samchain/econo-pairs-v1 huggingface dataset:
Should there be a greater fiscal adjustment, for example if the structural primary balance improves by 0.5 pp of potential output each year until reaching equilibrium – a path more consistent with the Stability and Growth Pact rules –, public debt could fall to 82% of GDP by 2040. Were this adjustment also accompanied by an ambitious package of structural reforms, the government debt ratio could be around 79% of GDP by 2040. In short, in order to bolster the sustainability of public finances, a multi-annual fiscal consolidation plan will have to be implemented once the pandemic is over and the adverse economic effects of the war in Ukraine have diminished. Although the necessary fiscal adjustment should be carried out gradually, the definition and early communication of this plan – in which all tiers of general government should participate – would be desirable, as this would help boost confidence and certainty about Spanish economic policies. Such confidence is particularly important amid the current context of monetary policy normalisation and the consequent tightening of financial conditions. As part of this plan, government expenditure policies must be subject to an exhaustive review to increase expenditure efficiency and to optimise the distribution between items in order to promote more robust and equitable economic growth. For instance, the weight of education and public investment expenditure in Spain is below the EU average,18 despite the broad consensus regarding the importance of these items to drive economic growth and mitigate inequality.

Of that increase, the return to pension revaluation in line with the consumer price index accounts for 55% to 65%, and the removal of the sustainability factor for 20%. The remaining 15% to 25% would be associated with the fact that, even with the 2013 reform, under the demographic and macroeconomic scenarios considered pension expenditure will grow by between 0.7 pp and 1 pp of GDP between 2019 and 2050. In addition, a permanent increase has been agreed in the transfers from the central government to the social security system, to meet the latter's so-called extraneous expenses, estimated at around 2% of GDP. Higher transfers from the central government serve to correct the current social security system deficit, but evidently have zero impact on public finances overall and, therefore, on their sustainability. Moreover, other measures introduced to align the effective and statutory retirement ages – chiefly a new regime of early retirement penalties and new incentives for late retirement – may alleviate the pension system’s shortfall, but their estimated effectiveness is subject to high uncertainty. The Government estimates an impact, in terms of lower spending, of between 1.1 pp and 1.6 pp of GDP by 2050. Likewise, the repealed sustainability factor will be replaced by the new “intergenerational equity mechanism” which, by means of a specific-purpose increase in social security contributions, envisages bolstering the Social Security Reserve Fund and adopting new measures as from 2032, depending on developments in pension spending relative to GDP.
Having said this, I do not mean that there is no hierarchy between the two objectives. I call for strong complementarity, not for a merging of objectives. To be more explicit, I consider that a monetary policy strategy that targeted asset prices would be a mistake. As central bankers, we need to avoid confusing economic agents; our role is to anchor expectations and ensure business continuity. 4. – There are still challenges to be addressed to provide authorities with the necessary policy toolbox for financial stability For it to be more effective, we still face a number of challenges in order to achieve an optimal macroprudential regulatory framework. First, we have to complete the regulatory framework for banks, by finalising the Basel III reform: I strongly wish and hope that we can reach a fair and 3/4  BIS central bankers' speeches  reasonable agreement soon. A revision of the European Macroprudential Framework is currently underway at the European Commission level. Moreover, decisive progress should be made to better provide macroprudential authorities with policy tools properly designed to address financial risks beyond banking. Market financing, shadow banking, Fintechs, pension funds, financial innovations are all part of the scope of macroprudential policy, insofar as they have the potential to pose a financial risk to our economies. Our next issue is less the solvency of banks than the liquidity of non-banks.

A comprehensive assessment of our current policy package should not only look at the intended consequences and side effects that can be observed, but also weigh them up against what would have happened in the absence of our exceptional policy [SLIDE 3]. How profitable would our banking system now be had we not eliminated the 2014–15 deflation risk? The landscape for our banking system would have been somewhat dire. In a deflationary environment – and we have avoided this lethal danger thanks to our monetary policy –, the debt-servicing cost for borrowers is heavier in real terms. Defaults are more frequent, and less sustainable debts result in higher credit spreads. The risk of a debt deflation spiral then increases further. But this has been avoided in the euro area and if the price of this is a temporary reduction in bank interest margins, then it is worth incurring such a secondary side effect. 2. – Let me turn now to the price of assets and the financial cycle At the level of the euro area, we consider the financial stability situation to be overall under control. The solvency ratios of significant euro area institutions have improved continuously since 2014, reaching 15% on average in Q2 2017. Overall private debt in the euro zone diminished as a share of GDP: 128% in 2011, 122% today. Non-performing loan ratios have also declined, especially for small and medium sized enterprises. I support the recent SSM initiative for provision rules for new flows of NPL, despite all the criticisms.
By now, all major financial institutions should have identified what needs to be done and be in, or near, the final stages of developing detailed plans. Work on changing all applications identified as high business priorities also should be well under way. In the United States, most large institutions plan to have their major applications available for external testing around the middle of 1998, with an expectation that testing with other major institutions would largely be completed by year-end 1998. This schedule allows all of 1999 for end-to-end testing on an industry-wide basis. But even with two years to spare, it is safe to say that no organization will be able to cope successfully with the Year 2000 challenge unless both its management and staff realistically measure its scope and commit to its solution. Bluntly stated, if your own management and staff, or your correspondents and customers, take any of the following positions, your organization may be at risk: • Denial -- the Year 2000 is not an issue for our organization. It is. • No resource problems -- our organization can handle the Year 2000 with its existing resources and within current information technology budgets. Very unlikely. BIS Review 87/1997  -4-  • Vendors will address the issue -- our outside vendors and service providers won’t let us down. Trust is not a substitute for testing. • Covered by contract -- our lawyers have determined that we are appropriately protected by our legal agreements.

Mr. McDonough considers the challenge presented by the Year 2000 problem Remarks by the President of the Federal Reserve Bank of New York, Mr. William J. McDonough before the Annual Membership Meeting of the Institute of International Finance in Hong Kong on 21/9/97. I am pleased to be able to share my thoughts with you today on an issue that is sure to challenge every one of our organizations for the next several years -- the Year 2000 and how the century date change poses a very significant risk for financial markets. As I look at the membership of the Institute of International Finance gathered here in Hong Kong, I cannot help but be impressed as to how truly global financial markets have become. Realizing that this meeting is being hosted here in Hong Kong, with the People’s Republic of China as the host country, further underscores how rapidly the world is changing and how interdependent we are. As a central banker, I worry a lot about events that could disrupt financial markets. Many of the events that I worry about are hypothetical. In those cases, a large part of my job is to convince others that the hypothetical event in question is sufficiently possible that it is in the industry’s best interest to work together to try to avoid the event and related problems. Today, I am sure that I do not have to convince you about the inevitability of the approaching century date change. It is a certainty.
By improving the quality of relative price signals, our price stability-orientated monetary policy makes it easier for policy makers and European citizens to identify the areas in which structural reforms are most needed. Beyond safeguarding price stability,  3  Today, the services sector accounts for 70% of GDP, 68% of employment and 96% of the new jobs created, but only 20% of intra-EU trade. This discrepancy reflects not only the fact that services often have an intrinsically local character, but also the many barriers and obstacles still hindering the free movement of services within the European Union. 4  See P. Hartmann, F. Heider, E. Papaioannou and M. Lo Duca (2007), “The role of financial markets and innovation in productivity and growth in Europe”, ECB Occasional Paper Series, September, as well as ECB (2007) “Financial integration in Europe”, Frankfurt a.M: ECB. BIS Review 31/2008  3  there is nothing monetary policy can do to foster the growth and employment potential of our economies. The only modest contribution a central bank can make to structural reforms is to assess their impact, and communicate in a balanced manner and through different channels and fora its views on the expected effects of reforms to the public, thereby helping to build a constituency supporting reform packages. •  As to fiscal policy, let me first stress that I have doubts on the possibility to make a deficit limit contingent on the implementation of structural reforms by national governments.

•  More specifically: o  structural policies in the Member States are supposed to seek to create flexible and efficient structures in product and labour markets with a view to fostering the growth potential of euro area economies and improving the adjustment mechanisms in EMU;  o  fiscal policies are supposed to ensure the sustainability of public finances, effectively limiting government deficit and debt ratios, thereby also ensuring that automatic fiscal stabilisers work effectively as an adjustment mechanism in the currency union; and  BIS Review 31/2008  1  o  wage policies should be compatible with trend developments in productivity in order to foster full employment and should take into account the overriding importance of wage flexibility as an equilibrating adjustment mechanism in the EMU. •  Within the Lisbon strategy, as refocused and reaffirmed by the European Council in 2005, Member States aim to gear national policies towards micro-economic flexibility and macro-economic stability. This would strengthen the capability of the euro area economy to swiftly re-allocate economic resources in view of exogenous economic shocks and improve its long-term growth prospects. The Lisbon Strategy and the peer surveillance of its implementation at the national level have raised the awareness among governments in European countries that structural reforms are decisive for remaining competitive in an increasingly global economic environment and to fully realising the economic potential of the EMU.
Yves Mersch: Policy needs, knowns and unknowns in the aftermath of the crisis Keynote speech by Mr Yves Mersch, Member of the Executive Board of the European Central Bank, at UBS, Zurich, 4 February 2016. *  *  *  I would like to thank Valerie Jarvis for her assistance in preparing this speech. Ladies and Gentlemen, I would like to thank Valerie Jarvis for her assistance in preparing this speech. Coming out of a crisis, one of the biggest challenges that policymakers face is uncertainty about the state of the economy. We can respond to this, of course, by looking at stylised indicators, such as inflation or employment. But for a forward-looking monetary policy, that’s not sufficient. We need to know the strength of the inflation pressures building up over the medium-term – that is, whether the economy is over-heating or under-cooking relative to its underlying potential. It is for that reason that central banks have traditionally used the concept of potential output – the level of output consistent with price stability – to gauge inflationary pressures. 1 If actual output is above potential output, there is a positive “output gap” and we can expect upward pressures on inflation. And if actual output is below potential, the opposite will be the case and disinflation will follow. In general terms, I see nothing wrong with this way of thinking. The economy is vastly complex and we need simplifying frameworks for assessing “how it’s doing” overall.

12 There’s a lot of scope for European firms to catch-up in terms of improving management quality, to make the organisational changes required by new technologies, and in terms of improving ICT skills, so that workers can operate those technologies effectively. 13 But looking further ahead, it’s clear we need to reflect on what types of skills will be needed for the next phase of the ICT revolution: the replacement of routine service occupations by robotics. 14 There will obviously have to be larger human capital investment in people who will design robots. But greater upskilling and professional polyvalence will also be needed in the people who use them: those who work in automated warehouses, for example, may have to have  10  http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2016/01/13/090224b08405ea05/ 2_0/Rendered/PDF/World0developm0000digital0dividends.pdf. Similarly, Diane Coyle notes that the UK’s Statistical Abstract for 1871–85 – in retrospect, the height of the industrial revolution – devoted just 12 of the 200 pages on the economy’s output and trade to manufacturing and transport “Commentary: Modernising Economic Statistics: Why It Matters,” National Institute Economic Review, No. 234 (November 2015). 11  Robert J. Gordon, The Rise and Fall of American Growth (Princeton UP; 2016). See also: Juan F. Jimeno, Frank Smets and Jonathan Yiangou, “Secular stagnation: A view from the Eurozone,” Secular Stagnation: Facts, Causes and Cures, ed . Coen Teulings and Richard Baldwin (CEPR, 2014). 12  Bart van Ark, Mary O’Mahony and Marcel P. Timmer, “The Productivity Gap between Europe and the United States: Trends and Causes”, The Journal of Economic Perspectives, Vol.
Conclusion So I am leaving the scene of monetary policy with some truly fascinating issues unresolved, just as other colleagues will surely do when it is their turn to leave. As a final comment I am very conscious that I have collected the description of being a ‘hawk’: of erring on the side of rate rises. Certainly my willingness to allow thoughts about insurance to influence decisions at the margin, has meant that on the occasions when I have voted with the minority it has been on the upside for rates. But equally the longer term issues, such as those of labour supply and  pensions saving, are more likely to manifest themselves on the downside. I am certainly very conscious of these factors too and perhaps my concern about these slower burn issues attracts less attention from commentators on monetary policy. Because one thing I have discovered about monetary policy is that downside issues are just as important for us as the opposite. No matter; I for one shall after January watch from the sidelines how things progress, but with a feeling of gratitude and privilege for the welcome improvement of my understanding of this fascinating area.

In spite of delays in execution, the programme has, on the whole, been very successful. Our collaboration with the IMF according to the current economic programme will conclude in August, but of course, our long-standing co-operative relationship with the Fund will not end then. On behalf of the Central Bank, I would like to use this opportunity to thank the IMF and its staff for their efforts over the past two-and-a-half years. The conclusion of the IMF-supported programme and the implementation of the capital account liberalisation strategy bring the determination of Iceland’s future monetary  2  BIS central bankers’ speeches  and economic policy framework to the fore. That work has already begun, partly with the Central Bank’s December 2010 report entitled Monetary Policy in Iceland after Capital Controls. Let us think back for a moment to 1961, when the Central Bank of Iceland first opened its doors. As will be described in subsequent speeches, the Icelandic economy was changing rapidly at that time. A number of structural changes were well underway, and some of them are still in effect today. The policy of the time aimed at establishing market-based economic equilibrium in Iceland. Trade in goods and services was liberalised, and multiple exchange rates were supplanted by an exchange rate based on underlying economic conditions. Then, as now, Iceland was pursuing an economic programme in collaboration with the IMF. Then, as now, Iceland’s economic ties to the rest of the world were under review.
But, from experience, we know that some uninsured, unsecured liabilities are not as reliably loss absorbing in resolution as others and, in practice, it has been difficult to break into the senior class. In part this is due to an absence of legal powers to facilitate this – and the BRRD addresses that problem. But in part it is because of the potential adverse consequences of taking resolution action within a class which includes liabilities that it is difficult to bail-in and where, although we have the power to exercise discretion in exceptional circumstances, it is undesirable and legally risky to rely on this discretion. Just as we require G-SIBs to maintain high-quality, long-dated capital instruments that can reliably absorb losses in a going-concern in order to reduce the probability that they fail, so too we should require G-SIBs to maintain high-quality, long-dated liabilities that can reliably absorb losses in a gone-concern, in order to reduce the probability that they fail in a disorderly way. So, which liabilities are sufficiently reliably loss absorbing in resolution to count towards a firm’s GLAC? Well, any liability that meets the following conditions: •  First, it must be sufficiently likely that the liability will actually be there when the firm enters resolution. The BRRD requires that, in order to count toward MREL, liabilities must have a residual maturity of at least 12 months. •  Second, the liability must be within the scope of the relevant authority’s resolution tools.

Clothing imports are not the only imports from low-cost countries that have exhibited strong growth. The share of our imports from these countries also seems to be rising for other goods, such as audiovisual equipment, furniture and white goods. This is pushing down the rise in prices for imported consumer goods. Structural changes in world trade have been important for the Norwegian economy, not least for the rise in prices for imported goods and services. We assume that the shift in imports towards low-cost countries will continue, with an attendant dampening effect on inflation. This effect will be countered by the increase in prices for oil and other commodities that is expected to result in a somewhat higher rise in producer and export prices among our trading partners. Monetary policy and the economic outlook in Norway and abroad Monetary policy in Norway is oriented towards low and stable inflation, with annual consumer price inflation of close to 2.5 per cent over time. This is also the most important contribution monetary policy can make to sound economic developments in the long term. Low and stable inflation provides the economy with a nominal anchor. This contributes to predictability for those who take decisions about saving and investment today, although the result of those decisions depends on how the economy develops in the future. In its conduct of monetary policy, Norges Bank operates a flexible inflation targeting regime, so that weight is given to both variability in inflation and variability in output and employment.
Many banks were closed on 1 January and an enthusiastic general public wanted to get hold of the new cash as quickly as possible, preferably on New Year's Eve. This meant that there was tremendous pressure on converting the ATMs to euro as quickly as possible at the end of the year, which the banks succeeded in achieving. On 2 January, 91 per cent of the ATMs in the euro area had been converted to euro, and it took only a couple more days until they all worked with  BIS Review 23/2002  1  euro banknotes. Many countries also distributed lower denomination banknotes (five and ten euro) via the ATMs to facilitate change for retailers. Despite this, and despite the advance distribution of coins, there arose a shortage of coins and of five-euro banknotes in a few places, although the system worked well on the whole. With regard to other types of machines, it has been reported that, for instance petrol machines could not accept euro banknotes at first. However, this is being overcome. The changeover to the euro was done in different ways in different countries. Naturally, help was required from all those who handle cash, and despite this there were long queues in many places. However, the customers seem to have accepted this with relative equanimity, perhaps because it was a holiday period and many had vacation at that point in time. The situation improved rapidly in the retail trade, but it took a little longer in the banks.

It is worth remembering, in this  BIS Review 23/2002  3  context, that there is no reason why a cash changeover should have to be made at the start of a year, for practical reasons it would be better implemented in March or October. Another alternative described in the report is known as "Big Bang", i.e. to begin a cash changeover at the same time as the krona exchange rate is fixed and full membership of the monetary union occurs. This scenario requires a preparation period of 2-2.5 years. This makes the demand that the euro can be handled in all transactions in Sweden, both physical and electronic, and by everyone in Sweden, from the corner tobacconist to the National Swedish Social Insurance Board and the major banks from the first day of membership. As this alternative involves a simultaneous changeover in IT systems, other practicalities such as accounting and payment of taxes, as well as a physical cash changeover, it makes high demands on co-ordination and information. Taking into account the longer preparation period prior to the actual EMU membership required in this alternative, it would take longer until Sweden could fully participate in all forums for co-operation and decision-making within the monetary union than would be the case with a gradual transition process. The advantage of this scenario is that it would avoid uncertainty arising among the general public over the position of the euro during the transition period in that the euro could be used everywhere immediately.