the track record of economic policy and performance in the NMS, as well as to the implications for these  8  Schadler et al (2005)  BIS Review 53/2006  3  countries, and indeed for the euro-area as a whole, of an unduly rigid interpretation of the provisions of the Treaty. The application of the Maastricht criteria In making this point I am clearly not suggesting, as some academics have done, that the Maastricht criteria are “neither necessary, nor sufficient”. On the other hand, there are some aspects of the criteria that could legitimately be the subject of reflection. The calculation of the reference value of the inflation criterion is a case in point. Over the past few years there has been a debate about how one should define “best performance” in relation to inflation and also about the term “outlier”. And even about why countries outside the euro area should be included among the best performing countries. This debate appears to have resurfaced again during the preparatory phase of the current ECB Convergence Report. Another, and currently very topical aspect that also has ‘level playing field’ connotations is the impact of the ongoing spike in the international oil price.
Presentation of the 2020 Annual Report of the Autorité de contrôle prudentiel et de résolution (ACPR) Press conference, Friday 28 May 2021  Speech by François Villeroy de Galhau, Governor of the Banque de France Chairman of the ACPR  Ladies and Gentlemen, It gives me great pleasure to be with you again for the presentation of the 2020 Annual Report of the Autorité de contrôle prudentiel et de résolution (ACPR – Prudential Supervision and Resolution Authority), in the company of the new Vice-Chairman, Jean-Paul Faugère, Dominique Laboureix, Secretary General of the ACPR, and Alain Ménéménis, President of the Sanctions Committee. I would first like to pay tribute to the staff at the ACPR – more than 1,050 men and women whose professionalism is exemplary and recognised – who have worked especially hard, both on-site and remotely, to monitor closely the effects of the economic crisis on financial stability. Exactly a year ago, when we were just at the start of the Covid crisis, I pointed out to you, in this exact same setting, how vigilant we were being and how confident I was, both in the competence of our supervisor and in the resilience of the financial system. Looking back, we haven’t done too badly at all: at this stage, the financial risks are, on the whole, under control, thanks to resilient financial institutions with solid fundamentals (I).

For my part I also considered it important to focus the difficult forecasting work on the time perspective that was deemed to be the most essential for monetary policy and not become too involved in discussions about a more uncertain future. This argument was strengthened in my opinion when the Riksbank’s decision-making process became a collective undertaking. With a less explicit rule and an entirely flexible time horizon our discussions would have risked focusing – more than would have been desirable – on the choice of time perspective, at the cost of a discussion about what we actually know about the present and what we believe about developments over the coming two years. Consideration of real developments Allow me also to say a few words about the background to the clarification of the principles for monetary policy that the Riksbank decided on at the start of 1999. When the inflation target was established in 1993 we understood even then that it couldn’t be applied mechanically. That was intimated, among other things, in a statement that the target was not to begin to apply fully until 1995, in order thereby to cushion the effects of the inflationary impulses that were predicted during 1993 and 1994 following the krona’s fall and the change in indirect taxes. There were also several occasions during the latter half of the 1990s when policy was not conducted slavishly on the basis of CPI forecasts. That was because it was obvious that it could result in absurd consequences.
Once the joint banking supervision facility in the euro area has been established, the idea is that the ESM will take over from the EFSF and the loan can be channelled directly to the Spanish banks. This will break the links between the crisis banks’ finances and the Spanish government’s finances. The European Commission has signalled that a proposal regarding banking supervision will be announced in early September. One condition for the ESM to be able to take over the loan is, of course, that the mechanism is actually activated. This requires approval from countries that together account for 90 per cent of the capital paid into the mechanism. At present, approval is yet  BIS central bankers’ speeches  3  to be given by Germany – which is awaiting a verdict from its constitutional court in mid-September. The Memorandum of Understanding regarding support to the Spanish banks makes it clear that the Spanish government is expected to carry on with its work on reducing its budget deficit to just below 3 per cent. The time limit they have been given to reach this has been extended by one year to 2014. Spain has given an account of its budget plans and the savings to be implemented to reach the target. During the summer the IMF has also given strong support to Spain’s efforts. Concern over the situation in Spain and Italy The market’s reactions to the agreement on banking support to Spain can be described as cautiously positive.

For a region where socioeconomic disparities are wide, where the rural-urban divide is pervasive and considerable segments of society are still excluded from the economic and social mainstream, these developments have enormous potential to transform the current state to one where the financial needs of all segments of society are catered to. Several pre-conditions however must exist to realise this potential, and they all have to do with securing the trust and confidence of consumers in the digital financial system. This includes a regulatory framework that is appropriate and proportionate, a secure digital financial infrastructure and incentive systems that are aligned with providers that are both responsive and responsible. In Malaysia, efforts that are underway to enact a new Consumer Credit Act will further strengthen the foundations for the development of consumer finance in the digital age. The proposed legislation is important on several levels. First, it will reinforce fundamental protections provided to consumers in the provision of credit, including that provided by a growing number of nontraditional entities through digital solutions. Second, it will institutionalise inter-agency arrangements between authorities responsible for regulating consumer credit activities to promote consistent minimum protections and fair treatment of borrowers. And third, it will provide stronger assurance of more responsive and coordinated consumer protection arrangements to take into account the fast-evolving financial services landscape going forward. Equally important is a strong focus on financial education to promote financially and digitally literate consumers.
It is available on our website along with other data and information useful to policymakers, business people and the general public. We use our website to share what we learn about our diverse District, and you will find detailed information about the region at the site. I invite you to visit newyorkfed.org to explore our highly localized maps and information on small business, credit and housing conditions and even the latest job openings at the New York Fed. 2  BIS central bankers’ speeches  Finally, and crucially, in the aftermath of the financial crisis, we are working with our colleagues in Washington, D.C., and at other agencies to help put the nation’s financial system on a firmer footing. Our supervisors are working hard to ensure that our District’s banks are operating safely and soundly. Although much has been done, we are not finished and are determined to keep at it. I recognize fully that there can be no return to pre-crisis business as usual – whether on the part of the financial sector or on the part of regulators like ourselves. All in all, there is a lot to keep myself and my colleagues busy. National economic conditions Now I’d like to turn to the national and regional economy. The incoming data on the U.S. economy generally has been a bit more upbeat over the past few months, suggesting that the recovery may be finally establishing a somewhat firmer footing.

Across Upstate New York, the cycle of recession and recovery has been much less pronounced than in the nation, which means that the region has been more stable in recent years than many other places around the country. This has been particularly true in Buffalo, which experienced an employment decline of about 3½ percent during the downturn – a significant loss, to be sure – but well below the over 6 percent decline that occurred nationally. One reason why Upstate New York weathered the storm better than the nation as a whole is the resiliency of its housing markets. Like much of Upstate New York, Buffalo’s housing market has proven to be more stable than many other parts of the country. In fact, since the peak of the national housing market in early 2006, home prices in the Buffalo area have increased by about 10 percent, compared with a decline of more than 30 percent nationally. As a result, the drop-off in economic activity that is connected, directly and indirectly, to the performance of the housing sector has not been as severe here as in many other places around the country. 1  As measured by the 12-month change in core PCE deflator. 2  See for instance, the behavior of the three- and six-month changes in the core PCE deflator.
The most important concrete instrument for promoting cohesion is, of course, the EU’s convergence criteria for EMU participation: low inflation, low interest rates, a stable exchange rate and balanced government finances. Much has been said and written about these criteria. I have already suggested that perhaps it is not just these criteria as such that are the key to a monetary union that functions properly, although the part they have played in disciplining policy in a number of member states should not be underestimated. But I do believe they have had the important effect of contributing to a greater consensus than before on issues of stabilisation policy. The Maastricht Treaty’s institutional requirements concerning formal central bank independence and the legal infrastructure of the financial sector have also contributed to the consensus that has been achieved and which I believe is central for the proper functioning of EMU. A remarkable degree of economic convergence throughout the EU was achieved in the second half of the 1990s. If one excludes Greece, the gap between the highest and lowest rates of inflation among EU countries narrowed from 10 percentage points in 1990 to 1% point in 1997. In 1995 the gap in the public finances extended from a deficit of almost 8% of GDP in Sweden to a deficit of 2.3% of GDP in Denmark. By 1997 the gap had narrowed to a 0.1% surplus in Denmark and a 3.0% deficit in Spain. The EMU process also led to more similar levels of interest rates.

The Bank is already doing a great deal to address climate risk, and we outline even more ambitious plans for the future. As a long-term and global investor with holdings in thousands of companies, we have a financial interest in companies adapting well to the risks and opportunities presented by climate change. Norges Bank intends to be a driver for change, pushing companies to make the transition to net zero emissions. The companies we invest in reflect the transition that the whole world needs to undergo. The fund as an investor Our characteristics as an investor The climate risk in the fund reflects who we are as an investor and our overall investment strategy. In a nutshell: the fund is large, broadly diversified, long-term and index-based. Chart: Large, broadly diversified, long-term and index-based 70 percent of the more than 12 trillion kroner in the fund is invested in equities, making us one of the world’s largest shareholders. We have holdings in 9,000 companies in 70 countries. And we are a long-term investor. Since only the real return can be spent by the government, the fund could, in principle, last forever. 1/6  BIS central bankers' speeches  Put simply, the strategy for the fund is to strike the best balance between expected return and risk by spreading our investments far and wide and owning a little of everything in the market. There is a solid body of research to support such an approach.
Indeed, in a perfect world we might wish to see workers moving from higher-productivity to lower-productivity firms to enable good practices and processes to be effectively diffused from the upper to the lower tail. 39  The US job-to-job flow data are more comprehensive than those in the UK at picking up job moves within a given quarter. This methodological difference means that estimated US churn rates will be stronger than those in the UK, but this can only explain part of the gap between the UK and US job-to-job transition rates. 40 We combine the ASHE and BSD data for this analysis. 13  All speeches are available online at www.bankofengland.co.uk/speeches  13  Table 4 shows a matrix of transition probabilities for workers between four quantiles of the probability distribution for companies. 41  All of these probabilities are conditional on a worker moving in the first place  and so sum horizontally to one. Two points stand out. First, there is a high degree of stickiness in job moves. Workers tend to move between jobs in the same productivity quartile. In the upper and lower quartiles, around 40% of jobs moves are within-quartile. The second point is that there is rather limited evidence of technological diffusion being supported by jobs flows from firms in the frontier to the long tail. The probability of a worker for a company in the upper quartile moving to one in the lowest quartile is around 20%.

3, pp. 391-410. Bahaj, S, Foulis, A and Pinter, G (2017), ‘Home values and firm behaviour’, Bank of England Staff Working Paper, No. 679. Baldwin, R (2016), The Great Convergence: Information Technology and the New Globalization, Harvard University Press. Bank of England (2016), ‘Understanding and measuring finance for productive investment’, Bank of England Discussion Paper, April 2016. Batten, S and Jacobs, D (2017), ‘Foreign-owned firms and productivity’, Bank Underground, 17 August 2017. Belsham, T and Rattan, A (2017), ‘Corporate Bond Purchase Scheme: design, operation and impact, Bank of England Quarterly Bulletin, Vol. 57, No. 3, pp. 170-181. Berlingieri, G, Blanchenay, P and Criscuolo, C (2017), ‘The Great Divergence(s)’, OECD Science, Technology and Innovation Policy Papers, No. 39, May 2017. Bjelland, M, Fallick, B, Haltiwanger, J and McEntarfer, E (2011), ‘Employer-to-Employer Flows in the United States: Estimates Using Linked Employer-Employee Data’, Journal of Business & Economic Statistics, Vol. 29, No. 4. Bloom N and van Reenen, J (2007), ‘Why Do Management Practices Differ Across Firms and Countries?’, Journal of Economic Perspectives, Vol. 24, No. 1, pp. 203-224. 24  All speeches are available online at www.bankofengland.co.uk/speeches  24  Brennan, S, Haldane, A and Madouros, V (2010), ‘The Contribution of the Financial Sector: Miracle or Mirage?’, in Turner, A et al, The Future of Finance: The LSE Report, London School of Economics and Political Science. Brynjolfsson, E and McAfee, A (2014), The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies, W. W. Norton & Company.