samchain/econo-pairs-v1 huggingface dataset:
In the conduct of monetary policy, we assess the objective of stabilising inflation at close to 2½ per cent over time against the objective of stabilising output and employment. Given the low inflation rate, we have decided to keep interest rates at a low level and at times considered an even lower interest rate. However, against the background of solid growth in the Norwegian economy since summer 2003, we have instead decided to use some time to bring inflation back to target. Household debt has risen sharply since the mid-1990s. At the same time, house prices have shown a marked increase. Debt developments through the 1990s can probably be viewed to some extent as a delayed adaptation to the deregulation of the housing and credit markets in the 1980s, after many households burned their fingers immediately after the deregulation. At the same time, the credit market has deepened. New loan products have emerged, and it is easier to raise loans. Borrowers can choose their repayment schedule. Credit and housing market liberalisation provides homebuyers with the opportunity to establish a high housing standard early in their adult lives and draw on this capital later in life. In recent years, household income growth has been solid, household confidence regarding the future has been strong and households probably perceive higher income levels as permanent. This may have resulted in a further rise in house prices and debt. In addition, low real interest rates are currently contributing to this.

The crisis revived the debate about the optimal size of the financial industry and the finance-growth nexus. Often, and especially at the beginning of the recent crisis, public opinion has blamed the excessive growth of the financial industry and the extremely advantageous remuneration packages in the sector. One argument in the debate against the traditional finance-growth paradigm is that the high wages may draw talent away from other productive sectors in the economy since financial and non-financial sectors compete for the same scarce supply of human capital. 9 Thus, an excessive growth of the financial sector may not be fully desirable. Thomas Philippon formally analyses this trade-off in his (2010) AEJ Macro paper and discusses the implementation of corrective taxes and subsidies to guarantee the optimal allocation of resources between the financial and the productive sectors. 10 Thomas Philippon’s paper published in the Quarterly Journal of Economics in 2012 11 analyses the allocation and compensation of human capital in the financial industry. Together with his co-author Ariell Reshef, he documents the pattern in wages and skill intensity in the financial industry in the US between 1909 and 2006. The authors show that this pattern is non-monotonic. High compensations in banking and the ability of the financial industry to attract the most skilled workers are not permanent features of this industry. As the paper shows, changes in financial regulation are important determinants of these patterns. Tighter regulation tends to lead to an outflow of resources from the financial sector.
For this reason, I would like to focus my presentation today on the integration of these countries into the EU and, more specifically, on how the ECB sees the so-called accession process. Let me start by saying that the ECB's attitude towards accession is a positive one. In fact, the ECB is conducting a fruitful and constructive dialogue with the central banks of the accession countries at many levels and in many areas. Once a year, the Governors and Deputy Governors of the central banks of the accession countries and the Eurosystem meet to discuss policy issues related to EU accession. This year's meeting will take place in Berlin in December. In addition, these meetings have been complemented with multilateral seminars to support the preparatory work for the final adoption of the euro in fields such as statistics, payment systems or legal issues. Central banking co-operation between the Eurosystem and the central banks of the accession countries has also been enhanced through the organisation of bilateral visits and seminars. To give you an idea of the significance of this co-operation, let me mention that, only last year, around 300 central banking co-operation activities, including technical assistance, were organised throughout the Eurosystem. The main areas of co-operation have thus far been payment systems, legal issues, and statistics, as they entail the longest lead times. These activities are continuing apace also this year.

Efforts to strengthen the financial and banking systems need to be made in the next years, also for the fulfilment of the so-called "economic" Copenhagen criterion, which requires the existence of functioning market economies and the ability to cope with competitive pressures. Compliance with this criterion for EU accession will require the adoption of EU legislation in the area of financial services, including those related to banking, insurance and investment firms, as I have mentioned before. All in all, in order to fully comply with the acquis communautaire, it would be necessary to further advance institutional reforms related to the applicability and enforcement of laws, in particular as regards the enhancement of corporate governance and legal frameworks. Finally the development of a stable and well-functioning financial sector in the accession countries is also key to the smooth conduct of monetary policy in an enlarged euro area. Efficient and competitive banking sectors as well as smooth functioning capital markets are needed to ensure macroeconomic and financial stability in the accession countries and to support the convergence process of these economies. They are also needed for the proper conduct of monetary policy and, thus, for the successful participation of accession countries in the euro area. Indeed, deep and liquid capital markets are key to enabling an efficient use to be made of monetary policy instruments, since structural weaknesses in the banking sector could have severe implications for the monetary policy transmission mechanism and could affect the responsiveness of banks to changes in the monetary policy stance.
SPEECH  The coronavirus crisis and SMEs Speech by Christine Lagarde, President of the ECB, at the “Jahresimpuls Mittelstand 2021” of Bundesverband Mittelständische Wirtschaft Frankfurt am Main, 1 March 2021  It is a great pleasure to have the opportunity to speak to you today. At the ECB we care deeply about connecting with small and medium-sized enterprises (SMEs), since they are the foundation of the European economy. SMEs make up 99.8% of all non-financial companies in the EU, provide 66.6% of jobs and generate 56.4% of added value. [1] It is decisions by companies like yours to invest, hire and innovate that put the European economy on a path to growth. But in Germany, being part of the Mittelstand has a special quality that is about much more than the firm’s size. It is about the philosophy of how to do business and the spirit of management. As Ludwig Erhard said, what defines the Mittelstand is “eine Gesinnung und eine Haltung”[2], how one acts and behaves in society. This way of doing business has brought tremendous economic success. Of the 2,700 “hidden champions” worldwide – SMEs that are leaders in niche markets – almost half are part of the German Mittelstand. [3]  1/8  And it has also helped to pull Germany through times of great crisis. The Mittelstand was central to the country’s Wirtschaftswunder after the Second World War. It was critical to Germany’s swift bounceback from the global financial crisis in 2008.

In particular, the growth of M2-M1, covering passbook savings deposits, accelerated from 7.6% in December 1995 to 9.6% in October 1996. In such a context, it is important to monitor closely the investments which, within the P investment aggregates, constitute fairly close substitutes for monetary assets in the strictest sense. M3 + P1 posted significant annual growth of around 4%. On the financing side, total domestic debt showed a yearly growth trend of around 3.3%. Total domestic debt incorporates the debt financing obtained by resident non-financial agents in the corporate, personal and public sectors, be it in the form of borrowing from credit institutions or debt issues on domestic or international markets, and is thus a valuable yardstick BIS Review 2/1997  -3-  for analyzing the financing provided to the economy. Even though government debt continues to be the most dynamic component of total domestic debt, its twelve-month growth slowed sharply from 13.4% in December 1995 to ó.9% in September 1996. Outstanding lending by credit institutions to the private sector is practically stable, particularly owing to the corporate sector's sizeable cash surplus. According to the National Institute for Statistics and Economic Studies (INSEE), the self-financing rate of companies and near-companies stood at around 114% in the second quarter of 1996. I shall now make a few comments concerning interest rates, which fell across the board in 1996.
I would now like to highlight the key initiatives that both sides 1/7  BIS central bankers' speeches  have delivered this year: First, Singapore took key measures to deepen our commitment to China’s markets:  In January this year, MAS was amongst the first group of central banks and sovereign wealth funds to sign up to participate in China’s inter-bank foreign exchange market. In addition, the third China-Singapore government-to-government project was launched in Chongqing. In June this year, MAS announced the inclusion of RMB investments as part of Singapore’s Official Foreign Reserves. This was done in recognition of the steady and calibrated liberalisation of China’s financial markets, and the growing acceptance of RMB assets in the global portfolio of institutional investors. Second, we have strengthened supervisory cooperation:  In April , the inaugural China Securities Regulatory Commission (CSRC)–MAS Supervisory Roundtable was held to exchange views and perspectives on supervision of capital markets activities. In July this year, the China Insurance Regulatory Commission (CIRC) and MAS organised our first exchange session to facilitate deeper bilateral discussions in the area of insurance. Third, we continued to broaden financial cooperation:  In March, the existing cross-border RMB initiatives in Suzhou Industrial Park and Tianjin Eco-city were expanded to the cities of Suzhou, Tianjin and Chongqing. In July, MAS’ Managing Director Mr Ravi Menon hosted the Singapore-China (Chongqing) Financial Conference. The event saw a good response of more than 400 participants.

7 Built upon a bedrock of strong financial cooperation ties, the Shanghai –Singapore partnership has flourished over the years. I foresee that our partnership will receive a boost under a more dynamic Asian financial landscape. II. Evolving New Asian Financial Landscape 8 Many observers have expressed their opinion that in recent years, a gradual shifting of the world’s economic centre of gravity to Asia has taken place. With the shift, many expect a new Asian Financial Landscape to emerge, presenting tremendous new opportunities ahead. Let us look at how this financial landscape is expected to evolve:  Asia’s economic size and rate of growth will pack a much stronger punch in the new era. In 1990, Asia’s share of global GDP was 23.2%. By 2014, this had increased to 38.8%, much larger than the shares of the U.S. and the E.U. If current growth trends continue, Oxford Economics forecast that Asia’s share will reach nearly 45% by 20253. OECD estimates4 that the size of the global middle class will increase to 4.9 billion by 2030. The bulk of this growth will come from Asia. By 2030, Asia will represent almost two-thirds of the global middle-class population and almost 60% of middle-class consumption. With increasing economic weight, Asia is expected to play a leading role in global financial markets. I made similar observations in a speech last week at the ASIFMA Annual Conference in Singapore: Equity markets in Asia recorded strong growth over the past ten years.
Despite the consensus among policy-makers on the importance of financial stability, the economic literature lacks adequate theoretical and empirical studies on the details of the transmission mechanism from financial stability to macroeconomic stability. At this point, academia is expected to do their share in this respect. The two-day conference will stage parallel sessions, panel discussions and presentations on these issues. Banking sector dynamics, macroprudential measures and their impact on macroeconomic stability, systemic risk issue and sovereign debt dynamics are among the topics that will be addressed at the conference. Two of our distinguished guests, Mr. Ricardo Caballero and Mr. Franklin Allen, will be delivering speeches. Mr. Caballero will be presenting a speech on the first day of the conference and Mr. Allen’s presentation is scheduled for the second day. On the second day of the conference, the panel discussion titled “How did the crisis challenge the Central Banking as we knew it? What should (not) change?” will be held, at which senior central bankers will be sharing their country experiences. I think this panel discussion will be very interesting and beneficial for all the participants. The studies that will be presented throughout the conference will contribute to better understanding of the factors threatening financial and macroeconomic stability and developing policies to achieve these two objectives simultaneously. I believe that the conference will also serve as a forum for the participants for exchanging views.

Erdem Başçi: Financial and macroeconomic stability Speech by Mr Erdem Başçi, Governor of the Central Bank of the Republic of Turkey, at a conference on “Financial and macroeconomic stability”, organised by the Central Bank of the Republic of Turkey jointly with the Central Bank of Brazil, the Bank of Finland and the Journal of Financial Stability, Istanbul, 4 June 2012. *  *  *  Distinguished Guests, Welcome to the conference on Financial and Macroeconomic Stability, organized by the Central Bank of the Republic of Turkey jointly with the Central Bank of Brazil, the Bank of Finland and Journal of Financial Stability. In November last year, we organized yet another conference on Financial Stability and Inflation Targeting, with a focus on financial stability. Country experiences since then have shown once more how costly it would be economically and socially if and when financial stability is neglected. Therefore, financial stability is of utmost importance for policymakers in attaining macroeconomic stability. As a matter of fact, this conviction, which is also supported by international platforms such as G20, IMF and BIS, has not only raised several new questions regarding the design and implementation of monetary policy, but also proposed a new research agenda in the academic literature. Esteemed Participants, Sustainable growth, low inflation, steady employment growth, low levels of unemployment and a balanced public finance can be listed as the main indicators of macroeconomic stability.
21 The results are much the same. On average, the dispersion in banking returns is statistically significantly lower than for non-banks, at the 1% level, both for UK and global institutions. And, in general, we observe a compression of returns during credit booms and a dispersion in busts. There is evidence of an increase in the degree of coordination of global banks’ activities after the financial liberalisation of the 1980s. This suggests credit cycles may have become increasingly synchronous globally. To test this formally, we construct pair-wise correlations between countries’ credit cycles for two post-war sub-samples, 1945–79 and 1980–2008. We plot the cumulative distributions of these cross-country correlations in Chart 16. The same technique can be applied to correlations between countries’ medium term fluctuations in GDP (Chart 17). In each chart, a shift to the right of the cumulative distribution indicates an increase in the degree of crosscountry correlation. Chart 12 Dispersion of equity returns of US banks and top 100 US PNFCs (by market cap)  (1), (2) and (3) represent medium term credit booms. Outside of these areas represent medium term credit busts. Source: Thomson Reuters Datastream and Bank calculations. 20  Theoretical explanations have been put forward by, among others, Campbell and Cochrane (1999) and Mele (2007), who show that habits and cyclically asymmetric risk premia respectively may generate counter cyclical volatility in asset pricing models. 21  This global group of banking institutions included UK and US banks as a subset.

But it also drives up volatility due to risk illusion. Because riskadjusted returns are constant, this must entail an increase in the probability of there being a severe negative shock, so the probability of a crash rises. Chart 2 shows a simulation of the model when for 100 periods with normally distributed shocks. The frictionless benchmark model generates the path shown by the maroon line. As specified, the path is mean reverting, with movements in the macro state around trend. Allowing for reputational effects generates the blue path, giving a threshold level of fundamentals shown by the green dashed line. As the macro state hits the threshold, banks adopt risky policies to signal high ability. In this simulation this happens four times, in periods 3, 50, 68 and 72. Consider the threshold breach in period 72. As during the Great Moderation, the good macro state at first persists. The credit boom fuels high fundamentals. But while headline fundamentals have improved, risk-adjusted fundamentals have not. Eventually, this results in a crunch in credit and a sharp deterioration in the macro state, as risk is realised. 10  In particular, the Sharpe ratio (the expected value of fundamentals relative to their standard deviation) is constant across both regimes. BIS Review 168/2010  7  Now suppose that financial liberalisation generates heightened competition between banks, in the model. increasing the market premium on reputation. This raises the value of Chart 3 shows the effects of the reputational weight being raised . The threshold for risky policies falls.
Currently, we can only see a very small number of major market players establishing ecosystems who are shifting towards new business models. I should say that ecosystems are certainly attractive for clients enabling them to receive almost everything a person needs every day in a single environment, in one application. However, we are well aware of the risks inherent in such ecosystems as banks are investing depositors’ funds in new businesses, in their expansion. Returns on these businesses may be both lower and later than expected by the bank being the centre of an ecosystem and financing its evolution. Therefore, we need to protect depositors’ and investors’ interests because those who place their funds with banks should certainly be confident that this money would not be affected by the actual profits of an online cinema or even an online cinema network owned by their banks. Another challenge posed by ecosystems is a potential abuse of dominance, and not only in the financial market. Furthermore, this may also affect the development of several sectors and, eventually, product prices and quality for end consumers. Therefore, we raised this issue long ago, and we have started to develop ecosystem regulation approaches we will be discussing with you, as Anatoly Aksakov has already mentioned. This year, we are going to publish a consultation paper on the regulation of banks developing ecosystems, which will become the first step towards the start of our joint efforts with the market community aimed at devising ecosystem regulation approaches.

Christian Noyer: Demographic shifts – threats or opportunities? Opening remarks by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, at the Montreal conference: “Demographic shifts – threats or opportunities?”, Montreal, 11 June 2012. *  *  *  Ladies and gentlemen, It is a real pleasure for me to open this session of the Montreal conference on demographic shifts. I am no demographics expert, you know, but I will try to give my opinion of central banker on this extremely important matter. There is no major uncertainty as to the demographic shifts that are in progress. We already have a clear idea of the likely demographic trends for the coming decades and, even more importantly, of their age and geographical breakdowns. We must capitalise on this knowledge to analyse the potential impacts of these shifts and determine how they could contribute to decision-making. In that regard, I would like to raise a few points that are relevant to central bankers. I will focus on the case of developed countries and more particularly on Europe, where demographic developments are mainly driven by the combination of longer life expectancy and a low fertility rate. As regards the latter, it is comforting to note that this rate in France and Canada is less problematic than those in most economies of the same group. When considering demographic developments, much attention is paid, legitimately, to public debt issues.