samchain/econo-pairs-v1 huggingface dataset:
We very much value the skills and diversity they bring to our efforts, so in a short recruitment pitch, when you ‘Think Science’, think too of central banking. After all, science starts with curiosity and asking the right questions. Science teaches people to conduct dedicated research and disciplined analysis. These skills and talents make a good supervisor, policymaker or senior leader, and they are the reason that the Bank increasingly recruits from beyond the field of economics. Not least because scientific advances in Artificial Intelligence and machine learning are reshaping our world, transforming the nature of both work and commerce. This revolution will impact all aspects of the Bank’s work, from the future of work, through its effects on employment, productivity and wages, to the future of finance, as the nature of customer service, trading and risk management transforms. These advances in science and technology are also transforming our focus today – money. They are making digital money more like its physical counterpart – instant, anonymous and direct. And scientific advances are modernising physical currency, cash, which still has a hugely important role in society. We use a host of technologies to protect our physical banknotes against counterfeiting. The switch to polymer has allowed us to introduce new security features, including see-through panels, coloured foils and detailed metallic images. Polymer also makes our banknotes stronger, with a lifespan two and a half times that of paper notes, and greener, because they will be recycled when they reach the end of their useful lives.

*********************** We look to history when we chose a new character, but money has a future not just a past. The selection of the new £ note character is not my only announcement today… because as I alluded to earlier, money is evolving. Today, it is much more than polymer. While cash remains invaluable to many, it is now the second most frequent transaction method after debit card payments.1 And innovation is expected to make other electronic forms of payment easier to make and faster to settle. The technological revolution in finance will bring more tailored products, keener pricing, and more diverse sources of credit for households and SMEs. The Bank is embracing fintech and ensuring that it develops in ways that maximise the opportunities and minimise the risks for society. We aim to enable, empower and ensure. 1  Cash transactions made up 37% of all transactions in 2017. 4  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  4  Enable new technology by developing the right environment for fintech to thrive, such as by upgrading the Bank’s hard infrastructure on which finance relies – such as our large value payments system, RTGS. The Bank is one of the first to allow non-bank payment service providers to directly access its system, something that is lowering the costs of payments across borders. Enabling also means having the right soft infrastructure, such as rules and regulations, to help fintech thrive.
Obviously, if the starting point is a structural budget deficit, then the return to budget balance will require spending to grow more slowly than nominal growth or else a discretionary increase in revenues, until balance is achieved. Evidence suggests that the application of a rule of this type during the upswing prior to the last crisis would have substantially curbed the public spending permitted each year, allowing the generation of significant room for manoeuvre that would have limited the deterioration in public finances during the crisis. Finally, pressing ahead with the various pending reforms would raise the economy’s growth potential which – through its effects on employment and productivity – is one of the basic determinants of reductions in public debt. These reforms include, in the regulatory area, revision of regulations that hinder the market entry of new firms or that limit their growth; in the labour market, reforms to reduce the degree of duality and to improve the employment prospects for the long-term unemployed; and the need to increase the efficiency of the legal system and of the education system and to promote the accumulation of technological capital, among others. Accordingly, any delay in their implementation or, worse still, a hypothetical reversal of reforms already introduced since the start of the crisis, would significantly worsen the prospects for economic growth and would make the fiscal consolidation still needed more costly. Conclusions Let me conclude by recalling the challenges and risks for the economy as a whole raised by the current fiscal imbalance in Spain.

With regard to the composition of this adjustment, according to the Stability Programme the public deficit path projected for the period 2017-2020 will be achieved mainly through control of total primary public expenditure, i.e. without including public debt interest payments. Specifically, if the projections are fulfilled, the weight of primary public expenditure in GDP will be reduced by 3 pp over this period, to 36.6% in 2020. At the same time, government revenues are expected to grow moderately, by 0.9 pp of GDP over the programme’s horizon, to 2020. On the expenditure side, the Government projects moderate growth in its wage bill, basically reflecting the 1% rise in the remuneration of public-sector employees approved for 2017 and the impact of savings arising from reforms approved in previous years. At the same time, the Stability Programme assumes that the downward trend in spending on unemployment will continue, in line with favourable labour market developments; that the application of the adjustment factor to pensions will continue to hold down pension spending, in a positive inflation environment; and that current spending on goods and services will continue to be firmly controlled over the coming years. 5/8  As for public investment, the Stability Programme projects an increase in general government investment of 10% in 2017.
Like the privatisation of the distribution system, the facility at Arlanda is a part of the Riksbank’s efforts to streamline cash handling. The 19 Riksbank offices that conducted these operations 10 years ago will have been reduced to one by 2013. In the same period, the number of personnel will have been reduced from around 300 to approximately 10 people. 7  Payment Security Report Sweden 2008, VISA Europe. 8  I am talking about the Observatory for Payment Card Security (Observatoire de la sécurité des cartes de paiement) which since 2004 produces an annual report that gives an objective account of the state of the card industry in France. BIS Review 7/2010  5  The Riksbank also recently evaluated the use of cash in Sweden and concluded that the current Swedish banknote and coin series is becoming outdated. There is a need to further develop the security details. It may also be sensible to make the relatively heavy Swedish coins lighter. Another problem is that the level of coin circulation is low. A few years ago, every Swedish household had an average of SEK 850 in coins stored in a bowl, jar or money box. It is hardly likely that this figure is lower today. Partly on the basis of this evaluation, the Riksbank has decided that the 50-öre coin is no longer needed. It will therefore be withdrawn during the autumn and öre will thereafter only exist as a virtual arithmetical unit. I think it feels rather strange to imagine this virtual öre.

Those who prefer cash also say that to a certain extent it may be a case of old habits dying hard, or that they happened to have cash on them and therefore used it. Those who prefer cards say instead that one of the reasons is that they do not like to walk around with cash. A comparison of the interviewees’ attitudes to cash and cards also reveals that cash is perceived as being more secure, while cards are seen as being somewhat less secure. There is also a clear generational aspect to the choice of means of payment. The youngest age group, those under 25, feel a greater sense of security when using cards than the other age groups and are more than willing to use their cards to pay small sums. Those who are 45 or older pay with cash to a greater extent. The oldest age group, those who are 65 or older, prefer to pay with cash, even when they buy something that costs over SEK 500. This tendency is the same now as it was in the previous survey. What does it cost to pay? Should the trend towards increasing card payments and decreasing cash payments be regarded as positive or negative? One way of attempting to answer this question is to consider the cost to society of various payments. If the payment system is to be efficient, these payments should reasonably cost as little as possible.
Retail price inflation (on the Government’s target measure) has averaged 2.7% over this period, and has in fact been marginally below the 2½% target for much of the past two years. Short- -term interest rates – which went up to 12% (and tentatively even to 15%) before we left the ERM in 1992 have been stable at 6% for the best part of a year. Helped by a decline in inflationary expectations, UK 10 year Government bond yields have fallen, to around 4¾% which, apart from a brief period at the beginning of 1999, is the lowest they’ve been for nearly 40 years. They are now just about as low as in any major industrial country with the exception of Japan. And the number of people in work has recently been at an all-time high in the UK as a whole - and close to its high point in Scotland; while the rate of unemployment, on a claimant count basis, is at a 25-year low, both in the UK as a whole and in this country. The question remains – can we keep it up? The answer to that question depends on developments both at home and abroad, but let me comment first on the international situation which is currently the focus of a great deal of attention.

The Governing Council did, however, make it clear that the ECB remains supportive of the objectives of EMIR II and is fully committed to contributing to its implementation where legally possible and in line with its mandate. The ECB looks forward to fruitful cooperation with ESMA and other authorities in taking this forward.4 In times of upheaval in global payment markets, it is all the more important for Europe to close ranks. In the United States we have already seen two mergers of two significant payment service providers this year. Both mega-mergers had a market value of $ billion and more could follow. In such dynamic markets, in which economies of scale play a pivotal role, we should not get lost in national details but should self-confidently enhance the conditions of the European single market and the competitiveness of its participants, without, however, putting up protectionist barriers. Conclusions Allow me to conclude. As central banks, we must remain true to our core mandate. Through change or crisis, we must retain the capacity to adapt to evolving needs and do what needs to be done. But that should not come at the expense of independence or accountability. Ultimately, we will be judged on how we deliver price stability. Trust is the central bank’s most valuable asset.5 1 European Central Bank (2011), The monetary policy of the ECB. 2 Eurobarometer, European Commission. 3 Mersch, Y. (2018), “ Virtual currencies ante portas”, speech at the 39th meeting of the Governor’s Club Bodrum,  Turkey, 14 May. 4 Mersch, Y.
Professional and transformational leadership: Leading beyond your institution Human capital development is of course incomplete without the presence of leadership. Leadership is a force like no other. Leadership drives organisations to new levels of performance and achievement together. But leadership can also be a source of inertia. As innovation continues to draw deeper lines of interconnectivity, successful future leaders are no longer those who only steer their institution, but those who can influence and collaborate with others to drive the growth of the industry towards brighter prospects. The future of banking lies very much in the collective vision of its leaders. Much of our developments in the past have been regulatory-driven. This approach is not sustainable. Drastic change is required. Collectively, industry leaders need to be more involved in playing a pivotal role to shape the future banking ecosystem. While it is natural to strive for individual or institutional success, the industry must break away from the tendency of working in isolation, or worse, waiting for others to lead. Instead, collective responsibility is needed in areas 2/3  BIS central bankers' speeches  where common solutions are required for the betterment of the banking sector. Bank Negara Malaysia has already identified several priority areas, particularly in the fintech space, which will benefit from greater joint participation by the industry. While this is a start, it should not limit the possibility of industry leaders coming together to address other areas of shared interest. I certainly hope to see this becoming a norm in the near future.

At the same time, the strained financial situation in the public sector points to weak employment growth in local governments in the period ahead as well. Thus, employment growth is likely to be somewhat weaker during the year compared with our December forecast. As early as February, we changed somewhat our outlook for the rate of wage increases as a result of the situation in the labour market. There is reason to expect total rises in wage costs to average around 3.5 per cent in 2004 and 2005, which in terms of average collectively agreed levels leaves little room for more than about 2 per cent on average in the years ahead. The wage bargaining round appears so far to have gone relatively well, but the historical experiences of Swedish wage formation suggest that one should be cautious about assuming that we are home and dry. The parties appear to be far from agreement on a number of issues, and there are risks of conflicts arising. As long as the agreements are reached at moderate levels from an inflation perspective, longer agreement periods are preferable. This would alleviate some future uncertainty and should thereby contribute to a better economic situation. So while employment, measured by the number of hours worked, in the business sector was weaker than expected last year, GDP growth was roughly in line with the Riksbank’s expectations. This means that productivity was higher than anticipated.
We did this when we decided to use reinvestments under the pandemic emergency purchase programme more flexibly, and when we agreed on the transmission protection instrument. These programmes ensured that rate normalisation proceeded smoothly. The third element of a robust strategy is a clear reaction function. At our last meeting, we clarified our reaction function and the sources of information that will be important to us. The future calibration of the rate path will be determined by – and will require continuous monitoring of – three key inputs, and this is what I will explain now. The inflation outlook The first input is our assessment of the inflation outlook in light of the incoming economic and financial data. This will be informed primarily by our staff inflation projections. Monetary policy must be forward-looking, given the lags with which our policy works. And the staff inflation projections are the best mechanism for distilling incoming economic and financial data into a comprehensive picture of medium-term inflation dynamics. The future rate path will depend on whether we see inflation converging durably to our target in our forecasts, and the level of confidence we have in this convergence as captured by the balance of risks. Our latest forecasts see headline inflation at 2.1% in 2025 and core inflation at 2.2%, which is a downward revision compared with our last projection round in December. But the confidence band around these forecasts is now unusually wide.

This is leading workers to use their bargaining power to recoup lost income. For the seven countries covered by the ECB’s wage tracker,[4] collective bargaining during 2022 led to an aggregate wage rise of 4.7% for this year. This is already playing a stronger role in core inflation. While wage-sensitive items[5] contributed only around 0.5 percentage points to core inflation before the pandemic, that contribution has more than doubled in recent months. If both workers and firms accept fair burden sharing, and stronger wage growth represents merely a rebalancing between labour and capital, then both wage and price pressures should diminish as this process plays out. But if both parties attempt to unilaterally minimise their losses, we could see a feedback mechanism between higher profit margins, wages and prices. The risk of such a “tit-for-tat” dynamic is also heightened by the prospect that labour market tightness will linger. Unlike other jurisdictions, labour participation in the euro area has grown robustly since last year[6], helping to address part of the soaring labour demand driven by reopening. But the pandemic has also led to a sharp increase in public employment[7], reducing the pool of labour available to the private sector. And how much further labour supply can expand overall will depend, among other things, on complex policy questions such as countries’ attitudes to immigration and childcare.
The fact that the reason for many virtual currencies is to skirt the formal financial system adds further to the reservations of many. On this front, the Financial Action Task Force (FATF) has published a number of reports on risks and guidance for risk-based approach in mitigating money laundering risks associated with technology such as virtual assets and internet-based payment services. Understanding, monitoring and supervising virtual assets would require development of new techniques and methods. Last but not least, in watching out for new and emerging risks, we must not forget that old risks may rear its head in new ways. There are two issues in relation to this: Firstly, while the number of terrorist attacks have declined over the past few years, the nature of terrorism and terrorism financing have evolved. New modus operandi such as lone-wolf attacks and remote terrorist cells, as well as availability of new products in the financial sector, such as prepaid cards and mobile banking, has given rise to new patterns and methods of financing terrorism that are different from a decade ago. We must not forget that dealing with these financial crimes should remain a high priority due to the direct and immediate human costs involved. Secondly, we must also not forget that even with the emergence of the technologies described earlier, we are still very much reliant on cash. Demand for cash worldwide continues to rise. For Malaysia, currency in circulation has increased by around 150% over the past decade.

Adherence to this requirement will inject transparency, accountability and ensure the integrity of the financial system. It will prevent criminals from hiding their ownership of companies and assets through complex methods and vehicles. I last spoke at this conference in 2011. The theme of the 2011 conference was “Raising the bar in enforcement and compliance”. Looking back and taking stock of the present state, I am glad to see that the whole industry has matured and progressed in such a significant way. This is validated by the NCC report that the sector’s control measures for both money laundering and terrorism financing are strong. Further, fines imposed by the Bank on financial institutions has decreased over the past few years, reflecting the progress made by institutions in ensuring adequate controls. I hope the industry continues to strengthen its capability to fight crime. Another area in which progress has been made is the priority accorded within each institution to compliance. The focus of the compliance function has developed to become more comprehensive as financial institutions have a better understanding of the threats and risks involved. With increasing awareness of the direct and indirect costs of non-compliance, the compliance function is no longer viewed only as adherence to rules set by regulators, but is instead, an integral part of the organisation’s culture. The very fact that the theme of this 4/5  BIS central bankers' speeches  conference is on reshaping the future, governance and transparency is a testament to this.
In terms of improved systems to enhance risk management internationally, the Continuous Linked Settlement Bank (CLS) was successfully established last autumn. It was an international response to a well recognised but partly unresolved risk: risk to foreign exchange settlement which goes back to the Herstatt crisis in 1974. CLS now settles FX transactions in eleven major currencies. And total daily values of transactions settled now exceed $ trillion: a figure that is likely to grow further. 2  BIS Review 49/2003  These are examples of ex-ante steps to reduce both the emergence of threats and their potential impact. But the third leg of our work is to consider what to do if there is a problem. What happens if a threat materialises? Firstly there is what I might call a “traditional” financial crisis involving one or more banks directly. All such crises ultimately manifest themselves in a shortage of liquidity, which can easily spill over from one bank to another. Clearly we need the market intelligence, expertise and operational experience to handle the liquidity aspects of such an event. Secondly, there is the possibility of what I would call an LTCM type problem. In autumn 1998 the creditors of LTCM - mainly banks and investment banks - became concerned by LTCM’s financial position. The concern was partly that even though LTCM may have been short of bankruptcy, there could be attempts by its creditors to reduce their exposures, and thereby to set off major market disturbances.

Others are more of a surprise, such as LTCM. What is certain is that financial crises can be very costly. For sovereign debt crises they can run to a loss of 15-25% of GDP. For Chile in the early 1980’s they were closer to 40%. So the art of minimising the emergence of crises, and mitigating their effects when they do nevertheless occur, are matters of public importance. For us in London the challenge is particularly real. Our focus must clearly be on the stability of the UK financial system. But markets have globalised; and they have also become more complex. With London a pre-eminent international financial centre, contagion from just about any significant financial crisis anywhere in the world has the potential to threaten financial stability here. In a broad sense, I like to think of financial stability in terms of maintaining confidence in the financial system. Threats to that stability can come from shocks of one sort or another. These can spread through contagion, so that liquidity or the honouring of contracts become questioned. And symptoms of financial instability can include volatile and unpredictable changes in prices. Preventing this from happening is the real challenge. So how do we fulfil our responsibility for the “overall stability of the financial system as a whole”? The Bank’s role is set out in the MoU. How do we approach the tasks of reducing the threat of crises and of coping with them if they actually occur?