samchain/econo-pairs-v1 huggingface dataset:
In terms of data, however, this is the best we have at the moment. So, notwithstanding substantial data issues, the question is how can we, as policymakers, influence these unobservables? 5  While we can expect a re-launch of capital investment growth, I am quite certain that growth rate that we have witnessed in the 2000s, with strong inflow of FDIs and real estate bubbles in some countries will not be seen again in the near future. That is why so much focus is on the total factor productivity, ultimately seen as the only source of long-term growth. Of course, the TFP is an unobservable variable, usually measured by the Solow residual. What drives the TFP growth is a much trickier question. Is it innovations, technology advances? For us as policy makers, understanding the determinants of technology adoption, the TFP growth, is key, as this gives us the channel to act through. There is an increasing number of theory and empirical papers linking development and the adoption of technologies to the role of institutions defined in a very broad way. And data seem to be supportive of the link – there is a strong positive relationship between the quality of institutions and human capital on one side, and growth on the other. But then, when it comes to the quality of institutions, or human capital, there has been little or no convergence of the CEE.

The initial step in that process was the FOMC’s decisions to first reduce, and then end, its net purchases of Treasury and mortgage-backed securities.2 These purchases pushed longer-term interest rates lower, making it less costly for consumers and businesses to borrow, and contributed to favorable overall financial conditions that supported spending. The next step will be to raise the FOMC’s target range for the federal funds rate the short-term interest rate at which banks lend to each other. In March 2020, the FOMC reduced the target range for the federal funds rate by 1-1/2 percentage points to near zero. This very low interest rate contributed to the sharp rebound in demand, which propelled the strong labor market recovery over the past year. But with today’s strong economy and inflation that is well above our 2 percent longer-run goal, it is time to start the process of steadily moving the target range back to more normal levels. In particular, I expect it will be appropriate to raise the target range at our upcoming meeting in March. Once the interest rate increases are underway, the next step will be to start the process of steadily and predictably reducing our holdings of Treasury and mortgage-based securities, which had grown significantly as a result of the purchases that began in March 2020. Last month, the FOMC released a set of principles that will guide that process.3 Assuming the economy develops roughly as I expect, I foresee this process getting started later this year.
In particular, we needed to bear in mind that the euro area’s financial system is predominantly bank-based. Take the structures of private credit outstanding as an example: recourse to banks makes up more than 70% of non-equity external finance in the euro area. By comparison, in the US the equivalent proportion is only around 30%. This reflects the fact that the US financial system is primarily market-based. In the euro area, guaranteeing steady access to credit for households and companies largely means preserving the viability of the banking system. Banks play such a dominant role in our economy that it was appropriate to focus our non-standard measures on the banking sector. This profound contrast in financial and economic structures explains the different responses by central banks to the crisis as exemplified by the approaches of the ECB and the Federal Reserve System of the US. We rely on different channels as regards the transmission of our policy action. But these variations do not reflect conflicting views on fundamental principles or objectives. On the contrary: given the different structures, the approaches need to be different to achieve the same objective. Thus, I would strongly argue that central banks around the world are united in purpose. As I indicated before, the remarks I just made on the ECB’s response to the crisis did not contain any message concerning future monetary policy, and should not be interpreted as containing any such message.

Key agencies such as MGTC and Sustainable Energy Development Authority (SEDA) have been established to provide the required support and incentives to promote the industry. On the financing side, Bank Negara Malaysia has worked closely with the Ministry of Finance and the Ministry of Energy, Green Technology and Water to establish the Green Technology Financing Scheme (GTFS). The scheme is expected to benefit over 140 companies. With an initial allocation of RM1.5 billion, it was recently increased with an additional RM2.0 billion. The scheme was structured to reduce the financial risk borne by financial institutions, as the government guarantees 60% of the financing amount via Credit Guarantee Corporation Malaysia Berhad (CGC) and bears 2% of the total interest or profit rate. This financing framework aims to improve the preconditions for financial institutions to finance viable and innovative green technology companies. It provides avenues that help bridge information gaps between financiers and businesses, and introduces credit enhancements and financial incentives to address any market short comings in meeting a legitimate economic need. Efforts are also being carried out to strengthen the capacity of financial institutions to provide advisory support to businesses. The certification process that verifies the businesses which qualify for the GTFS is central to these efforts, as it not only verifies the technical capabilities of the businesses, but also assists in assessing its commercial viability. Since the introduction of the GTFS in 2010, the growth of green technology financing in Malaysia is beginning to gain traction amongst financial institutions.
The first years of monetary independence were years of hyperinflation, recession, insufficient foreign reserves, permanent depreciation of domestic currency and general macroeconomic instability. I would like to mention, as an illustration, that just after the monetary independence, the exchange rate depreciated almost on a daily basis, which along with the high monetary and fiscal expansion led to hyperinflation. In 1993, for instance, the average inflation reached nearly 350%, which was devastating for the economy. With the joint efforts of policy makers and scientists, policies for managing the exchange rate volatility as well as inflationary spiral were quickly adopted, which together with the support of the international financial institutions enabled the economy to stabilize and market principals to function. In October 1995, a monetary strategy of stable exchange rate of the denar against the Deutsche mark was adopted and against the euro since January 2002 – a strategy that then as well as now is considered to have been one of the supporting pillars of the stability of the Macedonian economy. Today, after 28 years of monetary independence, it is my pleasure to note that the National Bank is an institution whose credibility and integrity are being permanently reaffirmed. Maintaining price stability is the ultimate objective of the National Bank’s monetary policy.

Without it, we cannot imagine to successfully cope with the challenges ahead of us, especially now, when the European integration is becoming more realistic, which means intensive preparations for the future monetary integration. All of this requires an unconditional consistency in the price stability and the exchange rate of the domestic currency, a supervisory setup that is close to the European one, as well as institutional capacity for a quality dialogue with the European monetary authority. In the end, on behalf of the central bank team and on my behalf, I would like to thank and pay a tribute to the previous governors and managements and to all those who have been part of the central bank in the years behind, the ones that selflessly dedicated themselves and managed to build an institution that is independent, transparent, highly professional and respected in the international community. I would also like to thank the professionals who are a part of our team today – they are the foundation of the values that we constantly build, following the only path to our European future. Even today, 28 years after the monetary independence, we stand firm ahead of new challenges and I assure you that we will succeed by guaranteeing the stability of the denar and price stability, which are the best contributions that a central bank can make for the prosperity of our society. Congratulations on the 28th anniversary of the monetary independence! 2/2  BIS central bankers' speeches
This has already been achieved to some  BIS Review 83/2006  3  extent within the EU, but it needs to be achieved on a global basis. Moreover, the coordination and exchange of information must be strengthened both in “peacetime” and during crises. Not surprisingly, I consider it important to implement regional financial stability analyses to detect possible vulnerabilities; the type of analyses now being made in the IMF-led exercise in the Nordic-Baltic region. Furthermore, both the institutions and the public authorities must gain greater knowledge of where the risks end up and what might happen if the ultimate risk-takers suffer problems. The Nordic countries and the Baltic countries Financial integration has come a long way in the Nordic and Baltic countries. There is a close collaboration between the central banks and financial supervisory authorities in the Nordic countries. We have agreements on consultation in the event of crises and we hold joint crisis exercises. As Swedish banks play an important role in the Baltic countries, discussions are under way on the signing of a consultation agreement between the Swedish and Baltic authorities. One important weakness that remains is the unclear distribution of the financial costs between countries in the event of a crisis. A closely-linked but also unsolved issue is which country’s assessment of the situation will prevail and who may decide on measures such as closing a bank.

Are the Danish taxpayers prepared to help pay to save Nordea’s operations in a crisis or do you see it as a problem for the Swedes alone? The question can be reversed, to ask how we Swedes would regard a crisis in Danske Bank. These issues are not unique to our countries; they apply to all countries and therefore require widescale international management. This is a difficult but important issue to discuss – before the next crisis occurs. One means of making this issue more concrete could be to hold a new Nordic crisis exercise based on the conditions in a real bank. It would be necessary in this type of exercise to take a stand on the specific case, which in turn might make it easy to continue a general discussion. Conclusion The crises during the 1980s and 1990s led to many important measures being taken: A number of international standards were adopted to create global minimum standards for regulation and supervision, for instance the Basel Committee’s Core Principles for effective banking supervision. The tasks of the IMF and the World Bank were increased to systematically identifying vulnerabilities in countries’ financial sectors, proposing measures to remedy them and giving technical assistance. The private agents in the financial market have also taken initiatives to reduce risks. They have, for instance, established the CLS Bank to reduce risks in foreign exchange trading.
Most bank lending to both households and companies takes place at variable interest rates, and in the bond market, rates are often variable.13 Household and corporate consumption and investment decisions should therefore be primarily affected by short-term market interest rates and expectations of future short-term interest rates, while the acquisition of assets that push down the term premium should be less important. Despite the very short interest-rate fixation periods on household and corporate loans, the Riksbank's purchases could have an effect if they lower bank funding costs. An important source of funding for the banks is the market for covered bonds. Banks issue such bonds, often with a maturity of 2-5 years, mainly to finance household mortgage loans. Thus, even though the mortgage loans usually have a short interest-rate fixation period, lower premiums (i.e. lower interest rates and higher prices) on covered bonds could push down the bank funding costs and thus lead to lower lending rates. However, as I noted above, the premiums on covered bonds do not appear to have been affected when the Riksbank bought government bonds during 2015-2019. This argument becomes even clearer when one looks at how the banks' actual lending rates to households and companies developed during the period. If the acquisition of assets had had an important effect on the interest rates that households and companies encounter, we should have seen that lending rates to these fell more than the policy rate was reduced in 2015-2019.

If the Riksbank has not succeeded in building confidence, it would be much more difficult to conduct monetary policy today. I suspect that today's high inflation would have more easily become entrenched and been able to start a price-wage spiral. In that case, the Riksbank would have had to raise the policy rate even more this year, which would have resulted in a greater slowdown in the economy. The purchases in phase 1 may thus have reduced the risk of such a scenario. Is the Riksbank’s financial independence threatened? The valuation losses in Table 1 cannot be directly transferred to an annual result.36 However, since the value of the Riksbank's assets has fallen rapidly, the Riksbank will most likely report a major financial loss this year37 It is not unlikely that the Riksbank's reported equity in the next financial statements will be negative, at least if one disregards unrealised gains in the revaluation accounts for gold and foreign currencies (see Table 4) The fact that capital is shrinking or even becoming negative need not be a problem for a central bank. Some central banks, such as the Federal Reserve and the Bank of England, hand out all of the surplus to their principal and therefore have no capital except a small base fund and any risk provisions. And some central  35 The calculation is based on an alternative where the policy rate is the same.
Banks should also explore the offering of real-time payment facilities for bill payments where there is demand for such services. Conclusion Ladies and gentlemen, the introduction of JomPAY will complement the existing measures to accelerate the country’s migration to e-payments. Moving forward, MyClear, MEPS and the banks should continuously collaborate to explore new and innovative ways to achieve greater payment efficiency. Both consumers and businesses should capitalize on the benefits and opportunities derived from the adoption of e-payments to enhance competitiveness in this rapidly evolving world. Let me conclude by congratulating MyClear and the banks on the successful establishment of the national bill payment scheme, JomPAY. I hope such a collaborative spirit will be enhanced to drive the country towards a successful migration to e-payments. 4  BIS central bankers’ speeches

This year, the squeeze on real income growth is likely to mean that both house prices and consumer spending weaken together. The housing market leads me to the second recent development – the reassessment and repricing of risk in the financial sector. It is clear that the housing market is being severely affected by the reluctance of the banking system to expand its balance sheet further. Banks are adjusting to the fact that many asset markets are unlikely to re-open in their old form and, as they do so, the supply of mortgage finance is being restricted. Once the adjustment in the financial sector is complete, banks will be able to resume lending. But the era of cheap mortgage finance that underpinned the housing market in 2006 and the first half of 2007 is over and, as a result, it is reasonable to expect the ratio of house prices to incomes to fall back, though with real interest rates still low by the standards of the past fifty years, not to previous averages. 2  BIS Review 79/2008  These changes to our spending power and to the housing market are “real” shifts that, although not easy to accept, we cannot side-step. Lord Mayor, we face the most difficult economic challenge for two decades. But I am confident that we can meet it. Inflation will fall back and growth will recover. But the cost of the necessary adjustment will depend on the credibility of the framework for monetary stability.
We have gained an increasing understanding that how we finance postsecondary education has significant effects on a variety of critical economic outcomes, including economic growth and inequality. For example, our research suggests that higher student debt and delinquencies reduce household formation and depress homeownership. But there are many important questions still left unanswered. What is the relationship between the amount and type of educational investment that people make and their outcomes? What attributes are associated with borrowers who are more successful at  1  2  Payback Time? Measuring Progress on Student Debt Repayment. BIS central bankers’ speeches  repaying their student loans? Are there particular types of degrees that are associated with better performance with respect to student debt repayment or with better living standards earlier in life? What are the best interventions to help borrowers avoid the consequences of delinquency and default, and to limit any default costs to taxpayers? Do borrowers who use programs like income-based repayment eventually succeed in paying off their debts? How do income-based repayment programs affect important decisions such as labor supply, consumption and household formation? These are important questions for the nation, as the human capital of our citizens is far and away our most important asset, and student loans are an important mechanism for financing needed investments in that asset. But it is very hard to answer these questions with existing data.

We expect the fall in commodity prices, which is driven by the weak global demand, to bring consumer inflation down, and the awaited moderate pace of domestic demand to restrain the upside risks. Thus, we believe that underlying inflation will move downward in the forthcoming period. Distinguished Guests, Now, I would like to give a brief account of developments in economic activity and the shortterm outlook on which the inflation forecasts are based. According to the GDP data of the second quarter of 2014, economic activity was relatively weaker compared to the outlook we presented in the July Inflation Report. In the second quarter, we saw that industrial production remained virtually unchanged quarter-on-quarter, while national income posted a decline after eight quarters in seasonally adjusted terms (Chart 13). This decline was mostly attributed to the agricultural sector, which made a 0.3 point negative contribution to quarterly growth. Therefore, national income growth lagged behind industrial production growth (Chart 14). 6  BIS central bankers’ speeches  Industrial production, which grew by 1.1 percent in the July-August period of 2014 compared to the preceding quarter, contributed to growth in the third quarter. On the other hand, we may see some decline in the agricultural value added. Thus, there are signals that GDP growth may fall short of the industrial production growth in this period as well. Factors like the slowdown in the European economic growth and geopolitical developments led the external demand to decelerate, inducing a marked slowdown in the growth of exports excluding gold (Chart 15).
However, since the beginning the annual excess return on equities has been close to ½ percentage point. We have  2  BIS Review 53/2009  established an equity management strategy that seems to be fairly robust to market fluctuations and that has, as we have seen, generated solid returns viewed over a longer period. Developments in the Fund’s fixed income portfolio have followed a different path. The annual return on the actual portfolio was ½ percentage point lower than the return on the benchmark portfolio. The results were not due to investment in high-risk fixed income instruments. At the end of 2008, as much as 64 per cent of the bonds in the Fund’s fixed income portfolio had the best credit rating, AAA, 20 per cent had the second best, AA, while ten per cent were rated A. Five per cent of bonds were rated BBB, which is the rating the credit rating agency Standard & Poor’s has assigned companies such as Telenor and Statkraft. Only one per cent of the fixed income portfolio has a lower credit rating. Realised losses as a result of bankruptcies have been low. The following table provides a static situation report. As the recession follows its course, and the credit rating agencies continue to respond positively to criticism, ratings will probably be adjusted to a certain extent. The emphasis will nevertheless be on high-quality paper. How then can an excess return become negative from one year to the next?

To explain this, allow me to draw your attention to developments in yields on bonds with a BBB rating, i.e. among the less high quality bonds in the Fund’s portfolio. The above chart shows the pronounced changes in the difference in yield between these bonds and government bonds, or the credit spread. This does not per se reflect a higher risk of bankruptcies. If this were the case, perhaps half of these solid companies would have to file for bankruptcy in the course of a few years. In this analysis from the Bank of England, risk premiums on corporate bonds are instead divided into three components. One component takes account of expected losses and another uncertainty with regard to expected losses – in other words, fear. The third primarily indicates that these bonds have become illiquid, or more difficult to buy and sell. These liquidity premiums, and perhaps also premiums for the initial panic and fear, do not pose a problem for a fund like the Government Pension Fund. On the other hand, a prolonged period of fear and liquidity shortages – if the authorities are not able to reverse these developments – could lead to higher future losses. The Fund’s fixed income portfolio is well diversified across different types of bonds and different regions and the active strategies had low correlation in normal markets. However, the financial crisis revealed that these strategies were exposed to more underlying, systematic risk.