samchain/econo-pairs-v1 huggingface dataset:
Many Emerging Market Economies (EMEs) have had a wealth of experience in the mismanagement in their macroeconomic, fiscal and monetary policies, and all of them had paid a heavy price for their past mistakes. The fact that the latest series of crises erupted in the developed world does not mean EMEs are immune from the spillover effects. More fundamentally, the Emerging Market Economies, including Hong Kong where household debt to GDP ratio saw a record high, must learn from the latest mistakes of the developed world and take extra care in not getting into the mind-set or habit of spending beyond our means, whether at the household, corporate or government level. Hong Kong should in particular guard against the temptation of “collective irresponsibility” by pushing for or condoning public policies that entail spending that cannot be sustained in the medium to longer run, or else we would be mortgaging the future of our children and grandchildren. This again is easier said than done, and requires considerable wisdom of Hong Kong people and the courage and skills of our leaders to resist increasing pressure and temptations for unrestrained public spending. Hong Kong’s population is aging, and aging fast. At present, the elderly  BIS central bankers’ speeches  5  dependency ratio of Hong Kong is 5:1. This means that Hong Kong now has 5 persons within the age group of 15–64 supporting each person over the age of 65.

After the Global Financial Crisis, there is some reduction in the private sector debt in some countries, notably in the US. However, the levels of government debts have continued to rise. Before the Global Financial Crisis, the US federal debt was $ trillion. In 7 years’ time, the federal debt increased by almost 100% to $ trillion. This is equivalent to an increase from 63% of GDP to 103% of GDP. In the euro-area, the level of public debt was 100% of GDP prior to the eruption of the European Sovereign Debt crisis in 2011, and it went up by another 2.7 trillion Euros and reached 120% of GDP in Q3 2014. In Japan, the situation is even worse. Public debt to GDP ratio went up steadily in the last twenty years and now reaches a stunning level of about 260%. Together with private-sector debt, the total debt of Japan adds up to about 480% of GDP, the highest in the developed world. So we don’t have a pretty picture in the developed world as a whole. 9. Such rapid growth of public debt in major advanced economies reflects the lack of fiscal discipline and unrestrained spending behaviour of their governments. Except for Germany, most European governments have never been able to record fiscal surplus in any year since the early 1980s, with average annual fiscal deficits amounting to about 3–8% of GDP.
Several options need to be explored, including the possibility of offering a choice of approaches to supervisors, or an evolutionary framework whereby the system could develop in sophistication over time. In principle, we would certainly like to see a system that a reasonably large number of banks could sensibly aspire to. There are only two caveats that I would make. First, of course, there are the implications for supervisory resources if a very large population of banks have to have their internal ratings systems approved. And secondly, even a simple framework has to observe certain minimum requirements. This means the ability to relate an internal rating to a quantifiable concept, such as loss-given-default or default probability; the ability to demonstrate that this relationship is historically valid, or - in the likely absence of long runs of data - at least plausible; and third, as I said before, a forward-looking dimension to the rating. Whilst the Bank of England is doing its best - I hope with some success - to help the economy avoid the booms and busts of previous decades, banking is likely to remain a cyclical industry, and to my mind it would be simply imprudent to base ratings and capital on a borrower’s position at the top of an economic cycle. Operational risk Use of internal ratings will of course raise many of the sorts of difficulties for testing and validation that were identified for credit risk modelling.

We also need, as a second step, a collective economic strategy in the euro area, which could be backed up with a euro area “Finance Minister”: growth and employment will be stronger in Europe if we combine more structural reforms where they are needed – such as in France and Italy – and more fiscal and/or wage support in those countries with room for manoeuvre – such as Germany. On that note, I wish you very fruitful discussions throughout this conference and I shall now leave the floor to the first session on measurement issues. Thank you for your attention. 3/3  BIS central bankers' speeches
Moving on to the second aspect – the importance of using SARON more actively in financial products and developing a liquid, SARON-based yield curve: To date, Libor has been widely used in financial products, however market participants are now working hard on transitioning to new, SARON-based products. These include derivatives, especially interest rate swaps, which can be used to hedge against changes in interest rates. 1 A SARON-based interest rate swap market was set up back in 2017. Trading activity in this market remains low, however it is expected to pick up once SARON becomes more widely used in cash products (such as loans, mortgages and capital market instruments) and investment products. The SARON1  An interest rate swap allows a contractually agreed, fixed interest rate (e.g. for a period of five years) to be exchanged periodically for a floating interest rate. The floating interest rate portion of the contract is determined by a reference rate. Page 2/3  Berne, 13 June 2019 Andréa M. Maechler  News conference  based yield curve will then be able to take over the role of the current, Libor-based yield curve. Yield curves are important benchmarks for market participants and serve as the basis for pricing medium and long-term financial products. And, finally, the third aspect – how should interest payments be calculated for a period of three months, for example? Libor provided a three-month rate which could, among other things, be directly applied to the calculation of interest payments on money market mortgages.

For instance: What kind of financial risks do climate and environmental threats pose for the finance industry? And could these risks weaken the resilience of the financial system, or indeed affect macroeconomic variables and monetary policy? The SNB’s goal in joining the NGFS is to engage in dialogue and share knowledge in order to better understand – and anticipate – the potential impact of climate risks. Page 3/3
capacity  Legitimacy: Appointment process and international role  Capacity: Treasury administration and advisory councils  Accountability: Stronger democratic control over euro area affairs  First, we need a legitimacy-enhancing appointment process. The Finance Minister could thus be appointed for a five-year period by the European Council acting by qualified majority on a proposal from the president of the EU Commission. The new appointment would be subject to the formal approval of the European Parliament, and the Finance Minister would be member of the Commission, as well as chair of the Eurogroup. Second, the euro area Finance Minister would need to be backed by a genuine Treasury administration. Such a civil service would also benefit from the public advice of two independent bodies, the European Fiscal Board and the Competitiveness Council. Last, if we succeed in implementing further integration, we will need stronger democratic control over euro area affairs. To this end, we will need to consider a euro area format of the European Parliament. Relationships between euro area MPs and national parliaments will also need to be enhanced. As I said, not only do we need to better coordinate public policies, but we also have to foster private risk-sharing throughout the Eurozone. To recall Wolfgang Schaüble, European leaders need to show “that balanced budgets, growth and investment are not mutually exclusive, but rather go hand-in-hand”5. 5  Wolfgang Schaüble, “Managing Europe – What is Germany’s responsibility?”, speech at the LSE, March 3 2016. BIS central bankers’ speeches  7  III.

François Villeroy de Galhau: Europe at a crossroads – how to improve economic governance and growth performance of the Eurozone? Presentation by Mr François Villeroy de Galhau, Governor of the Bank of France, at the German Institute for Economic Research – DIW Berlin, Berlin, 8 June 2016. *  *  *  I am delighted by the opportunity, kindly offered by DIW, to share some remarks on Europe here in Berlin. As you may know, I have strong ties with Germany. In particular, I completely share the German culture about the importance of responsibility and long-term vision. At this juncture we probably all agree on two things – and my focus today will be that these two things are closely intertwined: •  Monetary policy cannot be the only game in town. •  Although Monetary Union is a success, Economic Union remains to be built. I want to pay tribute to Helmut Schmidt, who said in October 2011: “There was a failure to set the economic rules of the game for the currency union. A powerful authority with responsibility for fiscal and economic policy was not set up.” 1 I will first argue that monetary policy has been doing its fair share (I). I will then discuss the need for a “full coordination” of national economic policies in the Euro area, and discuss what concrete progress can be made (II). Finally, turning to private risk-sharing in the Eurozone, I will focus on the importance of building an efficient Financing and Investment Union (III).
The award of the Nobel Peace Prize to the European Union in 2012 for having “over six decades contributed to the advancement of peace and reconciliation, democracy and human rights in Europe” attested to the success in achieving this original goal. I believe that the goals of ensuring peace and promoting integration and economic development are in fact related. As the World Trade Organization rightly reminded us, the trade war unleashed during the Great Depression contributed to the outbreak of the Second World War. In this respect, one very positive consequence of trade between nations is that it contributes to transforming “rival” nations into partners, who share interests instead of having conflicting interests. Undoubtedly, since the foundation of the European Coal and Steel Community in 1952, economic and political integration in the EU has attained a most notable level. However, the process has been neither linear nor gradual. Over almost 7 decades of history, the European project has witnessed long periods of calm – where little or nothing remarkable happened – punctuated by “transformative periods” that have contributed decisively to its development and to shaping its current form. Normally, these deep transformations have stemmed from processes involving reflection and negotiations, conducted in a more or less orderly fashion. 3/10  Introduction of the single market and the euro For example, the start-up of the single market was the outcome of lengthy negotiations that began officially in 1985.

Also, the greater degree of risk-pooling in the euro area would contribute to aligning financial responsibility with the pan-European decision-making process, which has already been set in place in the areas of banking supervision and resolution. The current situation is such that the ultimate backing for ensuring deposits in a failed institution depends on national institutions, while the responsibility for supervision and resolution falls on other pan-European institutions. Shortly after the financial crisis broke, Mervin King ironically pointed out that international banks tended to be global in life, but national in death. This quote would appear to still be applicable in the euro area. In a genuine banking union banks should be European, both in life and in death. As you know, the debate on the EDIS was rekindled in November last year owing to an article5 by the German finance minister, Olaf Scholz, in which he advocated its implementation. This was something which, in his own words, “was no small step for a German finance minister”. The German proposal actually referred to the introduction of a European reinsurance scheme rather than a fully pooled EDIS, and it was moreover subject to various conditions. In any event, the debate clearly remains open and differences persist among the European partners. But I hope and wish that, as on previous occasions, we can forge a consensus allowing us to complete this basic third pillar, introducing a truly common and, therefore, fully pooled EDIS. European banking consolidation and integration.
In the 1800s and up  1  Bordo, M.D. and Jonung, L. (1987), "The long-run behaviour of the velocity of circulation". Cambridge University Press and Norges Bank  2  J.D. Sachs, F. Larrain (193), Macroeconomics in the Global Economy  BIS Review 46/2003  3  to the First World War, the gold standard and price fluctuations in the agricultural sector contributed to alternating inflation and deflation. In the interwar period 1918-1940, real interest rates were fairly high, sometimes well above 5 per cent. This was partly due to the policy of gold parity and the reestablishment of the gold standard, which resulted in high nominal interest rates in a number of countries. The post-Second World War era can be divided into two periods. The postwar period up to the collapse of the Bretton Woods agreement in 1971 was characterised by unusually low real interest rates, ranging from 0 to 2 per cent. Real interest rates were low despite high returns in the stock market, strong growth in output and in stocks of real capital. According to most economic growth theories, this should have been accompanied by a high real interest rate. From a more short-term perspective, however, low real interest rates led to high investment activity and growth. However, this probably contributed to the tensions that led to the marked changes in economic policy in the 1970s and 1980s, internationally and in Norway. To a certain extent, a negative real interest rate characterised the 1970s and most of the 1980s in Norway.

European Central Bank: Press conference on the chosen design for the New ECB Premises Introductory statements by Mr Jean-Claude Trichet, President of the European Central Bank, and Mr Lucas Papademos, Vice President of the European Central Bank, to the press conference on the chosen design of the international urban planning and architectural design competition for the New ECB Premises, Frankfurt, 20 January 2005. *  *  *  Ladies and gentlemen, We have invited you today for the presentation of the chosen design proposal in the international urban planning and architectural design competition for the New ECB Premises. In our introductory remarks we would like to do the following: first, to briefly recall the main steps that have led to the outcome of the competition. Second, to present the chosen design proposal in some detail. And third, to explain what happens next. Afterwards, we will be happy to answer further questions, as will the chosen architect when it comes to technical questions on the design proposal. The decision of the Governing Council / the conclusion of the competition Last Thursday, on 13 January 2005, “the Governing Council chose the design for the ECB’s new premises out of the 3 revised design proposals of the 3 prize winners of the international urban planning and architectural design competition.
This seems implausible, as it would trigger a major financial crisis, a risk that policy makers in Europe are certainly aware of. It can be discussed at length if it was a good idea to let one or another country in, but once officially a member and in a situation as frail as it is today, the decision becomes irreversible. At any rate, public debt troubles in Europe are quite complex and call for a global, permanent solution. According to the forecasts contained in the third review of Greece’s stand-by agreement with the IMF, from now to 2020 Greece must generate a primary fiscal surplus of 6% of GDP per year. Thus it could take its public debt from its present-day levels of around 1.5 times its GDP to 1.3 times. This is a major adjustment if we consider that in 2008 the country posted a primary deficit of 4.5% of GDP, all this under the assumption that it will pay an interest rate between 6 and 7%, and the interest rate is today around 16%. Certainly, if the rates don’t go down it will be hard for Greece to recover easy access to private credit markets, as hard as obtaining permanent funding by official agencies. From these crossroads, Greece will have to find new permanent solutions that allow it to return to fiscal solvency and distribute the losses without jeopardizing financial stability. Another complex aspect of the situation of developed economies is their weak recovery.

8  BIS central bankers’ speeches  Figure 5 Multilateral nominal exchange rate (1) (index, 2005=100) 140  140  130  130  120  120  110  110  100  100  90  90  80  80 00  01  02  03  U.S.  04  05  06  07  08  09  Commodity exporters (2)  10  11  Chile  (1) An increase indicates a depreciation of the local currency. (2) Simple average of Australia, New Zealand and Canada. Source: Bank for International Settlements (BIS). Figure 6 Real exchange rate (index, Jan.00-Mar.11 average=100) 170 160 150 140 130 120 110 100 90 80 70 60  Range (*)  Average  U.K.  U.S.  South Korea  Mexico  Eurozone  Peru  Japan  Norway  Poland  Malaysia  Israel  New Zealand  India  Turkey  Chile  China  Thailand  South Africa  Hungary  Philippines  Canada  Czech Rep.  Russia  Australia  Brazil  170 160 150 140 130 120 110 100 90 80 70 60  Spot  (*) The range shows maximum and minimum values posted by the local currency during indicated period. Source: Central Bank of Chile based on figures from the Bank for International Settlements (BIS).
Together, these forces are reducing the cost of providing traditional financial services and are paving the way for new ways to channel savings and manage risks. Structural developments in the financial sector can be important for monetary and financial stability. Central bankers thus follow developments with great interest. Today I will examine some aspects of the changes taking place and their potential consequences for monetary and financial stability. Let me run through the structure of my speech. First, I’d like to touch upon some characteristics of the Nordic economies as a background to the financial sector issues I will discuss later. Second, I will define the two stability terms that I have just introduced. Third, I will discuss the growing importance of securities markets. I will then reflect upon cross-border integration in the banking sector and consequences of the Internet. Finally, I will take a quick look at what challenges structural changes may pose to the authorities, and then conclude. 2. Some characteristics of the Nordic economies  The economies of the four largest Nordic countries have some well-known features that distinguish them from most other developed countries. 1  BIS Review 78/2000  For a start, they all have fairly large public sectors, as illustrated by the level of public sector employment. Compared with Anglo-Saxon countries, the differences are striking. The large public sectors are the result of a deliberate choice to ensure equal access to certain services like health care.

Normally, the timeframe will continue to be 2 years after the excessive deficit occurred. However, the revised Stability and Growth Pact now allows for the possibility to extend this timeframe to 3 years. In my view, this is a positive change since the earlier system in practice meant that countries only had a few months to correct an excessive deficit, and this did not increase the respect for the Stability and Growth Pact. However, in addition, a possibility to revise the initial deadline has been introduced which creates a risk for an excessively prolonged EDP. To summarise, some of the changes in the Stability and Growth Pact thus go in the right direction and might enhance the discipline, while other changes introduce a flexibility that could be abused. As always, the proof of the pudding is in the eating. So far, budget plans have not moved in the stricter direction despite the fact that growth prospects have improved. The yearly average deficit for the euro area will stay at about 2.4% of GDP for the next couple of years according to present plans. The structural deficit is expected to improve only marginally between 2005 and 2006 – from 2.2 to 2.1 per cent – despite a strong economy. It is important to stock up now ready for future times with lower growth. The recovery and consolidation of the EU’s largest economy, Germany, is of central importance in this context. Why have we not seen the problems earlier?
Structural questions have been brought to the fore during the British Presidency and there have been somewhat more concrete discussions in various committees about how to get Member States in step here as well. One approach involves finding good examples in different fields, just as in the case of employment, and analysing the structural problems of each country. This process generates what the British call peer pressure, which can also contribute to the desired national changes coming about. Once again, however, the decisions in this field largely have to be made at national level. But to perhaps an even greater extent than with fiscal policy, the major benefits of a successful national policy will accrue to the country in question. By itself, this seems hopeful and should facilitate changes. At the same time, the political resistance in most EU countries is strong. Some believe that the very fact of monetary union will generate desired reforms in labour markets. Possibly but not necessarily - when high unemployment rates in recent decades in many EU countries have failed to produce changes, why, it may be asked, would monetary union be more successful? In conclusion, I consider that much work at EU level will be invested in political education and a search for methods to gain support for changes in this field. But I do not foresee the same pressure in the joint processes as in the case of fiscal policy; there is less need of a common approach.

As a  1  We have been tracking these developments using data our economists have developed to help us better understand the job prospects facing recent college graduates. These data are available on our website and are updated regularly. See The Labor Market for Recent College Graduates. BIS central bankers’ speeches  5  result, for the first time during this recovery, both unemployment and underemployment among recent college graduates has generally been falling. This means that, not only has it become easier to find a job upon graduation, but more college graduates are taking jobs that better utilize their degrees. In addition, starting salaries for recent college graduates have been increasing for the past couple of years, reflecting the growing demand for their skills in a tighter job market. To conclude, while there are economic challenges facing both the nation and the region, I am optimistic that we will continue to make progress on both fronts over the next few years. Achieving our dual mandate of maximum sustainable employment and price stability will help those who will graduate soon to achieve their own aspirations. Thank you for your kind attention. I would be happy to take some questions. 6  BIS central bankers’ speeches