samchain/econo-pairs-v1 huggingface dataset:
Multinational firms can influence national regulations through the threat of relocation, as well as arbitrage tax systems by shifting income flows and intangible assets across jurisdictions. There can also be incentives for countries to use labour standards as a tool of international competition – the so-called “race to the bottom”. This makes it more difficult for countries to enforce their core values and protect their people. It also leads to corporate tax bases being eroded, which makes it harder to finance welfare [16] 3 / 10  BIS central bankers' speeches  states. [16] OECD analysis, for example, estimates global revenue losses from tax avoidance to be in the range of 4% to 10% of corporate income tax revenues. [17] These effects occur when countries are not large enough to exercise regulatory power against mobile capital or cross-border firms. But it is harder for this to happen at the level of the EU, since it represents a market that companies can ill afford to leave. Having regulatory power at the EU level enables EU countries to exercise sovereignty in the areas of taxation, consumer protection and labour standards. First, the EU gives its members the capacity to prevent multinationals from avoiding corporation tax by exploiting loopholes or extracting subsidies. This is a complex area, but some recent progress has been made on this front. New European rules have entered into force this year to eliminate the most common corporate tax avoidance practices.

10 / 10  BIS central bankers' speeches
However, all of these problems are partly related to the good access to venture capital that has been created by high saving in some parts of the world. Credit granting has slowed down in a number of countries and the financial crisis has contributed to the recession in the world economy The problems in the housing market and the financial crisis that arose have led to credit terms being tightened in some of the world’s larger economies. The difficulties in obtaining loans have contributed to a number of companies experiencing difficulty in financing their investment, and have subdued household consumption. Falling stock market prices and house prices have contributed to household wealth declining rapidly in many countries. This also slows down consumption and investment. The financial crisis has contributed to GDP in the world as a whole declining this year and to unemployment rising in most countries. The Riksbank’s assessment is that the recession in the global economy in 2008-2009 will be the worst since the post-war period. 2  BIS Review 56/2009  Extensive economic policy measures have been taken In contrast to the way that economic policy was conducted at the end of the 1920s and the beginning of the 1930s, the authorities have on this occasion acted quickly and forcefully. Central banks have acted quickly In the United States the policy rate has been cut from 5.25 per cent in autumn 2007 to 0.25 per cent.

The lenders expected that house prices would continue to rise, increasing the value of the collateral, an assumption which meant that the risk to the lenders was assessed as slight. The strong increase in the new forms of mortgages contributed to the overheating in the housing market. BIS Review 56/2009  1  Another factor that can also be assumed to have contributed to the housing market bubble in the United States is the US housing policy, which since the mid-1990s had become increasingly aimed at extending house ownership among households. For example, the semi-nationalised mortgage institutions Freddie Mac and Fannie Mae were to offer a particular share of their total lending to low-income families. This contributed to many households receiving loans despite having an uncertain ability to repay. The credit expansion that was seen in the United States can also be seen in a number of other countries. In autumn 2005 the housing market bubble in the United States burst and house prices began to fall. As the value of the households’ most important collateral fell, an increasing number of households could no longer renew their subprime loans at the same low interest rate. The lenders had tightened the credit terms. The interest rate shock that followed meant that an increasing number of households experienced problems in paying, which in turn pushed down house prices even further. This occurred as an increasing number of households and banks were forced to sell the houses at compulsory auctions at a lower price than before.
Examples include linking the payment application to retailers’ customer programmes, or cross-institutional analysis and visualisation of end customers’ payment data. Experiments are being conducted in China on linking face recognition technology and payment transactions, opening up the possibility of making payments in the future by smiling into the seller’s camera. In this process of innovation, it is of course essential that the key questions relating to aspects such as misuse or criminal usage as well as the protection of customers are addressed effectively and coordinated internationally. It is therefore important that the same business models with the same risks be subject to the same regulation. As part of its statutory mandate, the SNB also has a role to play when it comes to innovations in the field of cashless payments. Specifically, it is the commissioning party and system manager of SIC. At infrastructure level, the latter’s function is to offer the most attractive framework possible for a cashless payment system that is fast and ensures high availability. The SNB works together with stakeholders on the ongoing development of the SIC system. One year ago, for example, the operating hours of this system were adjusted at the request of the participants. However, end customers’ needs in respect of payment transactions are best met by private sector solutions. Here, too, the advantages of the two-tier system come into play. The slide 10 illustrates the point, taking payment transactions as an example.

And finally, I will take a brief look at digital central bank money for the general public, a subject currently generating a lot of debate, and will outline why there is no need for it if the system for cashless retail payments is efficient and innovative. The potential of DLT for the FMI So let me begin with the potential that DLT has to offer for the FMI. The FMI is the bedrock of our financial system, facilitating the reliable transfer of securities and money between buyers and sellers. The slide 2 shows a simplified FMI process chain for the settlement of a securities transaction. Transactions are first made via a trading platform, for instance a security is bought on the Swiss Exchange. This purchase is then cleared and settled. Security and money are simultaneously transferred between buyer and seller. In Switzerland, this takes place via the securities settlement system SECOM and the payment system Swiss Interbank Clearing, or SIC for short. It is entirely possible that distributed ledger technology could take hold in various fields. I would like to look here at two possible areas of application: securities settlement and crossborder payments. Page 3/8  One of DLT’s key characteristics is that it makes verified information available to a large number of parties simultaneously. It is therefore particularly appealing in the case of complex processes where coordination is required across a whole range of participants.
The lack of specific alternative funding channels or sources can hinder investment particularly in higher-risk projects -startups, intangibles and innovation- which depend on venture capital or other specialised sources of market-based financing in their early stages. Small and medium-sized enterprises generally also encounter problems in tapping capital, owing to reduced access to market finance. There are several obstacles contributing to fragmentation. First, an investor seeking to diversify its portfolio by having exposures to companies in different countries must deal with legal barriers. The most telling example is the lack of harmonisation of insolvency regimes, which vary widely across jurisdictions for financial and non-financial corporations, as a result of different cultural traditions and legal frameworks. Second, this investor might face different regulations, as the process of strengthening the pan-European regulators is still incomplete. This is a more pressing question as markets become more integrated and technologically complex. Brexit entails a significant risk of further fragmentation, as some companies and transactions may relocate to several different financial centres, while others may remain in the UK. 11  Third, there are also inconsistencies in capital taxation. This is not only a problem of tax rates: tax bases are also different across countries, and there is enormous diversity and complexity in terms of legal requirements and forms, as in the case of withholding taxes. In addition, the so-called debt bias due to the favourable tax treatment of debt relative to equity distorts incentives in favour of the former.

Such challenges relate, in particular, to the potential consequences of the “low for longer” scenario on the profitability of financial intermediaries in general, and of banks in particular, and on their attitude towards risk-taking. In addition, financial intermediaries are now facing a number of relatively new sources of uncertainty, including the simultaneous rise of new regulations, technologies and market players, against a backdrop of rising environmental, social and governance (ESG) concerns. Along with these novel factors, new risks are emerging, ranging from cyber-risks and risks related to crypto-assets to misconduct and legal risks, physical and transition risks associated with climate change, and risks related to regulatory arbitrage. Both regulators  3  and market players are just starting to learn how to deal with and address all these new threats. Let me now share some thoughts on some of the risks I have mentioned and then suggest some policy actions that policy makers could consider implementing in an effort to mitigate them. -  Low bank profitability  Starting with low bank profitability, I would like to highlight three messages. First, this is more a regional than a global issue. In fact, the profitability ratios of banks across countries show marked heterogeneity. For example, the return on equity of Canadian, Swedish and US banks is relatively high. In contrast, banks in Japan and the euro area find themselves in the lower part of the distribution.
Underlying inflation, which measures the rise in prices, excluding products with highly-variable prices (notably energy and fresh produce) and also public utility charges, after stripping out the impact of tax measures, rose at a slower twelve-month rate of 0.7%. France was thus the best performer of the euro area in this field, along with Germany, with twelve-month HICP growth of 1.7% in December 1999. Since the start of 1999, the Eurosystem - comprising the European Central Bank (ECB) and the eleven national central banks of the countries having adopted the euro as their currency - has been responsible for defining and implementing monetary policy. In accordance with the Maastricht Treaty, the primary objective of the single monetary policy is price stability. This is defined as a year-on-year increase in the HICP for the euro area of below 2%. The definition of this medium-term objective is the same as that adopted by the Monetary Policy Council for French monetary policy when the Banque de France was granted independent status a little more than six years ago. 1  BIS Review 55/2000  In order to achieve its main goal of price stability, the Governing Council of the ECB decided, as you know, to refer to two groups of indicators, or “pillars”, for European monetary policy: –  the first pillar is a prominent role for money, reflected by the choice of a quantitative reference value for growth in M3, the broad monetary aggregate for the euro area. This reference value has been set at 4.5%.

However, we can talk in terms of a radical change in the Swedish economy in one important respect with regard to the relationship between growth and inflation. Inflation expectations in Sweden seem to have stabilised around 2%, which indicates that the target for price stability has attained high credibility. During the 1970s and 1980s, inflation amounted to 8% on average. This means that wage-earners, landlords, central and local government and entrepreneurs now calculate with quite different nominal price increases than previously in their budgets and their pricing decisions. However, this is not an expression of a new economy but rather indicates a return to the conditions that existed in the first two decades after the Second World War. Developments during the Korean War clearly show the importance of low inflation expectations for the development of the economy. The well-based expectations made it possible to restore the economy to a rate of inflation of 3% a year after inflation had risen to 20%. The return to low inflation could take place without any dramatic restraint and without mass unemployment. Comparisons between this year’s wage development and wage development during the previous high inflation period are a strong illustration that high nominal wage increases do not have a positive correlation with real wage increases. While real wage increases this year are expected to total around 3%, wage earners have periodically experienced reductions in real wages in the period 1975 to 1995 and on average only slightly over a half per cent increase.
This transition also involves a downshift in China’s trend growth rate, which is inevitable given the level of economic development in China and the shrinking margin of underutilized labor market resources. Economic transitions are always difficult to manage, and invariably present policymakers with unexpected challenges. It is not surprising, then, that market participants are focused on the risk that the downshift in Chinese growth could prove to be more pronounced than anticipated. I want to be clear. The rebalancing process now underway in China is both necessary and appropriate, and will unfold over a period of years. How to pragmatically strike the best balance between progress on long-term reform and support for short-term growth is, of course, a matter for policymakers in China. You can be sure that you will have the backing of the official international community as you oversee this important transformation. Finally, the slowdown in Chinese and broader EME growth has been a key factor behind the sharp drop in global commodity prices since mid-2014. The income streams accruing to commodity export countries have been adversely impacted, requiring sometimes painful downward adjustments in investment and economic activity in these countries. Here, too, it may take time for markets to find a new equilibrium, as investment projects that were based on the price structure prevailing a few years ago are still coming online. In most cases, EMEs appear to have the tools and the resources to help manage their way through the current period of difficulties.

Assessment of Risks to the Outlook The forecast that I have just described is my best assessment of how the U.S. economy will evolve over 2016. But there is uncertainty and risk relative to this baseline forecast, which also needs to be taken into consideration in assessing the implications of the outlook for monetary policy. There are two key considerations to this risk assessment. First, are the perceived uncertainties about the forecast higher, lower or about average as compared to the past? Second, are the risks symmetric around the baseline forecast or skewed upward or downward? The level of uncertainty is important in that it relates to the expected magnitude of forecast errors. The balance of risks is important in that it relates to the expected sign of those forecast errors. At the New York Fed, we use surveys, internal models and judgment in forming our risk assessment. Some surveys, such as the U.S. Survey of Professional Forecasters (SPF), ask respondents for both point and density forecasts. The density forecasts take the form of respondents filling out a histogram of their probability assessments that the forecasted outcome will fall into given intervals. These histograms can be aggregated and the resulting aggregate distribution can be used to assess both the level of uncertainty as well as the balance of risks. Recent U.S. SPF surveys have not indicated any significant changes in the overall degree of uncertainty around growth or inflation. The balance of risks have been roughly symmetric for inflation and tilted to the downside for growth.
The main change being that we now base our forecasts on our own view of the future repo rate path and we give this forecast relatively large significance when communicating our monetary policy. We have also worked extensively on bringing in new, larger models, such as general equilibrium models, into the forecasting work. The forecasts are the result of an interplay between models and assessments Our toolbox for making forecasts consists of assessments, theories, empirical studies and models. These tools complement one another and have different roles in the work. They are all important and necessary to make as good forecasts as possible. As the economy is so extremely complex, we use various macroeconomic models to help us piece together a coherent picture of the economy. These models are based on modern economic theory, empirical studies and practical experience of different correlations in the economy. This makes it easier for us to make a consistent assessment of how the different parts of the economy will develop. If one merely studies individual correlations one misses the interdependence existing between the different parts and sectors of the economy. There is a considerable risk that the different parts of the analysis will not hold together. 3  Pollard (2004) shows that 79 out of 88 central banks have committees which make interest rate decisions. 4  See Blinder and Wyplosz (2004). FOMC stands for Federal Open Market Committee. 2  BIS Review 77/2008  But models are merely simplifications of the reality.

For a small, open economy like Sweden the natural starting-point for the forecasting work is how economic activity and inflation develop in the world around us. The forecasting work therefore begins with an international outlook meeting, which has the purpose of reaching a preliminary forecast for international events. Soon after this a financial market meeting is held. At this meeting there is a discussion of market participants’ expectations of the repo rate and how these have changed since the previous monetary policy meeting. These are then compared with the model forecasts for the repo rate and how these have changed. In addition, there are analyses and discussions of what has happened in the financial markets since the previous assessment. House prices, credits, stock market rates, exchange rates, money supply, international rates and so on are also discussed at this meeting. After this a current status meeting is held, where the focus is on the current situation in the Swedish economy. One particularly important aspect is to assess how much of the Swedish economy’s total resources in the form of labour and machinery are currently being used to a normal extent. Apart from new information on the current economic situation, there are also discussions of other new information that may be important for the forecasts in the slightly longer term. The first monetary policy group meeting with the Executive Board summarises new information After this it is time for the first large monetary policy group meeting.
We all know that regulation in markets is nothing new and what it requires is a better analysis by firms on the cost of doing business in different markets compared to profitability. For some firms, we see aggressive actions to adjust their geographic footprints to avoid, at least for a time, the impact of the new standards. For other firms, we see productive and realistic discussions about how to address the new standards, including how booking models and other business operations need to change. In addition, we are seeing home country supervisors engaging in discussions with firms, asking important questions about how host country rules and regulations will affect group operations and seeking to understand the knock-on effects of the new rules across the global operations. As firms are adapting both business strategies and operations to meet home country and host country rules and regulations, we are hearing about the challenges that have been identified. However, there is still a lack of specificity around these challenges, including quantifying the impact – on business, strategy, customers and staff; identifying potential near-term mitigants; and developing proposals on potential longer-term solutions that could be the basis of a productive dialogue. Rhetoric is fine, but it’s not enough. We need to understand on a more concrete level how these changes are going to impact the firm, from your clients to your operations, from your business models to your culture.

The work of the Basel Committee on capital and liquidity standards, as well as the work of the Financial Stability Board (FSB) on cross-border resolution, are but a few examples of the hard work that global bodies have been undertaking to address the weaknesses identified through the crisis. At the same time, national authorities have been working hard both to implement the agreedupon global fixes, but also to develop and execute appropriate remedies for problems identified at the national (or local) level. Locally, while appreciating the need to address the  BIS central bankers’ speeches  1  crisis on a global scale, many countries saw the need to be in a better position to safeguard their own. The bottom line, in fact, was: the crisis was global, but the impact was felt locally. Global in life; local in death, as the saying goes. So, while authorities have endeavored to develop and implement common global rules across a wide range of issues, many national authorities have simultaneously moved to develop and implement national standards – that may conflict with or appear at odds with a barrier-free and harmonized financial system that allows the free flow of capital and competition across the globe. National rules that require local capital and local liquidity are two examples of standards that may present challenges to the efficient and effective operations of global firms. It will be important for firms to be in a position to meet both sets of requirements.