samchain/econo-pairs-v1 huggingface dataset:
39 At the macro level, studies drawing on cross-country experience have suggested that certain measures of diversity – in particular, the degree of ethnic fragmentation – may sometimes be associated with lower levels of economic growth. 40 One explanation for this finding is that  31  Lombardielli et al (2005)  32  Tetllock (2015). 33  Iaryczower et al (2013)  34  Haldane (2014). 35  Lagarde (2014). 36  Haldane (2009). 37  Landemore (2013). 38  Guillaume et al (2015). 39  Alesina and La Ferrara (2000). 40  Easterly and Levine (1997), Alesina et al (2003). BIS central bankers’ speeches  7  fragmentation may make it harder for society to agree on the public goods it wishes to provide – transport, schools, energy, defence – thereby retarding growth. 41 Another is simply that it increases the risk of conflict and friction, which absorbs human and social capital and thus damages growth. The potential fragility of more complex systems is a familiar theme from other disciplines too. In ecological biology, complex eco-systems, like tropical rainforests, are known to be more fragile than simple ones, such as savannahs. Cascades, conflicts and contagion are both more likely and more potent, the greater the number of interacting parts. That means complex societies, like complex eco-systems and financial systems, may exhibit a “robust-yet-fragile” property. 42 The greater richness of the rainforest or cosmopolitan city may come at a cost. So diversity is no one-way street, no panacea.

It has been enjoyed by generations of children, so it has a particular resonance at tonight’s event supporting Children in Need. And it has a happy (diverse, multi-cultural) ending. But The Sneetches also shines an uncomfortable spotlight on a psychological flaw in us all – the desire to differentiate, to stereotype. A half-century on, this flaw is one with which society continues to wrestle, not least in a world where the co-mingling of cultures, races and creeds has never been greater. In practice, this co-mingling has not always had such a happy ending. Tonight, I want to discuss some of the issues around diversity. These are relevant to groups large and small, from communities and organisations to economies and nation states. These issues affect all of us, children and adults, whether at school, work or play. In keeping with the spirit, I want to discuss diversity by drawing on a diverse a set of disciplines to explore the lessons they hold. And I will conclude with suggestions for some new directions in promoting diversity, in particular in organisations such as the Bank of England. We are all sneetches Let me start with what might appear, on the face of it, a rather controversial statement. Everyone is this room is a star-bellied Sneetch. I am, all of you are and everyone outside this room is too. By that I mean we all discriminate, to a certain degree and in certain situations, based on the characteristics and creeds of the individuals we encounter.
When countries experience hyperinflation, domestic prices of goods and services will rise every minute. In such a situation, no one will 1 I would like to note that the views expressed in this oration are my own as an economist and do not  necessarily reflect the views of the Central Bank of Sri Lanka. I also would like to acknowledge the technical support received in preparing the oration from Dr Chandranath Amarasekara and his team at the Economic Research Department of the Central Bank of Sri Lanka. 1  want to hold the local currency, and people will rush straight from the bank to the shops to buy goods, fearing that their currency holding will lose value along the way. In fact, the banking system itself will collapse. As people lose faith in local currency, the barter system, or the exchange of goods for goods or services will become the norm, making transactions significantly more difficult. Hyperinflation will also cause adverse redistributive effects, destroying real value of middle class savings in local currency and real incomes of fixed income earners such as workers and pensioners. One can read horror stories of hyperinflation in Germany and Australia in the 1920s, and more recently in several Latin American countries and also in countries like Zimbabwe. The episode of hyperinflation in the inter-war Germany is said to have facilitated the rise of Hitler and the global destruction that followed.

High and volatile inflation causes lenders like banks and other financial institutions to demand a higher fixed interest rate on loans to compensate for the risk that inflation will move around, thus raising  2  the cost of finance for investment. At the same time, financial institutions need to offer higher nominal and real interest rates to encourage savers to deposit their money to mitigate the risk of high and volatile inflation eroding the real value of their savings. High and volatile inflation increases the margin between lending rates and deposits, and this high cost of financial intermediation penalises both savers and borrowers. High and volatile inflation encourages workers to bargain for higher wages. High and volatile inflation also prompts producers and sellers in the economy to add higher markups in pricing of goods and services. The combined result of this self-fulfilling cycle will be lower economic growth and higher current account deficits, depleting reserves and volatile exchange rates, and the country will end up with a commercial capitalist class of buyers and sellers of imported goods, or a class of middlemen! Then the question is, what is the appropriate level of low and stable inflation, which will result in more desirable outcomes? Most advanced economies set their inflation target in the low single digits around 2 per cent. For example, the United States and the United Kingdom desire to maintain inflation at around 2 per cent, while in the Eurozone it is below but close to 2 per cent.
In 2016 we want to see that this project has produced three high quality books on The History of Norges Bank 1816-2016, The Monetary History of Norway 1816-2016 and on selected Topics in Central Banking in an international historical perspective. The aim of the workshop is to bring together international experts from central banks and academia for informal discussions and an exchange on topics related to the writing of central bank and monetary history. We expect discussions to be active and lively and we want this workshop to kick-start research activities in these important areas. I want to thank the Graduate Institute here in Geneva and Professor Marc Flandreau in particular for their hospitality and for allowing us to spend almost two days discussing research in central bank and monetary history. Previous books about the history of Norges Bank have been written in Norwegian, and predominantly by previous central bank governors. But “the times they are a-changin”, to  BIS Review 131/2008  1  phrase Bob Dylan (Dylan, 1964), 1 and today we believe that best practice in writing central bank and monetary history is achieved by contributions from professional academic experts in relevant areas. The research should be brought up to international quality standards through the usual peer review process.

Its growth forecasts are among the highest in the EU, but does it serve as an example when levels of unemployment and indebtedness are so high? There are many models: Ireland is one, and Spain too… Employment is a lagging indicator. Moreover, unemployment figures, especially youth unemployment, have already fallen to levels below those at the time that the bank bailout was requested. Indeed, they are above 2008 levels, but I can still recall the levels of 20 years ago, so it’s all relative. They have always been higher than in the rest of the EU, even during the boom years. But I believe the mentality in Spain has changed. The ability to acknowledge the reality and to adapt to it shows that it is a mature democracy. That is the type of mortar we need for a monetary union. Spain feels particularly underrepresented in the EU since you took, in 2012, the rotating seat on the ECB’s Executive Board, which it had occupied since the institution’s creation. Do you think that, given its demographic and economic weight, the situation should be corrected? Passports should play a minor role in European representation, especially in supranational institutions like the ECB. Quotas are inappropriate. When we enter the ECB’s Governing Council meeting room, we leave our passports in the cloakroom. The only conditions laid down by the Treaty are competence and reputation. That’s quite different however in intergovernmental institutions where appointments are the result of allocation. 2  BIS central bankers’ speeches  De Guindos in the Eurogroup?
The 1946 Bank of England Act conferred upon us powers, subject to the agreement of the Chancellor of the Exchequer, to issue directions to bankers - though the term “bankers” was not defined; and it provided for the Treasury to give such directions to the Bank as, after consultation with the Governor, they thought necessary in the public interest. Such directions would necessarily have been made public: none were in fact ever given. In any event the Bank of England was in a formal, statutory, sense throughout this period well along the spectrum towards the subservient polar extreme which I described earlier, in relation to policy making, although we did enjoy elements of independence, for example, in relation to security of tenure for the duration of fixed term appointments for Governors and Directors, and in some degree in relation to our finances. I am bound to say though that this was not at all how it felt in practice. Even within this statutory framework independence is rather like age - you are as independent as you feel! The question really came down to how far we were able to influence the Government, which in turn depended upon how far they themselves valued our advice and how far they felt a need to take account of it in the light of possible public - including importantly financial market - reactions in the event of disagreement.

But, as a French and European citizen, I cannot help and feel proud of having one the two main currencies in the world. In sum, benefits of the euro include a high degree of credibility of monetary policy reflected in the level of long-term interest rates; diminished exchange rate volatility; completion of the single market and encouragement to cross-border trade. None of this, of course, can be taken for granted. Benign conditions currently prevailing on financial markets can be reversed. Shocks may be coming, which would impact negatively European economies. Despite some signs of cooling, imbalances are still building up, especially in the housing sector, fuelled by a dynamic expansion of credit, although in no way comparable to those in some other developed economies. But I have the strong conviction that we are fully equipped to deal with any contingency, and, provided the necessary structural reforms are undertaken, keep the economy on a path of growth and stability. BIS Review 51/2007  1  2)  How have those successes been achieved? A lot comes, in my view, from the institutional and operational framework in which monetary policy is developed and implemented. The independence of the ECB and of the 13 participating NCBs is enshrined in the Treaty. They are institutionally, operationally and financially independent from European Community institutions and national governments. We have a clear and transparent definition of price stability: inflation below but close to 2% over the medium-term. The monetary policy framework of the Eurosystem is “medium-term” oriented.
In particular, the fact that unemployment rates remain high despite the pick-up in economic activities has led many people to worry that this might be a “jobless recovery”. This high unemployment, if prolonged, could have a deep and lasting impact on both consumption and the potential growth of the US economy. Moreover, consumption in the US will be adversely affected by the decline in household wealth as well as the increase in personal saving rate. Other issues which may exert downward force on the world recovery include the high level of public debt which may put upward pressure on long-term interest rates and the US and other advanced countries’ financial sectors which are still weak and may not be able to support the recovery of the economy. On the domestic front, the downside risk comes from the ability of the government to swiftly execute the SP2 investment projects. In other words, the disbursement may not proceed as expected due to the lack of capacity to effectively implement many projects simultaneously. More importantly, political unrests which affect the stability of the coalition government may distract, disrupt, or in the worst case, discontinue the disbursement process. Taking both upside and downside risks into consideration, the Bank of Thailand’s Monetary Policy Committee assessed that the Thai economy is expected to recover gradually, supported by better global economic outlook and accommodative monetary and fiscal policies. Meanwhile, the inflationary pressure continues to be subdued for the time being.

Even though the liberalization policies were adopted independent of the EU perspective, they helped to facilitate Turkey’s attempt to apply for full membership, by providing a solid basis for lasting progress. On the other hand, member countries of the EU have tried to make some adaptations in their banking regulations to integrate financial systems. Competition among them has increased. A universal banking system is accepted. Banks either have increased their assets or have merged with other banks in order to be strong in a market where competition is intensified. New financial products are created every day. Technology is used intensively in order to reduce costs and serve customers better. In parallel to these developments many reforms have been made in order to develop the Turkish banking system. Some amendments were made to the Banking Law to harmonize it with European standards, and now we are in the process of preparing a new Banking Law. These changes will require some banks to strengthen their financial situation and bring their credit risk and equity participation ratios closer to the EU norms. Within the process of becoming more deeply integrated with the European financial markets, the Turkish banking system will now face new competition. The CU agreement has naturally affected Turkish banks and changed the dimensions of competition. But Turkish banks seem ready in many ways for this new and larger competitive environment. Today banks in Turkey are made more dynamic by a high-technology electronic infrastructure, high-quality services and well-trained manpower.
There is evidence that the stimulus cheques sent to US households, as part of the new administration’s fiscal expansion, have been spent disproportionately on durable goods (as one might expect of any one-off source of income). The semiconductor sector may represent the starkest example of this collision between stronger demand and weaker supply. Chart 12, for example, plots shipments of PCs by the major five global producers against exports of semiconductor components from Japan. The first rose significantly through the course of last year, boosted by the general shift away from consumer services to goods, and in particular the necessity of working more from home and, for firms, of moving activity online. But semiconductor production contracted in Japan and other major producing countries through the latter part of last year and the result was a marked drawdown in inventories and a sharp rise in prices. Chart 12: Demand for PCs rose steeply last year but supply of components declined  Source: Goldman Sachs, see Goldman Sachs (2021, see footnote 6) for further detail. Changes on a year ago. Semiconductor components include wafers, flash memory and DRAM memory, weighted by 2017 shipment values.

As the Swiss economy is on the upswing, income is rising, as are the prices of assets. Demographic changes could also add to the pressure. For instance, immigration of well-qualified persons with high purchasing power has increased quite steeply since the agreement on the free movement of persons entered into force almost five years ago. These factors all tend to drive up demand for residential space. So far, supply has been able to keep pace with the increasing demand. Nevertheless, with supply adjusting only slowly, a higher level of demand could well accelerate price increases in the real estate market. It would then be the SNB’s responsibility to ensure – under these more difficult circumstances – that price movements in the real estate market did not threaten price stability as a whole. BIS Review 11/2007  1
Encourage banks to improve their management of risk  We’ve also attained the third goal: to go beyond a rules-based structure and instead encourage banks themselves to improve their abilities to identify, measure, and manage their risks appropriately. As you know, the most sophisticated approaches to credit or operational risk in the New Accord will permit banks to rely increasingly on their internal assessments of risk when determining how much capital to hold. At the same time, the New Accord will be flexible enough for banks to build their risk management functions on the best practices available in the industry, even as those practices evolve in the future. By promoting the improvement of the management of risk across the industry, I believe that we are laying a foundation for more stable markets. The milestones achieved square with banks’ and supervisors’ long-standing efforts All of us can take great pride in meeting the goals that the Committee set out to embrace: the three pillars of capital adequacy, enhancing the risk-sensitivity of the capital framework, and creating incentives for banks to improve their management of risk. And we should recognize that these proposed revisions square well with the efforts that banks and supervisors themselves have undertaken, independent of the Committee’s work. The banking industry has done much over the years to adopt a forward-looking approach to risk management – one that emphasizes flexibility in, and improvements to, the measurement and management of risk over time.

The moral from all this is one that will be all too familiar to you as accountants, though perhaps one that sometimes gets forgotten by consumers of accounting statements, namely that the appropriate way to frame accounts depends on how they will be used and what questions are being asked. The Asset Purchase Facility accounts may tell us the scale of gains or losses on the Asset Purchase Facility portfolio narrowly considered, but will miss the impact on the public finances from higher activity and lower financing costs and fail to tell us anything about it macroeconomic effectiveness. The rise in asset prices and the recovery in confidence since the start of the Quantitative Easing program have been significant. We cannot identify precisely how much of this is a direct result of Quantitative Easing, and hence the scale of the boost to tax revenues. I have no doubt that this issue will continue to be debated for years to come, and that some sceptics may remain unconvinced. But even a sceptic should acknowledge that the net accounting gain or loss on the Asset Purchase  3  4  Of course that is not true of holdings of corporate assets. BIS Review 126/2009  Facility provides an incomplete measure of the impact of Quantitative Easing on the economy and on the public finances. Thank you.
5  The real exchange rate shock is likely to push down on domestic demand but should increase export supply. 4  BIS central bankers’ speeches  disturbances. Attempts to keep inflation at the inflation target in these circumstances may cause undesirable volatility in output”.6 In other words, if shocks drive inflation sufficiently away from the target, the MPC are allowed to choose how quickly to return inflation to 2% and should explain such policy decisions via the open letter system. I have often been asked whether or not changes to the target, or the remit, or to CPI itself would help us to set policy. The answer is a clear no. Of course, the Government can decide to change these things if it wants to, but that wouldn’t magic away the problem. The unfortunate and difficult truth is that the shocks that have hit the economy recently have not been caused by monetary conditions. They are real economy shocks which make us individually and collectively worse off – we have to pay more tax, we have to pay more, in real terms, for petrol, gas, electricity and imported goods or services. The choice that monetary policymakers face is how much of these relative price shocks should be accommodated by a higher level of prices, and how much should be accommodated by a squeeze on nominal wages (and higher unemployment).

At its heart, a model – any model – is just a framework for thinking about an issue, be it how the economy reacts to different shocks, how the setup of a car might affect the way it handles a corner, or how a disease might spread through a population. As all modellers would concede, they can only provide an approximation of reality, which is always far more complex. That isn’t to say that models aren’t useful – far from it. Economic models, like any other, are essential. But they are not a panacea. For example, it would be a mistake to think one can just keep learning and adding to a single economic model until it gets ever more complete. What tends to happen is that one just ends up with a very large model which nobody can understand or use for any practical purpose. Instead, the best way forward in understanding the economy seems to be to use a variety of different models, remembering the relative strengths and weaknesses of each, and applying judgment accordingly. That is exactly what the MPC does when it considers the appropriate stance of monetary policy. The Bank’s approach to modelling strives to be eclectic. 6  The remit can be found at http://www.bankofengland.co.uk/monetarypolicy/pdf/chancellorletter110323.pdf  BIS central bankers’ speeches  5  What about forecasts? They too are essential, given that the lags between setting policy and its impact on inflation require us to be forward-looking.