samchain/econo-pairs-v1 huggingface dataset:
But the reason for hope, even if it has not yet triumphed over experience, is that, despite the short-term political considerations that have prevented adjustment so far, the lesson of Sudoku for economists is that cooperation is better than conflict. There are potential gains for all in the longer term. That is why the UK Government put so much effort into the G20 process. It is, as they say, the only game in town. Working with our international partners will be important if we are to achieve reforms to the international monetary system. But, as one of the low-saving group of countries, we must not neglect the need for domestic policy actions. The need for a rebalancing of our economy has been apparent for some time; I spoke about it in a speech just along the coast in Plymouth ten years ago. The proportion of our domestic output that we save has fallen by around a third over the past decade, as the share of consumption, especially public consumption, has risen sharply. Looking ahead, monetary and fiscal policy together must help to bring about a switch of demand from private and public consumption to net exports and business investment as the recovery takes hold. A key element in raising the national saving rate is the elimination over time of the structural deficit in the public finances. Of course, there is a perfectly sensible debate about the appropriate timing of the withdrawal of the temporary fiscal stimulus as the economy recovers.

That might involve a recession in the deficit countries, or an acceptance by the surplus countries that, one way or another, trade imbalances must be reduced. Sudoku for economists shows that countries cannot pursue for long incompatible economic policy frameworks. The reason why continuing large deficits are not sustainable indefinitely is that for every current account deficit there is an equal net capital flow in the opposite direction. Even if those flows remain constant in size, they imply an ever increasing stock of international asset and liability positions. Today China alone has reserves of over two trillion dollars, and Japan another trillion dollars. Adding inexorably to the stock of international assets and liabilities is like adding one brick on top of another to form a tower. With skill, it can be done for a surprisingly long time. But eventually the moment comes when adding one more causes the tower to fall down. If countries do not work together to reduce the “too high to last” imbalances, a crisis of one sort or another in financial markets is only too likely. We saw that following the first oil crisis in the 1970s when the attempt to “recycle petrodollars”, as they were called, led to defaults by a number of emerging market economies and a crisis in western banks. And sudden shifts in capital flows have led to periods of remarkable volatility in exchange rates between the world’s major currencies, the dollar, yen and euro (and, before 1999, the deutschmark).
Unlike an individual borrowing money, government borrowing can be rolled over and increased over such an extended period that repayment becomes a problem for the next generation not the present one. Sadly, this kind of behaviour is rather common and widespread. It is hard to imagine a reasonable person wanting to maintain a good lifestyle now by borrowing huge amounts of money which can only be repaid by his or her children or grandchildren. In other words, allowing or asking governments to spend beyond their means for an extended period of time is tantamount to society mortgaging the income and livelihood of our future generations. Such action is irrational and irresponsible, but it’s happening all over the world. No wonder some people have  2  BIS central bankers’ speeches  posed the question – if this is the kind of world we’re living in, is it really worth saving? Can central banks save the world? “Yes and no” 9. Rather than trying to answer this metaphysical and provocative question, let me quickly return to the subject of my remarks today: can central banks save the world? The short answer is “yes and no”. 10. When a financial crisis occurs and the financial system is facing imminent meltdown, as happened in the wake of the collapse of Lehman Brothers in 2008, shockwaves in the form of a severe credit crunch normally follow as banks and other financial firms lose confidence in each other and hold on to whatever liquidity they can.

Banque de France researchiii based on a panel of 22 advanced economies shows that over the 1996-2014 period it has been the main determinant of the slowdown in business investment (negative contribution of 80%). The second lever is confidence or, in other words, the level of uncertainty (17%). Concretely, rules have to become simpler and more stable for entrepreneurs. In France and Spain, we are still far from the best performers in the latest World Bank ‘Doing Business’ ranking: we came in 29th and 32nd respectivelyiv. But alongside the economic levers, financial levers play a role too (slide 9). As Europe’s economy is close to the “technological frontier”, businesses need to innovate more. As such, they need to be able to take more risks, which means more equity financing, rather than debt financing. But Europe is lagging behind: equity capital amounts to only 52% of GDP in the euro area, compared with 121% in the United States. In addition, (slide 10) the cost of equity (CoE) has remained astonishingly high on both sides of the Atlantic – more than 9% for large listed companies in the euro area according to Banque de France calculations – despite the sharp fall in interest rates over the last two decades. This means that the risk premia have increased. The high CoE could prompt companies to give priority to dividends and share buybacks over investment – we have seen this situation occurring in the United-States. So, in practice, what is the way forward?
In practice, the concrete design and use of monetary policy instruments will depend crucially on the degree of volatility of the short-term rate chosen as the operational target that the ESCB will be willing to accept. This volatility will in turn depend on several factors: •  the width of the corridor defined by the two standing facilities available to absorb or provide liquidity (the deposit facility for the floor and the marginal lending facility for the ceiling). Under normal circumstances, the two facilities will bound the overnight interest rate. They will operate at the overnight maturity and will be accessible at the discretion of counterparties and for unlimited amounts, provided, in the case of the marginal lending facility, counterparties can supply adequate collateral. A very narrow corridor, allowing very little room for the functioning of the money market, would not be strictly in line with market principles. On the other hand, a very broad corridor would not help contain excessive market volatility. As a consequence, the width of the corridor is likely to be set pragmatically (currently, it is around 2% for most central banks that operate an interest rate corridor similar to the one planned for the ESCB);  •  the frequency of fine tuning operations could be a more discriminating factor for interest rate volatility. Very frequent intervention of the ESCB in the money market would not, in my view, be fully consistent with market principles.

The ability to endure, to persevere, to be resilient in the face of such extreme odds is about having a great sense of purpose of what needs to be achieved and the motivation of why it needs to be achieved. The sheer responsibility and the awareness of the accountability that comes with it is the very driver of such perseverance. It is also the fear of failure and knowing the far-reaching and damaging consequences. This is reinforced with the values and the discipline to stay the course to do what is right and to do what is in the interest of the people. The discipline is also important so that the Central Bank is consistent in its behaviour in managing the challenging conditions or in its aspirations to push the frontiers and create great value for the country. During such times, having great clarity in the vision and on the objective of what is to be achieved becomes paramount. This has to be the starting point if it is to draw on the energies of the entire organisation. Articulating it with great clarity throughout the organisation allows the collective alignment to the goals. This also avoids being diverted by distractions when we are confronted with destabilising times. It is also imperative when we are ambitious with bringing about change and transformation. Knowing clearly the outcomes and the benefits it brings increases the potential of bringing diverse groups within a country and across countries to building the consensus on achieving a common goal.
They also depend upon other key players like the Ministry of Finance and they depend upon the efficient working of the financial markets. Other preconditions for Inflation Targeting can partly be met by the Bank of Albania. The full implementation of Inflation Targeting can therefore take place ONLY conditionally. One can compare this situation with the tailoring of a suit for a special occasion. Let me make this comparison. One can find a good tailor and ask him to make a suit for a special occasion. All measures can be taken, such as the length of the arms and the length of the legs. The suitable materials can be found. One needs the appropriate fabric, in the appropriate color. Upon all these preconditions of (1) the good tailor (2) the precise measures (3) suitable materials, the tailor can start the tailoring of the suit. But, there is still no guarantee that the suit will fit you perfect. Or, it may happen that you look appealing in the tailor-shop, but not at the day of the special occasion. For instance, the temperature may have fallen so that you need an additional coat, or even a different fabric. Or, the environment of the special occasion may make you look overdressed. You tried to make it perfect, but the environment is lagging behind. Factors that you could not influence yourself can make you look different from how you had wished to look with the new suit.

The economy is more or less at full employment, consumption has rebounded, and household income growth has recovered to near pre-crisis rates. The problem with the US recovery, at least from the perspective of Singapore and the region, is not its pace of growth but its composition. US GDP growth is not generating as much trade as previously, with persistent weaknesses in business investment, including in IT. This has implications for export growth in Asia and in Singapore. US consumption generates only around two-thirds the import demand that US investment does. So for Asia and Singapore, we need to see a recovery in US investment. BIS central bankers’ speeches  1  China’s growth should slow but we do not expect a “hard landing”. The official target of 6.5% is quite attainable on the back of fiscal stimulus and continued credit expansion. In fact, the risk is not of too low a growth rate but a growth rate that is achieved by adding to the underlying vulnerabilities in the Chinese economy: high and rising levels of corporate debt, industrial over-capacity and deteriorating asset quality in the banking system. Changes in the composition of China’s growth will continue to have an impact on Asia and Singapore. The rebalancing of demand away from investment and towards consumption has weighed on the region’s exports of commodities and capital goods. But over time, there are opportunities for countries which re-orientate the structure of their exports to tap on China’s burgeoning demand for consumer goods and services.
And, finally, before 1 April the following year, the Minister of Finance and General Government has to submit a report to the Government on the degree of fulfilment by all tiers of government of the objectives in the initial budget. I consider that these reports should in fact offer this complete picture of the budgetary projection that we are today lacking. I would further remind you that the Government has announced the creation in 2013 of an Independent Fiscal Authority to ensure compliance with budgetary regulations. This type of institution has proven useful in other developed countries in enhancing budgetary policy credibility. It is, however, crucial that such an institution should enjoy a degree of independence, effective responsibilities and resources in line with best international practices. I will now discuss the essential features of the State and Social Security budget for 2013. Macroeconomic setting and fiscal deficit The draft State Budget for 2013 is part of a macroeconomic setting in which real GDP is estimated to decrease by 0.5% as a result of a negative rate of change in national demand of 2.8%, which would be partially offset by a 2.3 pp contribution from the external sector. BIS central bankers’ speeches  5  This projection of a 0.5% decline in GDP in 2013 is clearly optimistic compared with the fall of around 1.5% currently projected by most international organisations and analysts. That said, I would like to make two observations.

It was difficult to predict the large fall in share prices and property prices. The decline in demand was substantial in any case and production and employment fell considerably. Unemployment reached the highest level of the post-war period. The  2  BIS Review 43/2006  budget deficit and government debt (as a percentage of GDP) also increased to all-time highs as a result of the crisis. Sweden and Finland were the European countries that suffered the most from the crisis, but other countries also experienced serious problems (see Figure 4). For most countries, this proved to be dearly-bough experience. Monetary policy was reformed to inflation-targeting policy, the exchange rate was allowed to float and a deficit target and an expenditure ceiling were introduced as norms for fiscal policy. We have had this new policy in Sweden for around 10 years now, and many other countries have chosen a similar policy. The labour market situation Most people would probably agree that the period from the mid-1990s, when inflation targeting was introduced, has been a relatively successful time in macroeconomic terms. Inflation fell fairly quickly from levels close to 10 per cent to around the inflation target of 2 per cent. Inflation has remained at a low level since then, albeit slightly too low in recent years (see Figure 1). Annual GDP growth has on average been twice as high over the past ten years as during the period 1980-1993. Employment growth has also been higher (see Figure 5).
During the 1990s, a debate arose in the United States as to how far these exceptions could be made and whether the universal bank was to be or not to be. A number of scientific studies showed that in the trade-off that existed between benefiting from economies of scale within different types of banking activities and increasing the risks of exploiting conflicts of interest, the benefits of economies of scale weighed heaviest. For instance, it was shown that the shares and corporate bonds issued between January 1927 and September 1929 gave lower earnings if they were issued by a commercial bank than if they were issued by an investment bank. This indicated that investors required a lower risk premium if a commercial bank managed the issue than if an investment bank was responsible. The investors appear to have trusted commercial banks more, and fear of exploitation of the conflicts of interest does not appear to have dominated. The investors appear to have had most confidence in the issue when the commercial bank had outsourced its investment banking activities in a separate company. This would indicate that the investors were aware of the  BIS Review 47/2004  3  conflicts of interest, but that they considered the commercial banks’ greater capacity for certification outweighed these. In 1999 these regulations were completely removed by the introduction of the Gramm-Leach-Bliley Act.

Jean-Pierre Roth: The population is ageing - we cannot wait any longer! Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank, at the Association suisse des actuaires, Basel, 17 June 2005. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  Like other developed countries, Switzerland has been hard hit by the phenomenon of demographic ageing. It is putting our old age pension scheme to a severe test. The ageing of the population is also impacting on our ability to innovate, our potential to achieve productivity gains and our competitive dynamism in a globalised and demographically diversified world. This is why measures need to be put in place quickly. At the heart of this demographic challenge lies the need to enhance the productivity of our economy as well as our productive capacity. It is all the more important to secure favourable growth conditions because the ageing of the population in itself could impact negatively upon our capacity for growth – which is under strain already now. Increasing the productivity of our economy and the pace of growth is essential if we wish to maintain our system of social security. At the macroeconomic level, the financing of old age pensions works according to a simple principle.
5 I will not go in to it here, but merely note that a majority of us on the Executive Board has regarded the current repo rate as in practice being the lower bound. This zero interest rate problem received much attention in the academic world in connection with the Japanese central bank cutting its policy rate to zero as a result of the economic stagnation in the 1990s. One of the possible solutions if a central bank has cut its policy rate to its lower bound, and wants to cut it further, is to promise a policy rate around zero for a long time to come. Over time this would have a similar effect to cutting the interest rate to below zero and then raising it to above zero. The repo rate path facilitated communication During the financial crisis, lessons from this research became surprisingly topical for a number of countries in addition to Japan. The repo rate path fulfilled a central role here, as it enabled the Riksbank to make clear its intentions for monetary policy during an uncertain situation. When the Riksbank cut the repo rate to 0.25 per cent in July last year, the repo rate path signalled a low repo rate for a long period ahead. I believe this gave us an advantage over many other central banks, who tried to use purely verbal methods to signal that their policy rates would be low for a long time. Credibility plays an important role in monetary policy.

“Before” are the closing rates on the day before the repo rate path was published and “After” are the closing rates on the day it was published. Prospera’s survey covers money market participants. Sources: Reuters EcoWin, TNS SIFO Prospera and the Riksbank. A recurring phenomenon during the three years with our own repo rate path has been that market expectations of the repo rate have from time to time deviated from the Riksbank’s repo rate forecast. Allow me to comment further on this. 6  In addition to the repo rate cut of 0.25 per cent, the Riksbank has granted loans at a fixed interest rate for the purpose of bringing down actual interest rates paid by companies and households. BIS Review 85/2010  5  Market expectations and the repo rate path As I mentioned earlier, one important purpose of publishing a repo rate path is to influence expectations among the participants in the economy. The established view at present is that monetary policy has its main impact by influencing expectations of future interest rates. A natural question here is if the Riksbank’s repo rate path has differed from other agents’ expectations of the repo rate, and how large the deviations have been. What role do the differences between market expectations and the Riksbank’s forecasts play? How large are the deviations… As we have seen, the Riksbank, the market and other economic agents can have different views on how the repo rate will develop. Sometimes the differences are small, and sometimes they are large.
But producers have also gained because price stability helps them to plan ahead. Lower inflation and confidence in central bank policies have, in turn, reduced uncertainty about future price developments. The lower inflation risk premium is allowing even industrial economies to grow at lower real interest rates than in the past. And, finally, an unambiguously beneficial consequence of the new international monetary order is that it allows for more efficient distribution of capital. At the same time as the current polarisation of exchange rate regimes has come into being, financial globalisation has intensified. Capital controls are being lifted in a growing number of developing countries. In the 1970s, net flows of private capital to the world's poor countries amounted to a little over 1% of host-country GDP. 3 By the end of the 1990s, this percentage figure had grown by a factor of three. Today, there is a broader acceptance of the benefits to be derived from financial liberalisation. Indeed, the gains expected from a free market for international capital are substantial. Global finance allows for a better allocation of world resources, enhancing the prospects for growth of all nations. For richer countries of the world, there are new investment opportunities to finance the expanding needs of their aging populations. Younger and poorer nations obtain access to capital to realise their high potential growth. This is the basic teaching of the theory of international capital flows.

Denny H Kalyalya: Expansion of Zambia’s banking sector Remarks by Dr Denny H Kalyalya, Deputy Governor-Operations of the Bank of Zambia; at the official opening of Bank of China’s new premises, Lusaka, 9 December 2008. *  *  *  • Honourable Minister of Finance and National Planning, Dr. Situmbeko Musokotwane, MP; • His Excellency – the Chinese Ambassador to the Republic of Zambia; Mr. Li Qiangmin; • Managing Director of the Bank of China (Zambia) Limited; Mr Du Qiang; • Distinguished Invited Guests; • Ladies and Gentlemen. I am greatly honoured for having been invited to speak on the occasion of the official opening ceremony of Bank of China’s new premises. Ladies and Gentlemen As part of the on-going Zambia-Chinese relationship, the Bank of China was established in 1997. Since then the Bank has recorded tremendous progress. Distinguished Invited Guests During the past 8 years, the overall financial performance and condition of the banking sector has been satisfactory. The sector has continued to expand and we anticipate increased economic and investment activity in the period ahead. Banks are expected to continue to provide the required level of finance to consolidate the economic gains registered so far. The Bank has achieved tremendous growth since its inception in 1997. During the last eleven years, total assets have increased by 325% to K507.9 billion in October 2008 from K13.8 billion in December 1997. Regulatory capital increased by about 1,000% to K41.9 billion in October 2008 from K3.8 billion December 1997.