samchain/econo-pairs-v1 huggingface dataset:
Facing the deep European Investment and growth gap, we need to implement major European investment programmes to bridge that gap while tackling common structural priorities such as the fight against climate change which must absolutely not become a collateral victim of the crisis, or digitalisation which will be even more than before the key driver of future productivity. 2/ Preserving the single market while “repairing” firms is our second common goal in the recovery phase. National governments did well in the acute phase, by taking emergency measures such as providing guarantees and liquidity support to their SMEs. But, as these measures will have to be prolonged and transformed into long-term solvency measures, national differences could create an “unlevel playing field“. A single market – which is in the interest of all Member States, starting with Germany – means common rules for corporates:  Page 7 sur 10 if not, our economies risk further divergence and that would be very unfortunate. The solvency of European business is our shared challenge, and calls for shared solutions. Focusing on these two objectives is more important than arguing about public debt. But let me, for the sake of consistency, propose two basic principles: Existing debts are and will remain the responsibility of national governments. Let us stop this fruitless debate about Eurobonds and the mutualisation of past debt. Fiscal consolidation will remain a national obligation – including in France –, but with appropriate timing in order to avoid the premature and procyclical tightening of public finances.

This lending incentive will reduce bank funding costs by several billions of € each year. The Italian banking sector – and through it, Italian businesses and  Page 4 sur 10 households – is the main beneficiary of ECB refinancing operations with almost 30% of total credit operations outstanding. This even leads some in other countries to argue that our monetary policy is being conducted for the benefit of Italy: they are wrong. Monetary policy is not conducted for any one country, be it Germany, France or Italy. The Governing Council takes its decisions collectively and independently, taking into consideration the euro area as a whole. That being said, let us simply acknowledge that belonging to the Monetary Union has provided Italy with substantial financial relief in this crisis. The ECB has worked well for Europe and for Italy. Our Governing Council took note last week of the judgement by the German Federal Constitutional Court. Let me be crystal-clear: we remain undeterred, as President Lagarde said; furthermore, we are definitely dedicated to and determined to deliver on our mandate as conferred by the Treaty. As the  Page 5 sur 10 European Court of Justice has said, our past actions are indeed proportionate to that mandate. More broadly, I hear debates in our two countries shedding doubt on (i) the independence of the central bank – that should be brought “under political control” – and on (ii) its mandate – which should go beyond price stability, to include employment or the fight against the health crisis.
Compared with other countries that have implemented similar reforms, it is perhaps primarily the changes in fiscal policy that distinguish Sweden. During the mid-1990s a radical consolidation program was implemented, with broad parliamentary support, and a framework with an expenditure ceiling and target balance was introduced. The relatively good central government finances over the past ten years have undoubtedly been a source of strength for the Swedish economy. 2  BIS Review 8/2007  The Riksbank’s monetary policy framework and strategy Let me now, with this as background, move on to describe our monetary policy strategy in slightly more detail. 1 The inflation target The Riksbank has chosen to specify an explicit target for inflation. The target is for the annual rate of change in the consumer price index, CPI, to be 2 per cent, with a tolerance for deviations of ± 1 percentage point. The decision to define the target for monetary policy clearly in terms of a specific figure was of course partly due to the desire to create a nominal anchor that everyone could recognise and base their expectations on. However, another important reason was that it would facilitate assessments of the Riksbank’s activities and make the Bank more easily accountable. This is particularly important now that the Bank is so independent. Inflation can be measured in many different ways. The Riksbank chose the CPI as target variable partly because it is a broad price index that represents typical purchases made by consumers, and the index is familiar to the general public.

Yes, there are new and continuing challenges to business models across the whole of the insurance sector, whether from changes to Government regulations affecting annuity businesses, through the advent of new capital, particularly in re-insurance, to challenges from overseas insurers. Those challenges are short, medium and long-term and very considerable. We can’t – and won’t – take our eyes off those challenges to the industry. But Solvency II is a train of the future speeding down the track towards us – for both regulators and firms the message is: be on board or get left behind. So it is a key priority for us, working with you, to get implementation right and on time. The clocks are counting down. We are now at a pivotal moment for Solvency II preparations. Solvency II will bring about the most significant change to the industry in decades. Following years of negotiation and delays, we are finally at a point where the end is in sight and the regime is to become a reality. With the majority of the legislation now finalised, the PRA’s focus has shifted to implementation. Since assuming this responsibility in early August, I have been struck by the volume of activity and the energy with which PRA staff are working to ensure that we – and most of you – hit the 1/1/16 deadline.
Ladies and Gentlemen, Banks which do not make investments to take advantage of the new technology may find themselves losing customers to the better-quality or lower-cost products of banks that do. Investing in IT however, entails high cost and an uncertain payoff. The changes brought about by IT - new products, more sophisticated customers, changing cost structures, and enhanced competitive pressures - have all combined to transform the structure of the banking industry. And with further development of new technology, the industry will likely continue to evolve. Advances in IT have also resulted in new database technology and data-mining techniques that can expand the range of services that banks may offer their customers. The winners will be those who are able to harness on the capability of ICT in making strategic decisions - in terms of enabling better alignment of businesses, enhancing organisational capacity and capability such as in risk management, and building better customer relationships. Today, decisions on ICT investments demand a more thorough assessment, extending beyond the cost implications, to include better human resource redeployment, more efficient work flow process and system interface, expandability of the technology platform and the level of complexity to users and customers. BIS Review 33/2002  3  As banking institutions continue to adopt greater sophistication in the application of ICT, efforts must also be intensified to develop ICT-savvy employees and to increase customers’ understanding and acceptance of the new approaches.

The role of quality, and its inter-relationships with operational aspects of a service organisation has been expressed in what has been described as the “service-profit chain” as follows: (i) profit and growth are stimulated primarily by customer loyalty; (ii) loyalty is a direct result of customer satisfaction; (iii) satisfaction is largely influenced by the value of services provided to customers; (iv) value is created by satisfied, loyal and productive employees; (v) employee satisfaction results primarily from high-quality support services and policies that enable employees to deliver results to customers. Superior insights on customer needs will be an important advantage. This will involve recognising the diverse needs of the different customer segments. There is now already a discernable change in the pattern of customer behaviour. There is now an increasing shift towards a customer base that has less need for the standard distribution systems for most banking services. “If you build it, they will come” used to be the by-word for domestic banking institutions. A new branch would naturally attract new customers. Now, while customer relationship is of vital importance, these needs to be addressed in the context of the needs of the younger customers for retail services who do not want the “inconvenience” of a branch. The preference is for services as much as possible over the telephone, ATM or Internet. Writing cheques has become an inconvenience. This new generation of customers have their own ideas of what a bank should be and successful banks need to respond to this change.
Therefore, the banking sector failed to fulfill its core function as a provider of resources for the economy. At the same time, risk management principles were not put into practice in the banking system and the consequences were apparent in the 2000-2001 crises. Another unfavorable impact of high and chronic inflation on the economy in our country is that economic units became used to operating in a highly inflationary environment. To put it more clearly, backward indexing behavior became common in pricing activities. Thus, wall of inertia evolved in inflation, which was difficult to break. Here “inflation inertia” simply refers to the situation of, yesterday’s inflation designating today’s inflation and today’s inflation designating future inflation. Hence, as inflation increased, inflation expectations increased with it and a self-nurturing inflation cycle began. In a period of high and chronic inflation, consumers were not inclined to control price and quality less and were also less concerned about diversity in selecting products. At the same time, producers were less concerned with cost and efficiency while pricing and were willing to determine profit margins freely, and invest less on increasing product diversity. As a result of this behavior created by the inflation process, goods and services could be sold at any price since consumers did not control prices, while producers did not control cost. Thus, this attitude provoked a resistance against anti-inflationary policies that were introduced at intervals and significantly slowed down the decline of inflation.

At this point, instead of going into detail about the inflation outlook, I suggest that you refer to the press release “March Inflation and Outlook”, which is available on our website. Figure 2: Inflation Developments * 100.0 90.0  CPI  WPI  80.0 70.0  (%)  60.0 50.0 40.0 30.0 20.0 10.0  Mar-05  Jan-05  Nov-04  Jul-04  Sep-04  May-04  Mar-04  Jan-04  Nov-03  Jul-03  Sep-03  Mar-03  May-03  Jan-03  Nov-02  Jul-02  Sep-02  May-02  Mar-02  Jan-02  Nov-01  Jul-01  Sep-01  Mar-01  May-01  Jan-01  0.0  *For the January-March 2005 figures, 2003 base year index was used. Source: SIS. I would like to briefly consider the underlying reasons for the success of the fight against inflation. Along with the issues mentioned above, the implementation of firm and sound policies and important institutional reforms are crucial to the decline of years of inflation and finally getting rid of the label; “a country with chronic high inflation”. The first, and perhaps the most significant institutional development, is that the institutional structure of our Bank has become conducive to maintaining price stability. As you know, in 2001, in amendments to its law, the main purpose of the Central Bank of the Republic of Turkey was designated as maintaining price stability and the Bank was given the mandate to directly determine necessary monetary policy and monetary policy instruments.
These new elements in the functioning of the labour market may help the Riksbank to combat inflation and will probably be good for growth and thus employment in the long term. However, they must be weighed against a possible deterioration in security of employment for the individual. How high can the rate of wage increase go without causing inflation to accelerate? In the long term the development of real wages must reflect the labour force's ability to produce goods and services. Thus, real wages can only rise as long as productivity is increasing. If real wages rise faster than productivity, companies are forced to either raise their prices if they can, which means that inflation rises, or to reduce their labour force or curtail their operations. Nominal wages can thus increase by the total of the inflation target of 2 per cent and the growth in productivity. If we assume that the Swedish productivity rate trend is approximately 1 to 2 per cent, a reasonable assessment is that an average increase in payroll expense of around 3.5 per cent should be sustainable in the long term. However, it is important to point out that the arguments regarding wage scope are based on several assumptions. The first concerns an increase in total payroll expense, i.e. both wage increases through collective or local bargaining and other types of increase in payroll expense, such as payroll tax and collective charges.

Inflation was assumed in the main scenario to be in line with the inflation target one and two years ahead, albeit at the lower edge of the interval. The risks we foresaw for Swedish inflation were mainly related to developments in the financial markets and to wage formation. In that situation, we chose to leave the repo rate unchanged and decided to hold an extra monetary policy meeting, which will take place tomorrow. The Municipal Workers' Union's termination in advance of the third year of its collective agreement need not in itself constitute a threat to the inflation target, as long as other groups in the labour market are prepared to stand back in favour ot this union's members. However, if other groups were also to demand higher wages, the inflation target might be threatened. The Riksbank would then be forced to tighten monetary policy by raising the repo rate, which would lead to lower growth and employment. During the past two wage bargaining rounds in 1998 and 2001, the social partners indicated that wage formation had improved. It remains to be seen whether wage formation is now sufficiently flexible to manage the necessary changes in relative wages. Thank you. BIS Review 63/2002  7
So, in a rapidly changing environment, the Taylor Rule and other similar prescriptive rules will wind up being “behind the curve.” For example, in the fall of 2008, Taylor Rule prescriptions were well above the level of rates that was appropriate given the sharp and persistent deterioration in the economic outlook and the sharp tightening in financial conditions that occurred during that period. Of course, many economists at that time recognized that such prescriptions would have been inappropriate and suggested various ad hoc modifications to the prescriptions – in fact, John himself suggested that modifications to his rule were appropriate at that time. 2 Nonetheless, there was no consensus about the “right” modification to the rules at that time, in part, because the circumstances were unprecedented and the outlook so uncertain. If the FOMC had been required to justify to Congress deviations from a reference rule at that time, I believe that this would have slowed down how we responded to the crisis and would have resulted in a monetary policy that was not sufficiently accommodative. The consequence could have been a longer financial crisis and a deeper recession. Second, the Taylor Rule, as typically used, assumes that a 2 percent real short-term interest rate is consistent with a neutral monetary policy. However, a large literature concludes that the equilibrium real short-term rate is very unlikely to be constant, with its value affected by many factors, including the pace of technological change, fiscal policy and the evolution of financial conditions.

Our first press conference was conducted in November 1974, shortly after the collapse of the BrettonWoods fixed exchange rate regime. Moreover, from 1975 onwards we published yearly goals for the growth of monetary aggregates in order to guide market expectations of interest rates and inflation. With the introduction of our new monetary policy concept six years ago, we took three specific measures in order to further enhance our transparency: •  First, we have defined consumer price inflation of less than 2% as our quantitative goal for price stability. This step has enhanced the predictability of our monetary policy because market participants know exactly what we want to achieve. They can expect monetary policy to be tightened if we believe that inflation could exceed 2%. •  As a second step, we now regularly publish a medium-term inflation forecast. This forecast helps market participants to predict future monetary policy because they not only know our goal for inflation, but also how we judge future inflationary pressures. •  Our third step towards more transparency has been to explicitly communicate our operational target. We announce our target as a 1% band on short-term interest rates, that is, on the three-month Libor. We thus regularly offer market participants a quantitative indicator of changes in our monetary policy stance. Our experience with the systematic communication of our monetary policy during the past six years has been very positive.
For instance, the Riksbank uses what is known as a general equilibrium model of the Swedish economy named RAMSES (the Riksbank’s Aggregate Macromodel for Studying the Economy in Sweden). But the models always need to be supplemented with personal judgements. These judgements become particularly important when unusual events and structural changes occur that alter the functioning of the economy. This was the case during the financial crisis, for instance. Figure 3 shows the RAMSES forecast for the GDP gap and the Riksbank’s forecast in the Monetary Policy Report  5  However, at the time this decision was made, no alternative scenario was unambiguously better than the main scenario if one calculates the mean squared gap for the combination of GDP gap and CPIF. BIS central bankers’ speeches  5  published in February 2009. As you can see, there is a fairly large difference between the forecast generated solely from a model and the published forecast supplemented with personal judgements. Figure 3. Forecasts for the GDP gap Monetary Policy Report 1/2009  Source: The Riksbank  The significance of the personal judgements becomes even clearer when we see the forecasts for the repo rate (Figure 4). According to our forecast, a much more expansionary monetary policy was needed during the crisis than was suggested by RAMSES. Figure 4.

But we have so much to learn from experts in other fields. Strengths as Blind Spots One of the most important lessons I’ve learned as a CEO is that there’s no fixed endpoint when it comes to shaping an organization’s culture. You can never take a step back and say, “We’ve finished the culture project. Well done! Now it’s time to focus our efforts elsewhere.” Culture is constantly evolving, and therefore needs to be constantly nurtured. One of the most challenging elements is that there’s no clear benchmark for success. And sometimes your greatest strengths can become your blind spots. As an organization with a public mission and regulatory responsibilities, the Fed needs to have a particular focus on compliance. But cultures with a heavy focus on compliance can breed a sense that individuals aren’t responsible for their actions. As a CEO, I’ve tackled these issues by focusing on principles and values rather than writing extensive policies that try to cover every potential decision. This puts a premium on individual accountability to do what’s right and creating an environment where everyone has the ability and responsibility to speak up. Somewhat paradoxically, focusing on principled decision making and accountability, rather than relying exclusively on rules and policies, can be the most effective safeguard against wrongdoing and unethical behavior. What’s the Way Forward? Creating a positive work culture is challenging and ongoing work. And there’s no silver bullet that can solve cultural problems overnight.
Once the minister concerned had appointed each director, they could draw up a contract of objectives and means whose results could be tracked to ensure accountability. This approach is widely practised in Sweden and elsewhere, and requires no legal changes. Why not start experimenting it straight away? By way of examples, the Attali report cited the tax and accounting administration, INSEE, civil protection and the prison service. Support for managers These increased levels of responsibility and autonomy must be accompanied by a change in managerial culture to one that is more open and participative with a cross-cutting focus. When it comes to change management, we never spend enough time listening to and informing the men and women working in the public service, nor do we devote enough resources to supporting them dayto-day. Social dialogue, when it manages to get beyond posturing, can provide one of the levers for change. This support is particularly important for "middle"  Page 18 of 19 or local managers: they are the link between senior management and public service workers, and recognition and empowerment are crucial. For example, every year we bring the top 600 managers at the Banque de France together to discuss the progress of our strategic plan. We have given them more leeway when evaluating their teams or organising teleworking, backed up by feedback as often as possible. Simplification Lastly, simplification is an essential vector for transforming public services – expected by everyone but all too often neglected.

Page 19 of 19 But nobody, from central government to various locally elected representatives, appears ready to give up ground. Is it illusory, for example, to dream of the principle of one entity being in charge of one area of expertise? It may be instructive to take a look at how the Germans make their federalism work in practice. *** To conclude, yes, there is still hope... because, as Paul Éluard so aptly put it, "There is another world, but it is inside this one"... especially if we combine a number of ingredients – in which I firmly believe – to cure our current democratic malaise. (i) First, a long-term perspective and perseverance, free from shorttermism; (ii) a focus on ex-post results, rather than merely surrendering to the tyranny of media announcement effects; (iii) clarity of responsibilities and management autonomy, rather accumulating expertise and creating ‘rival power bases'; (iv) and mutual enrichment between academic reflection and economic action - I see this as a positive thing for monetary policy, and I hope it will be for transforming public services. And what better place for believing in these things than right here in the Académie des sciences morales et politiques? Thank you for your attention. Page 20 of 19 Sauvé, J.M., Où va l'État ?, Speech, Conseil d’Etat, 8 April 2013. de Tocqueville, A., L’Ancien Régime et la Révolution (1856).