samchain/econo-pairs-v1 huggingface dataset:
While the ONS have suggested that the official data are likely to be better at picking up small retailers and unconventional shopping channels, such as internet purchases, the conformity of the picture given by the Distributive Trades survey with other potential indicators of spending, such as consumer confidence and the Agents reports, have led us to place less weight on the official data on retail spending for the present. 2  BIS Review 95/2008  The surveys will not always provide the best coincident guide, however. For instance, during the 1999-2002 period, the official data suggested greater swings in manufacturing output growth than did the Industrial Trends survey (see Chart 3). Now, during this period, we know that there was a rapid expansion in ICT-related activities, followed by a sharp contraction. The simple balance of “ups” over “downs” in the Industrial Trends survey could therefore be expected to have failed to reflect adequately the sharp movements in that sub-sector’s activity. So, for this period, the official data probably gave a better picture of what was going on. BIS Review 95/2008  3  A second use of surveys is in the application of forward-looking questions to form a view of the near-term outlook. In that regard, questions on business and consumer confidence, and on the trend in orders and backlogs, can give some indication of likely trends in output and spending.

Responses to those sorts of questions can, for instance, help us work out how businesses have been affected by the recent depreciation of sterling, and the tightening in credit conditions. A fourth use of the surveys is in providing measures of variables for which there is no official counterpart. In particular, the amount of economic slack in the economy is a key determinant of inflationary pressures. We have official indicators of slack in the labour market – unemployment, vacancies and the like – which is one factor determining pay growth. But we have no official measures of the amount of slack within businesses, which potentially affects pricing pressures. Business surveys such as the Industrial Trends survey do, however, ask how intensively firms are working their capital (see Chart 5). And the MPC draws on this  4  BIS Review 95/2008  information in forming a judgement about the overall margin of spare resources in the economy. A fifth, and perhaps less obvious, use of survey information is in refining our picture of the past. I noted earlier that the official data tends to get revised for some while after it is first released. But it turns out that there are some systematic patterns in the historical revision process. Moreover, for some series, we have found a tendency for revisions to be in the direction of reducing the discrepancy with the corresponding survey information.
There have also been notable achievements in the area of talent development with the proliferation of programmes and certifications which have focussed on Islamic finance offered by several major institutions of higher learning, professional entities, training agencies and industry groups around the world. More recently, platforms for greater engagement among practitioners, scholars and regulators have further added to international collaboration in Islamic finance. And finally, the evolution of Islamic finance in this decade has been marked by its international dimension in which it is becoming an increasingly important part of the global financial landscape. The development of Islamic finance in emerging economies also reflects the changing global pattern of financial and economic integration. This is taking place with the strengthening of financial and economic linkages between Asia and the Middle East and the increased activity of Islamic finance beyond the traditional Muslim countries including the more established financial centres. Cross-border transactions are growing as more issuers  BIS Review 64/2010  1  consider Islamic finance as an attractive alternative means for raising capital, whilst investors are also increasingly considering it as a new asset class in their investment universe. This internationalisation and sustained global expansion of Islamic finance has taken place despite the more challenging environment presented by the global financial crisis, demonstrating the resilience of Islamic finance as a stable form of financial intermediation. Global financial regulatory reforms Ladies and gentlemen, Much has been said and written about the causes of the global financial crisis.

The recent period of low inflation may appear surprising from a cyclical perspective given that we have seen positive economic growth over the past four years, supporting a steady and gradual absorption of economic slack. This has raised the question of 1/4  BIS central bankers' speeches  which factors, cyclical or structural, may have played a role in the growth-inflation relationship. A comprehensive analysis by the Eurosystem has concluded that adverse cyclical factors have played a crucial role in explaining low underlying inflation. These notably consisted of dampened economic activity and high unemployment in the aftermath of the sovereign debt crisis, and subsequently subdued foreign demand and low oil prices.2 Yet, these factors are of a temporary nature and should not affect inflation over a medium-term horizon, even though they might impact on the speed of adjustment in inflation. Moreover, given the uncertainty surrounding the measurement of economic slack, the true amount may be larger than estimated, which could slow down the emergence of price pressures. This is particularly visible in the labour market, where wage growth has remained subdued despite strong employment gains. Nonetheless, these factors should wane as the economic expansion continues and unemployment further declines. In fact, wage growth in the euro area has already picked up recently and the labour market is expected to improve further.
7  Simulations by Dorich, Labelle, Lepetyuk and Mendes (2015) using a model for the Canadian economy indicate that a target of 2 per cent leads to a result that is almost as good as if the target were raised to 3 or 4 per cent, given that the policy rate can be complemented by quantitative easing as well as active and credible supporting communication. BIS central bankers’ speeches  3  Major direct impact of interest rate changes makes Swedish CPI unique This direct impact of interest rate changes on inflation is quite unique to Sweden. The reason for the effect is that we include household mortgage costs in the CPI in a slightly different way than most other countries with inflation targets. More specifically, we attempt to measure households’ costs for living in an owner-occupied property, where interest expenditure is an important component.8 The CPI is calculated according to roughly the same principles in Canada, for example, but in practice the interest rate changes have a much smaller impact on the CPI there than here in Sweden.9 In Australia and New Zealand, interest rate changes also previously had a major direct impact on the CPI, but the method for calculating CPI changed in both countries at the end of the 1990s in a way that eliminated such effects.10 They now apply a method which is principally based on following price developments of new housing, a so-called net acquisition approach.

Companies report a decline in production, employment and orders for both the export and domestic market. Many companies have moved abroad or are planning to move all or parts of their production out of Norway. In recent years, the shipbuilding and engineering industries have sustained the activity level in Norwegian manufacturing. Shipyards experienced a sharp increase in new orders before end-2000 prior to the elimination of support to the shipbuilding industry in Norway and many European countries. The level of new orders has since then been very low, and the order backlog is nearly exhausted. A sharp increase in petroleum investment could provide positive growth impulses to the offshore-related industry. The demand impulses from petroleum investment to the mainland economy may, however, be weaker than has been the case earlier. Construction and installations with a high import content will account for a large share of the increase in investment from 2002 to 2003. Due to the high cost level in Norway, a growing number of contracts are also being awarded to foreign companies. At the same time, Norwegian shipyards are increasingly using foreign subcontractors in low-cost countries. This is having an impact on the Norwegian engineering industry. Many service industries have had to adjust capacity in pace with changes in operating parameters. Investment in service sectors has fallen sharply, and is expected to continue to fall. There is considerable excess capacity in the commercial building market.
BIS central bankers’ speeches  7  It should already be clear from what I have discussed so far that this is a misleading description. As monetary policy has not leaned against the wind to any great extent, this can hardly have had any particularly devastating effect on the economy. With what is by now a rather worn but at the same time very telling likeness, the Riksbank has not during this period hit the repo-rate brake, but rather eased up on the accelerator somewhat. No deflationist development driven by a weak real economy This picture is confirmed if one examines how, for instance, GDP and employment have developed since the crisis. Figure 5 summarises the percentage change in GDP per capita and the employment rate in relation to the pre-crisis figures in the countries Sweden is normally compared with. As can be seen, Sweden is not right at the top, but nor is it very far from it. There are only a few countries, according to these statistics only New Zealand and Germany, that have had a better development in both GDP and employment, that is, that are above and to the right of Sweden in the figure. Some claim that the development of unemployment has been less favourable. But here we must bear in mind the fact that the labour force in Sweden has increased relatively substantially during the period. This is essentially positive, but in the short run it will also contribute, purely mathematically, to keeping up the unemployment figures.

The IMF concluded its latest Article IV Report noting that financial regulation and supervision here is “among the best globally and…a frontrunner in implementing global regulatory reforms”.25 Trust can be sustained only if all countries follow the example of Singapore to implement standards consistently, fully and in a timely way. To provide confidence that full and consistent implementation is taking place, the FSB will support that with rigorous and transparent peer reviews and implementation monitoring. We are providing clear and simple reporting, through the work chaired by Ravi Menon in our Standing Committee on Standards Implementation. In my letter to G20 Leaders last week, I provided that Committee’s latest findings of our monitoring process, in a simple summary with report card. 24  Chart 14, from Haldane (2014), shows the correlation between national savings and investment. That correlation had reached zero just before the crisis, suggesting that the global financial system was fully integrated. However, this has now reversed sharply. Sapir and Wolff (2013) document the home bias in equity markets even within the euro area. 25  IMF (2014b). BIS central bankers’ speeches  11  From next year, the FSB will further enhance this reporting, through an annual reporting process on implementation. This will seek to highlight both shortcomings and good practice, and will seek to assess whether reform measures are having unintended effects and must therefore be adjusted. The FSB’s work will include focus in particular on the effects in emerging markets.
Second, stress testing could be used to profile the size of the skews from climate change to the returns of various businesses. 30 This is another area where insurers are at the cutting edge. Your capital requirements are based on evaluating the impact of severe but plausible scenarios. You peer into the future, building your defences against a world where extreme events become the norm. This stress-testing technology is well-suited to analysing tail risks likely to grow fatter with time, casting light on the future implications of environmental exposures embedded in a wide range of firms and investments. Stress testing, built off better disclosure and a price corridor, could act as a time machine, shining a light not just on today’s risks, but on those that may otherwise lurk in the darkness for years to come. Conclusion Our societies face a series of profound environmental and social challenges. The combination of the weight of scientific evidence and the dynamics of the financial system suggest that, in the fullness of time, climate change will threaten financial resilience and longerterm prosperity. While there is still time to act, the window of opportunity is finite and shrinking. 31 Others will need to learn from Lloyd’s example in combining data, technology and expert judgment to measure and manage risks. The December meetings in Paris will work towards plans to curb carbon emissions and encourage the funding of new technologies.

A current subject of horizontal analysis is leveraged loans – specifically, whether lax underwriting practices for such loans could pose a significant risk to financial stability. In addition, we have reorganized the supervision group at the New York Fed in a number of ways that promote unbiased analysis and professional objectivity. Many of these changes directly reflect the recommendations in a 2009 report that I commissioned from David Beim, which was featured in the recent This American Life program about supervision at the New York Fed. For example: •  Over the last five years, we have reassigned some of our most senior personnel to front-line positions at the largest supervised institutions. We also recruited experienced executives with financial backgrounds from outside the New York Fed. The purpose of these personnel changes was to position leaders with the confidence and depth of professional experience necessary to challenge the leadership of supervised financial institutions. •  We increased training, especially for more senior examiners. Since 2011, we have required enhanced training for senior supervisory officers on corporate governance, business strategies, and risks. Our goal is to deliver stronger and clearer  4  BIS central bankers’ speeches  supervisory views to boards of directors and senior management. Also since that year, we have offered a customized management development program for managers in the supervision group. •  We hired more risk specialists and created the role of business-line specialist to assess the risks and vulnerabilities in firms’ business models.
5  For a more detailed description of macroprudential policy, see for instance C. Nordh-Berntsson and J. Molin (2012), “A Swedish framework for macroprudential policy”, Economic Review, no. 1, Sveriges Riksbank, and my colleague Karolina Ekholm’s speech “Macroprudential policy and clear communication contribute to financial stability,” published on 30 March 2012. BIS central bankers’ speeches  3  focus for macroprudential policy is the risks in the financial system as a whole (see Figure 9). The supervision of individual institutions is, of course, also important to the stability of the financial system, not least as financial institutions are regarded as “systemically important”. But to capture the build-up of risks that could threaten the stability of the financial system – what are known as systemic risks – it is not enough to keep an eye on individual institutions. One needs to supplement this with a systemic, or macro, perspective. Macroprudential policy also requires appropriate tools. Let me discuss some of the macroprudential tools that could be useful to specifically manage the risks linked to house prices and household debt.6 Countercyclical capital buffers are one of the most discussed tools, and are a part of the Basel III international regulatory framework.7 The idea is to vary the capital requirements made of the banks; when there is strong credit growth, the requirements will be increased, while they will be reduced during financial stress, when there is otherwise a risk of a credit crunch.

6  BIS central bankers’ speeches  Figure 1 Quarterly economic growth (1) (q-o-q change, percent) 3  3  2  2  1  1  0  0  -1  -1  -2  -2  -3  -3 07  III.07  08  III.08  09  Developed (2)  III.09  Emerging (3)  10  III.10  (1) Regions weighted at PPP. (2) Includes: Australia, Canada, Denmark, the Eurozone, Japan, New Zealand, the Sweden, Switzerland, the U.K., and the U.S. (3) Includes Argentina, Brazil, Bulgaria, Chile, China, Colombia, the Czech Republic, Hong Kong, India, Indonesia, Malaysia, Mexico, Peru, the Philippines, South Korea, Russia, Singapore, South Africa, Thailand, Taiwan, Turkey and Venezuela. Sources: Central Bank of Chile based on each country’s statistics institute and International Monetary Fund. Figure 2 World growth (*) (y-o-y change, percent) 15 12 9 6 3 0 -3 -6 -9 -12 -15  15 12 9 6 3 0 -3 -6 -9 -12 -15 80  85  Developed  90  95  Chile  00  05  Latin America  10  (*) Gray area shows April 2011's WEO forecasts. Source: International Monetary Fund.
According to the latest Triennial Central Bank Survey of foreign exchange and derivatives market activity conducted by the Bank for International Settlements (BIS) in April 2013, total global average daily turnover across overthe-counter foreign exchange instruments – including spot, forward, swap, and option transactions – was estimated to be more than $ trillion, an increase of nearly 60 percent since 2007. 2 This trading volume dwarfs the U.S. fixed income market, where average daily turnover at the end of 2013 was about $ billion. 3 Within this large market, a broad range of foreign exchange products is traded each day by a diverse set of market participants for a wide variety of reasons. Derivatives are the largest component of global trading in the FX market, accounting for about 60 percent of turnover in 2013. They play an important role in helping transfer a wide variety of risks from entities that cannot or do not want to bear it to those that can and do – including risks associated with hedging cross-border exposures or positions in other markets, such as fixed income – or to provide a source of funding to help meet liquidity needs. The most actively traded derivative product, foreign-exchange swaps, accounted for about 40 percent of all trading activity in the global FX market in 2013, serving as a critically important cross-currency funding tool for a wide variety of market participants.

This story was much more unique, as involved the first banking crisis in Europe since the EU single market was formed in the early 1990s. Today I am not going to talk about the build-up to these events, and I will have little to say about the second story. I have expanded on both in various publications and speeches that I can refer you to. Instead, I am going to talk about what happened to the Icelandic economy afterward – its deep recession and its recovery – and then reflect on some of the policy challenges that still face us. But let us first reflect on the distance that has been travelled since that fateful autumn of 2008. Iceland’s financial sector was crumbling, and the authorities had to take extraordinary measures to keep basic domestic banking services up and running, including letting the international part of the banking system go into resolution, wiping out all equity in the banks, and removing their managers. Many expected the sovereign to default on its obligations, which would have left Iceland shut out of international capital markets for years. A key aspect of crisis management was therefore to ring-fence the sovereign from the failing banks and minimise the socialisation of private sector losses. And Iceland was well on its way into its deepest post-war recession, where GDP contracted by 12.5% from its peak in the fourth quarter of 2007 to its trough nine quarters later, in the first quarter of 2010.
Headway is most visible in our improved competitiveness, and more incipient in the recomposition of the contribution of domestic demand to activity, or in the reallocation of productive and financial resources towards industries with higher growth potential. The Spanish economy grew slightly in the third quarter – the first rise in output since the opening quarter of 2011 – amid a somewhat more favourable external setting, and with financial tensions lifting and confidence indicators improving. As in the rest of the euro area, the coming quarters will foreseeably see a prolongation of the path of gradual recovery, which is expected in its initial phases to continue to be driven by the external sector. In recent quarters, net external demand has played a key role in sustaining activity, owing to the sound export performance, the weakness of imports and the highly favourable tourism figures. Moreover, the decline in private domestic demand is being checked as a result of the rise in investment in equipment and of the stabilising of private consumption. The adjustment in competitiveness, in its various different strands, is playing a central role. In Spain, this has been done through what is known as “internal devaluation”, the direct containment of costs and margins, not through the nominal depreciation mechanism, which  BIS central bankers’ speeches  3  was the normal device prior to our joining the monetary union. Internal devaluation is, evidently, more complicated and slower than nominal depreciation; but, in turn, the gains to be had are more durable.

Further, like the Federal Reserve and the Bank of England, it has pursued a very expansionary liquidity-provision policy, which can be measured by the sizeable increase of over 50% in its balance sheet since 2008. Among the extraordinary measures, I would highlight the long-term (as long as three years) refinancing operations; the extension of the list of assets accepted as collateral for the loans made to banks; and the launch of asset purchase programmes, such as the Securities Market Programme, the two Covered Bonds Purchase Programmes (including Spain's) and the announcement, in August 2012, of the Outright Monetary Transactions programme. More recently, in July this year, a policy of forward guidance has been adopted, involving the more accurate communication of the projected behaviour of official interest rates in the future. Yet we should remember that the capacity of monetary policy to resolve the problems at the root of this crisis is very limited. What it can do, and is doing, is making time so that other players who do have the proper tools to resolve the problems can adopt the measures needed, and so that such measures may take effect. The other European economic authorities, starting with the Commission, have – in close collaboration with national governments – taken significant steps towards correcting the weaknesses exposed in the euro's institutional arrangements. Thus, a permanent mechanism, the European Stability Mechanism, has been set up, with the capacity to provide funds to the Member States deprived of access to the capital markets.