samchain/econo-pairs-v1 huggingface dataset:
[Slide 1] A property worth 100 in 1998 would have sold at 280 in 2007 in Spain and Ireland and at 230 in Greece. Between 1998 and 2007 bank lending for house purchases increased by more than 400% in Spain, 500% in Ireland and 800% in Greece. The credit boom led to a sharp increase in private sector indebtedness. But such imbalances have not only been a private sector story. Between 1998 and 2007 the compensation of employees in the public sector (that is the number of employees times their per capita wages) increased cumulatively by close to 180% in Ireland (i.e. five times the euro area average) and by close to 110% in Greece (i.e. three times the euro area average). Public spending growth has systematically exceeded nominal GDP growth also in Portugal (about double the average for the area). Fiscal discipline had been clearly insufficient. Even when the headline fiscal deficit was suggesting a healthy situation until around 2008, that was misleading as GDP was above potential and strong tax revenues resulting from housing booms were not sustainable. During the 2008–09 crisis, the sharp drop in domestic demand caused a significant fall in revenues, which in some previously booming countries were based on very cyclically sensitive taxes, such as corporate taxes, stamp duties and capital gains taxes. At the same time, government spending was increased by crisis-related measures.

Such reforms, if well designed and fully implemented, will reorient the engines of growth towards high-productivity sectors and enable companies to thrive in the Single Market and in the global economy. Studies based on general equilibrium models have confirmed that the long-run growth effects of such reforms are indeed positive and potentially very high.13 [Slide 9] This is my last chart. It shows model-based simulations carried out for the Portuguese economy by using a large-scale new-Keynesian dynamic general equilibrium model of the euro area and the world economy.14 In the model simulations shown, the wage mark-up is reduced by 10 percentage points over a period of five years. The size of the reduction mimics the cumulated gross wage differential between Germany and the rest of the euro area countries between 2005 and 2010, that is, in the five years after Hartz IV reform. To obtain a comparable set of results, the price mark-up is also reduced by 10 percentage points over five years. These simulations show clearly that to maximise the impact of reforms on GDP and employment it is important that those reforms have to reduce both wage and price mark-ups. The simulations also show that the impact of reforms is positive already in the second year and increases progressively afterwards. All this is consistent with other  13  See Gomes S., P. Jacquinot, M. Mohr, M. Pisani (2011), Structural reforms and macroeconomic performance in the euro area countries. A model-based assessment, ECB working paper no.
Thirdly, while corporates find more business opportunities, they also face even more challenges which you, as corporate treasurers, are probably well familiar with. For example, increasing market risks, where corporates operating in multiple countries are faced with growing exposures to different currencies and rates. In fact, divergent monetary policies among key advanced economies have led to greater volatility in the global foreign exchange market. And, with the international use of the renminbi on the rise, the reform of the yuan’s exchange rate since August 2015 has also resulted in more two-way movements of the exchange rate against other currencies. These recent developments have created more market risks. 15. Lastly, global regulatory reforms have also had an impact on corporate treasury management. These reforms, particularly the higher capital and liquidity requirements under Basel III, have led to more constraints on global banks in providing funding and making a market for hedging tools for corporates. As such, there is an undesirable impact on corporate treasurers in terms of financing cost and asset and liability management. Benefits of CTCs 16. Corporates need smarter solutions to address these opportunities and challenges. There has been a greater call for corporates to set up more structured regional corporate treasury centres, CTCs in short.

Many market participants have considered CTCs useful for a number of reasons:  BIS central bankers’ speeches  3  •  one, through centralising treasury activities, CTCs help effectively translate management’s vision into firm-wide policies, such as preferences on operating currencies, hedging and day-to-day transactions;  •  two, CTCs help lower funding costs through the optimal use of intra-group funding and netting, as well as external financing; make more co-ordinated use of corporate balance sheets, and; enable corporates to more effectively tap capital markets for longer term funding;  •  three, they help optimise working capital positions and facilitate daily sales through customised transactional arrangements. And by concentrating excess liquidity in CTCs, senior management can achieve better visibility and control over their cash and reduce frauds; and  •  four, they act as corporate centres to consolidate various foreign exchange and interest rate exposures and allow centralised hedging on net positions. Therefore, corporates can eliminate redundant procedures to reduce associated costs and enhance efficiencies. 17. In addition, more and more corporates are adopting technologies, such as the “Enterprise Resource Planning” System and the “Treasury Management System”, which enable them to improve control over local subsidiaries’ activities and standardise treasury operations. All in all, CTCs can play the critical role of an inhouse bank within a multinational corporation and a function that multinationals should develop in tandem with their global expansion plans. Hong Kong as a preferred CTC location 18.
One of the key pillars of Title II is that, unlike a bankruptcy proceeding, the FDIC will have access to liquidity from the U.S. Treasury to help ensure an effective resolution. While this access provides significant support for an effective resolution, it will still be important for the resolution authorities to provide clarity about the timing and the amount of liquidity resources that will be made available after a firm enters into resolution. This clarity will likely be necessary in order to calm creditors and markets at the time of resolution. Under the single point of entry framework, the intent is to create a highly capitalized bridge entity so that counterparties will be willing to stay engaged based upon the improved creditworthiness of the bridge parent and its recapitalized subsidiaries. If successful, this will reduce the need for the up-front provision of external liquidity resources. Nevertheless, to make the viability of the bridge entity fully credible, market participants must believe that the bridge company has access in a timely way to whatever additional liquidity resources might prove necessary. In addition, under the Dodd-Frank Act, Title II is not the baseline or preferred approach for dealing with the failure of a large complex firm. For a firm to go through Title II, a determination must first be made that the failure of the firm and its resolution would have serious adverse effects on U.S. financial stability under the insolvency law that would otherwise apply.

Given the trade and financial linkages of this region with the European economy, it is of interest to also shed some light on the Europe’s growth prospects. It is encouraging that the economic recovery is expected to proceed in the monetary union, at a growth rate of slightly below 2%. It is to be supported by the ECB’s monetary policy measures, by the earlier progress made with fiscal consolidation and structural reforms, and low oil prices as well. However, similar to the global outlook, the economic recovery in the euro area is moderate and downside risks prevail. They pertain to the global uncertainties that were mentioned previously, as well as to broader geopolitical risks. It seems that the possibility of prolonged slow growth is high, and this could affect the potential to grow, as well. This asks for policies of supporting long-term economic growth, which typically calls for structural measures – more innovation; technology sharing; support to the global regulatory reforms in order to improve the resilience of the financial system; investments in human capital, education, health and infrastructure. At the end, let me once more wish you a pleasant stay in Macedonia and a successful meeting. I hope that you will have a chance to see Skopje and that you will enjoy it. 2  BIS central bankers’ speeches
Chart 7  Krone exchange rate 6,0  75 Basket index  80  ECU index  85  6,5 7,0  90  Euro  95  7,5  100  8,0  105  8,5  110  9,0  115 80 82 84 86 88 90 92 94 96 98 Source: Norges Bank Legg inn filadresse her  The pressure against the krone exchange rate was particularly strong in the autumn of 1998. The crisis, first in Asia and later in Russia, led to considerable turbulence in international markets. At the same time, pressure in the labour market led to high wage increases, while the current account was negatively affected by a fall in export prices, combined with increases in imports. All in all, these factors contributed to creating depreciation expectations. Thus, fluctuations in oil prices represent only one of many causes of exchange rate variability over the past few years. Monetary policy is aiming at exchange rate stability. The krone exchange rate depreciated gradually through the first half of 1998, and in August there was a strong pressure against the krone. Norges Bank responded by increasing its key rates seven times through 1998, with a total of 4½ percentage points. After the last interest rate increase, in August 1998, the interest rate on banks’ deposits in Norges Bank was 8%. The strong increase in interest rates was not sufficient to bring the exchange rate back to its initial range.

Resolution is the toughest nut to crack in the financial reform package, but it is also the one that I think does more to unlock other issues, including the appropriate steady-state endpoint for the bank capital regime. Put simply, the answer in my view is different in a world of effective resolution that ends too big to fail. But in the alternative outcome, where too big to fail remains with us and there are doubts around the effectiveness of resolution, it is hard to avoid the conclusion that higher capital requirements will follow, and cross-border establishment will be through subsidiaries. Let me also say that we have made more progress on resolution in the last few years than many people expected. To say that we are not there yet should not conceal the real progress made. And, an important credit on this goes to Paul Tucker who has led much of the international policy thinking on resolution. Paul leaves us at the end of the week for the calmer environment of Harvard – we shall miss him in many ways, and I hope that when we get to an outcome on bank resolution that meets our wish to reject the permanence of fragmentation, we will remember how much Paul did to get us there.
After that there was an attempt to "bridge over" the international economic downturn that followed in the wake of the oil crisis. The cost problem was checked by devaluation. The idea was to keep demand up until international economic activity showed an upturn. Another example is the beginning of the 1980s, when activity in the economy once more came out of synch. Sweden came out of the decline faster than other European countries by means of two aggressive devaluations, but the cost was that inflation became stuck at a high level. The General Council also expressed scepticism, in its comments on the commission's report, of the statement that it would be possible to pursue an individual economic policy in the case of remaining outside EMU. With hindsight, one can perhaps conclude that this scepticism was a little exaggerated in that the steering interest rate has been both higher and lower than in the euro area in recent years and the krona has fluctuated substantially. Given that a country has systems for both fiscal policy and monetary policy that inspire confidence, there appears to be somewhat better scope for action within the framework of an economic policy aiming at macroeconomic stability than was earlier assumed. 1  Sweden and the EMU, SOU 1996:158.

-  Persons filling key roles should be expected to have the necessary skills and experience to carry out their tasks appropriately. The supervisor has a role in assessing the qualifications and integrity of these key personnel through fit and proper tests. 2  BIS Review 38/2005  -  Depending on the size and complexity of the bank, appropriate structures and control mechanisms such as strong internal audit, external audit and the oversight function of the board (directly or through supporting committees such as audit committees, risk committees, compensation committees etc) support the effective operation of a supervised bank. -  Other elements, such as the appointment of independent board members who can exercise objective judgement, are usually recognised as good practice. Basel II and corporate governance Let me turn now to the Basel II capital framework. I am asked to speak about Basel II quite frequently, but while I am often requested to talk about the mechanics and the impact of the new framework, I am seldom asked about its corporate governance aspects. This is unfortunate because, in my view, Basel II is fundamentally about better risk management anchored in sound corporate governance. With that in mind, I would like to focus now on three areas where I believe Basel II will contribute to more effective corporate governance. I will refer to these as the three C’s: controls, culture and clarity. Controls The first “C” is controls.
On this occasion, the deficit doubled within three years, while the exchange rate appreciated once again. That country was the United States and the references are to episodes when the deficit grew rapidly in the early 1980s and again at the turn of the 1990s. And some observers detect signs today of a similar replay beginning. To be fair, however, it should be noted that the dollar tended to remain as firm during the years of deficit reduction in the late 1990s as it had when the deficit was rising in the early 1980s, and that, on balance, there may not be a very clear long-term relationship in either direction between the US deficit and the dollar exchange rate. But at least the US experience warns us against presuming there to be an automatic negative causation flowing from the one to the other. The relationship between fiscal and monetary policies It may be worthwhile examining more generally certain aspects of the relationship between fiscal policy and monetary policy. The economy can be characterised as comprising any number of different sectors. At the highest level of aggregation the classification is usually the public sector, the corporate sector, the household sector and the overseas sector (the counterpart to the external balance of payments).

Nonetheless, euro area GDP is expected, at end-2022, to still be somewhat less than 4 pp below the level that would have been observed according to last year’s December projections (the latest before the COVID-19 outbreak). 7  Given the exceptional uncertainty over future pandemic-related developments, this baseline scenario has been accompanied by a more favourably defined alternative scenario. In it, euro area GDP would, at the end of the time horizon considered, be slightly higher than was envisaged in December 2019. Another, more adverse scenario was also laid down, in which the negative gap relative to the 2019 reference would be around 9 pp. Inflation fell in August to - 0.2%, and its core component, which excludes energy and food, stood at a very low level of 0.4%. The ECB’s projections point to a gradual recovery in the coming years. At the end of the projection horizon, inflation would stand at only 1.3%, some distance off our related target. Moreover, several factors tilt the risks to economic growth to the downside: uncertainty over how the pandemic will evolve; the possibility of a no-deal Brexit; and a potentially more adverse reaction by unemployment and in the dynamics of corporate start-ups and company failures once the support measures have run their course. In parallel, there has been a progressive appreciation by the euro in recent months. This introduces disinflationary pressures at a time when the euro area inflation outlook is, as I said, for a record low.
Most prominently, global interconnectedness implies large and swift transmission of shocks across countries. A seemingly localized supply shock, such as the tsunami in Japan or the floods in Thailand two years ago, created ripple effects in various parts of the world by disrupting the global supply chain of production. From the perspective of most Asian economies, the abrupt economic contraction in the US and the euro area during the financial crisis were examples of external demand shocks. While such “real spillovers” generated by supply or demand shocks can be quite damaging, the avenues for dealing with them are apparent and relatively uncontroversial. Fiscal automatic stabilizers should be allowed to work fully and monetary policy could be eased to cushion the impact so long as medium-term inflation expectations are contained. Calibrating the policy response to these shocks may not be straightforward, but they do not, in of themselves, pose challenges to the underlying framework of policy. On the contrary, “financial spillovers” associated with extraordinary monetary policy easing in advanced economies have prompted many central banks and academics to do some soul searching about the appropriate framework, not just for monetary policy, but also for regulatory and capital account policies that can best deal with these shocks. It has been around five years that the US federal funds rate has been kept at the zero lower bound, and this has been supplemented with multiple rounds of large-scale asset purchases.

To date, in order to implement its monetary policy, the SNB has allowed the three-month Swiss franc Libor to fluctuate within a range. Obviously, this element of its strategy will have to change. The SNB will announce the requisite changes in due course. Conclusion Ladies and Gentlemen, to conclude: We have seen that, ten years on from the crisis, central banks’ basic mission has not fundamentally changed. However, the environment in which they operate has evolved and continues to do so. For this reason, it is essential that the SNB has a precise understanding of the changes it faces, and adapts itself in response, in order to ensure the continued and optimal fulfilment of its mandate. To date, the SNB has been able to rely on a sound strategy and on the skills and state-of-theart technologies that allow it to remain agile in a constantly changing world. I am convinced that it will continue to do so in the future. Thank you for your attention. 7 Information on the working group, including updates on outstanding issues, is available at www.snb.ch/en/ifor/finmkt/fnmkt_benchm/id/finmkt_reformrates. Page 9/9  Ten years after the crisis: evolving markets and the challenges for the SNB Andréa M. Maechler and Thomas Moser Member of the Governing Board / Alternate Member of the Governing Board Swiss National Bank Money Market Event Geneva, 8 November 2018  Sources: FSO, SNB.
It is the one Forum in which regulators come together with finance ministries, central banks and the international financial institutions, specifically to look at financial stability issues, and how they should be resolved. In its first four years, the FSF has made some progress. Its work on Offshore Centres certainly led to improvements in regulatory standards in a number of those centres. And it has stimulated both the securities and insurance regulators to work more quickly, and in a more determined way than was previously the case. I have first hand knowledge of that impact. But more could be done. It remains difficult and slow to agree priorities between the Forum’s membership. I also think it could usefully take a somewhat broader view of its responsibilities. The Forum could do more to co-ordinate the activities of the sectoral international regulators and to contribute to their priority-setting. It could use its privileged links with the G7 finance ministers to bring more political impetus to the work of the bodies represented on it. IOSCO and IAIS, for example, have no other structural links to ministers, or to central bankers. The Forum is well placed to identify weaknesses in regulation, whether in member states or internationally. This would not involve duplication of effort, as some fear, rather the addition of urgency and focus to work already under way.

A new agenda for change So while the architecture may remain fundamentally the same, the plumbing of the financial system has undoubtedly been improved. This is unromantic work, but when crisis hits in the middle of the night, and unpleasant odours emerge from the system, it is the plumber you call, not the architect. However, it is reasonable to ask whether these changes are sufficient to reduce the incidence of financial crises in the future and to enhance our ability to manage such crises as will, inevitably, occur. I do not propose today to try to cover all the issues that might be raised by that general question. I certainly do not plan to talk about fiscal and monetary policies, which are no longer my area of expertise. I will also leave to one side the important developments of bankruptcy and insolvency procedures. The IMF’s Sovereign Debt Restructuring Mechanism (SDRM) proposal seems to have been shelved for the time being but, judging from recent successful bond issues by Mexico and Brazil, some solid progress is clearly being made on collective action clauses which should allow for more timely and orderly restructuring of sovereign debt in case of problems. However, all of these subjects are, as we say, above my pay grade. I will concentrate instead on the regulatory dimension. I do not propose a very radical agenda. Regulators are not normally revolutionaries.