samchain/econo-pairs-v1 huggingface dataset:
The letter says: “The rise in the cost of living in the past three years has been larger than has been seen in many other countries that compete with us in foreign markets. When the cost of living rises, so wages should also rise and consequently so too production costs, with the result that our competitiveness declines. Do we not have to fear this?” Unfortunately we do not know what advice Nurkse gave to Jaakson, and within only a couple of years the question was no longer of any great relevance for Eesti Pank. During the second world war, Ragnar Nurkse focused in his work on inflation and exchange rates. The research that he published on these topics has led many writers to call Nurkse one of the main architects of the Bretton Woods system. After the war Nurkse taught for thirteen years in the prestigious Columbia University in New York. There he mainly focused on development economics, earning a great reputation as an international advisor on the subject. He died unexpectedly and still relatively young at only 51. The view of Ragnar Nurkse of the time notes his thorough knowledge of economic theory and practice, his original ideas, and his clear vision. He was the sort of man who is clearly needed in the world today. When Estonia regained its independence it chose the path of reform, with a unique combination of conservatism, innovation and a recognition of its own limitations. Estonia chose once again the road to Europe.

In this setting, the ECB’s clearly expansionary monetary policy stance, the institutional reforms to the financial governance of the EU, and the cleanup and restructuring of the national financial sector were all pivotal in significantly reducing the degree of financial fragmentation in the euro area between 2010 and 2012. Deleveraging by the non-financial private sector has also notably influenced competitiveness. This ongoing process is very advanced both in the case of non-financial corporations and of households. In the case of companies, for instance, the debt/GDP ratio has fallen by more than 40 pp from its peak, meaning it now stands below the average for euro area firms. This has all contributed to goods exports increasing from having accounted for 15% of GDP in 2009 to approximately 24% in 2019. During this period, export growth has, moreover, been higher in general terms than that of foreign markets. This has enabled the global trade share to be maintained, despite the ever-more influential role of the emerging economies in world trade. In parallel, there have been significant and permanent increases in the Spanish economy’s export base. This is been in terms of the figures both for total export firms and of those for firms that regularly export. As regards the proportion of exporting firms relative to total firms, the attendant growth rates have been very sharp since 2009.
At the same time, we must take care that our efforts to ensure the safe and sound operation of the financial markets do not stifle the innovation and creative energy that is changing banking and finance – indeed, the world – for the better. With these thoughts in mind, it is my firm conviction that to successfully meet the challenges of the twenty-first century, our very notion of supervision, broadly speaking, must evolve to include financial institutions themselves and the discipline applied by the marketplace. Supervision in the twenty-first century And so what is the purpose of supervision in the twenty-first century? What are the objectives, and how can those objectives be best pursued? Let me say first of all that there is no easy or single answer to these questions. The twenty-first century financial marketplace is too dynamic, too complex, and supervisors must work within the political realities of our respective nations. What I envision is a flexible, multi-faceted strategy that emphasizes prudence and problem prevention, compatibility with the market, and a close and cooperative working relationship between the private and public sector. With these priorities in mind, I believe there are three essential elements of a modern supervision framework: •  effective bank-level management;  •  market discipline; and,  •  official supervision. Let me discuss each of these in turn, noting that each should reinforce the others to effectively promote a safe and sound financial system.

Eva Srejber: New economy - or blend of new and old? Speech by Eva Srejber, Second Deputy Governor of the Sveriges Riksbank, at a meeting arranged by WM-Data ub Tylösand on 23 October 2000. *  *  *  Major technological changes have occurred before. Then as now, many people talked about a new age that would involve better communications, new economic relations and a very promising future. It is therefore important to keep a level head amidst the technological enthusiasm over future opportunities. The fact that I am today emphasising the risks more than the advantages, is not because I consider the risks to be more important than the advantages, but because the risks appear to have been largely forgotten in the general debate on the economy. Let us make a sober analysis of what is happening, and maybe we can avoid repeating the mistakes made during previous technological leaps. Moreover, I will touch on the uncertainty and lack of information regarding the structural changes currently taking place in the economy. In conclusion, I will also indicate to what extent these phenomena have already affected and can be expected to affect monetary policy. It has happened before A nation’s economy is constantly subject to changes that lead to reappraisals or to the development of old economic relations and theories. This is nothing new.
Market operators are once again spending money freely outside of their day jobs. An example: For almost 40 years, I have spent a not insignificant portion of my savings collecting rare, first-edition books. Like any patient investor in any market, I have learned through several market cycles that you buy when nobody wants something and sell when everyone clamors for more. During the financial debacle of 2007–09, I was able to buy for a song volumes I have long coveted (including a mint-condition first printing from 1841 of Mackay’s Memoirs of Extraordinary Popular Delusions, which every one of you should read and re-read, certainly if you are contemplating seeing the movie The Wolf of Wall Street). Today, I could not afford them. First editions, like paintings, sculptures, fine wines, Bugattis and homes in Highland Park or River Oaks, have become the by-product of what I am sure Bill Martin would consider a party well underway. I want to make clear that I am not among those who think we are presently in a “bubble” mode for stocks or bonds or most other assets. But this much I know: Just as Martin knew by virtue of his background as a noneconomist who had hands-on Wall Street experience, markets for anything tradable overshoot and one must be prepared for adjustments that bring markets back to normal valuations. This need not threaten the real economy.

Under the chairmanship of Ben Bernanke, all 12 Federal Reserve Bank presidents, together with the sitting governors of the Federal Reserve Board, have input into the decision-making process. There is a formal vote – regardless of who is the Fed chair – that includes only five of the 12 regional Bank presidents plus the governors, but all of the principals seated at the table participate fully in the discussion of what to do. And yet, either because we will effect a change in the chairmanship starting in February or because at the last meeting we took the step of tapering back by a small amount our massive purchase of Treasuries and MBS, great attention is being placed on the voters for 2014, of which I am one. Two comments I recently read have been buzzing around my mind as I think about the many issues that will condition my actions as a voter. 1  “It’s Alright”, words and music by Waylon Jennings, copyright Waylon Jennings Music, 1980. BIS central bankers’ speeches  1  Beer goggles … The first was by Peter Boockvar, who is among the plethora of analysts offering different viewpoints that I regularly read to get a sense of how we are being viewed in the marketplace.
However, aside from monetary policy, it lacks powerful decision-making institutions. This means that rules-based frameworks must act a substitute for centralised authority. For fiscal and economic issues, a unitary state would have a finance ministry which both defines and vetoes fiscal and broader economic policies. EMU must achieve the same effect through its economic governance framework. We know from  BIS central bankers’ speeches  3  research, including some by Professor Rogoff, also corroborated by experience, that softrules will not achieve the desired outcome. Strengthening the rules governing fiscal and broader macroeconomic policies is thus essential. The Stability and Growth Pact (SGP), which was created to discipline fiscal policy, has not worked well and is now being strengthened and complemented by a macroeconomic imbalances procedure. Greater automaticity in the implementation of the SGP is needed when unsustainable policies put the stability of the euro area as a whole at risk. Credible economic governance needs to be consistent and predictable. It also needs to be backed by timely, tough sanctions to encourage compliance. Fiscal surveillance should set ambitious benchmarks for excessive deficit and for setting the adjustment path towards a country’s medium-term budgetary objective. The liquidity dry-ups and contagion risks also call for stronger backstop mechanisms, to provide significant, albeit temporary, liquidity assistance. Stronger financial supervision at euro area level is also essential. Finally, national authorities need to take ownership of their European commitments. This means anchoring EU rules in their national legislation and making them mandatory and being held to account by domestic parliaments.

Vítor Constâncio: Laudatio for Professor Kenneth Rogoff, recipient of the 2011 Deutsche Bank Prize in Financial Economics Speech by Mr Vítor Constâncio, Vice-President of the European Central Bank, at the Laudatio for Professor Kenneth Rogoff, recipient of the 2011 Deutsche Bank Prize in Financial Economics, Frankfurt am Main, 22 September 2011. *  *  *  Ladies and Gentlemen, It is a great pleasure to address a few words to mark the awarding of the 2011 Deutsche Bank Prize in Financial Economics to Professor Kenneth Rogoff of Harvard University. I will recall some of Professor Rogoff’s outstanding contributions to economics and financial economics, and I will also comment on some of his research in the context of the responses to the current crisis. Let me first emphasise that research plays a crucial role for the Eurosystem – just as it does for other central banks. Indeed, research has provided an essential input to the definition of the ECB’s price-stability monetary policy strategy. I would thus like to express my appreciation to Professor Rogoff for the influential contributions he has made in many fields of special relevance to central bank policymakers, ranging from monetary policy to international finance and financial crises. He merits particular praise for helping us to improve our understanding of some of the main causes and mechanisms behind the links between financial crises and sovereign debt crises.
Responsible openness based on international collaboration and standards. This principle is particularly relevant to the UK given the Government’s policy of maintaining the UK as a leading international financial centre, which is itself rooted in a centuries-long tradition of London as a major global trading hub. In practice, what does this mean? It means three things: first, that we have a mandate to engage strongly in international standard-setting processes and make sure that we are at the forefront of implementing those rules in a thorough way; second, that we adopt practices and structures which promote strong collaboration with colleagues in other jurisdictions; and third, that we are open to hosting cross-border business in the UK – but only if it is appropriately controlled and governed. Our recent moves to ring-fence retail banking, and other expectations (some going back to 2014) that firms will subsidiarise material retail banking and insurance businesses, are a vital part of what enables us to take this approach safely. 3. Proportionality and sensitivity to business models, and promoting competition. We have, for better or for worse, adopted a system in which financial companies are privately or mutually owned and then regulated in the public interest in order to make them internalise costs which might otherwise be borne by others. An analogy is sometimes drawn with pollution: the factory is encouraged to generate wealth for its owners by employing people to make products that people want to buy, but it cannot have a free pass to pour waste chemicals into the river.

The other attraction of using the approach taken for the SMCR for future regulation is that it has been the preferred approach adopted by Parliament most recently when not constrained by EU regulation (for the rollout of the SMCR to insurers, which occurred in December 2018). This is an important consideration at a time of heightened debate, in a Brexit context, about so-called “Henry VIIIth” and “Cardinal Wolsey” powers. Although it is uncertain quite what those gentlemen’s views would have been on the output floor in Basel 3.1, my point is that making use of an approach recently chosen by Parliament seems to me to have considerable attractions relative to choosing something completely new and untested. Would it not, though, be easier and better simply to stick with the EU model through which we have recently imported a large volume of rules? This approach is radically different from the approach the UK has taken when left to its own devices. Indeed, the EU model, with a large body of technical rules set out in the equivalent of primary legislation, is quite different from how most of the world does it. For example, the EU and Switzerland were the only two members of the Basel Committee on Banking Standards where Basel 3 was implemented through primary legislation rather than the prudential authority’s rule-making powers – in major economies like the US, Australia and Canada the regulators did the implementation.
Those reforms have played an important role in reducing risk in the system, alongside the overall improvements in capital, risk  4  BIS Review 70/2004  management, and the financial infrastructure. Further progress in strengthening risk management practices is an investment worth making, particularly at a time when the markets appear to be pricing in a relatively benign view of risk in the financial system and in the economy overall. BIS Review 70/2004  5

But the underlying picture is one of growth gradually picking up to around its historical average rate, reflecting continued recovery in investment and a higher contribution from net exports and, on the back of that, some modest strengthening in consumer spending as we go through next year. One should not, though, put too much weight on any single path, as the coloured fan in Chart 4, which covers nine out of ten of the possibilities as we see them, is pretty wide. That serves to emphasise the high degree of uncertainty at the current juncture. Those uncertainties include not only the spending of households and businesses here in the United Kingdom, but also the evolution of demand abroad. In particular, while the euro area overall has exhibited decent growth in recent quarters, the countries of the periphery are struggling with a mixture of fiscal, banking and competitiveness problems. There is a risk that this could lead to  2  Imports of aircraft were temporarily high in 2010 Q4 reflecting the forthcoming change in VAT treatment, but the data were still encouraging even after allowing for the resulting distortion to import growth in 2011 Q1. 2  BIS central bankers’ speeches  renewed banking sector turbulence and a hit to confidence more generally, with adverse consequences for us. Even though our central projection has growth returning to around its historical average rate, that would still leave the level of activity well below a continuation of its pre-crisis trajectory (Chart 5).
Then, I will outline the Central Bank’s inflation forecasts presented in the Inflation Report, which will be posted on our website shortly. Although the recovery in global economic activity is expected to be slow and gradual, the perception that the worst part of the crisis is over has continued to support optimism across financial markets and increased the appetite for risk during the third quarter. Parallel to the recovery in global risk perceptions, the risk premia of emerging markets fell rapidly and reached almost pre-crisis levels (Figure 20). In this period, the perception was that many emerging markets, which had been considered in the pre-crisis period as ‘highly risky’, were not as risky as envisaged. Favorable statements of credit rating agencies regarding the sovereign rating of Turkey – one of the leading countries among these emerging markets – alongside the relatively lower level of Turkey’s risk premium compared to other emerging  8  BIS Review 143/2009  markets – as was the case throughout the crisis – have confirmed the decline in Turkey’s relative riskiness (Figure 20).

Negative coverage of the banks and Icelandic economy went hand in hand at this time, both temporarily eroding international investor confidence. The reputation of Iceland’s economy and banks was tarnished. From an Icelandic perspective, the first months of 2006 were therefore characterised by a currency depreciation, falling equity prices and international discussion about the viability of Icelandic banks and macroeconomic imbalances in Iceland. A massive economic downswing was even predicted, possibly comparable to the southeast Asia crisis of the late 1990s. This was a development we had not particularly expected or prepared for. Interestingly, not only did Iceland feel the tangible effects of changes in sentiment in global financial markets – the turbulence in Iceland also reverberated through a number of distant countries with which we have no business contact. This shows that Iceland had become integrated into the global financial market. It was obvious that the Icelandic banks and authorities faced a major challenge that called for a serious response. The banks responded with greatly increased communication about their activities, financial position and other targets of criticism. They made various reforms, answered other points in detail, slowed down their expansion, tapped new credit markets and, last but not least, refuted predictions that the turnaround in external conditions, weaker króna, lower Icelandic equity prices, higher finance costs, etc. would have to dent their profitability severely.
As an example of this, the EU itself is looking to amend MiFID2 to iron out areas that need further work. Second, as the world moves on, so the rules need to adapt. If they do not, we will be heading for trouble. The key point here is that good practice means that authorities should be transparent at the time in explaining rule changes, and those changes should be consistent with international standards where appropriate. Let me give three examples of areas of rule changes we in the UK are looking at, two involving banks and one life insurance. First, the Basel regime for banks has, from the outset in the 1980s, applied to so-called “internationally active banks”. The EU has chosen to apply it to all banks and relevant deposit takers. That was a matter of choice. But the Basel regime is heavy duty and complicated when applied to small banks (I know many big banks will say the same, but sorry that’s life). So, we want to see if we can apply a strong but simple framework of rules for small banks that are not internationally active. This is a sensible step in my view and not out of line with the principles and practice of equivalence. Indeed, there are other countries, such as the US and Switzerland that have regimes for small banks and have been determined equivalent to the EU in many areas. Second, the EU changes its rules in December to allow software assets to count as bank capital.

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Countries with growing current-account and budget deficits were now able to obtain finance in the emerging international capital markets. Economic policy in many Western countries, Sweden included, drifted further and further away from Keynes’s basic tenets. Inflation, which in the Bretton Woods era had averaged around 4 per cent, soon rose to twice that. When unemployment began to increase in connection with the oil crises in the 1970s it was evident that Keynesianism faced a crisis. It offered no solution to the problem of stagflation. Earlier ideas were now revived and new approaches were developed. The difficulties decision-makers face over adjusting imbalances in good time had already been highlighted by economists, above all in the United States, in the late 1960s. There is a considerable risk, for example, that a demand stimulus when activity is low will not have time to act before an upturn has occurred. Policy is therefore liable to accentuate cyclical fluctuations instead of smoothing them. Perhaps the most pungent criticism came from those who argued that in practice, firms and households act in the light of their economic policy expectations. If, for example, the government tries to stimulate demand by increasing transfer payments and thereby the budget deficit, households will simply save the additional benefits because they expect that, sooner or later, the public sector deficit will have to be financed and this entails either increased taxes or decreased transfers. There would be no increment to demand because households strive to keep consumption stable over time.

Whilst these may appear to be self-indulgent memories, the comparison of the economy then and now does provide a thoughtful backdrop for what I want to discuss with you this evening. Compared with the economy in the 70s, maybe things aren’t as bad now as we sometimes like to believe! The first topic I want to cover will be what central banks can do to help achieve the holy grail of low inflation, stable growth and full employment. In particular I will take a monetary approach to explaining the issues. Second, I want to talk about the monetary policy decisions facing us right now and explain my own recent voting position. Third, I want to give an update on our latest initiative, the “Funding for Lending Scheme”. Money and the balance sheet of the central bank In the Acknowledgements to his 1988 classic “A Brief History of Time”, Stephen Hawking notes that he was told that each equation he included in the book would halve its sales. He only included one.1 You may be relieved to hear that there are no equations in this talk tonight. But I mention this because I am going to refer regularly to something which has been empirically proven to send some journalists to sleep faster than counting sheep. The Bank of England’s balance sheet. I hope you are all still awake? Good, because the Bank’s balance sheet is actually where all the action is.