samchain/econo-pairs-v1 huggingface dataset:
François Villeroy de Galhau: External imbalances - challenges and policy responses Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the "Financial Globalisation" conference, Central Bank of Ireland Symposium, Dublin, 2 February 2018. * * * Accompanying slides Speech elaborated with the contributions of Antoine Berthou, Matthieu Bussière, Laurent Ferrara, Sophie Haincourt, Francesco Pappadà and Julia Schmidt Ladies and Gentlemen, First and foremost, I would like to congratulate the Central Bank of Ireland on the 75th anniversary of its creation, and especially my colleague and friend Governor Philip Lane. I am delighted to be part of this conference dedicated to “Financial Globalisation”, with such distinguished speakers and panellists. I would like to share with you a few thoughts on global current account imbalances and in doing so I will take mostly a policy perspective. The stylised facts are well known so I will be brief [Slide2]. Starting from the late 1990s, the world economy was characterised by very substantial growth in global current account imbalances. Despite a process of rebalancing and short-term movements mainly related to commodity prices that started with the Great Recession in 2008– 09, these imbalances have remained large and persistent. Consequently, net international positions have continued to increase [Slide 3]. The euro area is one of the regions where developments have been particularly striking [Slide 4]. Although countries such as Spain or Italy have rebalanced their current accounts, imbalances still persist, mostly due to the large surpluses of Germany and the Netherlands.

Large current account imbalances, in particular deficits, pose significant risks for external debt sustainability and raise the possibility of sudden stops.6 Gross positions are now 3 to 4 times larger than their 1995 level, ranging from 150–300% of GDP (150% in the case of the US and 300% in the case of France, for example). Net positions are considerably smaller [Slide 8, table on right-hand side], but have widened by a factor of 5 to 10 with respect to their level in 1995. The counterpart of persistently large current account imbalances is large net external asset positions [as already shown in Slide 3], but also continued accumulation of external assets and liabilities. In this respect, the composition of the financial account (FDI, equity and debt portfolio flows as well as the other investment category, which largely comprises banking flows) matters. Examining the different financial instruments, one notices that the volatility in overall flows is largely driven by banking flows [Slide 9]. Given the large pre-crisis expansion in cross-border banking flows, especially within the euro area, the “low” level observed in recent years could 2/5  BIS central bankers' speeches  simply be interpreted as a return to normal. Indeed, in the aftermath of the Great Financial Crisis, banking flows retrenched the most, followed by debt portfolio flows.7 Portfolio equity flows have been much more resilient than debt flows, which have halved between the pre- and the postcrisis periods.
Spotting problems and keeping them from mounting up Given the limited time we have, I have given you a very brief overview of what resolving a bank entails. It is a gruesome and complex event, and one which is best avoided, but not at all costs. To avoid failure, banks and supervisors must spot problems early on and address them quickly. Since the crisis, stress tests have become an important tool for helping us to do this. Stress tests basically assess how banks would fare in various hypothetical scenarios involving different future paths for the economy and the financial markets. Usually, there is a baseline scenario, where things develop as expected. And then there is an adverse scenario, where they don’t: inter alia, GDP, unemployment and property prices are stressed two years ahead in this scenario. So you can see that the key idea of a stress test is to assess how banks would cope if the going gets tough; it’s all purely hypothetical, of course. Stress tests allow us to make a consistent assessment. Each bank has to apply the same scenarios and calculate their impact in the same way. This means that the results can be compared across banks. And stress tests provide a glimpse of the bank’s risk management in action. How quickly can it process the scenarios and assess their impact on [the state of] the bank? This is important information about the quality of governance. But the main focus of stress tests is on capital.

Sabine Lautenschläger: The banks and the market Speech by Ms Sabine Lautenschläger, Member of the Executive Board of the European Central Bank and Vice-Chair of the Supervisory Board of the European Central Bank, at a Lecture at the Florence School of Banking and Finance, Florence, 15 March 2018. * * * Almost ten years ago to the day, the world of finance was shaken by a strong tremor. On 16 March 2008, JP Morgan offered to buy the investment bank Bear Stearns. And it was time. Bear Stearns was in deep trouble: its share price had fallen by two-thirds since the beginning of that year; it was bleeding money; and it was basically shut out of the funding market. At the time, the failure of Bear Sterns was considered a major event. No one knew that the big quake was still to come. It happened half a year later, on 15 September 2008, when another investment bank failed: Lehman Brothers. It pushed the financial system close to the abyss. Trust evaporated, markets dried up, and around the globe, banks were sent reeling. All in all, it was the biggest financial crisis in decades. It dragged down the real economy, which fell into what we now call the Great Recession. In the euro area, economic output went down by almost 4.5% in 2009, while unemployment jumped by more than a quarter to 9.6%. Three years later, it reached 12%.
Low price and wage inflation Not everyone benefits from a more closely integrated global economy and new technology. In many countries, the competition for low-skilled jobs has intensified, depressing wages for these workers. On the other hand, technological advances have pushed up demand for high-skilled labour for which there is a wage premium. The result is wider wage gaps. The income distribution between labour and capital has also changed. It had long been a widely-held view among economists that the labour share of GDP would remain fairly constant over time. Keynes described the stability of the labour share as “one of the most surprising, yet best-established, facts in the whole range of economic statistics”.6 Yet since 1980, corporate profits have risen faster than wages (Chart 6). 6 Keynes, J.M (1939): "Relative Movements of Real Wages and Output", The Economic Journal 49 (193), pp 34–51. 6  Norges Bank  Chart 6 Labour share. Labour costs as a share of GDP. 1) Selected advanced economies. Percent 55  55  54  54  53  53  52  52  51  51  50 1978  1983  1988  1993  1998  2003  2008  2013  Economic perspectives 15 february 2018  50 2018  1) Belgium, Denmark, Finland, France, Germany (data for West Germany before 1992), Ireland, Italy, Japan, Netherlands, Portugal, Spain, South Korea, Sweden, Switzerland, the UK and the US. GDP−weighted average.

Variables are selected according to the number of Bloomberg alert subscriptions, but data on consumer prices, producer prices and wages are excluded. BIS central bankers’ speeches  9  Chart 7: Interest rate reaction to FOMC meeting 18/9/2013(a) UK  Change since 12pm (bps)  US  15  Bernanke's conference ends  10  FOMC  5 0 -5 -10 -15 -20 -25 -30  12:00 15:00 18 Sep 2013  18:00  21:00  08:00 19 Sep  11:00  14:00  -35 17:00  Source: Bloomberg. (a) 1-year OIS rates, 2-years forward. Chart 8: Sensitivity of UK interest rates to economic news(a)  Sensitivity of UK 2y1y government yields to UK economic surprises  Basis points per one standard deviation surprise  Sensitivity of UK 2y1y government yields to US economic surprises  10 8 6 4 2 0 -2 -4 -6 -8  2006 - 08  2009 - Apr 2013  May 2013 - latest  Aug 2013 IR 14 Oct 2013  -10  Sources: Bloomberg and Bank of England calculations. (a) Based on bi-variate regressions of daily yield changes on the daily average surprise in the variables within the Economic Surprise Indicators. The diamond shows the regression coefficient and the bars indicate plus or minus two standard deviations.
It is important that we succeed in maintaining an industry structure that promotes learning, innovation and development. The Government Petroleum Fund was established in 1990 with a view to safeguarding long-term considerations in the use of petroleum revenues. In March 2001, the fiscal rule and new guidelines for monetary policy were introduced. The fiscal rule implies that the central government budget deficit shall be equivalent over time to the expected real return on the Government Petroleum Fund. The new guidelines for economic policy received broad support in the Storting. The rule specifying that only the real return on the Petroleum Fund is to be used means that the capital in the Fund is not depleted. The capital in the Petroleum Fund will increase as long as there is a positive cash flow (to the central government) from petroleum activities. When the conversion from petroleum revenues to financial wealth has been completed, the objective will still be to restrict withdrawals so that the real value of the Fund’s capital is maintained - in principle, indefinitely. The fiscal rule thereby provides a long-term anchor for fiscal policy. It provides a stable framework that contributes to curbing fluctuations in the Norwegian economy that are caused by converting petroleum revenues into investment at home and abroad. The new guidelines have changed the interaction between the different components of economic policy. Monetary policy has been given a clearer role in stabilising economic developments. A clear monetary policy objective is a necessary complement to the fiscal rule for ensuring reasonable macroeconomic stability.

Jarle Bergo: The Norwegian economy - possibilities and challenges Address by Mr Jarle Bergo, Deputy Governor of Norges Bank (Central Bank of Norway), at a seminar hosted by Agder Research Foundation, Arendal, 12 May 2005. Please note that the text below may differ slightly from the actual presentation. The address is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 20 April, Inflation Report 1/05 and on previous speeches. The  Charts in pdf-format can also be found on the website of the Norges Bank. *  *  *  The Norwegian economy is growing at a solid pace and there are prospects that growth will remain high. The recession was mild after the previous expansion culminated in 2002. The period of relatively high cost inflation in Norway came to an end without production being impacted to the same extent as during the recessions in the early 1980s and around 1990. One of the main reasons for this is probably that low inflation in the 1990s and current monetary policy have anchored expectations of low and stable inflation among economic agents. Together with private consumption and fixed investment in the petroleum sector, traditional exports were an important factor underlying growth in the early stages of the recovery that started in the first half of 2003. Prices for many of our main export goods have risen as a result of strong growth in new markets.
Paul Tucker: Credit conditions for firms – stability and monetary policy Speech by Mr Paul Tucker, Deputy Governor for Financial Stability at the Bank of England, to the Association of Corporate Treasurers’ Annual Conference, Liverpool, 18 April 2012. *  *  *  It is quite a few years since I last spoke to an ACT gathering and it is very good of you to ask me back. Since then, many of you have been close to the front line of the financial crisis that overtook us nearly five years ago. Bridging the financial economy to the real economy, you have had to navigate a demanding obstacle course while the real economy “rebalances”. That means that businesses – the productive part of the economy on which our prosperity depends – are having to adjust after years, preceding the crisis, when spending was loaded too much towards household and government consumption, the country’s income from net trade was too weak, and investment was too heavily weighted towards commercial real-estate construction. That rebalancing has some way to go. While many of the planned tax increases are already in place, government consumption will continue to be scaled back for the next few years. There is also a risk that households will spend less than expected in order to rebuild their balance sheets, holding higher liquid savings than previously as a precautionary buffer.

Those with long memories know we have achieved low inflation and steady growth before - though never for so long - only to see them slip away. They ask: what’s to prevent that happening again? A lot has changed in the past fifteen years. We now have an approach to setting interest rates which provides much better incentives for policy makers to take the right decisions. This - and the strong track record built up over the past decade - has stabilised expectations, with the result that it takes more to throw inflation off course. This is crucial insurance against the risks of a more turbulent decade ahead. A trickier issue - and one on which I want to spend some time tonight - is the vexed question of information. Statisticians get an even worse press than economists. But they are indispensable. Just as well run businesses need good management information, so successful monetary policy depends on having good information about the economy. The statistical fog surrounding the true state of the economy has proved a particularly potent breeding ground for policy errors in the past. Are we yet in sight of a clearer view? The policy framework But let me start first with the policy framework: what grounds are there for being confident that it provides the right incentives for policy makers to take good decisions?
Macroprudential is no longer the policy that dares not speak its name. To safeguard these hard-won reforms, Europe now has a Single Supervisory Mechanism and European Systemic Risk Board. The Bank of England now houses the Prudential Regulation Committee and the Financial Policy Committee. The independence of these committees and their accountability to the people they serve through their respective parliaments are essential bulwarks against the inevitable recidivism that follows a financial crisis. The longer we go without disruption the more important it is to remember, remember that when it comes to financial stability, success is an orphan. Since the crisis, macroeconomic outcomes have been much less benign. Growth in both the euro area and the UK has been, on average, a percentage point lower; and inflation has been twice as volatile. There has been a persistent margin of spare capacity, with unemployment, on average, 1-1½ percentage points higher. But there have also been important differences. While the euro area has continued to experience ‘divine coincidence’ the UK has not (Chart 1). In the euro area, inflation has averaged half a point below target, reflecting in part the drag from persistent slack in the labour market. In contrast, UK inflation has been above target, averaging 2.3%, during a period where the economy was operating well below potential. That reflects the inflationary impacts of two large exchange rate depreciations and weak productivity that have offset a major positive shock to labour supply.

Efforts are being made both by the financial industry and the policy-making community to address the most important micro issues, including the lack of transparency, product complexity and inappropriate incentives in the  4  BIS Review 75/2010  originate-to-distribute model. However, in recent months there have been some, albeit nascent, signs of improvement in securitisation activity, in part supported by a narrowing of spreads on securitised products (i.e. yield on securitised products over Libor). The narrowing spreads, which reflects the compensation investors are demanding for holding these assets, could bring prices closer to levels where issuance of ABS securities makes economic sense. This has been indicated in the responses to ECB bank lending surveys and in lower retention rates by banks for newly-issued ABS. While it is difficult to disentangle the relative contribution of micro and macro factors to the improvement, it seems clear that the improved economic outlook has played an important role. IV. Overall assessment  Let me now conclude with the overall assessment of the identified risks to euro area financial system stability (slide 15). Although the main risks to euro area financial stability essentially remain the same as those to which attention was drawn in the last issue of the FSR, their relative importance has changed significantly over the past six months.
Mr. Bäckström discusses monetary policy and unemployment in Sweden Speech by the Governor of the Bank of Sweden, Mr. Urban Bäckström, before the Swedish Economics Association on 6/3/97. First a word of thanks for the invitation to this evening’s discussion. This is the third year in succession that your Association’s agenda has featured monetary policy. My first introductory talk, in 1995, was about the importance of low inflation and the background to and implications of focusing on price stability. Last year I took up matters to do with monetary policy’s construction and effects, as well as the considerations behind the monetary policy decisions in recent years. This evening I shall be elaborating on those discussions and then deal with monetary policy in the context of Sweden’s high unemployment. Economic developments in Sweden Following the deep recession in the Swedish economy in the early 1990s, we are now in the fourth year of economic expansion. Since 1994 production’s annual growth rate has averaged 2.8 per cent, which is considerably above the trend to which we have been accustomed in recent decades. In 1994 and 1995 the GDP growth rate averaged as much as 3.5 per cent. This increase was concentrated on the internationally oriented sector and industrial activity registered the fastest upswing in a long time. This led to capacity problems despite relatively high investment growth. The strong expansion was therefore not sustainable. Moreover, the credibility of economic policy was impaired by weak central government finance and an unfavourable history of inflation.

As the structures and institutions in the Swedish labour market resemble those in the rest of Western Europe in many respects, it is reasonable to suppose that the same forces have been at work in our country but that their impact and importance were concealed for a long time by an expansionary economic policy that was ultimately unsustainable. High and more or less permanent unemployment, or high equilibrium unemployment, is a sign that the labour market is functioning poorly. These problems are rooted in turn in wage developments because it is price formation which is the central market mechanism. Conclusion The best way in which monetary policy can contribute to an economy that functions better economy with employment and growth is by keeping inflation low and stable. 8  Björklund, A., Edin, P-A., Holmlund B. & Wadensjö, E. (1996), Arbetsmarknaden (The Labour Market), SNS förlag, Stockholm. 9 Examples of an explanation of persistence theories are given in Lindbeck (1993), Unemployment and Macroeconomics, MIT Press, and in Snower (1994), "Commentary: The Extent of High Unemployment in OECD Countries" in Reducing Unemployment: Current Issues and Policy Options, Federal Reserve Bank of Kansas City. BIS Review 38/1997  - 11 -  The economy can then expand along its long-term growth trend. If this path, which is determined by structural factors, permits a rapid increase in output, growth will then be high. If potential output rises slowly, on the other hand, economic growth will be weak even if monetary policy were to be very expansionary.
Both the second-quarter Spanish Labour Force Survey figures and the Quarterly National Accounts estimates released at the end of August reflect high employment growth rates in the first half of the year (3% yearon-year; around half a million new jobs). The most recent data on Social Security registrations,  2  BIS central bankers’ speeches  i.e. those for July and August, show a certain moderation in the rate of job creation in this period, albeit still in a positive vein. Labour costs continued to moderate in the first half of the year, reflecting the greater flexibility with which firms can adjust their labour conditions to the macroeconomic environment. If the trend prevailing in the past year and a half continues, the rise in employment may put the unemployment rate at around 20% in 2016 Q4. In the realm of inflation, the recent energy price falls have interrupted the course of recovery of the CPI. After posting positive year-on-year rates in June and July, for the first time in nearly a year, the overall price index slipped back (by –0.4%) in August. It is important, however, to emphasise the temporary nature of this new bout of disinflation, linked to the recent oil price fall in the international markets. In fact, the rate of change of the CPI excluding energy increased by 0.9% in August, growing slightly faster than in July, while the indicator which excludes unprocessed food as well, so-called “core inflation”, grew by 0.7%.

Luis M Linde: Performance of and outlook for the Spanish economy Testimony by Mr Luis M Linde, Governor of the Bank of Spain, before the Senate in connection with the draft State budget for 2016, Madrid, 23 September 2015. *  *  *  Luis M Linde: Performance of and outlook for the Spanish economy Testimony by Mr Luis M Linde, Governor of the Bank of Spain, before the Senate in connection with the draft State budget for 2016, Madrid, 23 September 2015. Ladies and gentlemen, In my appearance today, as part of the process of discussion and approval of the budget in the Senate, I will focus on analysing the performance of, and outlook for, the Spanish economy and on the role of the State budget for 2016, following approval of the draft law by the government on 31 July, and the role of the Budget Plan for 2016, submitted to the Council of Ministers on 11 September. The external setting of the Spanish economy Heightened uncertainty is presently the most noteworthy feature of the external setting of the Spanish economy. The recovery in the advanced economies and the return to normal on the international financial markets have been affected by the consequences of the global economic slowdown, as a result of the downturn in some emerging economies, particularly China, and especially in light of the difficulties involved in assessing its real magnitude in the medium term.